Lancashire Ins. Co. v. Bush

• Decision Date: 04 April 1900
• Parties: LANCASHIRE INS. CO. v. BUSH ET AL.
• Court: Nebraska Supreme Court

60 Neb. 116

82 N.W. 313

LANCASHIRE INS. CO.

v.BUSH ET AL.

Supreme Court of Nebraska.

April 4, 1900.

Syllabus by the Court.

1. A judgment will not be reversed because of an error or defect in the proceedings which does not affect the substantial rights of the complaining party.

2. Under the valued policy law (section 43, c. 43, Comp. St. 1899). the statute fixes the worth of the property insured conclusively at the valuation written in the contract of insurance, and in case of total loss that sum is the measure of recovery.

3. Under such a policy, in case of partial loss the actual damage is the measure of recovery.

4. If, under a valued policy, the property insured is totally destroyed as the result of two or more fires, the measure of recovery for the final loss is the amount written in the contract, less amounts paid in settlement of previous losses.

5. After a partial loss under a fire policy, which renders the building untenantable, the insured is not guilty of a breach of the vacancy clause of the contract, where he permits the property to remain unoccupied pending the period during which the insurer is authorized to exercise its option to repair the damaged building.

6. There is nothing in the constitution of the United States or of this state which forbids classification of subjects for the purpose of legislation. The power to classify is subject only to the limitation that the classification must not be arbitrary.

7. The provision of section 3 of the valued policy law (section 45, c. 43, Comp. St. 1899), permitting the taxation as costs of a reasonable attorney's fee upon rendering judgment against an insurance company on a contract insuring real estate, is grounded on considerations of public policy, and is constitutional.

Error to district court, Lancaster county; Hall, Judge.

Action by Abbie Bush and others against the Lancashire Insurance Company. Judgment for plaintiffs. Defendant brings error. Affirmed.Wellington H. England and Halleck F. Rose, for plaintiff in error.

Abbott, Selleck & Lane and Willard E. Stewart, for defendants in error.

SULLIVAN, J.

The Lancashire Insurance Company issued to Abbie Bush and Mabel B. Davis the contract of insurance upon which this action is grounded. The property insured was real estate, being a dwelling house in Crystal Springs addition to the city of Lincoln. The amount of insurance written in the policy was $1,800, and it was stipulated that the loss, if any, should be payable to William McWhinnie, mortgagee, as his interest might appear. On July 31, 1894, the insured building was partially destroyed by fire. Arbitrators chosen by the parties to ascertain the actual amount of the injury determined that the property was damaged to the extent of $748.80. This sum was paid by the company, and accepted by the insured and the mortgagee as full compensation for the loss sustained. The building was not restored to its former condition, but remained vacant and untenantable until September 23, 1894, when a second fire completed the work of the first, by reducing the remnant to ashes. This action was then instituted to recover of the company the difference between the amount paid on account of the first loss and the amount for which the property was insured. The jury, in obedience to a peremptory instruction from the court, returned a verdict in favor of Bush, Davis, and McWhinnie for the sum of $1,147.98, and judgment was rendered accordingly. The court also allowed the plaintiffs $150 as an attorney fee, and taxed the same to the company, as part of the costs. A reversal of the judgment is contended for upon four grounds.

It is first insisted that the court erred in permitting McWhinnie to assert his claim both by petition and answer. It is not clear that the petition, in which he was named as a party plaintiff, was filed by his authority; but, if it was so filed, we cannot see that the judgment should for that reason be set aside. By section 145 of the Code of Civil Procedure it is made the duty of the court in every stage of an action to disregard any error or defect in the pleadings or proceedings which does not affect the substantial rights of the complaining party, and it is therein further declared that “no judgment shall be reversed or affected by reason of such error or defect.” It does not appear that the company was, or that it could have been, prejudiced in the slightest degree by reason of the failure of the court to strike McWhinnie's name from the petition. There is therefore no merit in the first assignment of error discussed in the briefs.

The next question for decision is whether the loss occasioned by the second fire was a total loss, within the meaning of the valued policy law, which took effect July 1, 1889. The first section of the act is as follows: “Whenever any policy of insurance shall be written to insure any real property in this state against loss by fire, tornado, or lightning, and the property insured shall be wholly destroyed, without criminal fault on the part of the insured or his assigns, the amount of the insurance written in such policy shall be taken conclusively to be the true value of the property insured, and the true amount of loss and measure of damages.” Section 43, c. 43, Comp. St. 1899. This statute is grounded on public policy. It is designed to prevent overinsurance, and to avoid the evils resulting therefrom. Oshkosh Gaslight Co. v. Germania Fire Ins. Co., 71 Wis. 454, 37 N. W. 819;Insurance Co. v. Leslie, 47 Ohio St. 409, 24 N. E. 1072. To accomplish the end in view, the legislature has provided that, in case the insured property is entirely destroyed, the insurer shall abide by the valuation written in the policy. The statute, which is to be regarded as part of the contract, fixes conclusively the worth of the building which is the subject of insurance. If the property is wholly destroyed, its actual value is not to be determined by evidence, agreement, or arbitration. The damages are liquidated, and the measure of recovery already ascertained. But, if a partial loss occur, the policy holder is entitled to actual damages only, because the law has not fixed the value of any part of the insured property. In this case the insurer paid the actual damages resulting from the first fire. It does not claim to have paid anything more. When the second fire occurred, and the building was wholly destroyed, the owners were entitled to recover as damages its true value, less the amount previously paid. The true value of the entire structure being indisputably fixed at $1,800, and it being conceded that the actual loss caused by the first fire was $748.80, the conclusion is inevitable that the value of the remainder was $1,051.20. To receive evidence for the purpose of ascertaining the amount of the loss occasioned by the second fire would violate the policy of the law, which is to make the insurer pay the amount of the risk upon which it has taken premiums. We are not able to see any force in the argument that the statute does not apply because the property was destroyed by two fires instead of one....