Cussler v. Firemen's Ins. Co. of Newark, N. J.
| Decision Date | 18 April 1935 |
| Docket Number | No. 30228.,30228. |
| Citation | 194 Minn. 325,260 N.W. 353 |
| Parties | CUSSLER v. FIREMEN'S INS. CO. OF NEWARK, N. J. |
| Court | Minnesota Supreme Court |
Appeal from District Court, Hennepin County; H. D. Dickinson, Judge.
Action by Louis Cussler, Jr., against the Firemen's Insurance Company of Newark, N. J. From an order denying its alternative motion to amend the findings of fact and conclusions of law in its favor, or a new trial, defendant appeals.
Order reversed with directions.
M. H. Boutelle and Herbert W. Rogers, both of Minneapolis, for appellant.
Clyde F. Bort, of Minneapolis, for respondent.
Tried without a jury, this action on a valued fire insurance policy resulted in an order for judgment for plaintiff for the full amount of the insurance, $6,000. Defendant, the insurer, appeals from the order denying its alternative motion to amend the findings of fact and conclusions of law in its favor or for a new trial.
The policy, in the Minnesota standard form, covered a summer cottage on Lake Minnetonka. The loss was total, resulting from fire October 18, 1931. There was also a $300 coverage of personal property. That item is not in issue. Plaintiff furnished defendant his sworn statement of the loss November 13, 1931. November 27th defendant served upon plaintiff proper and timely notice of its intention to rebuild the cottage instead of paying the stipulated insurance. Although defendant made every effort possible to have plaintiff furnish plans and specifications for the new building, he has refused to do so. Proceeding as best it could without the aid requested from plaintiff or any other, defendant employed a qualified building contractor, who prepared a working plan and a bill of materials for the proposed new cottage. (A photograph, not furnished by plaintiff, gave the externals of the building and the foundation indicated its dimensions). Although they were submitted to plaintiff, he neither approved them nor suggested change or addition. That his testimony admits. There was neither proof nor attempted proof that the plan and materials proposed to be used by defendant in the rebuilding would not have given plaintiff a structure of general likeness and equal fitness, and in all respects as "serviceable and valuable as before the fire." Globe & Rutgers Insurance Co. v. Prairie Oil & Gas Co. (C. C. A.) 248 F. 452, 457. Neither in evidence nor out of it is there claim of defect in plan or materials. Defendant's efforts to get at a satisfactory working plan and such specifications as were needed, if not all that they should be, failed in that respect solely because of plaintiff's refusal to co-operate. If any details were lacking, it was his fault and not that of defendant.
This action on the policy was commenced in April, 1932. There was then pending here Curo v. Citizens' Fund Mutual Fire Ins. Co., 186 Minn. 225, 242 N. W. 713, wherein there arose for the first time in this state the question whether, under a valued fire insurance policy in the Minnesota standard form, the insurer has the right in case of loss or damage to a building to rebuild or repair. The question was decided in the affirmative May 27, 1932. Because of the pendency of that case, it was agreed between counsel in this one that defendant's answer might be delayed "until such time as the decision in the Curo Case is handed down by the supreme court." Accordingly, the answer was not served until after the decision in the Curo Case. The defense was that defendant was not liable on the policy because it had made timely election to rebuild. Negotiations for a settlement were brought to an end by a letter written on behalf of plaintiff by his counsel wherein defendant was informed explicitly that, if it did rebuild, it would do so "positively" at its own risk. Plaintiff's reply to the answer reiterated that, if defendant "did rebuild, it would do so at its own peril." Naturally, in that situation, defendant did not proceed with the rebuilding.
1. As provided by the policy, the language of which in this respect is that of the Legislature rather than the insurer, the insurer had the contract right to elect to rebuild. That right was confirmed by our decision in the Curo Case. Vance on Insurance (2d Ed.) § 207. That is settled law. The leading case seems to be Morrell v. Irving Fire Ins. Co., 33 N. Y. 429, 88 Am. Dec. 396. In accord are Zalesky v. Iowa State Ins. Co., 102 Iowa, 512, 70 N. W. 187, 71 N. W. 433 (followed in Cocklin v. Home Mutual Insurance Ass'n, 207 Iowa, 4, 222 N. W. 368); Beals v. Home Ins. Company, 36 N. Y. 522; Wynkoop v. Niagara Fire Ins. Co., 91 N. Y. 478, 43 Am. Rep. 686; Hartford Fire Ins. Co. v. Peebles' Hotel Co. (C. C. A.) 82 F. 546, 548; Globe & Rutgers Ins. Co. v. Prairie Oil & Gas Co. (C. C. A.) 248 F. 452, supra.
After such an election by the insurer, "no action will lie on the policy to recover the money indemnity therein stipulated." Hartford Fire Ins. Co. v. Peebles' Hotel Co., supra. The character of the change which takes place upon the insurer's proper election to rebuild is illustrated in Wynkoop v. Niagara Fire Ins. Co., supra. In that case the plaintiff sought damages for improper performance by the insurer in making repairs to a building damaged by fire and served the usual proofs of loss. The insured thereupon demanded an arbitration of the question of damages under the policy. Arbitration was refused by the insured. It was held that the contract of insurance was out of the case with its provision for arbitration, and that the measure of damages for breach of the undertaking to rebuild did not depend upon damages inflicted by the peril insured against. The court said: 91 N. Y. 478, 482, 43 Am. Rep. 686. In Beals v. Home Ins. Co., supra, after a proper election to rebuild by the insurer, the insured refused to permit it to do so and insisted on doing his own rebuilding. Thereafter he sued upon the policy. It was held that he could not maintain the action.
We are not now called upon to consider the effect of a breach by an insurer of its contract to rebuild, nor to determine the measure of damages for such a breach, nor the rights of the insured in such a case, and so express no opinion thereon.
There is nothing in this case which even suggests that the building contract substituted for the insurance contract November 27, 1931, has ever been breached by defendant. On the contrary, it has done all that in reason it could do to get on with performance. By this action plaintiff formally denies its right to rebuild. Defendant was not obligated, and by plaintiff's demand could not be obligated, to rebuild at the "peril" of meeting both the cost of rebuilding and the outcome of this action on the policy.
2. We come now to another principle which puts plaintiff very much in the wrong. It is thus stated by Prof. Williston:
"Since the governing principle in the formation of contracts is the justifiable assumption by one party of a certain intention on the part of the other, the undertaking of each promisor in a contract must include any promises which a reasonable person in the position of the promisee would be justified in understanding were included.
"Wherever, therefore, a contract cannot be carried out in the way in which it was obviously expected that it should be carried out without one party or the other performing some act...
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