Mode, Ltd. v. Fireman's Fund Insurance Co.

• Decision Date: 21 February 1941
• Docket Number: 6836
• Parties: THE MODE, LIMITED, a corporation, Appellant, v. FIREMAN'S FUND INSURANCE COMPANY, a corporation; GLENS FALLS INSURANCE COMPANY, a corporation; NATIONAL FIRE INSURANCE COMPANY OF HARTFORD, a corporation; THE MERCHANTS FIRE INSURANCE COMPANY, a corporation; PHILADELPHIA FIRE & MARINE INSURANCE COMPANY, a corporation; QUEEN INSURANCE COMPANY OF AMERICA, a corporation; THE WESTERN ASSURANCE COMPANY, a corporation; ROYALTY INSURANCE COMPANY, LTD., a corporation; THE EUREKA-SECURITY FIRE & MARINE INSURANCE COMPANY, a corporation; THE PHOENIX INSURANCE COMPANY, a corporation; THE LONDON ASSURANCE CORPORATION, a corporation; THE LIVERPPOL AND LONDON AND GLOBE INSURANCE COMPANY, LIMITED, a corporation; ATLAS ASSURANCE COMPANY, LTD., a corporation; NORWICH UNION FIRE INSURANCE SOCIETY, LIMITED, a corporation; NORTH BRITISH AND MERCANTILE INSURANCE COMPANY, LIMITED, a corporation; SPRINGFIELD FIRE & MARINE INSURANCE COMPANY, a corporation; NEWARK FIRE INSURANCE COMPANY, a corporation; HOME FIRE & MARINE INSURANCE COMPANY OF CALIFORNIA, a corporation; GENERAL INSURANCE COMPANY OF AMERICA, a corporation; NIAGARA FIRE INSURANCE COMPANY, a corporation; NORTHWESTERN MUTUAL FIRE ASSOCIATION, a mutual fire insurance company, Respondents
• Court: Idaho Supreme Court

110 P.2d 840

62 Idaho 270

THE MODE, LIMITED, a corporation, Appellant, v. FIREMAN'S FUND INSURANCE COMPANY, a corporation; GLENS FALLS INSURANCE COMPANY, a corporation; NATIONAL FIRE INSURANCE COMPANY OF HARTFORD, a corporation; THE MERCHANTS FIRE INSURANCE COMPANY, a corporation; PHILADELPHIA FIRE & MARINE INSURANCE COMPANY, a corporation; QUEEN INSURANCE COMPANY OF AMERICA, a corporation; THE WESTERN ASSURANCE COMPANY, a corporation; ROYALTY INSURANCE COMPANY, LTD., a corporation; THE EUREKA-SECURITY FIRE & MARINE INSURANCE COMPANY, a corporation; THE PHOENIX INSURANCE COMPANY, a corporation; THE LONDON ASSURANCE CORPORATION, a corporation; THE LIVERPPOL AND LONDON AND GLOBE INSURANCE COMPANY, LIMITED, a corporation; ATLAS ASSURANCE COMPANY, LTD., a corporation; NORWICH UNION FIRE INSURANCE SOCIETY, LIMITED, a corporation; NORTH BRITISH AND MERCANTILE INSURANCE COMPANY, LIMITED, a corporation; SPRINGFIELD FIRE & MARINE INSURANCE COMPANY, a corporation; NEWARK FIRE INSURANCE COMPANY, a corporation; HOME FIRE & MARINE INSURANCE COMPANY OF CALIFORNIA, a corporation; GENERAL INSURANCE COMPANY OF AMERICA, a corporation; NIAGARA FIRE INSURANCE COMPANY, a corporation; NORTHWESTERN MUTUAL FIRE ASSOCIATION, a mutual fire insurance company, Respondents

No. 6836

Supreme Court of Idaho

February 21, 1941

INSURANCE-CONSTRUCTION OF POLICY-FIRE-FRIENDLY FIRE-HOSTILE FIRE.

