Court Opinion

ID: 6259801
Source: CourtListenerOpinion
Date Created: 2022-02-17 21:59:06.189643+00
Date Added: 2024-06-11T08:59:40.574175
License: Public Domain

Dissenting Opinion by
Mr. Justice Roberts:
I agree with the implication in the majority opinion that we should utilize the “factual expectation” theory to decide whether an insurable interest exists, but I dissent from the majority’s application of that theory in this case.
I believe that the condemnee—appellant here—has exactly that kind of interest which the “factual expectation” theory covers. As the majority notes, the “factual expectation” theory “states that ‘anyone who has an expectation of economic benefit from the preservation of property or an expectation of loss from its destruction, regardless of his relation to the property, *174has an insurable interest.’ This is a broad approach which ... is more closely allied to the concept of indemnity for often a man with no legally enforceable interest may suffer more from the destruction of property than a man who holds title.” (Emphasis added)
The Eminent Domain Code of 1964 gives a condemnee the kind of expectation and need for indemnity that should constitute an insurable interest. Under §408, Act of June 22, 1964 (Spec. Sess.), P.L. 6, §408, 26 P.S. §1-408 (Supp. 1969), “The condemnor, by filing a declaration of relinquishment in court within one year from the filing of the declaration of taking, and before having made the payment provided for in section 407(a) or (b), or as to which the eondemnee has not tendered possession of the condemned property as provided in section 407, may relinquish all or any part of the property condemned that it has not taken actual possession of for use in the improvement, whereupon title shall revest in the eondemnee as of the date of the filing of the declaration of taking, and all mortgages and other liens existing as of such date shall he reinstated-”1 (Emphasis added)
Since on the date (which was within the one-year statutory relinquishment period) of the fire, the condemnor had neither paid the eondemnee nor taken possession, it is clear that it was in a position to take advantage of the relinquishment provision of §408 or its nonstatutory equivalent if it so desired. At that point the condemnation sale was at most conditional, *175and the condemnee in effect held a reversionary interest. The condemnor had absolute discretion to return the property to the condemnee, and the condemnee would get the property with all encumbrances that existed at the time of the filing of the declaration of taking. Under these circumstances, “the title of the Authority is defeasible; . . . Thus for one year the risk of destruction by fire remained with the plaintiff, and, I think, for this reason ... it had an insurable interest in the building at the time of the fire.” Western Pennsylvania National Bank v. American Ins. Co. of Newark, N. J., 282 F. Supp. 632, 634 (1968) (Emphasis added)
The majority tries to avoid this problem by stating that if the condemnor returns the property to the condemnee, “it must make her whole with respect to any damages and losses.” Section 408 does indeed provide that “the condemnee shall be entitled to the damages sustained by him, including costs, expenses and reasonable attorney’s fees and such damages shall be assessed by the court, or the court may refer the matter to viewers. . . .” In my view, this provision would not cover the damages incurred here. The Commission Comment to §408 makes clear that the type of damages envisioned as collectible under this section are those resulting from the property being “ ‘tied up’; there may have been an entry by the condemnor, etc. ... In Long v. Commonwealth, 37 D. & C. 702 [56 Montg. 112] (1940), the court allowed the condemnee expenses incurred for plans, photographs, real estate experts and attorney’s fees. Expenses incurred for these items would, of course, be recoverable as damages under this section.”
The damages allowed under §408 thus are those resulting from the fact that there was a condemnation and subsequent relinquishment. The fire loss in the case before us is not of that type. Indeed, it would *176seem rather odd to me to require the condemnor to pay for fire damages for which it was in no way responsible and which occurred when the condemnee was in possession.2
Since I believe that under the facts of this case, §408 required the condemnee to bear a substantial risk of incurring a fire loss for one year, the condemnee had an insurable interest in the property at the time of the fire. I thus find it unnecessary to deal with the condemnee’s other arguments, and I would reverse the judgment of the court below.

 Although §408 became effective after the condemnation .date here, it was intended to clarify existing law (see Commission Comment) which had indicated that relinquishment was permissible under certain circumstances, without detailing which ones. I must assume that in this case, where the eondemnee retained possession and nothing had been paid, relinquishment would have been permitted, presumably under the terms of §408—-with all encumbrances still attached.

 The condemnor, which was not insured by appeUees, of course, could not recover damages under the insurance policy. Thus, although they had accepted premiums from appellant, the insurance company-appellees would be obligated to reimburse no one for the fire damages. Under the majority’s arbitrary result, the insured-condemnee is deprived of the very protection for which he had paid premiums under the insurance policy, and the insurance company is relieved of any obligation to pay for the loss which it had contracted and had been paid to bear. The majority’s result is even more arbitrary in light of the undisputed record that neither the insured nor the Authority acted improperly in any regard, violated any aspect of law, or breached any provision of the insurance contract. Nothing in the record before us compels either as a matter of law or public policy the unfair and unexpected result reached by the majority.