Court Opinion

ID: 9296762
Source: CourtListenerOpinion
Date Created: 2022-11-29 17:28:01.598903+00
Date Added: 2024-06-11T17:13:21.962520
License: Public Domain

DELA CRUZ, Chief Justice:
The Diamond Hotel Co., Ltd. (“Diamond Hotel”) appeals from a Superior Court order denying its motion for partial summary judgment and granting Elizabeth Blanco Matsunaga’s (“Matsunaga”) cross-motion for partial summary judgment. The court held that the lease agreement at issue violated Article XII of the Constitution (“Article XII”) of the Commonwealth of the Northern Mariana Islands (“CNMI”). On that basis, it declared the lease void ab initio.
The issue we address is whether an option to extend a fifty-five year lease is a “renewal right” creating an impermissible long-term interest in land, even if the option is conditioned on the law being changed. We have jurisdiction over this appeal pursuant to 1 CMC § 3102.
I. FACTUAL AND PROCEDURAL BACKGROUND
Manases B. Matsunaga (“Manases”), a person of Northern Marianas descent (“NMD”), owned Lots 380 B-NEW-1, 380 B-NEW-2 and 380 B-NEW-3, situated at Susupe, Saipan. On November 10, 1986, Manases and the Diamond Hotel entered into the lease agreement (“lease agreement” or “agreement”) that is the subject of this dispute.
Paragraph 3 of the lease agreement provides:
Term. The leasehold period shall be for a term of fifty five (55) years beginning upon execution of the AGREEMENT, except as provided in paragraph 21, below. TENANT shall have the right to terminate this AGREEMENT upon giving LANDLORD one (1) year written notice.
Excerpts of Record at 11. Paragraph 21 of the lease agreement provides that the lease term may be increased by the Diamond Hotel for up to thirty-five years, but only if the law is changed to permit such extension:
Tenant’s Future Right to Greater Estate. It is understood and acknowledged that under the existing law of the [CNMI], the TENANT cannot hold any interest in the premises greater than the leasehold granted hereby. However, it is agreed and understood between the parties that if at any time in the future the law of the [CNMI] should be changed so as to permit the TENANT to hold a term of years greater than fifty-five (55), then in that event, TENANT at its sole option, may extend the term for the duration allowable, provided, however, that the entire lease term under this AGREEMENT cannot be extended to exceed ninety (90) years (original 55 year term plus 35 years extension). The terms of this paragraph shall apply to each and every change in the law of the [CNMI], whenever the change shall occur.

Id.

Manases subsequently died. His sister, Matsunaga, succeeded him to all rights in and title to the leased premises.
On April 15, 1992, the Diamond Hotel filed a complaint against Matsunaga for declaratory judgment. In particular, it sought declaratory relief that the option to extend the lease term did not violate Article XII. Matsunaga counterclaimed for declaratory relief and *216unpaid rent. She alleged that the lease agreement violated Article XII, and was void ab initio. Diamond Hotel and Matsunaga each moved for partial summary judgment on the Article XII issue.
The Superior Court ruled that paragraph 21 of the lease agreement constituted a renewal right to extend the lease term beyond fifty-five years. It held that the Diamond Hotel, not being an NMD, acquired an impermissible long-term interest in the property and that the lease agreement violated Article XII. This appeal followed, pursuant to certification by the trial court. Com. R. Civ. P. 54(b).
II. ISSUE AND STANDARD OF REVIEW
The principal issue raised for our review is whether the option to extend the lease constitutes a “renewal right” as that term is used in Article XII, § 3, that, in combination with the fifty-five year lease term, renders the lease agreement violative of Article XII. If it is, then we go on to review whether the option is severable from the rest of the lease agreement. We review orders granting summary judgment de novo. Santos v. Santos, 4 N.M.I. 206, 209 (1995).
m. DISCUSSION
A. The Option to Extend the Lease Term beyond Fifty-Five Years
The Diamond Hotel argues that the lease agreement does not violate Article XII because the option to extend the lease term given in paragraph 21 does not involve an acquisition of an interest in land. It asserts that the option does not constitute a “renewal right” prohibited by Article XII because: (a) it is not a “presently existing” right to renew, but rather a conditional one; (b) the condition is based on an attenuated event over which the parties have no control, i.e., a change of law; and (c) the option, not having been exercised, is not a true “renewal right.” The Diamond Hotel therefore contends that the lease agreement is valid and the summary judgment should be reversed.
