Insurance Company of North America v. Bachler

• Decision Date: 04 April 1895
• Docket Number: 6124
• Citation: 62 N.W. 911,44 Neb. 549
• Parties: INSURANCE COMPANY OF NORTH AMERICA v. HENRY BACHLER
• Court: Nebraska Supreme Court

62 N.W. 911

44 Neb. 549

INSURANCE COMPANY OF NORTH AMERICA v. HENRY BACHLER

No. 6124

Supreme Court of Nebraska

April 4, 1895

ERROR from the district court of Otoe county. Tried below before CHAPMAN, J.

AFFIRMED.

Jacob Fawcett, for plaintiff in error:

The action must fail, because there was a mortgage upon the insured premises at the time of the fire, the existence of which had not been disclosed to the company. (Waller v Northern Assurance Co., 10 F. 232; Bowman v Franklin Fire Ins. Co., 3 Ins. L. J. [Md.], 935; Hinman v. Hartford Fire Ins. Co., 36 Wis. 159.)

The right of an insurance company to insist upon an appraisal as a condition precedent to the commencement of a suit, where the policy contains such a provision, is now the settled law of the land. (Redell v. Kennedy, 16 N.E. [N. Y.] 326; Knoche v. Chicago, M. & St. P. R. Co., 34 F. 471; Doyle v. Patterson, 6 S.E. [Va.], 138; Herrick v. Belknap, 27 Vt. 673; Delaware & Hudson Canal Co. v. Pennsylvania Coal Co., 50 N.Y. 250; Holmes v. Ritchet, 56 Cal. 307; Faunce v. Burke, 16 Pa. 480; Reynolds v. Caldwell, 51 Pa. 298; Flaherty v. Germania Ins. Co., 7 Ins. L. J. [Pa.], 226; May, Insurance, sec. 493; Reed v. Washington Fire & Marine Ins. Co., 14 Ins. L. J. [Mass.], 465; Scott v. Avery, 5 H. L. Cas. [Eng.], 811; Myers, Federal Decisions, p. 1036, sec. 72; Wood, Insurance, p. 757; Scottish Union & Nat. Ins. Co. v. Clancy, 8 S.W. [Tex.], 630; German-American Ins. Co. v. Steiger, 109 Ill. 254; United States v. Robeson, 9 Pet. [U. S.], 319; Lovejoy v. Hartford Fire Ins. Co., 11 Ins. Co., 11 Ins. L. J. [Ill.], 186; Gasser v. Sun Fire Office, 19 Ins. L. J. [Minn.], 243; Sullivan v. Sussong, 9 S.E. [S. Car.], 156; Johnson v. American Fire Ins. Co., 43 N.W. [Minn.], 59; Chippewa Lumber Co. v. Phenix Ins. Co., 44 N.W. [Mich.], 1055; Pioneer Mfg. Co. v. Phoenix Assurance Co., 10 S.E. [N. Car.], 1057; Hamilton v. Liverpool Ins. Co., 136 U.S. 254; Mossness v. German-American Ins. Co., 52 N.W. [Minn.], 932.)

E. F. Warren, also for plaintiff in error.

John C. Watson, contra:

If an insurance company elects to issue a policy without an application, or any representations concerning title, it cannot, after loss, complain that insured's interest was not correctly stated in the policy, or that an existing incumbrance was not disclosed. (Western Assurance Co. v. Mason, 5 Bradw. [Ill.], 141; Hartford Fire Ins. Co. v. Haas, 8 Ky. 610; Washington Mills Emery Mfg. Co. v. Weymouth & Braintree Mutual Fire Ins. Co., 135 Mass. 503; Castner v. Farmers Mutual Fire Ins. Co., 46 Mich. 15; Traders Ins. Co. v. Barracliffe, 45 N.J.L. 543; Agricultural Ins. Co. v. Yates, 10 Ky. 984; O'Brien v. Ohio Ins. Co., 52 Mich. 131; Rawls v. American Life Ins. Co., 36 Barb. [N. Y.], 357; Pennsylvania Mutual Life Ins. Co. v. Wiley, 100 Ind. 92; Dilleber v. Home Life Ins. Co., 69 N.Y. 256; Higgins v. Phoenix Mutual Life Ins. Co., 74 N.Y. 9.)

