Appeal from Judgment of the Court of Common Pleas, Civil Division, of Washington County, No. 73 May Term, 1983.
Frank C. Carroll, Washington, for appellants.
Richard W. DiBella, Pittsburgh, for appellee.
Rowley, Wieand and Del Sole, JJ.
[ 357 Pa. Super. Page 137]
On May 15, 1982, a two story brick home located at 127 Main Street, West Brownsville, was destroyed by fire. Joseph Luchansky and Josephine Luchansky were the insureds under a policy of fire insurance issued by The Farmers Fire Insurance Company. In an action on the policy by the insureds to recover their loss, the trial court denied recovery on the grounds that Joseph and Josephine Luchansky lacked an insurable interest in the Main Street property. The insureds appealed. We reverse.
The improved real estate had been conveyed to Michael Luchansky by his parents, the appellants, pursuant to a written agreement executed on May 20, 1975. That agreement, which made use of a form agreement to sell real estate, required the parents to convey the premises to their son for the sum of One ($1) Dollar. The conveyance was intended to make it possible to borrow money on the security of the home. Accordingly, paragraph seven of the written agreement provided as follows:
The parties further agree as follows: that in order to secure a mortgage upon hereinafter described realty, the [son] shall hold a deed on behalf of the [parents] and that the [parents] shall continue to hold equitable title or interest to the property. The [son] shall reconvey it to the [parents] when the mortgage is paid off or the property sold.
(Emphasis added). Consistently with this expressed intent, the parents also agreed in paragraph five:
[ 357 Pa. Super. Page 138]
From and after the date of this agreement, insurance and taxes shall be provided and paid for as follows: by the [parents].
Following the conveyance of legal title to the son, a mortgage was placed on the property. The loan proceeds were used for the benefit of the parents, and the mortgage was paid by the parents. They also paid the taxes, purchased insurance and paid the premiums therefor, collected some or all of the rent and made repairs. Although they testified that they paid the taxes, credit therefor was taken in their son's income tax returns. On two additional occasions, the property was again used as security to borrow money. In 1977, the son moved to Nevada. The parents thereafter leased the property to college students, collected the rents, kept the property in repair and kept it insured. However, legal title was not reconveyed to them until October, 1984. In the meantime, the building had been destroyed by fire.
The general rule is that anyone has an insurable interest who derives pecuniary benefit or advantage from the preservation or continued existence of the property or who will suffer pecuniary loss from its destruction. 43 Am.Jur.2d Insurance § 943; 4 Appleman, Insurance Law and Practice § 2123; Couch on Insurance § 24:13. A "[r]easonable expectation of benefit from preservation of the property is thus sufficient." 4 Appleman, Insurance Law and Practice § 2123. "It is not necessary to constitute an insurable interest that the interest be such that the event insured against would necessarily ...