In response, Matsunaga contends that the option to extend the fifty-five year lease for an additional thirty-five years creates an impermissible “long-term interest in real properly” as that term is used in Article XII, § 1. She contends that the option is a “renewal right” which invalidates the lease agreement. She asserts that, although conditional, the option is a “renewal right” contemplated by Article XII, § 3.1 We agree with Matsunaga: the option is a renewal right, notwithstanding that its exercise is conditioned on a future change in the law. We examine what is meant by the term “renewal right” by first briefly tracing the history of and purpose behind Article XII.
Land is a scarce Commonwealth resource. It has been referred to as the “cultural anchor” of the local Chamorro and Carolinian people. Wabol v. Villacrusis, 958 F.2d 1450, 1461 (9th Cir. 1992), cert. denied sub nom., Philippine Goods, Inc. v. Wabol, 506 U.S. 1027, 113 S. Ct. 675, 121 L. Ed. 2d 598 (1992). “Land is the only significant asset of the Commonwealth people.” Id., citing Northern Marianas Constitutional Convention, Analysis of the Constitution of the Commonwealth of the Northern Mariana Islands (Dec. 6, 1976) (“Analysis”). The constitutional restrictions on land alienation imposed by Article XII were intended as a safeguard for the people of the Northern Mariana Islands from losing control over this resource for a limited period (twenty-five years) during the Commonwealth’s transition to membership in the American political family. The policy underlying these ownership restrictions is set forth in Covenant § 805.2 Article XII implemented this policy.
The U.S. Constitution’s equal protection clause does not bar the application of Article XII.3 Wabol, 958 F.2d 1450. The U.S., we note, agreed on the protections embodied in Article XII during Covenant negotiations.4 Because of its ethnic-based prohibition on the sale and transfer of ownership of land, Article XII is indeed unique in American jurisprudence. However, the
*217prohibition was deemed necessary during the Commonwealth’s transitional years.
The Analysis further explains the reasoning behind Article XII:
From the end of World War II to the effective date of the Constitution, the law enforced in the Northern Mariana Islands has forbidden alienation of land to persons not citizens of the Trust Territory of the Pacific Islands. The people of the Northern Mariana Islands have had little opportunity to gain experience in land transactions of the kind that would be necessary to compete effectively against investors from other countries with well-developed economies.
Restrictions on land alienation are necessary to preserve the character and strength of the communities that make up the Commonwealth. The people of the Commonwealth are willing to sacrifice the short-term economic gain that might be achieved by putting their land on the market in order to achieve the longer-term economic and social gain that will come from preserving their family and social order, thus protecting the basis for enduring economic growth. The people are willing to take the time to learn how best to use their land, and to develop complete land use plans and comprehensive zoning regulations. These tools will be necessary to regulate the use of land in the Commonwealth and restrictions on land alienation will provide the necessary time to develop and enact these protections.
The Commonwealth is new. The people have had little experience in self-government. It is a more pmdent course to proceed carefully, accepting change only as it proves of long-term benefit to the Commonwealth as a whole. It is necessary to construct certain safeguards at the outset of the Commonwealth government to ensure that the change in the political order is supported by stability in the social order.
Id. at 166-67.
Article XII thus reflects the judgment of the framers that NMDs must "take the time” to “learn how best to use their land.” The objective of the law is to prevent the native Chamorros and Carolinians from losing possession of and control over their most scarce resource, land. The mechanism for achieving this is by restricting, during the period of protection, the transfer of land ownership and by prohibiting non-NMDs from acquiring more than a fifty-five year leasehold interest in Northern Marianas land. The transfer of a right that empowers a non-NMD to acquire an interest in land beyond a fifty-five year leasehold, as, for example, through an option to renew or to extend, would contravene the purpose of Article XII and would, therefore, be invalid. See, e.g., Wabol, 958 F.2d 1450.
While the intent of Article XII may appear paternalistic, it was necessary, from an islander’s standpoint, to ensure that NMDs have the opportunity to gain experience in land transactions. In light of these considerations, we shall broadly construe the term “renewal rights” as that term is used in Article XII, § 3, to include any right, conditional or unconditional, that a non-NMD could exercise to acquire a leasehold interest in land exceeding fifty-five years. As we shall explain, a conditional option like the one here is a renewal right contemplated and prohibited by Article XII.
