Columbia Real Estate & Trust Co. v. Royal Exch. Assurance

Decision Date20 July 1925
Docket Number11806.
Citation128 S.E. 865,132 S.C. 427
PartiesCOLUMBIA REAL ESTATE & TRUST CO. v. ROYAL EXCHANGE ASSURANCE, AND THREE OTHER CASES.
CourtSouth Carolina Supreme Court

Appeal from Common Pleas Circuit Court of Richland County; S.W. G Shipp, Judge.

Actions by the Columbia Real Estate & Trust Company against the Royal Exchange Assurance, against the London & Lancashire Fire Insurance Company, against the Royal Insurance Company, and against the Insurance Company of North America and the Fire Association of Philadelphia. Judgments for plaintiff, and defendants appeal. Affirmed.

The opinion of the circuit judge was as follows:

These four cases were heard before me at the April term of common pleas for Richland county, a jury trial being waived.

Plaintiff had four policies with defendants, for $10,000, $5,000 $5,000, and $7,500, respectively, making a total of $27,500 on two separate buildings, the Berkeley Apartments and Craven Hall, prorated $20,000 to the former and $7,500 to the latter. By a fire of March 5, 1922, actual damage of $12,047.75 was done Craven Hall, but it was not totally destroyed. The fire did not reach the Berkeley Apartments.

The policies stated that the agreed value of Craven Hall was $9,000, and permitted the $7,500 of insurance to be carried on it. No question is raised as to the amount of contribution to be made by each company, as all concede that eight-elevenths of each policy applies to the Berkeley Apartments, and three-elevenths to Craven Hall.

The two appraisers and umpire, under an agreement signed March 15th, agreed that the actual loss and damage to Craven Hall was $12,047.75 and the sound value $25,335.20. There is no dispute that these figures are correct. Plaintiff, in proofs of loss filed May 2, 1922, claimed from each defendant its pro rata share of the $7,500 insurance in effect, and now sues them for this.

The case may be succinctly stated (using approximate figures for simplicity) in this way: A building of the actual value of $25,000 is actually damaged $12,500. The value of the building stated in the policy is $9,000, and the amount of the insurance fixed in the policy and actually carried is $7,500. How much can insured recover? Defendants contend that under section 4095, Code 1922, plaintiff can recover only that proportion of the insurance that the actual loss and damage ($12,500), bears to the actual value ($25,000); that is, one-half of the insurance (using the approximate figures).

It seems clear to me that when the Legislature (section 4095, Code 1922), says "and a proportionate amount in case of partial loss," it means the proportion of the insurance that the actual loss bears to the amount of insurance. In other words, it means that in case of partial loss the company is to pay the actual loss up to the amount of its policy. Of course, if the actual loss is less than the face of the policy, the company pays only the actual loss. If the loss equals or exceeds the face of the policy, insured should recover up to the amount of this policy.

The policy contract is in fact one of indemnity against actual loss and damage by fire, and it remains such since the statute. The fixation of value by the statute makes the contract no less one of indemnity. Cave v. Insurance Co., 57 S.C. 354, 35 S.E. 577; 1 Joyce on Insurance (2d Ed.) § 25.

Defendants concede that under their contention insured can never recover the full amount of his partial loss even when less than his insurance. This is a concession that their construction of the statute causes the contract to cease to be one of indemnity.

The common-law rule is, that in case of partial loss, insured can recover indemnity for the actual loss sustained, not to exceed the amount of his policy. 14 R. C. L. p. 1301, § 475. There is a very strong presumption that the Legislature did not intend by this statute to change the common-law rule (25 R. C. L. p. 1054, § 280), and my construction makes it reach the same result.

Insured can recover only money to compensate him for the actual loss sustained. He cannot recover any portion of his building. The actual value of the building cannot be used as a basis for the proportion, because the statute forbids it (Cave v. Insurance Co., 57 S.C. 356, 35 S.E. 577), and there is no distribution or apportionment of the insurance to any portion or percentage of the building (Kinzer v. Insurance Co., 88 Kan. 93, 127 P. 762, 43 L. R. A. (N. S.) 121; Nicolet v. Insurance Co., 3 La. 366, 23 Am. Dec. 458.

To hold that this statute changes the contract of insurance to such an extent that insured cannot recover the amount of his actual loss and damage, although his contract calls for it and he has paid for this protection, would be "against common reason." The court should not impute any such intention to the Legislature, but will give the ambiguous statute such a construction "as will be consistent with justice and the dictates of natural reason." Ham v. McClaws, 1 Bay, 93, 98.

