Court Opinion

ID: 7956324
Source: CourtListenerOpinion
Date Created: 2022-09-09 00:16:39.717152+00
Date Added: 2024-06-11T16:34:17.008943
License: Public Domain

Levin, P. J.
(dissenting). I do not think the contract of insurance entered into by the Mosses and the defendant insurance company covering their prospective daughter-in-law’s engagement ring violated the public policy of this State. And whether it violated public policy is the core question.
The majority emphasizes Crossman’s1 inquiry whether the plaintiff there had been pecuniarily damaged by the loss of the building. But both the fore and aft of that opinion show the fundamental inquiry to be whether the policy of insurance is a wagering, gambling contract, not whether the insured will suffer a pecuniary loss. The Crossman opinion opened by stating the policy underlying the insurable interest rule, that a wagering, gambling contract of insurance contravenes public policy and, therefore, is void. It then stated the question (p 308): “If this policy falls within this class, it is void, and prevents plaintiffs’ recovery. If it does not, this judgment must be affirmed.” And at the end of the opinion (p 311): “Obviously this contract of insurance was not a wagering, gambling contract prohibited by public policy, but was valid and enforceable.”
In determining whether a policy of insurance is a wagering, gambling contract, evidence that the insured has suffered a pecuniary loss, as in Cross-man, establishes that the insurance policy is not of the prohibited kind. The converse is not necessarily true.
*342The Crossman Court observed that the policyholder’s interest “may be derived by possession, enjoyment, or profits of the property, security or lien resting upon it, or it may be other certain benefits growing out of or dependent upon it.” (Emphasis supplied.) (p 309) After considering various formulations of other courts, Crossman concluded (p 310):
“The rule is tersely stated in 14 RCL p 910: ‘It may be said, generally, that anyone has an insurable interest in property who derives a benefit from its existence or would suffer loss from its destruction.’ ” (Emphasis supplied.)
This record contains ample evidence to support a determination that the Mosses derived a benefit from the existence of the ring. Indeed, we could affirm on the basis that the evidence would have justified an express2 finding that the Mosses had a pecuniary interest in their daughter-in-law’s ring.
The Mosses had sufficient interest in her wearing a $1,000 diamond engagement ring to provide the ring. Having purchased the ring, they could have regarded their assumed obligation discharged. However, they paid an additional amount to insure the ring against loss. Having been importuned for one ring, they perhaps wished to protect themselves against a repeat performance. They might well have anticipated the possibility of yet another, and successful, plea from their son should the young-lady, once having established herself as the wearer of such an ornament, lose it.
They were not strangers to the wearer. The loss of the ring could well be the source of further expense. Their son was not yet self-supporting, at least when it came to the purchase of such a ring. *343Presumably, part of tbe ring’s value to them was whatever satisfaction their son and daughter-in-law would derive from her continued use of the ring. Since the perpetuation of that euphoric state, were the ring lost, could cost perhaps another $1,000, they might well expect the loss of the ring to be a financial loss to them.
Nor were they strangers to the ring. The purchase of the ring may well have required a sacrifice. The schedule of specifically insured property attached to their homeowner’s policy shows this to be the most valuable item listed. It is not our task to measure the importance of the ring to the parties or to weigh it on our scale of values. Man does not live by bread alone. Their son’s, their daughter-in-law’s, and perhaps their own, peace of mind might have been or become involved. Their interest was not remote. Public policy, as expressed in the insurable interest doctrine, does not require its forfeiture.
The present law of insurable interest evolved from a futile search for symmetry with familiar doctrines of property law.3 The sound and simple policy of refusing to enforce wagering contracts has, as precedents multiplied, become a body of law too frequently forgetful of the policy.
The query “Is there an insurable interest?”4 tends to direct a lawyer’s thinking to the law of property. The profession naturally associates an interest with a property interest, and a property interest with a pecuniary interest. However, if the question put is *344whether the insured was a gambler or wagerer, an entirely different image comes to mind. It is of fundamental importance here, as always, to ask the right question. Were the Mosses gamblers or wagerers? If they were, then they did not have an insurable interest. If they were not, then they did.
Crossman, as quoted in the majority opinion, says (p 311) that “title to, or lien upon, property, is not essential to an insurable interest.” Earlier the Crossman Court observed (p 308) that “it may be a special interest entirely disconnected from any title, lien or possession.” Yet the majority here concludes with the statement that the Mosses had neither title to nor any reversionary or security interest in the ring. It has been observed:
