Crisp v. Security Nat. Ins. Co.

• Citation: 369 S.W.2d 326
• Decision Date: 26 June 1963
• Docket Number: No. A-9470,A-9470
• Parties: Blanche CRISP, Petitioner, v. SECURITY NATIONAL INSURANCE COMPANY, Respondent.
• Court: Supreme Court of Texas

Page 326

369 S.W.2d 326

Blanche CRISP, Petitioner, v. SECURITY NATIONAL INSURANCE COMPANY, Respondent.

No. A-9470.

Supreme Court of Texas.

June 26, 1963.

Rehearing Denied July 24, 1963.

R. S. Sutton, Amarillo, for petitioner.

Gibson, Ochsner, Harlan, Kinney & Morris, Amarillo, for respondent.

CULVER, Justice.

The Security National Insurance Company issued its policy of fire insurance covering the household goods of the petitioner, Mrs. Crisp, in the total sum of $7,500.00. The goods were totally destroyed by fire and this suit was brought to recover for the loss.

Based on jury findings the trial court entered a judgment for Mrs. Crisp in the amount of $7,500.00. The Court of Civil Appeals has reversed and remanded for another trial. 364 S.W.2d 283.

The issue submitted to the jury is as follows:

'What amount of money, if any, do you find from a preponderance of the evidence, was the actual value to the plaintiff at the time and place of its loss by fire, of the furniture, furnishings and personal belongings of the plaintiff.'

The liability clause in the policy reads:

'Subject to Article 6.13 of the Texas Insurance Code, 1951, liability hereunder shall not exceed the actual cash value of the property at the time of loss, ascertained with proper deduction for depreciation; nor shall it exceed the amount it would cost to repair or replace the property with material of like kind and quality within a reasonable time after the loss, * * *.'

The Court of Civil Appeals was of the opinion and so held that the case was tried on the wrong theory, namely, on that of an implied contract rather than on an express contract and that the correct measure of damage was not the actual value to the plaintiff of the property at the time and place of its loss, but the reasonable cost of replacing the property with material of like kind and quality, making allowance for depreciation.

We do not agree with this interpretation of the policy. The quoted clause constitutes only a limitation on the amount of recovery. It provides that the recovery shall not exceed the actual cash value of the property less depreciation nor exceed the cost of repair or replacement. It does not establish a contractual measure of damages to which the insured must be relegated.

Indemnity is the basis and foundation of insurance coverage not to exceed the amount of the policy, the objective being that the insured should neither reap economic gain nor incur a loss if adequately insured. Queen Ins. Co. v. Jefferson Ice Co., 64 Tex. 578; Monarch Fire Ins. Co. v. Redmon, Tex.Civ.App., 109 S.W.2d 177, no writ history; Finch v. Great American Ins. Co. et al., 101 Conn. 332, 125 A. 628, 38 A.L.R. 1068. As one early decision, Washington Mills Emery Mfg. Co. v. Weymouth & B. Mut. Fire Ins. Co., 135 Mass. 503, puts it:

'The contract of the insurer is not that, if the property is burned, he will pay its market value; but that he will indemnify the assured, that is, save him harmless or put him in as good a condition, so far as practicable, as he would have been in if no fire had occurred.'

The trend of the decision increasingly is that the measure of recovery for fire damage shall correspond to the actual loss sustained by the insured in view of all the circumstances in the case. Valuation of Property to Measure Fire Insurance Losses. 29 Col.Law Review 857, 859.

It is a matter of common knowledge and of usual acceptation by the courts that used household goods, clothing and personal effects have no market value in the ordinary meaning of that term. They may be sold but only at considerable sacrifice which by no means represents the value of the articles to the owner. We find no recognized authority which would hold the insured to a recovery based solely on the proceeds obtainable on a secondhand market. Likewise, replacement costs do not afford a fair test. In some instances on account of obsolescence, change in style and fashion, this measure might represent an economic gain to the insured quite aside from the difficulty of application and proof. The measure of damage that should be applied in case of destruction of this kind of property is the actual worth or value of the articles to the owner for use in the condition in which they were at the time of the fire excluding any fanciful or sentimental considerations. Boise Ass'n of Credit Men v. U. S. Fire Ins. Co., 44 Idaho 249, 256 P. 523; Sun Fire Office of London v. Ayerst, 37 Neb. 184, 55 N.W. 635; Northern Assurance Co., Ltd. v. Stewart, 228 Ala. 201, 153 So. 243. See Appleman, Insurance Law and Practice, Vol. 6, § 3825; Couch Cyclopedia of Insurance Law, Vol. 7, § 1840. We are in agreement with the following statement from McAnarney v. Newark Fire Ins. Co., 247 N.Y. 176, 159 N.E. 902, 56 A.L.R. 1149:

'* * * The law of damages distinguishes between marketable chattels possessed for purposes of sale and chattels possessed for the comfort and well-being of their owner. In the instance of the former it judges their value by the market price. In the instance of the latter it measures their loss, not by their value in a secondhand market, but by the value of their use to the owner who suffers from their deprivation. The latter measure is employed in the case of household furniture, family records, wearing apparel, personal effects, and family portraits. Barker v. Lewis Storage & Transfer Co., 78 Conn. 198, 61 A. 363, 3 Ann.Cas. 889; Green v. Boston & Lowell R. Co., 128 Mass. 221, 35 Am.Rep. 370; Lake v. Dye, 232 N.Y. 209, at p. 214, 133 N.E. 448. * * *.'

The courts have not abandoned the consideration of either market or reproduction or replacement values in arriving at actual value to the insured, but evidence of those values may be used as a guide in making that determination rather than a shackle which compels strict adherence thereto. The trier of facts may consider original cost and cost of replacement, the opinions upon value given by qualified witnesses, the gainful uses to which the property has been put as well as any other facts reasonably tending to shed light upon the subject. Pinet v. New Hampshire Fire Ins. Co., 100 N.H. 346, 126 A.2d 262, 61 A.L.R.2d 706.

Where property, such as household goods and wearing apparel, has no recognized market value, the actual value to the owner must be determined without resort to market value. Britven v. Occidental Ins. Co., 234 Iowa 682, 13 N.W.2d 791; Lampe Market Co. v. Alliance Ins. Co., 71 S.D. 120, 22 N.W.2d 427; Featherston v. Hartford Fire Ins. Co., D.C., 146 F.Supp. 535.

We have not found that this problem has been directly passed upon by this court but a number of our Courts of Civil Appeals have discussed the problem and on the whole may be said to be in agreement with the foregoing principles.

In Southern Nat. Ins. Co. v. Wood, 63 Tex.Civ.App. 319, 133 S.W. 286, no writ history, the facts were somewhat similar to those under consideration here. The insured was permitted to testify as to what the value of the destroyed property was to her. She was held entitled to recover not merely what she could have sold the goods for in the market, but rather what their cash value was to her. In that case there was no proof of a market for household goods nor any testimony as to the cost of replacement. In Fidelity & Guaranty Fire Corp. v. Ormand, Tex.Civ.App., 62 S.W.2d 675, writ dismissed, the court upheld the following Special Issue on damages:

'From a preponderance of the testimony, what pecuniary loss or damage, if any, do you find was caused to the household furniture, wearing apparel and personal property of the plaintiff by reason of the fire * * *?'

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