Western Pennsylvania National Bank, Successor Trustee Underthe Will of William F. Sullivan, Deceased v. the American Insurance Company of Newark, New Jersey, a Newjersey Corporation, Appellant in No. 17,537.western Pennsylvania National Bank, Successor Trustee Underthe Will of William F. Sullivan, Deceased v. Northern Insurance Company, a New York Corporation,appellant in No. 17,538, 428 F.2d 1220 (3d Cir. 1970)

These appeals in diversity actions governed by the substantive law of Pennsylvania require us to decide whether a condemnee in possession has an insurable interest in real estate after the condemnor has published its declaration of taking and made the appropriate filing with bond. This issue is critical to the determination of the condemnee-appellee's claim for proceeds on fire insurance policies, a fire having occurred subsequent to the condemnation but while the condemnee was still in possession.

Although recognizing that the government state law was then somewhat illdefined, the district court held that the condemnee possessed an insurable interest and permitted him to recover. 282 F. Supp. 632 (1968).

While this appeal was pending, the Pennsylvania Supreme Court decided this precise issue in Van Cure v. Hartford Fire Ins. Co., 435 Pa., 163, 253 A.2d 663 (1969), and held that under such circumstances there was no insurable interest. Moreover, the court specifically rejected the holding of the district court in the case at bar. In a diversity action we are governed by the state substantive law as pronounced by the state's highest court. Erie Railroad Co. v. Tompkins, 304 U.S. 64, 58 S. Ct. 817, 82 L. Ed. 1188 (1938).

The judgment of the district court will be reversed and the cause remanded to the district court for the entry of a judgment in favor of appellees only to the extent of a pro rata refund on prepaid premiums on insurance policies.