“The requirement of insurable interest in property insurance, like most legal abstractions, has developed over the centuries primarily through judicial resolution of relatively isolated problems. Seldom have the courts examined the entire practice in terms of meaningful underlying policies, and the myopic views of older cases, canonized by precedent, often reflect themselves too brightly in later years to the detriment of sound modern analysis.” Har-nett and Thornton, Insurable Interest in Property: A socio-economic re-evaluation of a legal concept. 48 Colum L R 1162, 1163 (1948).
In the cited article, the authors discuss varying tests, e.g., “property right,” “contract right” and “legal liability,” but conclude the best is the so-called “factual expectation of damage” test — the expectation of economic advantage if the insured property continues to exist, or, stated negatively, the expectation of economic disadvantage upon damage to the insured property. They concede prece-dential support for the test they favor is “uncertain.”
Any test will inevitably fail because attention will inevitably focus on the test rather than on the *345policy. If there is to be a test, the rule adopted in Grossman would probably serve best, i.e., will the insured derive benefit from the existence of the property or suffer loss from its destruction. But even that may prove too narrow. The real question in every ease is whether the insurance policy under consideration contravenes public policy. At best, all other queries merely help organize one’s thinking —and may just as well disorganize it. At worst, they may simply provide us with a peg on which to hang our conclusive hat.
While, as the majority points out, no act of the insurer or agent can waive the insurable interest requirement, the trial judge could properly consider testimony of the agent who wrote the policy in appraising whether it would violate the public policy of this State to permit the Mosses to insure the ring. The agent testified that in a large number of cases the young man’s father purchases and insures the ring, that his agency writes such insurance 2 or 3 dozen times a year, that the customary procedure in each case is to bind the insurance pending receipt of an appraisal and determination by the insurer, based on information concerning the girl’s school, work, and general living situation, whether it desires to write the risk.
An adequate commentary on the state of the law of insurable interest5 is that there is still a question *346whether one spouse suffers an insurable loss upon the destruction of property owned by the other.6
The view I take requires consideration of the insurer’s claim that the Mosses may not recover because the policy covers only property which “is owned by or in the custody or control of the insured and members of the insured’s family of the same household.”
The daughter-in-law was not a member of the insured’s family of the same household. The Mosses assert, however, that the insurer waived that requirement. At trial the agent testified that before the insurance was written an appraisal of the ring was obtained and forwarded to the insurer, containing the following statement: “The wearer of the ring is Linda Epstein,” the young lady’s maiden *347name. He further testified that, prior to writing the insurance, the insurer’s general agent reviewed the file to decide whether it wished to underwrite the risk and was then advised that Miss Epstein lived in a household other than that occupied by the Mosses. On that evidence the trial judge was justified in concluding the insurer was aware of the circumstances and waived the condition now relied on by it.
“A policy of insurance is not void for the reason that the insured was not [as required by the policy]7 the sole and unconditional owner of the property, where it appeared that the insurer had full knowledge of all the facts and circumstances prior to issuing the policy.” Perkins v. Century Insurance Company, Ltd. (1942), 303 Mich 679, 683, quoting O’Neill v. Northern Assurance Co. (syllabus) (1909), 155 Mich 564. For earlier cases so holding see Crossman v. American Insurance Company, supra, p 307; Miotke v. Mechanics’ Insurance Co. (1897), 113 Mich 166, 168, 169; and Brunswick-Balke-Collender Co. v. Northern Assurance Co. (1907), 150 Mich 311, 314.
That the knowledge of the agent will be deemed the knowledge of the insurer, see Hawkeye Casualty Co., Inc., v. Holcomb (1942), 302 Mich 591, 604; Cap-paert v. Emmco Insurance Co., Inc., (1943), 304 Mich 130, 134; Prudential Insurance Company of America v. Cusick (1963), 369 Mich 269, 283; and Lipsky v. Washington National Insurance Company (1967), 7 Mich App 632, 636.
In Clawson v. Citizens’ Mutual Fire Insurance Co. (1899), 121 Mich 591, the insured had stated “deed” *348in answer to an inquiry as to the nature of his title, whereas he held the property with his wife as tenants by entireties, a state of title violating the policy’s requirement that the insured be the unconditional and sole owner of the property. Acknowledging this, the court, nevertheless, found the condition was waived, stating that where the company does nothing in the face of “facts which may be said to put the company upon inquiry in relation to the title, it is not unreasonable to say that there is such waiver.” (p 593)8
I would affirm the judgment.

