On the other hand, conditions may arise to send up the market value in excess of the intrinsic value, as ly in the case of dwelling-hot property, when, owing to the opel tion of the law of supply and demand, that class of property rose considerably in value. But such considerations, which are entirely abnormal, do' not effect the reinstatement costs of the building, and, consequently, have no bearing, in determining the amount recoverable under the fire policy, which must be based on the actual, reinstatement value, Tenancy agreements sometimes! contain a provision requiring,.the tenant, oF lessee, to keep the biild+ ings in a state of repair during term of the tenancy. This gives the tenant an insurable interest the property, and to cover his Wability to the landlord, or lessor, ho effects an insurance over the property. In the event of a fire, if he recovered only the market or selling Value of the buildings, he might not be fully indemnified, since under his tenancy agreement he would be obliged to reinstate. Consequently, unless he was indemnified on the basis of reinstatement value, his loss might not be adequately met, The Intention to Demolish Difficulties may arise'where at the time of the fire it is the intention to demolish the building. The ques-to be decided then will be whether the building possesses any value as a building, or whether the only value that can be considered is the selling value of the material that comprise the building. If the insured intended to pull the building down to erect a new one on the site, then it might be held that the only' value of the building to him is its value as old material, and to pay more than that would be to give the insured more than its actual Toss. But although the insured in. tended to demolish the building, the work of demolition had not commenced the building at the time of the fire would building possessing a and this being so, the company might not be justified in taking' advantage of what the insured contemplated doing, with it at some future date. If the insured instead of pulling down the building decided to sell it, and thut at a time when there was a slump in the property market, would he be indemnified only on the basis of the price the building would have fetched had it been sold jon the day of the fire? Or, if instead of either palling it down or selling it the insured decided to make more or less extensive al rerations to the building, neccs-sitaring possibly the removal of a considerable portion of it, would that be taken into consideration in adjusting 0 lose?
Need for Consistency Tt_ might be argued from the! principle of indemnity. that) the ingured's intentions with regard to the building, whether, ie, he meant to. pull i down or to.sell it at {oss or to alter. it; must be taken into account, as otherwise he would ba indemnified in excess of his. loss. To be consistent, however, the, same frame would require to be applied in Jother eases, a8 e.g, where a, trade intended to realize his, stock by a foreed sale. If a fire damaged of destroyed the stock before: thd insured could carry out his. intone tions, it would. not be possible adjust. the loss on any. other basis than the value of the stock ab thd time of the fire, for no other val would be advisable: by which measure the Joss, although the- fact chat the insured was prepared tq sell at a sacrifice might be used compromise with him in the adjust ment of the loss, otherwise he might recover more by the fire than lid would possibly have done had theta fboen no fire, In the ease Collingridge v. Royal Exchange Assurance ° Ca (1877), where a building had been acquired {by the Metropolitan Board of Works be demolished to make way for feertain street improvements, bub Fecfore conveyance, was burned, the court held that the insured was entitled to receive from his insurers the purchase price of the building fas agreed by arbitration, and not, merely its value as old' material, Tu a case such as this, however, the question should not be of much material moment to the company, seeing that as.tho building formed the subject of a sale contract the company would be subrogated to ite insured's rights against the pure ichnser for the purchase price, Aparé from this, however, where @ builds ing is unquestionably doomed, and, consequently, ceases to possess any, value as a building, i would seem to be disregarding the principle of indemnity to pay in the event off toss on the basis of reinatatemend valu Reinstatement or Replacement
Text read from the printed page and cleaned; old type leaves the occasional error.