Home Mut. Ins. Co. of Iowa v. Stewart

• Decision Date: 05 February 1940
• Docket Number: 14479.
• Citation: 105 Colo. 516,100 P.2d 159
• Parties: HOME MUT. INS. CO. OF IOWA v. STEWART.
• Court: Colorado Supreme Court

100 P.2d 159

105 Colo. 516

HOME MUT. INS. CO. OF IOWA v. STEWART.

No. 14479.

Supreme Court of Colorado

February 5, 1940

In Department.

Error to Larimer County Court; Arthur E. March, Judge.

Action on an automobile policy by W. E. Stewart against the Home Mutual Insurance Company of Iowa, a corporation. To review a judgment for the plaintiff, defendant brings error.

Reversed and remanded with directions.

Lowell White and Howard Roepnack, both of Denver and Lawrence R. Temple and Albert P. Fischer, both of Fort Collins, for plaintiff in error.

Waldo Riffenburgh, of Fort Collins, for defendant in error.

OTTO BOCK, Justice.

This is an action based upon a contract of insurance, to recover damages to an automobile resulting from an upset. The action was commenced in justice court, where judgment was entered against plaintiff in error, hereinafter designated as defendant, in the sum of $300, in favor of defendant in error, to whom we hereinafter refer as plaintiff. Defendant appealed to the county court, where, on trial to a jury, the result was a judgment in favor of plaintiff in the sum of $277.50 and costs. Defendant sued out a writ of error in this court, seeking a reversal of the judgment. For the purposes of this review, we limit our consideration to the fourth assignment of error, 'That the verdict of the jury and the judgment of the court is contrary to the law.'

The issues are not controlled by written pleadings. Briefly, the facts are: That plaintiff, holder of a policy of insurance in defendant insurance company, under the terms of which he would be indemnified for repairs to his automobile made necessary by an upset, met with such an accident February 19, 1938, resulting in damage to his car. Within six days thereafter defendant obtained from four concerns bids for making repairs, ranging from $175 to $320; February 25, 1938 defendant offered to repair the auto; negotiations continued between counsel for the respective parties until March 4 1938, when counsel acting for plaintiff refused to permit defendant to repair the car, because 'the lowest proposal will not repair the car satisfactorily.' Demand was made upon defendant for $320, the amount of damage claimed, with the statement that if the sum was not paid, or if the car was not repaired by a certain firm designated by plaintiff, suit would be instituted. Negotiations continued, and defendant offered to take the automobile to Denver for repair, which offer was declined by plaintiff. March 8 defendant wrote plaintiff's attorney as follows:

'After our conversation of yesterday, I reported to Mr. Lowell White, for the Company, and he told me this morning from Denver, that the company was ready and willing to repair Mr. Stewart's car and place it in as good order and condition as it was prior to his recent accident.

'The company has elected, as provided by the policy, to proceed in this manner rather than paying Mr. Stewart the amount of his damage.

'Please advise me at once of Mr. Stewart's intentions, so that there will be no delay in repairing the car.'

The auto was in possession of plaintiff, who made no reply, and March 15, 1938, commenced this action. The applicable portion of the provisions of the policy here involved, under the heading 'Insuring Agreements,' is as follows: 'Converage D-2--Convertible Collision or Upset. To pay for loss consisting of damage to the automobile or its equipment, caused by accidental collision or by upset.'

Under the heading 'Conditions':

'11. Limit of Liability--Coverages D-1, D-2, E, F, and G--The Company's limit of liability with respect to the automobile or its equipment shall be the actual cash value of the property damaged, destroyed or stolen, at the time such loss occurs, or the cost of its suitable repair or replacement not in excess of such value, and loss shall be ascertained or estimated accordingly with proper deduction for depreciation however caused and without compensation for loss of use, and shall in no event exceed to limit of liability, if any, stated in Item 3 of the Declarations.'

'18. * * * The Company may, at its option, either repair or replace any part or all of the insured property upon which loss is claimed or pay to the Insured in money the full amount of such loss as determined in accordance with the provisions of this Policy, subject, however, to such deduction, if any, as may be applicable thereto.'

Nothing had been done to the damaged car at the time the suit was commenced, and thereafter plaintiff had the repairs made by a concern of his selection, at a cost of $320.

Defendant predicates its defense on condition 18, supra. It contends that the letter of March 8, 1938, was an unqualified election thereunder. We think this contention is sound. When defendant exercised its option to repair the automobile, in which plaintiff, under the terms of the policy, had no choice but to acquiesce, the original contract of the parties was converted into a new one, under which the insurer was to repair the car and restore it to its former condition. Simpson's Law Relating to Automobile Insurance, 2d Ed., p. 100, § 102; Letendre v. Automobile Insurance Co., 1921, 43 R.I. 410, 112 A. 783; Gaffey v. St. Paul Fire & Marine Insurance Co., 1917, 221 N.Y. 113, 116 N.E. 778, Ann.Cas. 1918B, 1041; Sare v. United States Fidelity & Guaranty Co., 1919, 50 Dom.L.R. 573; Wynkoop v. Niagara Fire Ins. Co., 91 N.Y. 478, 481, 482, 43 Am.Rep. 686; Cussler v. Firemen's Ins. Co. of Newark, N. J., 194 Minn. 325, 260 N.W. 353, 355.

After election and repairs by the insurer the insured would have his remedies under the new agreement, based on the failure of insurer to properly repair the automobile in accordance with the terms of the policy, or for damages caused by an unreasonable delay in making the repairs. Plaintiff does not controvert these legal statements, but argues that an election, to be effective, must be explicit in the following particulars:

1. It...