Valued policy laws are held to be valid and enforceable, because based upon grounds of public policy and intended to do away with great evils, mischiefs, and abuses that were subverting business morality and injuring business interests, and being founded upon such considerations, like all other private contracts, their provisions or terms cannot be waived, either by express stipulation or doubtful implication. (Rielly v. Franklin Ins. Co., 43 Wis. 449; Williams v. Hartford Ins. Co., 54 Cal. 442; Chitty, Contracts, 598; Staines v. Wainright, 6 Bing. N. C. [Eng.], 174; Phalen v. Clark, 19 Conn. 421; Nellis v. Clark, 4 Hill [N. Y.], 424; Dodson v. Harris, 10 Ala. 566; Martin v. Wade, 37 Cal. 168; Hoover v. Pierce, 27 Miss. 13; Thompson v. Citizens Ins. Co., 45 Wis. 388.)

"Wholly destroyed" does not mean an absolute extinction by fire of the property. (Williams v. Hartford Fire Ins. Co., 54 Cal. 442.)

The term "total loss" is a native of marine insurance, and the precedents for the construction of the valued policy laws were at least given color by this doctrine of total loss as founded in that branch of law. Here, it must be observed, as a very important factor, that a total loss may be either actual or constructive. (Idle v. Royal Exchange Assurance Co., 8 Taunt. [Eng.], 755; Cambridge v. Anderton, 1 C. & P. [Eng.], 60; Dyson v. Rowcroft, 3 Bos. & P. [Eng.], 474; Gordon v. Massachusetts Fire & Marine Ins. Co., 2 Pick. [Mass.], 249.)

When the loss is not absolutely total in the ordinary sense of the term, but occurred in such a manner that the insured is deemed to be justified in abandoning all efforts to save what remains, under the marine insurance law, upon a formal notice of abandonment of his interest to the underwriter, he is entitled to claim a total loss. (Peele v. Merchants Ins. Co., 3 Mason [U. S.], 27; Bradlie v. Maryland Ins. Co., 12 Pet. [U. S.], 397; Coeplin v. Phoenix Ins. Co., 46 Mo. 211; Ruckman v. Merchants Louisville Ins. Co., 5 Duer [N. Y.], 342; The Brig Sarah Ann, 2 Sum. [U. S.], 206; Fulton Ins. Co. v. Goodman, 32 Ala. 108; German Ins. Co. v. Eddy, 36 Neb. 461; German Ins. Co. v. Penrod, 35 Neb. 273.)

Insurance companies cannot nullify the effects of the valued policy law by inserting in their policy arbitration clauses. (Hall v. People's Mutual Fire Ins. Co., 6 Gray [Mass.], 185; Bartlett v. Union Mutual Fire Ins. Co., 46 Me. 500; Reichard v. Manhattan Life Ins. Co., 31 Mo. 518; Amesbury v. Bowditch Mutual Fire Ins. Co., 6 Gray [Mass.], 596; Nute v. Hamilton Mutual Ins. Co., 6 Gray [Mass.], 174; Indiana Mutual Fire Ins. Co. v. Routledge, 7 Ind. 25.)

A provision of the policy which conflicts with the statutes of the state where the company is doing business is null and void. In such cases the statute enters into and becomes a part of the contract and controls any conflicting provisions in the policy. (Fletcher v. New York Life Ins. Co., 13 F. 526; Wall v. Equitable Life Assurance Society, 32 F. 273; Vore v. Hawkeye Ins. Co., 41 N.W. [Ia.], 309; Reiner v. Dwelling House Ins. Co., 42 N.W. [Wis.], 208; Sly v. Ottawa Agricultural Ins. Co., 29 U. C. C. P., 28; Goring v. London Mutual Fire Ins. Co., 11 Ont. [Can.], 82; Frey v. Mutual Fire Ins. Co., 43 U. C. Q. B., 102; Sauvey v. Isolated Risk & Farmers Fire Ins. Co., 44 U. C. Q. B., 523.)

