Garnier v. Aetna Ins. Co. of Hartford

• Decision Date: 04 February 1935
• Docket Number: 32966
• Citation: Garnier v. Aetna Ins. Co. of Hartford, 159 So. 705, 181 La. 426 (La. 1935)
• Court: Louisiana Supreme Court
• Parties: GARNIER et al. v. AETNA INS. CO. OF HARTFORD, CONN

159 So. 705

181 La. 426

GARNIER et al. v. AETNA INS. CO. OF HARTFORD, CONN

No. 32966

Supreme Court of Louisiana

February 4, 1935

Rehearing Denied March 4, 1935

Appeal from Fourth Judicial District Court, Parish of Morehouse; J T. Shell, Judge.

Suit by William V. Garnier and another against the AEtna Insurance Company of Hartford, Conn. From a judgment for plaintiffs defendant appeals, and plaintiffs answer the appeal and pray that judgment be increased.

Judgment amended in part, reversed and rendered in part, and affirmed in part.

St. Clair Adams and St. Clair Adams, Jr., both of New Orleans, and Theus, Grisham, Davis & Leigh, of Monroe, for appellant.

Madison, Madison & Fuller, of Monroe, for appellees.

OPINION

ODOM, Justice.

Plaintiff was the owner of a one-story frame residence on Boatner street in Bastrop, La., which was destroyed by fire about August 25, 1932. The property was insured by the defendant company against loss by fire for the sum of $ 3,000. Alleging that defendant was due the full amount of the policy, but that it had failed to settle the loss, plaintiff brought the present suit for $ 3,000, plus interest, statutory penalties, and attorney's fees.

The sole defense urged by the insurance company is that, subsequent to the date on which the house was destroyed, the assured has intentionally concealed and misrepresented material facts and circumstances concerning the insurance and the subject thereof, for which reason the policy was void and it was due assured nothing.

The house was mortgaged at the time of the fire to the Southern Kraft Corporation, and there was attached to the policy a loss payable clause making the proceeds of the policy payable to the mortgagee as its interest might appear. Defendant, although denying liability to the assured, concedes that, in so far as the mortgagee is concerned, its rights were not affected by the alleged misconduct of the assured. Defendant therefore deposited in court at the inception of the trial the sum of $ 1,910.89; its contention being that this amount represented the full value of the property destroyed and that the mortgagee could recover no more than that, regardless of the amount of its claim. In connection with the deposit, defendant alleged that "the sum deposited * * * may be withdrawn at any time on motion of the Southern Kraft Corporation and on a showing that the amount of its mortgage and interest to date is in excess of that amount and upon Southern Kraft Corporation subrogating defendant to all its rights under its mortgage against W. V. Garnier," the assured.

This allegation was made, no doubt, to make it plain that defendant admitted no liability toward the assured. At the time of the trial there remained only $ 800 due the mortgagee. When this fact was shown, the defendant was permitted to withdraw all of the deposit in excess of that amount.

There was judgment for the plaintiff and the mortgagee in the sum of $ 2,270, with interest thereon at 5 per cent. from September 27, 1932, until paid, less $ 800 then on deposit. Plaintiff's demands for penalties and attorney's fees were rejected. Defendant appealed. Plaintiff answered the appeal, praying that the judgment be increased to $ 3,000 and that defendant be condemned to pay attorney's fees and statutory penalties.

The fire policy here involved was written under the provisions of Act No. 135 of 1900, which is an act "To fix the value of immovables by nature insured against loss or damage by fire, in case of loss or damage by fire."

Section 1 of that act provides:

"That 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 issuance 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."

Section 2 of the act reads as follows:

"Be it further enacted, etc., That whenever any policy of insurance against loss by fire, is hereafter written or renewed on property situate in this State, and the said property shall be totally destroyed without criminal fault upon the part of the insured or his assigns, the full amount of the insurance on the property so destroyed shall be paid by the insurer, and that when the said property shall be partially damaged, without criminal fault on the part of the insured or his assigns, the insurer shall pay to the insured such amount as will permit the insured to restore the damaged property to its original condition. Provided that nothing herein shall be so construed as to prevent the insurer from replacing property partially damaged or totally destroyed at his own expense and without contribution on the part of the insured."

It is not contended by the insurance company that the destruction of the property was due to criminal fault on the part of the insured. The defense set up by the insurance company was that the assured had, since the property was destroyed, willfully misrepresented facts in connection with the insurance, which misrepresentations, it is alleged, rendered the entire policy null and void under the following clause contained therein:

"This entire policy shall be void if the insured has concealed or misrepresented, in writing or otherwise, any material fact or circumstance concerning this insurance or the subject thereof; or if the interest of the insured in the property be not truly stated herein; or in case of any fraud or false swearing by the insured touching any matter relating to this insurance or the subject thereof, whether before or after the loss."

There arose some controversy during the trial of the case as to whether the building was totally or partially destroyed. Plaintiff alleged that the house was "practically" destroyed and "amounted to a total loss so far as your petitioners were concerned." The testimony discloses that the assured suffered total loss of his property as a result of the fire. The building, which was of wood structure, was not totally consumed. Parts of the walls and floors were left, but what remained was so badly damaged that it could not be used again and was worthless. The sills and floor joists were damaged, but had some value. They could have been taken up and parts of them, at least, could have been used in another structure. But, according to the testimony of all the building contractors who were called as witnesses, except one, what remained of the building was practically, if not totally, worthless. Some of them said that, if the lumber which could have been salvaged had been sold at the market price, the amount obtained would not have been more than sufficient to clear the lot of rubbish.

On this point counsel for the insurance company say in their original brief at page 9:

"There is some question as to whether the loss was total or partial, as the foundation and floor sills were not destroyed and could be used in the reconstruction of the house. However, from the standpoint of our defense, it is immaterial whether the house was totally or partially destroyed."

This question is material, however, to plaintiff, because under the provisions of section 2 of the act above referred to, if the house was not a total loss, but was only damaged by the fire, the insurance company, if liable at all, is due the assured only such sum as would be necessary to restore the property to its original state. If there was a total loss, and if the assured has not rendered the policy null and void by fraudulent misrepresentations, as contended by the insurance company, then under the pleadings and under the law the assured is entitled to recover the full amount of the policy.

Our conclusion, after reading all the testimony, is that the property was a total loss to the assured.

According to the provisions of Act No. 135 of 1900, the insurer had the option of replacing the property at its own expense and without contribution on the part of the insured. The insurer elected to replace the house, and so notified the insured, who assented. But the building was not replaced, due to a disagreement between the assured and the insurer over plans for a new house. There were negotiations extending over a period of several months relating to the replacement of the property, but no agreement was reached and nothing was done. It is defendant's contention that during these negotiations, and with reference thereto, the insured made willful false statements and representations as to the kind and value of the house and fixtures which were destroyed. So that, in defense of the action brought by plaintiff, the defendant alleged that the policy had been rendered totally void, and that therefore there was no liability in so far as the assured was concerned.

The specific fraudulent and willful misrepresentations attributed to the assured by the defendant are, first, that in making proof of loss the assured stated that the value of the house destroyed was $ 3,000, when he knew that it was worth much less than that amount; second, that, when it was agreed that defendant should replace the property and an architect was selected to draw plans and specifications for the new building, the assured instructed the architect "to prepare plans and specifications for a building of a better and more costly construction with refinements and fixtures not contained in the original building and of a far more expensive and costly nature, all of...