Draper v. Delaware State Grange Mutual Fire Insurance

91 A. 206, 28 Del. 143, 5 Boyce 143, 1914 Del. LEXIS 20

• Court: Superior Court of Delaware
• Decided: June 29, 1914
• Status: Published

Opinion

Woolley, J.,

after making the above statement, delivered the opinion of the court:

[1, 2] In order for a party to recover on a contract of insurance, two things are necessary to be proven: First, the existence of a valid contract;- and, second, the occasion that fixes liability thereunder. A contract of insurance against loss or damage to property is a contract of indemnity. It is an undertaking on the part .of the insurer, based upon sufficient consideration to pay the insured a certain sum of money upon the happening of a certain contingency. The contingency, in the contract here sued upon, is loss occasioned the plaintiff by fire to the property described in the contract.

[3] A contract of insurance is essentially a personal contract. Traders’ Ins. Co. v. Newman, 120 Ind. 554, 22 N. E. 428. It is not a contract to insure property against fire, but is one to insure the owner of property against loss by fire. Destruction by fire of the property described in the contract of insurance is not the contingency upon which the insurer promises to indemnify the insured. It is only when by fire the insured has sustained a loss that the insurer may be called upon to perform its contract of indemnity.

[4] As it is quite impossible for the insured to sustain a loss to property by fire unless he has an interest in the property, and as he may recover only when he has sustained a loss, it is now recognized that in actions upon contracts of fire insurance, excepting in certain classes, as in marine insurance, the existence of an insurable interest on the part of and the consequent loss sustained by the insured, must be shown and proved before he can recover.

The insurable interest in property of one claiming indemnity for its loss by fire must first be shown to have existed at the inception of the policy, or to have legally subsisted during the risk (Hooper v. Robinson, 98 U. S. 528, 25 L. Ed. 219), and then to have existed at the time of the loss.

[5] If no insurable interest of the insured in the property can be shown at the time of its destruction, he, of course, can show no loss, and if he shows no insurable interest at the inception of the contract or during the risk, he fails to disclose a valid contract of insurance. A contract of insurance is a contract of indemnity, and its object is to avert a loss rather than to allow a gain. A policy of insurance against loss of property in which the insured has no interest, therefore, amounts to a wager, and wager policies are void upon the ground that they are contrary to public policy.

It becomes necessary, therefore, in an action upon a contract of fire insurance, for the insured to prove as facts, that he had an insurable interest in the property injured or destroyed, at a time when under the terms of the contract, the insurer was legally bound to indemnify the insured for loss when it happened, and that he also had an insurable interest in the property at the time of the loss. As these facts must be proved before recovery may be had, they must be averred before proof of them is allowed. Cooley's Briefs on the Law of Insurance, 85, 87, 135, 137, 138, 139, 141, 143; 19 Cyc. 583, 591, 920; Freeman v. Fulton, etc., Co., 38 Barb. (N. Y.) 247; Harness v. National Fire Ins. Co., 62 Mo. App. 245; Quarrier v. Peabody Insurance Co., 10 W. Va. 507, 27 Am. Rep. 582; Scott v. Phoenix Ins. Co., 65 Mo. App. 75; German Ins. Co. v. Everett (Tex. Civ. App.) 36 S. W. 125; Davis v. New England Ins. Co., 70 Vt. 217, 39 Atl. 1095; Vernon Ins. Co. v. Bank, 29 Ind. App. 678, 65 N. E. 23; Hardwick v. State Ins. Co., 20 Or. 547, 26 Pac. 840; Chrisman v. State Ins. Co., 16 Or. 283, 18 Pac. 466; Prussian National Ins. Co. v. Peterson, 30 Ind. App. 289, 64 N. E. 102; Bryan v. Farmers’Mututal Ins. Ass’n, 81 App. Div. 542, 81 N. Y. Supp. 145.

The demurrer is sustained to all counts of the declaration.