Grandview Inland Fruit Co. v. Hartford Fire Ins. Co.

• Decision Date: 29 March 1937
• Docket Number: 26340.
• Citation: 66 P.2d 827,189 Wash. 590
• Parties: GRANDVIEW INLAND FRUIT CO. v. HARTFORD FIRE INS. CO.
• Court: Washington Supreme Court

66 P.2d 827

189 Wash. 590

GRANDVIEW INLAND FRUIT CO. v. HARTFORD FIRE INS. CO.

No. 26340.

Supreme Court of Washington, En Banc.

March 29, 1937

Appeal from Superior Court, Yakima County; A. W. Hawkins, Judge.

Action by the Grandview Inland Fruit Company against the Hartford Fire Insurance Company. From a judgment dismissing the action, plaintiff appeals.

Reversed and remanded, with direction.

Cheney & Hutcheson and Walter J. Robinson, Jr., all of Yakima, for appellant.

Clarke & Clarke, of Seattle, for respondent.

MILLARD Justice.

A fire insurance policy was issued by defendant on June 18, 1934, in the amount of $10,000 upon a one and one-half story frame and brick warehouse, owned and operated by the plaintiff. The warehouse, which consisted of the main floor and basement was 100 feet long by 50 feet wide. On May 22, 1935, the building was destroyed by fire. Plaintiff held three policies of fire insurance, including the one described above, in defendant company, covering property in Grandview. The defendant's adjuster claimed that the loss was partial and amounted to $8,114. The plaintiff insisted that the building was totally destroyed, and that it was entitled to receive $10,000 by virtue of the valued policy statute Rem.Rev.Stat. §§ 7150 and 7151, reading as follows:

'§ 7150. Every insurer who makes insurance upon any building or property or interest therein against loss or damage by fire, and every agent who issues a fire insurance policy covering on any building or property or interest therein, and every insured who procures a policy of fire insurance upon any building or property or interest therein owned by him, is presumed to know the insurable value of such building or property or interest therein at the time such insurance is effected. Any insurer who knowingly makes insurance on any building or property or interest therein against loss or damage by fire in excess of the insurable value thereof, shall be fined in a sum not less than fifty dollars nor more than one hundred dollars. Any agent who knowlingly effects insurance on a building or property or interest therein in excess of the insurable value thereof, shall be fined in a sum not less than fifteen nor more than twenty-five dollars. Any person or party who knowingly procures insurance against loss or damage by fire on any building or property or interest therein owned by him in excess of its insurable value shall be fined in a sum not less than twenty-five dollars nor more than one hundred dollars.

'§ 7151. Whenever any policy of insurance shall be hereafter written or renewed insuring real property or any building or structure erected thereon or connected therewith, and the property insured shall be wholly destroyed, without criminal fault on the part of the insured, or his assigns, the amount of insurance written in such policy shall be taken conclusively to be the true value of the property when insured, and the true amount of the loss and measure of damages when destroyed. In case there is a partial destruction of the property insured, no greater amount shall be collected than the injury sustained: Provided, that the insurer shall have the option to repair, rebuild or replace the property lost or damaged with other of like kind and quality if he gives notice of his intention so to do within twenty days after the receipt of notice of loss: Provided, such insurer shall, within thirty days from the receipt of notice above, commence such rebuilding or replacing and shall diligently prosecute the same to completion, and shall pay to the insured the reasonable rental value of the premises with the buildings thereon from the date of loss to the date of such completion.'

The offer of $8,114 was increased to $8,500 and finally to $9,000. It was understood by plaintiff that, unless it accepted the $9,000 settlement upon the building policy, the defendant would not pay upon any of the three policies and it would be necessary for plaintiff to institute an action for collection of same. During these negotiations, the plaintiff consulted with, and was fully advised by the same attorneys who represent it in the prosecution of this appeal. Proofs of loss were prepared under all three policies and taken by the insured to its attorneys for their approval. The agreement compromising the claim for loss of the building in question reads as follows:

'The insured agrees to accept the sum of $9,000 in full compromise settlement of the claim under policy No. 6655 of the Hartford Fire Insurance Company of Hartford, Connecticut for loss by fire of May 22, 1935, in consideration of the Company's agreement not to litigate the claim, and the Company's waiver of their option to rebuild.