Article XII, § 1 restricts the “acquisition” of “permanent and long-term interests in real property” to NMDs. Article XII, § 3 states: “The term permanent and long-term interests in real property used in Section 1 includes freehold interests and leasehold interests of more than fifty-five years including renewal rights" (Emphasis added.)
The paragraph 21 option to extend the lease term, like other options used in lease agreements, is in the nature of a contract. Restatement (Second) of Contracts § 25 (1981). As with other contracts, the duty to perform under an option may be based on a condition. Id. § 224. It is true that until it is exercised an option conveys nothing. However, the principal function of an option contract is to “limitO the promisor’s power to revoke an offer.” Id. § 25 cmt. d. Although the Diamond Hotel’s option to extend the lease is conditional, paragraph 21 of the agreement clearly grants the hotel the power to control Matsunaga’s ability to dispose of her reversionary interest in the land. The option, which is contractual, gives the Diamond Hotel what it bargained for: a legally-enforceable limitation on Matsunaga’s power to lease the property to any party, other than itself, for thirty-five years beyond the fifty-five year lease term. Article Xn was designed to prohibit such an arrangement. Thus, in this respect, the paragraph 21 option is in the nature of a renewal right.
Renewal rights are expressly included in the calculus of “interests in real property” under Article XII. They cannot be used to increase a non-NMD’s interest in land beyond a fifty-five year leasehold. Because the option given the Diamond Hotel to extend the fifty-five year lease term may only be exercised in the event the law later changes to permit the extension, we examine whether this condition somehow makes the option not a “renewal right” prohibited by Article XII, § 3. Although *218we agree with the Diamond Hotel that the option to extend does not now constitute a conveyance of an interest in land, we focus on whether the option, though conditional, is a “renewal right” contemplated by Article XII, § 3 that, together with the fifty-five year lease, creates an impermissible “long-term interestQ in real property” as that term is used in Article XII, §§ 1 and 3.
Article XII was designed not only to prevent a non-NMD from actual acquisition of a leasehold interest beyond fifty-five years, but also to prohibit a non-NMD from holding any right or power that would allow it to later acquire a leasehold interest in land in excess of fifty-five years. Paragraph 21 presently gives the Diamond Hotel the right, “at its sole option” and upon the occurrence of a certain condition, to extend the lease agreement beyond the fifty-five year limitation. Although the right to extend is conditioned on a change of law that has not yet occurred, that fact alone does not make the renewal right something other than a renewal right. While the Diamond Hotel’s right to exercise the option to extend is not presently enforceable, Matsunaga remains under a duty to refrain from selling or encumbering her remainder interest in the fee.5 The fact that the option is conditional does not extinguish the rights and duties created by the paragraph 21 option.6
We are not persuaded by the argument that the option is not a renewal right because it has not been exercised and because it is based on a condition that is “attenuated.” The option to extend at issue already imposes a limitation on Matsunaga’s power to lease the land to anyone beyond the Diamond Hotel’s fifty-five year leasehold interest. The renewal right given the Diamond Hotel in paragraph 21 precludes Matsunaga from disposing of her reversionary interest to a third party.
Renewal rights permitting the future acquisition of an interest in land for more than fifty-five years are prohibited. Whether the renewal right is conditional or not is not determinative for purposes of Article XII analysis. What is critical is that the right to renew beyond fifty-five years has already been given the Diamond Hotel.
The rule cannot be otherwise. The purpose of Article XII is to furnish substantive protection to NMDs, to further the preservation of their culture, and to protect the underlying social order of the Northern Mariana Islands. Any agreement by which a non-NMD is given, receives, or obtains a right, conditional or otherwise, to acquire title to or an interest in land longer than a fifty-five year leasehold, would violate Article XII.
We therefore hold that the option given the Diamond Hotel to extend its fifty-five year lease is a renewal right, and that the option created a violation of Article XU since it gave the Diamond Hotel an “interest in land" beyond a fifty-five year leasehold. We go on to analyze whether the option to extend the lease may be severed from the lease agreement pursuant to the agreement’s severability clause, or whether the entire lease agreement should be declared void ab initio.