1. A clause in an insurance policy is to be construed most strongly against the insurer and liberally in favor of the insured.

2. The word "fire" as used in fire insurance policies in common parlance has a well-understood meaning of a hostile fire.

3. Where the meaning of the term "fire" in fire insurance policies as a hostile and not a friendly fire had been extensively and long recognized at time of issuance of fire policies, the insured and insurers were considered as having contracted with such definition in mind.

4. Where package containing antique jewelry was inadvertantly deposited in incinerator and destroyed by "fire" which was intentionally set and which at no time escaped from its usual or intended limits and which was at all times under control and such a fire as was customarily used for purpose of burning waste and debris deposited in the incinerator, it was a "friendly fire" not a "hostile fire" and the loss or damage sustained was not "direct loss or damage by fire" within meaning of fire policies.

APPEAL from the District Court of the Third Judicial District, for Ada County. Hon. Charles E. Winstead, Judge.

Action on policies of fire insurance. Judgment for respondents. Affirmed.

Judgment affirmed. Costs awarded to respondents.

Hawley & Hawley for appellant.

Applicable to insurance contracts as well as to ordinary contracts is the firmly established rule that where the language employed in a contract is clear and unambiguous, it is to be given its ordinary and commonly accepted meaning. The words "direct loss * * by fire," as employed in the contracts of insurance here in question, are certain definite and unambiguous in meaning and bring appellant's loss under the coverage of the policy. (Messinger v Cox, 33 Idaho 363, 194 P. 473; Tapper v. Idaho Irrigation, Ltd., 36 Idaho 78, 210 P. 591; Ripley v Railway Passenger Assurance Co., 20 F. Cas. 823; affirmed, 16 Wall 366, 21 L.Ed. 469; Foundation & Construction Co. v. Franklin Trust Co. (Pa.), 160 A. 711; Stone v. Granite State Fire Ins. Co. (N. H.), 45 A. 235.)

If the clause "direct loss by * * fire" is vague, uncertain, or ambiguous, then the doubts, uncertainties and ambiguities must be resolved in favor of the insured as against the insurer. This rule of construction is applicable in Idaho; it is not changed by legislative act directing the use of the New York standard form of fire insurance policy. (Smith v. National Fire Insurance Co., 95 S.E. 563; Matthews v. American Central Insurance Co. (N. Y.), 48 N.E. 751; Elliot on Contracts, Vol. 5, Sec. 4198, pp. 238-9; Rickerson v. Insurance Co., 149 N.Y. 307, 43 N.E. 856; 32 C. J. 1152, Sec. 265.)

The word "fire" has been given an entirely new and technical meaning, insofar as fire insurance policies are concerned, by certain courts holding that only a "hostile," as distinguished from a "friendly," fire is included within the policy coverage. This engrafted division does violence to sound reasoning and to well established and basic principles controlling the construction and interpretation of contracts. (Salmon v. Concordia Fire Ins. Co. of Milwaukee (La.), 161 So. 340; Countess Fitz-James v. Union Fire Ins. Co., 23 Irish Law Times & Solicitors' JI., pp. 168; O' Connor v. Queens Ins. Co. (Wis.), 122 N.W. 1038.)

Willis C. Moffatt and Carroll F. Zapp for respondents.

The Idaho standard fire insurance policy is to be construed like any other contract in view of its objects and so as to give effect to the intention of the parties making it. (Maryland Casualty Company vs. Boise Street Car Company, 52 Idaho 133; MacBey vs. Hartford Accident & Indemnity Company (Mass.), 197 N.E. 516; Frozine vs. St. Paul F. & M. Ins. Co., 195 Wis. 494; 218 N.W. 845.)

The statute prescribing the standard fire insurance policy being adopted from New York, the judicial interpretation of that state will apply. (Section 13, Chapter 185, Session Laws of 1913; Section 40-1401, Idaho Code Annotated; Stein vs. Morrison, 9 Idaho 426, 75 P. 246; Fitzgerald vs. German-American Insurance Company, 62 N.Y.S. 824.

