Ijames v. Republic Ins. Co.

• Decision Date: 19 May 1971
• Docket Number: No. 1,Docket No. 9265,1
• Parties: Gerald IJAMES and Anniece Ijames, Plaintiffs-Appellees and Cross-Appellants, v. REPUBLIC INSURANCE COMPANY, Defendant-Appellant and Cross-Appellee
• Court: Court of Appeal of Michigan — District of US

Page 366

190 N.W.2d 366

33 Mich.App. 541

Gerald IJAMES and Anniece Ijames, Plaintiffs-Appellees and Cross-Appellants, v. REPUBLIC INSURANCE COMPANY, Defendant-Appellant and Cross-Appellee.

Docket No. 9265.

Court of Appeals of Michigan, Division No. 1.

May 19, 1971.

Leave to Appeal Denied Aug. 4, 1971.

Released for Publication Oct. 8, 1971.

D. J. Watters, Plunkett, Cooney, Rutt & Peacock, Detroit, for plaintiffs-appellants and cross-appellants.

Jesse R. Bacalis, Detroit, for defendant-appellant and cross-appellee.

Before V. J. BRENNAN, P.J., and QUINN and O'HARA, ^* JJ.

O'HARA, Judge.

This is an action upon a fire insurance policy by the insured property owners against the insuring company. To this extent, it is an action on a contract. Since certain provisions in the policy are mandated by statute and appear both in the policy and the statute, it is a case of statutory construction.

The case was tried to a jury and submitted on special questions. Certain of the jury's findings were not appealed and form no part of the issues before us.

The precise issues are:

1) May an insurer elect alternate methods of adjusting a fire loss as to damages to the dwelling house proper and the damaged contents thereof?

2) Does the Attempted fraud of one of two named insureds under a Michigan statutory fire insurance policy bar recovery for the whole amount of the contents loss?

3) Must it be shown that the claimed misrepresentation or false statements were relied upon by the insurer to its prejudice or damage to bar recovery on the policy?

The statute and policy provision covering the first issue is as follows:

'It shall be optional with this Company to take all, or any part, of the property at the agreed or appraised value, and also to repair, rebuild or replace the property destroyed or damaged with other of like kind and quality within a reasonable time, on giving notice of its intention so to do within thirty days after the receipt of the proof of loss herein required.' ¹

Within thirty days of the filing of the proof of loss the defendant insurer wrote to their insureds as follows:

'We enclose the completed Agreement for Submission to Appraisers and nominate Mike Nolan * * * as our appraiser For contents.' (Emphasis supplied.)

'With respect to your claim for Building damage, * * * Company hereby advises you that it has exercised its option to Repair the damage to the building.' (Emphasis supplied.)

The nominated appraisers, unable to agree, selected an 'umpire'. The agreement for submission to appraisal calls for the fixing of the amount of loss by the vote of any two. The contents loss was fixed by two of the three at $11,006.87. The policy limits for contents loss was $6,400. The jury brought in a verdict made up of specific items submitted on special questions which totaled $9,625 on the contents. ²

It is the position of the appellant company that it owes appellees nothing because the jury found in specific and unequivocal answer to one special question that Mrs. Ijames, a joint named insured, intentionally and willfully made a false statement under oath to the defendant company relative to an item of the claimed loss of contents.

The policy and the statute in identical words each provides:

'This entire policy shall be void if, whether before or after a loss, the insured has willfully concealed or misrepresented any material fact or circumstance concerning this insurance or the subject thereof, or the interest of the insured therein, or in case of any fraud or false swearing by the insured relating thereto.' (M.C.L.A. § 500.2832, lines 1--6. (Stat.Ann.1957 Rev. § 24.12832, lines 1--6)).

The amounts paid by the insurance company were for damage under the dwelling house coverage and the repairs made thereto, and under the additional living expense provision. The company claims that the option clause here quoted is divisible as between the various coverages in the policy, and that the answer to stated question one is that the insurer may elect alternate methods.

Additionally, the company contends that even if the statute-policy does not specifically permit election of alternate methods of adjustment it does not specifically prohibit it, and that the insureds having signed the agreement to submit the contents loss to appraisal cannot be heard to complain of an election in which they willingly joined. ³ Further, the company contends that even though the election to submit to appraisal were binding upon them, the appraisers could, in no case, make an award against the company beyond its contents policy limits of $6,400.

Plaintiffs reply that the statute and policy are indivisible as to the election of options; that the company cannot have its appraisal cake and eat it, too; that since it elected to submit the contents loss to appraisal, the policy limits do not apply, and that plaintiffs are entitled to the full appraisal figure for the contents loss.

Thus, the question seems to be whether the company owes the insureds $6,400, $11,006.87 or nothing at all.

We consider firstthe question of whether the insured can split the adjustment p rocess and submit the contents loss to arbitration, and elect to 'repair * * * or replace' the dwelling house itself.

We think plaintiffs' reliance on the term 'divisible' as used in Monaghan v. Agricultural Fire Insurance Company (1884), 53 Mich. 238, 18 N.W. 797, is misplaced. In their brief plaintiffs quote from Monaghan, supra, as follows:

'This was erroneous; and the error consists in holding that the contract was divisible, * * *.' (p. 253, 18 N.W. p. 804.)

Indivisible it was, and so held, but Indivisible as between the rights of the various named insureds to recover. Admittedly, the three children who were named insureds with their mother,...