 Crossman v. American Insurance Company of Newark, N. J. (1917), 198 Mich 304.

 The trial judge did not file findings of fact. See GOB 1963, 517.1.

 See, e. g., Citizens State Bank of Clare v. State Mutual Rodded Sire Ins. Co. of Michigan (1936), 276 Mich 62; Guiterman v. German-American Insurance Co. (1897), 111 Mich 626.

 It has been suggested that “insurable relationship” would be a more accurate term, and, therefore, one less calculated to misdirect the inquiry. Harnett and Thornton, Insurance Interest in Property: A socio-economic re-evaluation of a legal concept, 48 Colum L R 1162, 1188 (1948). " ' ’

 Of interest is Stauder v. Association General Fire Co. (1957), 105 Ohio App 105 (5 Ohio Ops 2d 396, 151 NE2d 583), holding the father of minor children who is charged with their support and subject to the further order of the court, has an insurable interest in their clothing and in furniture and other household goods, belonging to his former wife, used in their care and custody. In American Indemnity Company v. Southern Missionary College (1953), 195 Tenn 513 (260 SW2d 269, 39 ALR2d 714), the court held that the stockholder of a corporation had an insurable interest in its property. See annotation: Insurable interest of stockholder in corporation’s property, 39 ALR2d 723. See, also, Insurable Interest in Property: An Expanding Concept, 44 Iowa L E 513 (1959). In a considerable number of cases the courts have struggled with the various tests in *346an effort to fit their facts within them. See, e. g., Bernhardt v. Boeuf & Berger Mutual Insurance Company (CA Mo, 1959), 319 SW 2d 672 (the plaintiff had an insurable interest in a house built on land owned by his mother whieh she had agreed to convey upon completion) ; Kludt v. German Mutual Fire Insurance Co. (1913), 152 Wis 637 (140 NW 321) (a husband had an insurable interest in property occupied by him but owned by his wife) ; Liverpool & London Globe Insurance Co. v. Bolling (1940); 176 Va 182 (10 SE2d 518) (a divorcee had an insurable interest in property which her father-in-law permitted her to occupy for the purpose of conducting a general merchandise business from whieh she derived a livelihood for herself and her children, his grandchildren). All the eases referred to in this footnote can, of course, be distinguished on their faets from the case at bar. Eor a comprehensive survey of the cases, see Coueh on Insurance 2d, § 24:12 et seq.

 See annotation: Insurable interest of husband or wife in other’s property, 68 ALR 362, and 27 ALR2d 1959. In Agricultural Insurance Company of Watertown, New York v. Montague (1878), 38 Mich 548, the court held that a husband does not have an insurable interest in his wife’s property (p 552): “the question arises here precisely as it would had the [insured property owned by the wife] been owned by a stranger.” Later the Court found an insurable interest in the husband where there was a tenancy by the entireties. Clawson v. Citizens’ Mutual Fire Insurance Co. (1899), 121 Mich 591. Under many policies written today the spouse is automatically deemed an insured, and this perhaps explains why the matter has not been recently litigated in Michigan. Indeed, this is the first Michigan ease in over 75 years to declare a poliey of property insurance invalid because the insured did not have an insurable interest. Another explanation may be that insurance companies do not raise the defense. The defendant’s former agent testified that the defendant no longer writes policies in this State.

 The Miobigan standard poliey of fire insurance once provided that the entire policy shall be void, unless otherwise agreed in writing, “if the interest of the insured be other than unconditional and sole ownership when loss' or damage occurs.” CL 1929, § 12572. This provision was eliminated by PA 1945, No 265.

 In Gordon v. St. Paul Fire & Marine Insurance Co. (1917), 197 Mich 226, 234, a provision eliminating coverage where the property was unoccupied more than 10 days was deemed waived when the company issued the policy with knowledge that the property was then unoccupied.