Aetna Insurance Company v. Johnson, &C.

• Decision Date: 01 July 1874
• Citation: 74 Ky. 587
• Parties: Aetna Insurance Company v. Johnson, &c.
• Court: Kentucky Court of Appeals

Page 587

74 Ky. 587

Aetna Insurance Company v. Johnson, &c.

Court of Appeals of Kentucky.

July 1, 1874.

APPEAL FROM SHELBY CIRCUIT COURT.

CALDWELL & HARWOOD, For Appellant.

W. C. BULLOCK, A. G. ROBERTS, For Appellees.

JUDGE PRYOR DELIVERED THE OPINION OF THE COURT.

The Ætna Insurance Company, by its agent, on the 8th of August, 1870, issued a policy of insurance to the appellees, Arinda Johnson and her two infant children, upon a dwelling-house and the building adjacent situate in the town of Consolation, in Shelby County, Ky. They were insured against loss upon the dwelling-house in the sum of $1,500, upon furniture and wearing apparel $300, buggy-house $200, and upon a store for $1,000, making the entire insurance $3,000. In September, 1870, the dwelling-house and some of the wearing apparel were destroyed by fire.

This action was instituted by Mrs. Johnson in her own right and as prochein ami of the infant children to recover of the appellant (the insurance company) the sum of $1,555, the loss they claim to have sustained. The insurance was for the period of one year, and the premium ($30) was paid by Mrs. Johnson for herself and children.

The company, by the terms of the policy, agreed to make good to the assured all such immediate loss or damage not exceeding the amount for which the property was insured as shall happen by fire to the property during the existence of the policy, the loss or damage to be estimated according to the true and actual cash value of the property at the time the same shall happen, etc.

One of the paragraphs in the answer of the defendant was that the dwelling was fraudulently burned and procured to be burned by one of the appellees (Mrs. Johnson).

After the testimony had been closed, various instructions were offered by the plaintiffs and defendant, all of which were refused by the court and others given in lieu thereof. The jury were told by instruction No. 1, "That if they believed from the testimony that the house or property insured by the defendant for the plaintiffs was burned while it was covered by the policy of insurance, they should find for the plaintiffs the cash value of the property so burned at the time of the fire not exceeding fifteen hundred dollars, provided they believe the cash value of the house to be $2,300, unless they believe from the evidence that the fire or loss of the property was caused by the fraud or gross negligence of the plaintiffs or their agents," etc.

Instruction No. 2: "That before finding a verdict against the plaintiff, A. J. Johnson, upon the ground that she fired the building or assisted or connived at its being fired, the jury should so believe beyond a reasonable doubt."

No. 3: "The jury are instructed that by the term cash value, as used in instruction No. 1, is meant and is used in contradistinction to the term `marketable value,' and means the amount of cash it would take to replace such a house in the condition it was in at the time the fire occurred."

Under these instructions, the proof conducing to show that to erect a new building the costs would exceed the amount for which the dwelling was insured, the jury rendered a verdict for the sum at which the dwelling was valued in the policy, viz., $1,500.

On the part of the defendant (the appellant) the proof stands uncontradicted that the house, including the lot on which it stood, would not sell for more than $800.

The parties to this contract of insurance have stipulated in express terms that in the event of loss or damage the same is to be estimated according "to the true and actual cash value of the property at the time the same shall happen," and to determine otherwise would be to create a new contract for them, or to give a construction as to its meaning not warranted by the language used. There is nothing on the face of the contract or in the facts that changes the ordinary meaning of the words used, and when the parties contract that the damage shall be the actual cash value of the property at the time of the loss it can not be said that they agreed or intended that in the event of loss the appellant was to pay what it would cost to erect a new building, as that constituted no part of the agreement. In the absence of a contract by which the parties agree as to the mode of ascertaining the loss another and different rule might prevail; but in a case like this, where the parties agree upon the basis and extent of recovery, and where neither fraud or mistake is alleged or proven, the terms of the contract can neither be restricted or enlarged.

In the case of the Commonwealth Insurance Company v. Sennett, Baer & Co. (37 Penn. 208) it is said, "The parties have chosen to fix for themselves the standard of valuation, and have stipulated that it shall be the true actual cash value of the property, etc. This basis for estimating the loss thus established must control and govern. It is the law of the contract established by the parties themselves." (Lycoming Ins. Co. v. Mitchell & Boyle, 48 Penn. 369.)

The only question of difficulty on this branch of the case arises in determining the mode of ascertaining the cash value of the building destroyed. If the appellees are allowed the original cost of the building, or a sum sufficient to erect a new one, this criterion would give them doubtless a much larger sum than they are entitled to recover; nor is it proper in fixing the value to ascertain the difference in the value of the lot with the building upon it and its value with the building destroyed, as by reason of the peculiar character of the building or the location of the lot for building purposes the latter might sell for as much, or nearly so, without the building as with it: and to determine its value by inquiry from witnesses as to its marketable value...