B. The Issue of Severability
The Diamond Hotel contends that if the option to extend the lease offends Article XII, it is severable from the lease agreement. As we have determined earlier, the option to extend the lease offends Article XII because it provides for the extension of the lease beyond fifty-five years. The Diamond Hotel asserts that the fifty-five year lease agreement should be allowed to survive because the parties mutually agreed to sever the option if it was determined to be unlawful.
Matsunaga, on the other hand, contends that Wabol controls our analysis. Like the lease and option to renew in Wabol, which were determined to be a single transac*219tion and therefore illegal, she argues that the option in this case is inseparable from the rest of the lease agreement. She maintains that the entire lease agreement constitutes one transaction and should be declared void ab initio.
1. The Constitutional Remedy
Article XII’s “enforcement” section states: “Any transaction made in violation of Section 1 shall be void ab initio.” Article XII § 6. Article XII, § 1 states that the “acquisition of permanent and long-term interests in real property within the Commonwealth shall be restricted to persons of Northern Marianas descent.”
Article XII, § 6 “means what it says.” Wabol, 958 F.2d at 1462. “The drafter’s intent could not be clearer; any transaction which violates section 1 is completely without force and effect. The language of section 6 admits of no equitable exceptions.” Id.
In this case, if the option given under paragraph 21 is an integral part of the lease agreement, we must declare the entire agreement void ab initio, notwithstanding the severability clause. If, however, the option is not an integral part of the lease, and is separable from the rest of the lease, then we examine whether the option, as the offending provision, may be severed and removed from the lease agreement without offending Article XII.
2. The Wabol Decision
Matsunaga asserts that the appellate decisions in Wabol foreclose severance of the offending option provision. We have carefully reviewed the opinions of the appellate courts in Wabol and find that case distinguishable from the case before us.
a. Trial Court and Appellate Division’s Opinions
In Wabol, the parties executed a lease for thirty years with an “option to extend” the lease for two additional ten-year periods. Wabol v. Muna, 2 CR 231, 236 (N.M.I. Trial Ct. 1985), rev’d in part, 2 CR 963 (D.N.M.I. App. Div. 1987), aff’d sub nom., Wabol v. Villacrusis, 958 F.2d 1450 (9th Cir. 1990), cert. denied sub nom., Philippine Goods, Inc. v. Wabol, 506 U.S. 1027, 113 S. Ct. 675, 121 L. Ed. 2d 598 (1992). At the time, a non-NMD could only hold a maximum lease of forty years in Northern Mariana Islands land. The trial court in Wabol stated: “To put it in the terms of Article XII, the lessee has a leasehold interest for 50 years including renewal rights.” Wabol v. Muna, 2 CR at 236-37. It then reformed the option provision of the lease agreement, reducing it to allow for only a ten-year option so that the entire interest under the option and basic lease term totaled forty years. Id. at 254-55.
In reversing the remedy fashioned by the trial court, the Appellate Division of the U.S. District Court for the Northern Mariana Islands stated that a “number of cases cited by the appellants support the proposition that a lease can’t be divided.” Wabol v. Muna, 2 CR at 971 (citing Hedges v. Dixon County, 150 U.S. 182, 192, 14 S. Ct. 71, 74, 37 L. Ed. 1044 (1893), Eliason v. Eliason, 443 P.2d 884 (Mont. 1968), and Parthey v. Beyer, 238 N.Y.S. 412 (App. Div. 1930)). Viewing the lease agreement, including the option, as constituting a single transaction for purposes of Article XII, the Appellate Division declared the entire agreement void ab initio.
We have examined the cases cited by the Appellate Division and are not satisfied that they stand for the proposition that a lease and the option therein are always inseparable. The first case, Hedges, concerned a constitutionally defective bond issue by a county government. See 150 U.S. at 182, 14 S. Ct. at 71. Hedges did not involve a lease.
Eliason, the second case relied upon by the Appellate Division, did not involve a lease with an option to renew. See 443 P.2d at 885-87. It concerned a lease without an option that was found to be in violation of a Montana statute prohibiting long-term agricultural leases.