If the policy does not clearly indicate that arbitration and award are conditions precedent to any action on the policy, then it is bad, and an action may be brought at once. (Birmingham Fire Ins. Co. v. Pulver, 18 N.E. [Ill.], 804; Gere v. Council Bluffs Ins. Co., 67 Iowa 272; Reed v. Washington Fire & Marine Ins. Co., 138 Mass. 572; Williams v. Hartford Ins. Co., 54 Cal. 442; German-American Ins. Co. v. Steiger, 109 Ill. 254; Mark v. National Fire Ins. Co., 24 Hun [N. Y.], 565; Liverpool, London & Globe Ins. Co. v. Creighton, 51 Ga. 95; Schollenberger v. Phoenix Ins. Co., 7 Ins. L. J. [Pa.], 697.)

If an arbitration clause seeks to oust the courts of jurisdiction by making the award of the arbitrators final, it is not binding on the assured. (Case v. Manufacturers Fire & Marine Ins. Co., 21 P. [Cal.], 843; German-American Ins. Co. v. Etherton, 25 Neb. 505; Crossley v. Connecticut Fire Ins. Co., 27 F. 30; Lasher v. Northwestern National Ins. Co., 18 Hun [N. Y.], 98; Mentz v. American Fire Ins. Co., 79 Pa. 478; Trott v. City Ins. Co., 1 Cliff. [U. S.], 439; Cobb v. New England Mutual Marine Ins. Co., 6 Gray [Mass.], 192; Stephenson v. Piscataqua Fire & Marine Ins. Co., 54 Me. 55; Allegre v. Maryland Ins. Co., 2 G. & J. [Md.], 136.)

In case of total loss arbitration cannot be made a condition precedent to action by the assured. (Rosenwald v. Phenix Ins. Co., 3 N. Y. Supp., 215.)

In those states having a valued policy law the condition for arbitration is not binding on the assured in case of total loss. (Thompson v. St. Louis Ins. Co., 43 Wis. 459; Thompson v. Citizens Ins. Co., 45 Wis. 388.)

RAGAN, C. NORVAL, C. J., not sitting.

OPINION

The opinion contains a statement of the case.

RAGAN, C.

To reverse a judgment pronounced against it by the district court of Otoe county in favor of Henry Bachler in a suit based on an ordinary fire insurance policy the Insurance Company of North America (hereinafter called the "Insurance Company") has prosecuted to this court proceedings in error.

1. The first assignment of error is that the district court erred in giving instructions numbered 1 to 10, both inclusive, upon its own motion; and the second assignment is that the court erred in refusing to give the instructions 1 to 11, both inclusive, requested by the plaintiff in error. The court did not err in giving all these instructions, nor err in refusing to give all the instructions asked for, and for that reason these assignments must be overruled.

2. No specific ruling of the district court in the admission or rejection of evidence is assigned as error in the petition in error filed here. Our examination of the record then is confined to the determination of whether the verdict pronounced by the jury is supported by sufficient competent evidence, and whether the judgment pronounced by the court is contrary to the law of the case.

3. The policy sued on was issued on the 1st day of October, 1889 and insured the property of Bachler from loss or damage by fire for one year. October 1, 1890, a renewal certificate was issued by the Insurance Company continuing the policy in force for another year, and on October 1, 1891, another renewal certificate was issued continuing the policy in force until October 1, 1892. On the 22d day of February, 1892, the insured property was destroyed by fire. At the time the policy was originally issued and at the time the policy was renewed on the 1st of October, 1891, there existed an unrecorded mortgage against the insured property. This mortgage was recorded in June, 1891, and was in...