'The undersigned insured hereby claims of the Harford Fire Insurance Company of Hartford, Connecticut, under the above mentioned policy in compromise, the sum of $9,000.'

The proofs were delivered to defendant's adjuster and drafts were issued and delivered to the plaintiff. A separate draft was drawn for the amount of the loss under each policy of insurance. All of the drafts were indorsed and cashed by the insured. The draft under the policy in suit contains the following language upon the back thereof and immediately above the written indorsement of plaintiff:

'Endorsement of this draft hereby acknowledges receipt of full payment, being in full satisfaction by compromise settlement of all claims and demands against said company for loss and damage under the policy of insurance as set forth on the face of this draft. In consideration whereof, the said policy is hereby

'Policy cancelled and surrendered.'

After acceptance of settlement with full knowledge as to all of the facts and being fully advised as to its legal rights with reference thereto by its own attorneys, plaintiff instituted this action to recover an additional $1,000 over and above the sum it had originally accepted as the amount of its loss.

The cause was tried to the court, which was of the view that the assertion that there was a partial loss only was made in good faith by the defendant. The findings of fact, so far as pertinent, read as follows:

'III. That on or about the 23rd day of May, 1935, said insured building was damaged by fire but that a valuable portion of the cement walls around the basement thereof remained undestroyed and a bona fide dispute arose between the plaintiff and the defendant as to whether or not said building had suffered a total loss as contemplated by section 7151 of Remington's Revised Statutes of the State of Washington, plaintiff contending that the loss was total and that it was entitled to recover $10,000, the full face of the policy, and the defendant contending that the loss was not total and that plaintiff's recovery should be restricted to the actual damage done to the building, to-wit, the sum of $8114.74.

'IV. That the parties entered into a compromise settlement of their dispute by an agreement upon the part of the defendant to pay and the plaintiff to accept the sum of $9000 in full satisfaction of the claim for loss under said policy #6655, and that in accordance with said settlement agreement plaintiff executed proofs of loss in the agreed amount of $9000 and that the defendant thereafter promptly issued and delivered its draft in said sum payable to the plaintiff and to A. M. Garrison and R. D. Inman, the principal stockholders thereof, which said draft contained, among other things, the following wording:

"Endorsement of this draft hereby acknowledges receipt of full payment, being in full satisfaction by compromise settlement of all claims and demands against said company for loss and damage under the policy of insurance as set forth on the face of this draft. In consideration whereof the said policy is hereby--policy cancelled and surrendered.'

'The said draft was duly endorsed by the plaintiff and its two said stockholders and that plaintiff was paid the sum of $9000 thereunder in full accord and satisfaction of its claim for loss under policy #6655 and that said policy was surrendered to the defendant company.'

Concluding that the $9,000 accepted by plaintiff prior to the institution of this action constituted a full accord and satisfaction of any and all claims for loss and damage under the insurance policy issued to the plaintiff, the trial court entered a judgment of dismissal, from which plaintiff has appealed.

Appellant contends that the loss was total and that, under the valued policy statute, the compromise and settlement does not preclude recovery for the unpaid deficiency, as there was not a valid accord and satisfaction.

The first question presented is whether the loss was total.

As a result of the fire, nothing remained of the building above the ground. The wooden floor of the basement was destroyed by the fire. The basement was filled with a large amount of débris. Most of the concrete walls of the basement fell into the basement as the result of the fire or were weakened and bulged inward. All that remained after the fire were a part of the foundation and the cellar. There was testimony that the original total replacement cost of the concrete foundation was $1,178.55. The witness who testified as to this was one of respondent's adjusters. He figured that 60 per cent. of the foundation could be used, therefore the value remaining of the building which was shown by the adjuster to be $11,897.17, was $707.13. In other words, all that remained of the building was less than 7 per cent. of its value. From the $707.13 should be deducted the cost of repairs and removal of the débris, which makes the actual value of the salvage remaining approximately $400. Until the time of the compromise of the claim, respondent's adjuster...