Chambers v. North British & Mercantile Insurance Co., Limited

• Decision Date: 09 June 1937
• Docket Number: 1707
• Citation: 175 So. 95
• Parties: CHAMBERS v. NORTH BRITISH & MERCANTILE INSURANCE CO., Limited
• Court: Court of Appeal of Louisiana — District of US

175 So. 95

CHAMBERS v. NORTH BRITISH & MERCANTILE INSURANCE CO., Limited

No. 1707

Court of Appeal of Louisiana, First Circuit.

June 9, 1937

St Clair Adams and St. Clair Adams, Jr., both of New Orleans for appellant.

Lewis &amp Lewis, of Opelousas, for appellee.

OTT Judge. LE BLANC, Judge (dissenting).

OPINION

On August 27, 1935, the defendant company issued a policy of fire insurance in favor of plaintiff by which it insured plaintiff against loss or damage by fire not exceeding $ 3,000 on one two-story frame building in the sum of $ 2,000 and on household and personal effects in the sum of $ 1,000. The property was totally destroyed by fire on June 12, 1936. The company paid the loss on the household effects without question, but offered to pay only one-half the amount of insurance on the building for the reason that prior to the fire and after the issuance of the policy, plaintiff had secured a judgment of separation from her husband and the insured building was decreed to be community property, and owned by the plaintiff and her husband in the proportion of an undivided half each; that the policy was a valued policy wherein the insured property was valued at $ 2,000, and, as plaintiff only owned a half interest in the property, she could only collect one-half of the insurance, which was her insurable interest in the property. This amount was accepted by plaintiff with full reservation of her right to sue for the balance.

This suit is for the balance of $ 1,000 plus 12 per cent. statutory penalty, interest, and attorney's fees. Judgment was rendered by the trial court for the amount claimed, with the 12 per cent. penalty, legal interest from the date of the fire, plus $ 250 attorney's fees. The defendant company has appealed.

It is the contention of the defendant insurance company that when the policy was issued to the plaintiff the value of the house was fixed at $ 2,000, and under the provisions of the valued policy law of this state, Act No. 135 of 1900, this valuation is conclusive on all parties to the contract, and, therefore, as the judgment of separation fixes plaintiff's interest in the property at an undivided one-half, she cannot recover more than one-half the value of the property fixed and assessed in the policy.

Prior to the passage of the above act, an insurance company could issue what is known as an open policy wherein it could limit its liability to the actual cash value of the property destroyed by fire, or to a certain proportion of the loss such as three-fourths or require the insured to become a co-insurer for a certain amount. The evident purpose of the valued policy law was to fix the value of the property in the policy and require the insurer to pay the face of the policy when the property is immovable by nature and is totally destroyed, irrespective of the actual cash value or any restrictions in the policy as to the amount of the liability. Tilley v. Camden Fire Ins. Association, 139 La. 985, 72 So. 709.

Section 1 of Act No. 135 of 1900 reads as follows:

"Whenever any policy of insurance against loss by fire is hereafter written or renewed, on property immovable by nature and situate in this State, and the said property shall be either partially damaged or totally destroyed, without criminal fault on the part of the insured or his assigns, the value of the property as assessed by the insurer or as by him permitted to be assessed at the time of the isssuance of the policy, shall be conclusively taken to be the true value of the property at the time of the issuance of the policy and the true value of the property at the time of the damage or destruction. Provided, that nothing herein shall be so construed as to prevent the insurer previous to the damage or destruction of property from reducing the insurance thereon."

Section 2 of the act provides that when a policy is issued in this state against loss by fire, and the property shall be totally destroyed without criminal fault on the part of the insured or his assigns, the full amount of the insurance on the property shall be paid by the insurer.

It is clear, when we consider the history and purpose of this law, as well as the language used by the lawmakers, that the intention of the act was to bind the insurer to a definite and fixed amount which becomes due upon the total destruction of the insured property, if immovable by nature, and prohibits the insurer from claiming that the cash value of the property was less than the face of the policy, and prevents the insurer from limiting its liability to a certain proportion of the loss. Indeed, the very words used in the act seem to indicate an intention to bind the insurer to a specific valuation, for the act says, "the value of the property as assessed by the insurer or as by him permitted to be assessed at the time of the issuance of the policy, shall be conclusively taken to be the true value of the property at the time of the damage or destruction."

The effect of the valued policy is thus stated in Corpus Juris vol. 26, p....