The opinion of the court was delivered by: Mercer, District Judge.
This is an action based upon policies of fire insurance
issued by the defendant insurance companies to the plaintiffs
seeking a recovery of alleged damage by fire to the buildings
described in the policies, said buildings being located at
600-608 North Adams Street, Peoria, Illinois. The fire
occurred on November 28, 1952 and it is alleged that the
resulting damage thereby exceeded the total of the face amount
of defendants' policies of insurance, the total amount of
insurance being in the sum of $24,000. Five insurance
companies are involved as defendants herein.
On September 3, 1952, prior to the date of the fire, the
Peoria Housing Authority, a Municipal Corporation, and the
intervening petitioner herein, filed in the County Court of
Peoria County, Illinois, a petition for condemnation of the
real property upon which the buildings described in
defendants' policies of insurance were located. The plaintiffs
herein, Max Edlin and Ida Edlin, were named as defendants in
the condemnation proceeding and were duly summoned to appear
in the condemnation action. This suit proceeded to trial on
January 6, 1953 in the County Court of Peoria County, Illinois
and on January 10, 1953 the jury returned a verdict therein in
favor of the said Max Edlin and Ida Edlin in the sum of
$43,500. Subsequent thereto and on January 20, 1953 a final
order and decree was entered on this award and on the same day
the award was thereupon paid to Max Edlin and Ida Edlin by the
Peoria Housing Authority.
A long and well-established rule in the State of Illinois in
a condemnation proceeding provides that the value of property
sought to be condemned is to be determined as of the date of
the filing of the petition without regard to any increase or
decrease in the value of the property between that date and
the date of trial or the date of judgment or the date of
payment. This rule of law was invoked by the County Court of
Peoria County, Illinois in the condemnation proceeding, the
presiding judge in the condemnation proceeding having
instructed the jury in this regard. Consequently, the verdict
of the jury was based exclusively on evidence of the value of
the property in question as of September 3, 1952, being the
date of the filing of the petition, and therefore, it must be
concluded that the jury did not take into account any decrease
in the value of the property by reason of the fire of November
28, 1952. The question presented by the foregoing facts is
whether the insured, being the plaintiffs herein and being
named in the defendants' policies of insurance, has sustained
a pecuniary loss by reason of the damage to the property in
question by fire and if no such pecuniary loss appears whether
the plaintiffs may nevertheless recover under the said
policies to the extent of the damage sustained.
It is the opinion of this Court that Illinois does not
follow the New York rule but follows a rule that a contract of
fire insurance is a contract of indemnity against such loss or
damage as the insured may sustain by reason of the destruction
of the property described in the policy and that where no
financial or pecuniary loss has been sustained by virtue of
such destruction there can be no recovery. (Citing: Beman v.
Springfield Fire and Marine Insurance Company, 303 Ill. App. 554,
25 N.E.2d 603; Schultz, for Use of Whitlock v. Home
Insurance Company, 205 Ill.App. 297; Patterson v. Durand
Farmers Mutual Fire Insurance Company, 303 Ill.App. 128,
24 N.E.2d 740.)
This Court has carefully examined the Beman case and is
impressed with the clarity of said opinion. In the instant
case the Court looks to the substance of the whole transaction
rather than to seek a metaphysical hypothesis on which to
justify a loss that is no loss. This Court is not convinced
that the plaintiffs herein have had any actual loss.
In 44 C.J.S. Insurance § 224, p. 933, it is said: "Fire
insurance is a personal contract with insured, and not a
contract in rem, its purpose being not to insure property
against fire, but to insure the owner of the property against
loss by fire." In 45 C.J.S. Insurance § 915, p. 1010, it is
said: "Since a contract for insurance against fire ordinarily
is a contract of indemnity, as discussed supra § 14, insured is
entitled to receive the sum necessary to indemnify him, or to
be put, as far as praticable, in the same condition pecuniarily
in which he would have been had there been no fire; that is, he
may recover to the extent of his loss occasioned by the fire,
but no more, and he cannot recover if he has sustained no
loss."
In support of the last clause of the text the Illinois
Appellate Court cases heretofore mentioned are cited in
support of the above doctrine. The case of Ramsdell v.
Insurance Company of North America, 197 Wis. 136,
221 N.W. 654, is also cited.
This Court recognizes the conflict of authority upon the
questions involved but feels constrained to follow what it
considers to be the law of Illinois upon the subject as
enunciated in the Beman case. In the case at bar this Court
must apply the law of Illinois irrespective of which of the
conflicting views the Court might think preferable. As the
highest State Court of Illinois has not passed upon the
question here at issue this Court is bound by the decisions of
the State's intermediate Appellate Courts in the absence of
persuasive evidence that the highest State Court would rule
otherwise. West v. American Telephone and Telegraph Company,
311 U.S. 223, 61 S.Ct. 179, 85 L.Ed. 139; Ballard v. Citizens
Gas Company of New York, a Seventh Circuit case, 196 F.2d 96.
The only applicable decisions of an Illinois court that have
been cited are the Appellate Court cases, including the Beman
case which this Court believes to be the law of Illinois upon
the subject involved.
This matter arises on two motions filed by the plaintiffs,
one being the motion of the plaintiffs to strike from
paragraph 2 of Count II of the Answer of the insurance
companies, certain allegations contained in said Answer in
reference to condemnation proceedings and the payment to the
plaintiffs thereunder and which portion of the Answer being
based upon the theory that the Edlins suffered no pecuniary
loss. The other motion is the motion of plaintiffs to dismiss
Count II of the interveners' complaint on the ground that
intervener suffered no loss.
In view of the Court's opinion it is ordered that the motion
of plaintiffs to strike from paragraph 2 of Count II of the
Answer of the insurance companies certain allegations, is
hereby denied. Ruling on the second motion of plaintiffs to
dismiss Count II of the intervener's complaint is hereby
reserved for future ruling. It appears to the Court that
before the intervener is in a position to assert any equitable
doctrine of subrogation that it must first be determined that
the insurance proceeds are payable to the Edlins and that if
the Edlins cannot recover then the Housing Authority would be
in no position to assert a right by way of an equitable
doctrine of subrogation. In the event the Edlins recover then
the intervener could and should have their day in court. If
the Edlins do not recover then it would appear that the
Housing Authority would have nothing upon which to base a
claim.
In respect to the second motion of the plaintiffs to dismiss
Count II of the intervener's complaint, the record is silent
on the question as to whether the Peoria Housing Authority has
sustained any loss. The pleadings are also silent in this
regard.
On the basis of the ruling of the Court upon the first
motion, it is ordered that the parties proceed in accordance
with this ruling in order ...