Parthey, the third case cited by the Appellate Division, also concerned an illegal agricultural lease. The lease in Parthey, however, did include an option to purchase the fee. See 238 N.Y.S. at 416. The Parthey court held that the lease and the option to purchase were not separable because the “consideration for both [the lease and option] is commingled and is not susceptible of being segregated and allocated, part to the option and part to the lease or extension of the existing lease.” Id. In so holding, the Parthey court did not foreclose the possibility of severing a provision in a lease agreement under circumstances that may permit it.
b. The Ninth Circuit’s Decision in Wabol
The Ninth Circuit Court of Appeals held in Wabol that “[b]ecause a void instrument cannot be reformed, Hedges v. Dixon County, 150 U.S. 182, 192, 14 S. Ct. 71, 74 (1893), the district court properly held that the lease was invalid.” 958 F.2d at 1463 (emphasis added). The court relied on Hedges alone as authority for this proposition.
*220Hedges states that “\w\here a contract is void at law for want of power to make it, a court of equity has no jurisdiction to enforce such contract, or in the absence of fraud, accident, or mistake to so modify it as to make it legal, and then enforce it.” 150 U.S. at 92, 14 S. Ct. at 74 (emphasis added). This means that a court may not use its equitable powers to reform an instrument which is void by reason of, for example, a statute or a constitutional provision.
Here, the Diamond Hotel urges us to sever the option from the rest of the lease agreement pursuant to the severability provision, which allows for severance of any lease provision determined unlawful. In Wabol, the Ninth Circuit did not address the question of whether a provision offending Article XII may be severed. There was no severability clause in Wabol. The power of a court to sever a lease provision (as, in this case, the lease agreement itself provides for) is distinct from a court’s power to reform the express terms of a contract that is otherwise void at law. See Somerset Importers Ltd. v. Continental Vinters, 790 F.2d 775, 782 (9th Cir. 1986). Granting the Diamond Hotel’s severance request does not involve the exercise of our equitable powers to reform the lease agreement, which is what Wabol forbade. Rather, it would enforce the parties’ agreement to sever a provision which makes the lease agreement illegal.
For the reasons which follow, we hold that an option to renew or extend the lease term may be severed, under appropriate facts, from a lease agreement. We explain why severance of an offending option provision may be permissible under Article XII.
In this case, severance of the option to extend which violates Article XII may be made without offending Article XII’s void ab initio mandate. First, the parties themselves have agreed to do so. By removing the option provision which makes the lease transaction unlawful, as the parties have mutually agreed to do, the lease remains valid. At least two courts have decided that severance of an illegal term that renders a contract void by statute is permissible to save the agreement. Mailand v. Burckle, 572 P.2d 1142, 1152 (Cal. 1978); Ai v. Frank Huff Agency, Ltd., 607 P.2d 1304, 1312-13 (Haw. 1980). We see no distinction between these two cases, which involve statutory violations of California and Hawaii law, and a case where the agreement embodies a transaction that violates a constitutional provision, like Article XII. Article XII, as written, does not preclude severance where the parties have agreed to do so in order to save the underlying lease. By removing the option clause, the lease agreement gives the Diamond Hotel only the maximum leasehold interest it could obtain at law.
The option, in combination with the otherwise valid fifty-five year lease, creates the Article XII violation. The lease instrument, however, provides for the removal of the option, the clause which causes the lease to be unlawful. There is nothing wrong with enforcing the severance clause. We fail to see why severance of the offending option would itself offend Article XII where the parties themselves have agreed to do so, and where the effect of severance would instead provide for only a fifty-five year maximum leasehold that a non-NMD may obtain.
Second, a provision in a lease agreement may be severed from the lease if such provision is not integral to the lease agreement and the parties have agreed to severance. "[W]hile there are various tests for determining the nature of a contract as entire or several, there is no formula for a test in all cases, and each case must depend largely on its own circumstances.” 17A CJ.S. Contracts § 331 (1963). The existence of a severability clause in a lease agreement “certainly strengthens the case for the severance of unenforceable provisions because it indicates that the parties intended for the lawful portions of the contract to be enforced in the absence of the unlawful portions.” Abbott-Interfast Corp. v. Harkabus, 619 N.E.2d 1337, 1343 (Ill. App. Ct. 1993).
The test employed by one court in determining whether a particular provision is separable and not integral to an agreement is “whether [the parties] would have entered into the agreement absent the illegal parts.” Panasonic Co. v. Zinn, 903 F.2d 1039, 1041 (5th Cir. 1990). Another court has held that the test of separability of a lease and an option is whether “the agreement [would] have been made were the parties not under the impression that it would be performed in its entirety.” Borneo Petrol, Inc. v. Epstein, 560 A.2d 655, 662 (N.J. 1989). At least two courts have found that the doctrine of separability applies to an agreement that contains a lease and an option to obtain a further interest in the leased land. See In re Guardianship of Sorum, 273 N.W.2d 710, 712 (N.D. 1979); Bonnco Petrol, Inc., supra.