A fire which is employed for the ordinary purpose of disposing of waste, confined within its usual limits, not excessive and under control, is not within the terms of the standard insurance policy and recovery cannot be had for loss or damage caused thereby. (O'Connor vs. Queen Insurance Company (Wis.) 122 N.W. 1038, 25 L. R. A. (N. S.) 501; Hartford Fire Ins. Co. vs. Armstrong, 219 Ala. 208; 122 So. 23; German-American Ins. Co. vs. Hyman, 42 Colo. 156; 16 L. R. A. 77; 96 P. 27; Metropolitan Casualty Ins. Co. vs. Bergheim, 21 Colo. App. 527; 122 P. 812; Lavitt vs. Hartford County M. F. Ins. Co., 105 Conn. 729; 136 A. 572.)

BUDGE, C. J. GIVENS and AILSHIE, J.J. concur. MORGAN, J., HOLDEN, J., dissenting.

OPINION

BUDGE, C. J.

This appeal is from a judgment rendered after respondent's general demurrer to appellant's complaint was sustained and appellant refused to plead further.

Appellant sought recovery upon policies of fire insurance issued by respondents, in the proportion that the face of the policy of each respondent bore to an entire loss sustained by appellant by reason of the destruction by burning of a quantity of antique jewelry in an incinerator.

The facts relative to the destruction of the jewelry and essential in the determination of the questions involved are set forth in appellant's complaint as follows:

"That the said antique jewelry was contained in a package which, . . . was inadvertently placed on a floor of the plaintiff's place of business, . . . shortly before the close of business . . . on the 28th day of November, 1939; that it was the regular and usual duty of an employee of the plaintiff, after the close of business, to sweep and clean the floors and premises of the plaintiff and to remove all debris, sweepings and trash to an incinerator in the basement of the plaintiff's place of business and there burn and destroy it; that in the regular performance of his duties the said employee did, during the night of November 28, and the early morning of November 29, 1939, sweep the floors, and without any knowledge whatever that the package containing the said jewelry was anything other than the usual waste accumulating on said floor in said department, did sweep the same with the refuse and debris on said floors and deposited the same in the said incinerator; that he thereupon following his usual duties, did build a fire in said incinerator and burned the trash; that the said employee and none of the plaintiff's employees, nor the plaintiff, had any knowledge whatsoever that the said jewelry had been so placed in the incinerator, and it was totally and completely destroyed by fire therein; that the fire was confined to the incinerator and that the purpose of the incinerator was to cheaply and for purposes of sanitation destroy the debris, dust, sweepings and trash daily accumulated in the plaintiff's place of business; that neither the plaintiff nor none of its employees intended to destroy the said jewelry, and its destruction was effected totally in ignorance of the fact that it was in said incinerator or destroyed therein until the 29th day of November, when the Gift Department Manager of the plaintiff discovered that the package was missing, and upon tracing its whereabouts the remains of the jewelry were discovered in the incinerator;

"XXXI

"That the said jewelry was totally and wholly destroyed by fire in the said incinerator; . . . that the said jewelry was part of the property covered by and included in each of the policies and contracts of insurance hereinbefore referred to . . ."

The policies of the insurance sued upon contain the following provision relative to the coverage:

"In consideration of the stipulation herein named and of Dollars premium does insure for the term of from the day of ? , 19 , at noon, against ALL DIRECT LOSS OR DAMAGE BY FIRE. . ."

The only question presented is whether the words "ALL DIRECT LOSS OR DAMAGE BY FIRE" protect appellant under the facts alleged in its complaint and admitted by the general demurrer. In other words, what did the parties intend by the word "fire" as used in the policies in question?

Appellant relies in the main upon Salmon v Concordia Fire Ins. Co. of Milwaukee, (La.) 161 So. 340, and the reasoning therein, coupled with the doctrine of construction that a clause in an insurance...