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Teague-Strebeck Motors Inc. v. Chrysler Insurance Co.3/8/1999
red by the home, but their only claim to an ownership interest was an agreement that was "oral and arguably unenforceable." Id. at 887.
{26} On the other hand, Chrysler cites several cases from other jurisdictions which held that the insured lacked an insurable interest because the claimed interest in the property was based on an invalid or contingent agreement. In Mackie & Williams Food Stores, Inc. v. Anchor Casualty Co., 216 F.2d 317 (8th Cir. 1954), the court held that the purchaser of an automobile lacked an insurable interest in the vehicle because the seller had failed to comply with statutory requirements for transfer of title. In Klukavy v. United National Insurance Co., 654 F.Supp. 622 (E.D. Mich. 1987), the purchasers of a bar claimed entitlement to the proceeds of fire insurance. They had both a purchase agreement and a management agreement with respect to the bar, but neither agreement had received the necessary approval of the state liquor control commission at the time of the fire. Both the seller and the purchasers were named beneficiaries under the policy "'as their interest may appear.'" Id. at 624. The court awarded the proceeds to the seller. In Price v. Trinity Universal Insurance Co., 654 P.2d 485 (Ks. Ct. App. 1982), the occupants of a house were held to have no insurable interest in the house when their occupancy was without the consent of the owner and was pursuant to a contract that was void for mutual mistake. Phalen Park State Bank v. Reeves, 251 N.W.2d 135, 138 (Minn. 1977), held that "an insurable interest may not be predicated on a contract which is void or unenforceable." The court remanded the case for trial to determine whether the bank's mortgage was usurious and therefore void. If so, the court stated, " he bank thus loses nothing by reason of the destruction of the property for it had nothing to which it had an enforceable right." Id. at 139. In Hane v. Hallock Farmers Mutual Insurance Co., 258 N.W.2d 779 (Minn. 1977), the court held that the insured no longer had an insurable interest in the farm on which he lived once he had assigned his interest in the contract to purchase the farm, even though he had an informal agreement with the assignee that he would have an opportunity to repurchase the farm. Finally, in Gossett v. Farmers Insurance Co., 948 P.2d 1264, 1272 (Wash. 1997) (en banc), the court held that "mere possession and expectation of ownership do not establish an insurable interest." Thus, the prospective purchasers of a house, who had been in possession of the house and had even made some improvements, had no insurable interest (except as to their improvements) when they had no agreement to purchase the house and the house was not security for any obligation owed by them. See id. at 1272-73.
{27} To resolve this dispute, we examine the purposes of the insurable- interest doctrine. New Mexico's insurable-interest statute is not a modern invention, unique to New Mexico. It traces its origins to English statutes of the eighteenth century. See Keeton & Widiss, supra, §§ 3.2(a), (b). " he purposes of the insurable interest requirement remain those that prompted the doctrine's creation: (1) discouraging the practice of using insurance as a device for gambling or wagering; and (2) removing the incentive for the procurer of the insurance to destroy the subject matter of the insurance, whether it be a life or an item of property." Robert H. Jerry, II, Understanding Insurance Law § 40, at 236 (2d ed. 1996) (Jerry). The doctrine is intimately related to the principle of indemnity, which is " he concept that insurance contracts shall confer a benefit no greater in value than the loss suffered by an insured." Keeton & Widiss, supra, § 3.1(a), at 135.
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