We therefore examine the lease agreement to determine whether the option is an integral part of it. If it is not an integral component of the agreement, the provision is separable from the lease and may be severed. We find, based on the language of paragraph 21, that the option was not intended to be an integral provision.
The parties in this case intended that the option be separable. Paragraph 34 of the agreement states:
*221Severability and Choice of Law. This AGREEMENT shall be subject to the laws of the [CNMI], and if any provision of this AGREEMENT shall be held invalid, under those laws for any reason, the same shall be deemed severable from the remainder hereof and shall in no way impair the validity of this AGREEMENT and all remaining provisions of this AGREEMENT shall otherwise remain in full force and effect.
Excerpts of Record at 11. The option provision, paragraph 21, states that the parties “understood and acknowledged that under the existing law of the [CNMI], the TENANT cannot hold any interest in the premises greater than the leasehold granted hereby.” Id. This statement shows that the parties anticipated that the option provision might violate Article XII. In order to guard against a ruling of illegality, they carefully specified that the lease was to grant only a legitimate interest in the land conveyed. If any lease provision was found to be offensive to Article XII or any other law, that provision was to be removed.
We conclude that the option to extend the lease may be severed without offending Article XII. By giving effect to the severance clause and removing the offending option, we are enforcing at law, and not reforming, the parties’ express agreement. The parties have agreed that the lease agreement should convey only a legal interest in land. The Diamond Hotel’s request for severance of the option provision from the rest of the agreement is warranted and should be granted.
IV. CONCLUSION
Recapping, we hold that the conditional option to extend the lease beyond fifty-five years is a renewal right which creates a violation of Article XII. Not being integral to the lease, however, the option provision is severable from the rest of the lease agreement, pursuant to paragraph 34's severability clause. The fifty-five year lease agreement thus remains valid.
The judgment of the Superior Court is REVERSED and the case is REMANDED with instructions to enter declaratory judgment consistent with this opinion and also to resolve Matsunaga’s unpaid rent claim. Additionally, jurisdiction over the funds now held in account for Matsunaga is hereby vested in the Superior Court.

 N.M.I. Const, art. XU, § 3 states: “The term permanent and long-term interests in real property used in Section 1 includes freehold interests and leasehold interests of more than fifty-five years including renewal rights . . . ." (Emphasis added.)

 Covenant to Establish a Commonwealth of the Northern Mariana Islands in Political Union With the United States of America, 48 U.S.C. § 1801 note, reprinted in CMC at B-101 et seq. (“Covenant”).

 “It would be truly anomalous to construe the equal protection clause [of the U.S. Constitution] to force the United States to break its pledge to preserve and protect [Northern Mariana Islands] culture and property.” Wabol v. Villacrusis, 958 F.2d 1450, 1462 (9th Cir. 1992), cert. denied sub nom., Philippine Goods, Inc. v. Wabol. 506 U.S. 1027, 113 S. Ct. 675, 121 L. Ed. 2d 598 (1992).

 Covenant, supra note 2, § 805.

 “A contractual promise may not yet be enforceable, while at the same time the legal duty that it created may not yet be discharged.” Arthur L. Corbin, CORBIN ON CONTRACTS [“CORBIN”] § 630 (1962).

 Corbin, supra note 5, is instructive:
It is clear that the fact that rights are future and conditional does not prevent their recognition and protection; they are within the protection of the Constitutional provision against impairment of obligation by a State. A contract creating such rights is legally effective according to its terms; if the payment of money is promised therein, to either the promisee or a third party beneficiary, the existence of a “contract right” is not denied merely because the money is payable in the future and only on the happening of an uncertain event or because some one has a power of termination or modification. If a right has to be "vested” in order to be recognized and protected, these rights are vested. It is immaterial whether the parties "expect” or “hope” that payment will take place. The holder of a fire insurance policy very seldom gets the money promised him, and yet he is not disappointed in his “expectations.” He both hopes and expects that his house will not burn down; yet no one doubts that he has “rights” created by the policy contract.
Id. § 626.