The diligence of counsel, evidenced by comprehensive briefs filed with me, has failed to locate a single decision in any jurisdiction construing a statute with exactly similar language. The result, however, of the statutes of a number of states covering the general subject-matter of valued policies is the same as that reached by me. While these decisions are not exactly in point, it is persuasive that they follow the common-law rule in cases of partial loss, and seem to vindicate the essential justice of such a conclusion. Seyk v. Insurance Co., 74 Wis. 67, 41 N.W. 443, 3 L. R. A. 524; German Co. v. Eddy, 36 Neb. 461, 54 N.W. 856, 19 L. R. A. 709; Queen Co. v. Leslie, 47 Ohio St. 409, 24 N.E. 1072, 9 L. R. A. 45; Dugger v. Insurance Co., 95 Tenn. 245, 32 S.W. 5, 28 L. R. A. 796; Lancashire Ins. Co. v. Bush, 60 Neb. 116, 82 N.W. 313; Oppenheim v. Insurance Co., 119 Minn. 417, 138 N.W. 777; Sachs v. Insurance Co., 114 Ky. 88, 67 S.W. 23.

Defendants further contend that insured is bound to the actual value of $25,000 by the arbitration agreement. By its express provision this does not "determine, waive or invalidate any other right or rights of either party." If it attempted to change the measure of damages laid down by the statute, it would, of course, be ineffective. Seyk v. Insurance Co., 74 Wis. 67, 41 N.W. 443, 3 L. R. A. 523; Queen Ins. Co. v. Leslie, 47 Ohio St. 409, 24 N.E. 1072, 9 L. R. A. 45; German Co. v. Eddy, 36 Neb. 461, 54 N.W. 856, 19 L. R. A. 707.

Plaintiff is entitled to interest at 7 per cent. from July 2, 1922, 60 days after filing proofs of loss. Cave v. Insurance Co., 57 S.C. 358, 35 S.E. 577; Berry v. Insurance Co., 83 S.C. 16, 64 S.E. 859.

The order directed a judgment against each of the defendant companies for the full amount of insurance that each company had upon the buildings, besides interest thereon and costs, making the total principal sum of $7,500, and said judgments were duly entered in the clerk's office of said court for said amounts, interest, and costs on the 11th day of August, 1923.

In due time, the defendant served notice of their intention to appeal from said order and the judgments entered thereon.

Cothran and Marion, JJ., dissenting.

John T. Seibels, of Columbia, and Spalding, MacDougald & Sibley and Smith, Hammond & Smith, all of Atlanta, Ga., for appellants.

J. B. S. Lyles, of Columbia, for respondent.

GARY, C.J.

Upon the authority of the case of Parnell v. Orient Ins. Co., 126 S.C. 198, 119 S.E. 191, 32 A. L. R. 648, and for the reasons assigned by his honor, the circuit judge, herein, the judgments of the circuit court are affirmed.

WATTS, J., and PURDY, A. A. J., concur.

COTHRAN J. (dissenting).

These four cases were tried together before his honor, Judge Shipp, circuit judge, without a jury. In each case the plaintiff sought to recover from the insurance company, defendant, its contributive part of the total insurance, $7,500, carried by the four companies upon a building in the city of Columbia, known as Craven Hall, which was partially destroyed by fire during the lives of the policies, and damaged in an amount exceeding the amount of the total insurance.

There is practically no dispute as to the facts, and no contest as to the liability of each company for some amount, or as to the distribution of the loss among the several companies upon its ascertainment; the contest is over the ascertainment of the loss.

The plaintiff claims the entire amount of the insurance, $7,500; the defendants contend that, under the "valued policy" statute of this state, they are not liable for the full amount of the insurance, but only for such proportion of it as the amount of the partial loss bears to the sound value of the building before the fire, or, expressed in mathematical terms, the sound value is to the amount of the partial loss as the amount of insurance carried is to the amount to be recovered.

The ascertainment of the two items, the sound value and the amount of the actual loss, was submitted, under the policy to appraisers, who reported, sound value $25,335.20; actual loss $12,047.75. The ratio of actual loss to sound value was, therefore, 47.55 per cent. No objection appears to have been raised to the report of the appraisers. The amount of the insurance was, as stated, $7,500, and the contention of the insurance companies is that they are liable only for 47.55 per cent. thereof, $3,566.25, distributable among them according to the several amounts of the policies. The plaintiff, on the other hand, contends: "In case of partial loss, insured can recover such proportion of the insurance as the amount of his actual loss bears to the amount of his insurance limited by the amount of his insurance. In other words, the common-law rule, the actual...

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