dissenting:
I dissent.
In the case sub judice, the verified complaint for injunction and imposition of trust filed by State Farm Insurance Co., as subrogee of Vito DeFrancesco, against Nancy Stewart alleges inter alia:
"At the time of the execution of the real estate contract, Stewart paid $6,000.00 as a down payment and DeFrancesco transferred possession of the property in accordance with the terms of the contract.
On or about May 11, 1990, the apartment building located at 5125 West Cermak Road, Cicero, Illinois, was destroyed in a fire.
At the time of the fire, and to the present time, the balance owed by Stewart pursuant to the terms of the real estate contract was $69,000. Stewart further agreed to assume an alleged loan to a third-party named Billy Eaton.
Pursuant to the Conditions and Stipulations in paragraph 4 of the contract, risk of loss by fire is determined according to the provisions of the Uniform Vendor and Purchaser Risk Act [(111. Rev. Stat. 1989, ch. 29, par. 8.1). Section 1(b)] of the Act provides as follows:
(b) If, when either the legal title or the possession of the subject matter of the contract has been transferred, all or any part thereof is destroyed without fault of the vender or is taken by eminent domain, the purchaser is not thereby relieved from a duty to pay the price, nor is he entitled to recover any portion thereof that he has paid ***.”
The deposition of Stewart included the following testimony regarding the contract:
"Q. What was the sale price of the building?
* * *
A. Seventy-five thousand.
Q. And what specifically did you discuss in any of these conversations in December of 1989 or January of 1990 regarding the nature of the sale that would be completed?
A. Well, we discussed that the building in its current condition, that I wouldn’t be able to get a loan, so we wouldn’t make the sale contingent on a mortgage, that he would sell me the building, I would repair it, and then I would get a loan on it and I would pay him the money.
Q. Were there any time parameters set for you doing that?
A. That I would apply for the loan in three months. That was the only frame.
Q. Did you and Mr. DeFrancesco ever discuss when the balance of the purchase price would be paid?
A. Yes.
Q. What was said about that?
A. It was to be paid when I got the loan that I applied for within the three months.”
On the same date the property was destroyed by fire, Stewart obtained financing in the sum of $80,000. Stewart subsequently received $130,000 for the fire loss from Hartford Insurance Company of Illinois.
DeFrancesco also insured the property in question. He was the named insured with State Farm General Insurance Co. with liability limits of $79,000 covering the premises. The policy covered the period beginning July 10, 1989, and ending July 10, 1990. The policy contained the following subrogation clause:
"7. Subrogation.
a. In the event of any payment under this policy, the Company shall be subrogated to all the insured’s rights of recovery against any person or organization and the insured shall execute and deliver instruments and papers and do whatever else is necessary to secure such rights. The insured shall do nothing after loss to prejudice such rights.”
State Farm Insurance contended below and also on appeal that Stewart breached the terms of the January 1990 contract. Also, pursuant to the equitable conversion doctrine, Stewart held her insurance proceeds in trust for the benefit of State Farm. We should affirm the trial court’s grant of summary judgment in the instant case because the record supports State Farm’s contention and the trial court’s decision.
Stewart posits that the trial court erred in granting summary judgment because triable issues remained to be decided. It is the province of the appellate court to review the record to determine whether a trial court has erred in granting summary judgment. See Espinoza v. Elgin, Joliet & Eastern Ry. Co., 165 Ill. 2d 107, 113, 649 N.E.2d 1323 (1995). However, we should affirm the trial court in the instant case because an examination of the record reveals that the trial court considered the pleadings, affidavits, depositions, and arguments by the parties and did not err in granting summary judgment.
Stewart also contends that DeFrancesco had no insurable interest in the property. However, the indisputable facts in the instant case establish that Stewart is clearly wrong on this issue. The law is clear that one need not even own property to have an insurable interest in the property. See Hawkeye-Security Insurance Co. v. Reeq, 128 Ill. App. 3d 352, 355, 470 N.E.2d 1103 (1984); International Insurance Co. v. Melrose Park National Bank, 145 Ill. App. 3d 286, 290, 495 N.E.2d 1197 (1986); IMM Acceptance Corp. v. First National Bank & Trust Co., 148 Ill. App. 3d 949, 954, 499 N.E.2d 1012 (1986).
Stewart further contends that the doctrine of equitable conversion is inapplicable to the facts of this case. Stewart’s view is not well founded.
The doctrine of equitable conversion is set forth in Shay v. Penrose, 25 Ill. 2d 447, 449, 185 N.E.2d 218, 219-20 (1962). Shay holds:
"Equitable conversion is the treating of land as personalty and personalty as land under certain circumstances. Hence, as between the parties and those claiming through them, when the owner of land enters into a valid and enforceable contract for its sale he continues to hold the legal title, but in trust for the buyer; and the buyer becomes the equitable owner and holds the purchase money in trust for the seller. The conversion takes place at the time of entering into the contract. It stems from the basic equitable principle that equity regards as done that which ought to be done. The doctrine of equitable conversion has been recognized in Illinois, as it has been in practically every other jurisdiction.” Shay, 25 Ill. 2d at 449.
Finally, the majority in the case sub judice concludes that the prerequisites for subrogation were not met in the instant case. I disagree. The majority correctly states:
"The prerequisites of subrogation are: (1) a third party must be primarily liable to the insured for the loss; (2) the insurer must be secondarily liable to the insured for loss under an insurance policy; and (3) the insurer must have paid the insured under that policy, thereby extinguishing the debt of the third party. [Citations].” See 288 Ill. App. 3d at 686-87.
However, although the majority correctly states the law relating to subrogation, a proper analysis of the record in the instant case evinces that the majority decision misapplies the rule of law in the instant case.
As stated by the majority, there are no Illinois cases directly on point and the decisions among various jurisdictions are divided as to the right of an insurer to be subrogated to an insured’s collateral contract rights. Relative thereto, the majority also writes:
"Having reviewed these authorities, we favor the view that an insurer that indemnifies its insured for property damage may not be subrogated to the collateral contractual rights of the insured against a third-party purchaser of the subject property. .[Citation].” 288 Ill. App. 3d at 688.
However, the record in the instant case establishes that Stewart received $130,000 for a building that she never paid for; that Stewart owed Vito DeFrancesco a balance of $69,000 on the building when the same was destroyed by fire; and that State Farm Insurance Company paid DeFrancesco $84,649.78 after the fire. Accordingly, State Farm Insurance Company was the subrogee of Vito De-Francesco.
The case of Twin City Fire Insurance Co. v. Walter B. Hannah, Inc., 444 S.W.2d 131 (Ky. 1969), is analogous to the instant case and is instructive. In Twin City, the insurer issued a fire policy to third parties who thereafter deeded the insured property to a corporate party, which, in turn, entered into a contract with vendees under which vendees promised to pay $4,500 for the property. The property was partially destroyed by fire, at which time the vendees still owed the corporate party $3,450 on the purchase price. The court in Twin City held that the insurer was entitled to be subrogated to the rights of the corporate party against the vendees and wrote:
"Had Twin City [the insurer] at once paid Hannah [the corporate party] $3450.00, representing the balance owed by Dunaway [the vendee], it would have succeeded to Hannah’s rights against Dun-away.” Twin City Fire Insurance Co. v. Walter B. Hannah, Inc., 444 S.W.2d at 136.
Similarly, in the instant case, as the trial court ruled, State Farm Insurance Co. at once paid DeFrancesco the $69,000 balance owed by Stewart and became entitled to succeed to DeFrancesco’s rights.
Perforce, I dissent.