Court Opinion

ID: 3760766
Source: CourtListenerOpinion
Date Created: 2016-07-06 07:17:17.215177+00
Date Added: 2024-06-11T14:12:04.575228
License: Public Domain

This is an appeal from a judgment entered by the Common Pleas Court of Cuyahoga County, sitting without a jury, in favor of plaintiffs appellees, John C. Westfall, et al., and against defendant appellant, The American States Insurance Company.
Appellees were the owners of certain premises on Franklin Boulevard, in Cleveland, Ohio. These premises consisted of a lot with two frame buildings, one behind the other.
On April 22, 1970, appellant issued a fire insurance policy to the appellees, insuring these two frame buildings. The pertinent clause of this policy provided:
". . . this company . . . to an amount not exceeding . . . [$9,000] . . . does insure the insured named above . . . to the extent of the actual cash value of the property at the time of loss, but not exceeding the amount it would cost to repair or replace the property with materials of like kind and quality . . . nor in any event for more than the interest of the insured . . . against all direct loss by fire . . ."
On March 26, 1971, the appellees contracted to sell the premises on Franklin Boulevard, including the two buildings, for a total consideration of $8,000. A clause in this contract provided: "Buildings on premises to be razed by purchaser."
On April 17, 1971, the rear building was damaged by fire. Subsequent to this fire, on June 11, 1971, title to the premises was transferred to the new owners and the appellees received the full consideration of $8,000.
Appellees sued appellants for the full amount of the insurance coverage. The trial court awarded the appellees $8,373, plus interest. Appellant assigns three errors for review by this court.
Appellant contends that the trial court erred in holding that the sellers of a building had an insurable interest and could recover under their insurance policy for a fire loss to the building when the sales contract, entered into prior to the loss, required the purchasers to demolish the building. We find merit in this assignment of error.
A long-standing axiom of insurance law is that an insured *Page 178 
must have an insurable interest in the property before he can recover on a policy insuring against damages to the property.Connecticut Mut. Life Ins. Co. v. Schaefer (1876), 94 U.S. 457;Richland County Mut. Ins. Co. v. Sampson (1883), 38 Ohio St. 672;  Great Am. Ins. Co. v. Curl (1961), 88 Ohio Law. Abs. 516.
Neither party disputes the proposition that a vendor of real property retains his insurable interest until title is transferred. The narrow issue presented by this case is whether the contractual provision in the purchase agreement that the buildings on the premises were to be "razed by the purchaser" elminated appellees' insurable interest in these buildings. This issue has apparently not been previously resolved in a reported opinion from this state.
After considering economic realities rather than merely examining the state of legal title, we conclude that the appellees did not retain an insurable interest in the building which they had contracted to sell and have destroyed by the purchaser.
The rationale for the rule that an insured party must have an insurable interest in the insured property stems from the public policy against "wager policies." A "wager policy" is one in which the insured has interest only in the loss or destruction of the property. Having contracted to sell the premises and have the building "razed by the purchaser," the appellees would gain no profit or advantage from the continued existence of the building. Appellees have failed to demonstrate that they were in any way injured by the destruction of the building. They suffered no economic disadvantage from the fire, as they were paid the full contract price for the premises by the purchasers. Under these circumstances, a conclusion that the appellees retained no insurable interest is mandated by the spirit and purpose of the rule prohibiting wagering policies, as well as fundamental fairness.
Courts in other jurisdictions have reached a similar conclusion. In Royal Ins. Co. v. Sisters of Presentation (9th Cir. 1970), 340 F.2d 759, the owners of an old convent had moved into a new building and contracted to have the old abandoned building demolished. Before demolition began, *Page 179 
the old building was destroyed by fire. The Ninth Circuit reversed an award of $174,000 to the insureds on the basis that the owners did not retain an insurable interest in the property. In accord are: Garcy Corp. v. The Home Ins. Co. (1973),353 F. Supp. 329; Aetna State Bank v. Maryland Cas. Co. (1972),345 F. Supp. 903; Lieberman v. Hartford Fire Ins. Co. (Ill.App. 1972),287 N.E.2d 38; Leggio v. Millers Nat'l Ins. Co.
(Tex.Civ.App. 1965), 398 S.W.2d 607.
The appellant further contends that the trial court erred in admitting hearsay testimony of plaintiffs appellees' repairman, which testimony was based solely on an unidentified publication. We find no merit in this assignment of error.
The testimony which appellant finds objectionable was given by one John B. Wright concerning the reasonable cost to repair the burned building. Mr. Wright qualified as an expert because of his work in the contracting field. Mr. Wright stated that he relied on a "little magazine" in arriving at his prices for doors, windows, etc. Appellant's counsel objected on the ground that he had no effective way to cross-examine since the "little magazine" wasn't available. After carefully establishing that Mr. Wright used the "little magazine" as a reference (R. 22), the trial court overruled appellant's objection. We cannot say that the trial court's action was improper. The extent to which expert and opinion evidence may be received rests largely with the discretion of the trial court. Wabash Ry. Co. v.Defiance (1895), 52 Ohio St. 262, aff'd 167 U.S. 88 (1897). A scientific expert may base his opinion on knowledge gained from publications. Bluebird Baking Co. v. McCarthy (1935), 19 Ohio Law. Abs. 466. An expert may testify as to value even though his conclusions are based in part, or even entirely, upon hearsay evidence. Masheter v. C. H. Hooker Trucking Co. (1969), 19 Ohio App. 2d 169,170.
The appellant argues that the amount of the judgment was excessive. This assignment of error is also without merit.
If the appellees are found to have an insurable interest *Page 180 
in the building in question there is ample evidence in the record to support the judgment of $8,373. Plaintiffs' expert testified that the cost of repair would be $10,610.50. Allowing, as required, for depreciation, depletion and deterioration of the neighborhood, the trial court could have reasonably arrived at a judgment of $8,373.
For reasons assessed under the first assignment of error, the judgment of the trial court is reversed and judgment entered for defendant appellant.
Judgment reversed.
DAY, J., concurs.
KRENZLER, P. J., dissents.