74 A.D.2d 436 | N.Y. App. Div. | 1980
OPINION OF THE COURT
In this action the plaintiffs, Stefan and Justyna Etterle and their son, Stephen Etterle, seek to recover the proceeds of a fire insurance policy which was issued by the Excelsior Insurance Company of New York ("Excelsior”) on November 22, 1974 to Stefan and Justyna and insured their two-family dwelling at 327 Fulton Street, Buffalo, New York. In their complaint plaintiffs allege that on October 1, 1977 while the policy was in full force and effect, the property was destroyed by fire and plaintiffs suffered damage of $29,279.41 for the loss of their dwelling plus $100 per month loss of rental, and that Excelsior has refused to pay the proceeds of their policy. In a separate cause of action plaintiff Stephen alleges that his parents transferred title of the premises to him on August 29, 1977 "solely as a matter of convenience due to [their] ill health” and gave him an executed power of attorney under which he contends that he is the legal representative of his parents. Stephen further alleges that during September, 1977 his mother was admitted to a nursing care facility due to her ill health and that his father, also in ill health, left the insured premises to reside temporarily with him.
In an affidavit in oppositon to defendant’s motion, plaintiffs claim that Stefan and Justyna hold an insurable interest in the premises because they reside therein and intend to maintain the dwelling as a residence. They further contend that Stephen also holds an insurable interest because he holds title to the premises and intends to derive income from the rental of the property and may recover on the policy because he is the legal representative to his parents.
It has long been the rule that, in order to prevent fraud and crime and to prohibit wagering contracts on property in which the insured possesses no interest, the lack of an insurable interest in the property insured renders the property insurance void and unenforceable (Scarola v Insurance Co. of North Amer., 31 NY2d 411, 413; Riggs v Commercial Mut. Ins. Co., 125 NY 7, 11-12). Section 148 of the Insurance Law requires an "insurable interest” in the covered property which is "deemed to include any lawful and substantial economic interest in the safety or preservation of property from loss, destruction or pecuniary damage”. The statute codifies the liberal interpretation applied by the courts in construing the interest necessary to constitute an insurable interest and recognizes that "[a]ny right which may be enforced against the property, and which is so connected with it that its injury or destruction will cause loss” is an insurable interest (30 NY Jur, Insurance, § 752, p 105; see, also, Scarola v Insurance Co. of North Amer., supra; Riggs v Commercial Mut. Ins. Co., supra; National Filtering Oil Co. v Citizens’ Ins. Co. of Mo.,
Two early Court of Appeals cases, on facts quite similar to the instant case, support the view that Stefan and Justyna retained an insurable interest in the property even though they had parted with legal title in favor of their son. In Redfield v Holland Purchase Ins. Co. (56 NY 354, 357) the plaintiff had occupied and worked a farm, although his wife held legal title to the property. Apparently there was an oral promise that plaintiff could have a life estate in the property. The court held that if the plaintiff had an equitable right to the possession of the land under a parol agreement he had an insurable interest in the property. In Berry v American Cent. Ins. Co. of St. Louis (132 NY 49, 57), plaintiff had transferred legal title to his home to his son under an oral agreement that the plaintiff father was to occupy the premises for the duration of his life, keep the property insured, and pay real property taxes. When the property was destroyed by fire, the insurance company refused to pay the proceeds to the father on the grounds that he no longer had an insurable interest. The court cited the "well-settled” rule that it was not necessary for the insured to have a legal or equitable interest in the property destroyed "if * * * he would be liable to loss if it is destroyed or injured” (Berry v American Cent. Ins. Co. of St. Louis, supra, p 56). The court stated: "The test of insurable interest is whether an injury to the property or its destruction by the peril insured against would involve the assured in pecuniary loss” (Berry v American Cent. Ins. Co. of St. Louis, supra, p 56). Even though the father may not have been able to enforce the right to use the property against his son because of the parol nature of the agreement, the court held that the father did have an insurable interest.
Stefan and Justyna may seek to establish at trial that they conveyed legal title to their property based on an oral understanding with their son that they would be able to remain on the premises if their health permitted. Moreover, if any dispute arose between the parents and their son, all requirements for imposing a constructive trust appear to exist so that Stephen would be deemed to hold the property as a trustee in favor of his parents. What was said about the grantor’s position in Sharp v Kosmalski (40 NY2d 119, 122) applies as well here: "Indeed, in the case before us, it is inconceivable that plaintiff[s] would convey all of [their] inter
Whether Stefan and Justyna are viewed as life tenants of the property or beneficiaries under a constructive trust, their interest is substantial enough to be described as an "insurable interest” (see Insurance Law, § 148; Belge v Aetna Cas. & Sur. Co., 39 AD2d 295, 298-299). They have alleged in their complaint that they were the named insureds, that they suffered lost income, and that their dwelling was damaged to the extent of over $29,000. It is evident that they claim that they would profit by or gain some advantage by their dwelling’s continued existence and suffer some loss or disadvantage by its destruction (see 3 Couch, Insurance, Insurable Interest [2d ed], § 24:13). They have clearly alleged an interest in the house at the time of its destruction (see 19 Couch, Insurance, Pleading [2d ed], § 76:211).
Excelsior may be able to raise an issue of fact as to the insurable interest of Stefan and Justyna, but under New York’s liberal pleading rules (see Siegel, New York Practice, § 208, p 245) they have made sufficient factual allegations of an insurable interest to withstand defendant’s motion to dismiss. The issue must await trial for resolution. A motion to dismiss a pleading for failure to state a cause of action will fail, "if from its four corners factual allegations are discerned which taken together manifest any cause of action cognizable at law” (Guggenheimer v Ginzburg, 43 NY2d 268, 275; see, also, Melito v Interboro-Mutual Ind. Ins. Co., 73 AD2d 819). Furthermore, Excelsior, in an attempt to "go behind the pleading and prove that it lacks merit”, has not "convince[d] the court that nothing the plaintiffs] might reasonably be expected to prove would help [them]” nor established that plaintiffs do not have a claim (Siegel, New York Practice, § 265, p 325). "When evidentiary material is considered, the criterion is whether the proponent of the pleading has a cause of action, not whether he has stated one, and, unless it has been shown that a material fact as claimed by the pleader to be one is not a fact at all and unless it can be said that no significant dispute exists regarding it, again dismissal should not eventuate [citations omitted]” (Guggenheimer v Ginzburg, supra, p 275).
However, plaintiff Stephen Etterle’s cause of action should be dismissed. He is not a named insured on the policy and he is not his parents’ "legal representative”. As the
Accordingly, the order appealed from should be modified by granting Excelsior’s motion to dismiss the complaint as to the plaintiff Stephen Etterle, and, as modified, it should be affirmed.
Cardamone, J. P., Simons, Doerr and Wither, JJ., concur.
Order unanimously modified and, as modified, affirmed, without costs, in accordance with opinion by Schnepp,, J.