Raplee v. Piper

Brief Fact Summary. While Plaintiff was in possession as vendee under the contract, a fire occurred, defendant vendor received $4,650.00 under the fire loss policy, premiums for which had been paid by Plaintiff. Plaintiff tendered to Defendant the difference between the amount actually unpaid on the contract and the insurance proceeds, but Defendant refused Plaintiff’s demand for credit on the purchase price.

Synopsis of Rule of Law. When a land purchase contract requires the vendee to keep the property insured against fire and there is a fire loss before performance of the contract is completed, any such insurance received by the vendor is to be applied on any remaining balance of the purchase price.

Facts. While Plaintiff was in possession as vendee under the contract, a fire occurred, defendant vendor received $4,650.00 as the fire loss under a policy, premiums for which had been paid by Plaintiff vendee as required by the contract, Plaintiff tendered to Defendant the difference between the amount actually unpaid on the contract and the insurance proceeds, but Defendant refused Plaintiff’s demand that $4,600.00 be credited on the purchase price.

Issue. Which party should receive the benefit of the insurance proceeds?

Held. The Plaintiff vendee. Judgment affirmed.
When a land purchase contract requires the vendee to keep the property insured against fire and there is a fire loss before performance of the contract is completed, any such insurance received by the vendor is to be applied on any remaining balance of the purchase price.
However, if the vendor at his own cost, for his own protection and not because of any agreement, has taken out fire insurance, then such contract is personal to him and he need not credit the proceeds against the price.
The court found that it would be unjust if the contract vendee, who was required by the contract to keep the property insured in the name of the vendor prior to consummation of the deal, should get no benefit from the insurance.
Under a uniform statute of the jurisdiction, the risk of destruction by fire is on those vendees only if they are in possession at the time of the fire or have taken legal title.

Dissent. The dissent would apply the rule described in subsection “b” above to allow the vendor, in whose name the insurance policy was at the time of the fire, to receive the benefit of the insurance. The dissent would hold that the insurance was personal to the vendor and was taken out for his own protection from loss.

Discussion. In this case the key fact seemed to be that, even though the policy remained in the vendor’s name, the premiums were being paid by the vendee pursuant to the agreement. In such a case, the vendee apparently felt the need to pay the insurance for his own protection, rather than waiting until the legal title was transferred. In order to maintain insurance on property there must be an insurable interest, which is customarily evidenced by legal title.