Gowans v. Northwestern Pac. Indem. Co.

• Decision Date: 30 December 1971
• Citation: 260 Or. 618,489 P.2d 947,93 Adv.Sh. 730
• Parties: , 46 A.L.R.3d 398 Shelley M. GOWANS and Patricia Y. Gowans, Appellants, v. NORTHWESTERN PACIFIC INDEMNITY COMPANY, Respondent.
• Court: Oregon Supreme Court

Page 947

489 P.2d 947

260 Or. 618, 46 A.L.R.3d 398

Shelley M. GOWANS and Patricia Y. Gowans, Appellants, v. NORTHWESTERN PACIFIC INDEMNITY COMPANY, Respondent.

Supreme Court of Oregon.

Argued and Submitted Sept. 13, 1971.

Decided Oct. 20, 1971.

Rehearing Denied Dec. 30, 1971.

Gerald R. Pullen, Portland, argued the cause for appellants. With him on the brief was Martin J. Howard, Portland.

Edward H. Warren, Portland, argued the cause for respondent. With him on the brief were Hershiser, Mitchell & Warren, Portland.

Before O'CONNELL, C.J., and McALLISTER, HOLMAN, TONGUE and HOWELL, JJ.

TONGUE, Justice.

This is an action against an insurance company under a policy insuring for 'loss by theft' to recover money paid by the insured as a reward for the return of stolen jewelry covered by the policy.

Defendant admitted the theft of the jewelry and payment of the reward for its return, but denied that plaintiffs were entitled to recover the amount of that payment as a 'loss by theft.' It is stipulated that both the value of the stolen jewelry and the amount of the reward paid for its return were in excess of the $2,000 limit of the coverage provided by the insurance policy.

The case was tried before the court, sitting without a jury. Plaintiffs appeal from an adverse judgment based upon the conclusion that the money paid by plaintiffs as a reward for recovery of the stolen jewelry was paid voluntarily and with knowledge that defendant would not participate in offering such a reward and was not a 'loss by theft' under the terms of the policy.

Neither party has cited any case directly in point and we have found none. We must, therefore, examine this insurance policy to determine whether plaintiffs' claim is within its coverage.

In doing so we must apply the rule that if the terms of an insurance policy are clear and unambiguous the insurance company is entitled to have it enforced as written (Ausman v. Eagle Fire Ins. Co., 250 Or. 523, 530, 444 P.2d 18 (1968)), but that if the terms of an insurance policy are ambiguous, any reasonable doubt as to the meaning of such terms will be resolved against the insurance company and in favor of the insured. Farmers Mut. Ins. Co. v. United Pac. Ins. Co., 206 Or. 298, 305, 292 P.2d 492 (1956).

In our view, the term 'loss by theft' is legally ambiguous in that, depending upon the intent of the parties in the use of that term, it can be given either a narrow meaning, so as to be limited to the value of the property stolen, or a broad meaning, so as to extend to all loss resulting from theft of the insured property.

In the absence of any evidence to the contrary, we are constrained to hold that at least a reasonable doubt exists whether by the use of that term the parties intended to adopt such a narrow and limited meaning, rather than such a broad and liberal meaning, and we therefore must resolve that doubt in favor of the insured.

It is an established rule of insurance law that where a peril specifically insured against sets other causes in motion which, in an unbroken sequence and connection between the act and final loss, produces the result for which recovery is sought, the insured peril is regarded as the proximate cause of the entire loss. 5 Appleman, Insurance Law and Practice 309, § 3083.

It is our opinion that in this case the payment by plaintiffs of a reward for recovery of their jewelry was a natural and direct consequence of the theft of the jewelry and followed naturally, although indirectly, from that act under the facts of this case and in the absence of evidence to the contrary. It is our opinion, under these facts, that the dominant cause of the loss incurred by plaintiffs as a result of the payment of that reward was the theft of the jewelry. Accordingly, we hold that plaintiffs are entitled to recover that amount from defendants as the measure of their 'loss' from the theft of their jewelry.

If stolen goods are later recovered, but damaged, the expense incurred by the insured to restore them to their former condition is ordinarily recoverable, although specific policy provisions may be controlling in such cases. See 15 Couch, Insurance 2d 464, § 54:243, and Housner v. Baltimore-American Ins. Co., 205 Wis. 23, 236 N.W. 546 (1931). Similarly, the expense incurred by the insured in recovering stolen goods is also ordinarily recoverable, although again, specific policy provisions may be controlling. See 6 Appleman, Insurance Law and Practice 243, § 3885, and Alamo Casualty Co. v. Laird, 229 S.W.2d 214, 218 (Tex.Civ.App.1950). For the same underlying reasons, it is our opinion that when stolen goods may be recovered by the advertisement of a reward, as in this case, the expense incurred by the insured in the payment of such a reward is a 'loss by theft,' in the absence of specific policy provisions to the contrary.

It is reasonable to infer in this case that plaintiff would not have recovered the jewelry if the reward had not been offered and paid, so as to require the company to pay $2,000 to plaintiff for such an admitted 'loss by theft.' It follows, in our judgment that upon payment of the...