31 N.Y.2d 411 | NY | 1972
Lead Opinion
The finding of fact that plaintiff purchased the automobile insured by defendant for value and without knowledge it was stolen has been affirmed, both by the Appellate Term and by the Appellate Division, and is not an open question here. Thus the issue of plaintiff’s insurable interest must be examined on the assumption he was an innocent buyer of the vehicle insured by defendant, and subsequently stolen.
Plaintiff had a right to possession of the car against any contrary assertion except that of the true owner. This right, under general principles, ought to be regarded as an insurable interest. The New York rule was laid down by Judge Finch in National Filtering Oil Co. v. Citizens’ Ins. Co. of Mo. (106 N. Y. 535). He noted that the cases he cited, e.g., Herkimer v. Rice (27 N. Y. 163), “ decide that an interest, legal or equitable, in the property burned, is not necessary to support an insurance upon it; that it-is enough if the assured is so situated as
This decision was followed in Riggs v. Commercial Mut. Ins. Co. (125 N. Y. 7) in which Judge Andrews observed that although a stockholder of a corporation had neither title to corporate property nor equitable title which he could convert to a legal title, he has a sufficient interest in such property to insure it. For example, its loss might affect dividends (p. 13). If the law recognizes the right of a purchaser of a car in good faith and for value to possession, it would seem to follow that this right to possession, limited though it may be, is insurable.
The general policy problem underlying the concept of ‘ ‘ insurable interest ” essentially is whether an insured, having no real economic interest in the subject, is actually making a wagering contract. The principle is laid down in Corpus Juris Secundum (Vol. 44, Insurance, § 175, subd. [b], p. 870): “ An ‘ insurable interest ’ is sui generis, and peculiar in its texture and operation. In general a person has an insurable interest in the subject matter insured where he has such a relation or connection with, or concern in, such subject matter that he will derive pecuniary benefit or advantage from its preservation, or will suffer pecuniary loss or damage from its destruction, termination, or injury by the happening of the event insured against. Great liberality is indulged in determining whether a person has anything at hazard in the subject matter of the insurance, and any interest which would be recognized by a court of law or equity is an insurable interest.”
Two States have held under similar circumstances to those now here that the purchaser in good faith of a car has an insurable interest. In New Jersey this was held in Norris v. Alliance Ins. Co. (1 N. J. Misc. 315), and in Washington in Barnett v. London Assur. Corp. (138 Wash. 673).
In a recent ease in the Second Department (Perrotta v. Empire Mut. Ins. Co., 35 A D 2d 961) the court treated as decisive on insurable interest whether plaintiff was “ an innocent purchaser of the automobile ”, Holding that he was not, the court held he had no insurable interest.
Decision in Nieschlag & Co. v. Atlantic Mut. Ins. Co. (43 F. Supp. 797 [S. Dist., N. Y.], affd. 126 F. 2d 834, cert. den. 317 U. S. 640, rehearing den. 317 U. S. 707) is distinguishable. The insured had no possession or right to possession of the goods represented by the fraudulent receipt. The fraudulent paper gave it nothing to assert against anyone and it could not bring itself within any of the general definitions of an “ insurable interest ”.
The order should be affirmed, with costs.
Dissenting Opinion
(dissenting). In this action to recover on an insurance policy, the issue presented is whether an innocent purchaser of stolen property has an insurable interest therein under section 148 of the Insurance Law.
The respondent insured allegedly purchased a used Cadillac for $4,100 from an unknown salesman whom he met through his brother-in-law. The car, which had previously been registered in New Hampshire, was then registered in New York and a comprehensive insurance policy thereon was issued by the appellant. Some three days after the purchase the car was stolen from the insured and concededly has not yet been recovered. Upon processing the theft, claim it was discovered that the insured automobile bore a false serial number — the implication being that the insured had purchased a stolen car. The appellant then disclaimed liability on the ground that the insured had no insurable interest in the subject property.
I disagree. The division of authority on this issue is widespread. (See Ann., Insurable Interest — Stolen Automobile, 33 ALB 3d 1417.) While some jurisdictions have adopted the position taken by the courts below (see, e.g., Skaff v. United States Fid. & Guar. Co., 215 So. 2d 35 [Fla.]; Barnett v. London Assur. Corp., 138 Wash. 673; Norris v. Alliance Ins. Co., 1 N. J. Misc. 315) others maintain the position that a purchaser of stolen property, having acquired no interest from, the seller, has no insurable interest in. the property (see Napanale, Inc. v. United Nat. Ind. Co., 169 Cal. App. 2d 119; Gordon v. Gulf Amer. Fire & Cas. Co., 113 Ga. App. 755; Hessen v. Iowa Auto. Mut. Ins. Co., 195 Iowa 141). I am of the opinion that this latter position, as set forth in Friscia v. Safeguard Ins. Co. (57 Misc 2d 759, supra) better represents the legislative intent underlying section 148 of the Insurance Law.
Under section 148, a contract of insurance is unenforceable absent an insurable interest in the person to be benefited. The section then defines an “ insurable interest” as “ any lawful and substantial economic interest in the safety or preservation of the property from loss, destruction or pecuniary damage.” While such interest need not be legal, equitable, or possessory, it must be such that the loss or destruction of the property will result in liability or pecuniary damage to the insured (Harrison v. Fortlage, 161 U. S. 57, 65; Riggs v. Commercial Mut. Ins. Co.,
In my opinion, the insured innocent purchaser had no “ substantial ” economic interest in the stolen car. His monetary investment was lost at the time of purchase; and having purchased the vehicle from one without any interest therein, he acquired only a qualified possessory interest (as against all but the true owner) which, as Mr. Justice Stecher pointed out in Friscia (57 Misc 2d 759, supra) was so tenuous that it might have been terminated at any moment by the true owner. As such, the value of the qualified possessory interest was highly speculative, and a loss thereof can hardly be considered “ substantial.”
Moreover, in thus holding the interest of the innocent purchaser of stolen property to be insurable, the courts are effectively expanding the liability exposure of insurance companies in this State. I submit that such is more properly a legislative function, which could be effected by a simple amendment of section 148 to include within its coverage the nonsubstantial interest of the innocent purchaser of stolen property.
Accordingly, the judgment below should be reversed.
Chief Judge Fuld and Judges Scileppi, Breitel, Jasen and Gibson concur with Judge Bergan ; Judge Burke dissents and votes to reverse in a separate opinion.
Order affirmed.