Patriotic Order Sons of America Hall Association v. Hartford Fire Insurance Co

• Decision Date: 28 September 1931
• Docket Number: 27
• Citation: 305 Pa. 107,157 A. 259
• Parties: Patriotic Order Sons of America Hall Association, Appellant, v. Hartford Fire Insurance Co
• Court: Pennsylvania Supreme Court

157 A. 259

305 Pa. 107

Patriotic Order Sons of America Hall Association, Appellant, v. Hartford Fire Insurance Co

No. 27

Supreme Court of Pennsylvania

September 28, 1931

Argued May 27, 1931

Appeal, No. 27, Jan. T., 1932, by plaintiff, from judgment of C.P. Huntingdon Co., Feb. T., 1931, No. 90, on directed verdict for plaintiff, in case of Patriotic Order Sons of America Hall Association v. Hartford Fire Insurance Co. Affirmed.

Assumpsit on policy of fire insurance. Before BAILEY, P.J.

The opinion of the Supreme Court states the facts.

Judgment on directed verdict for plaintiff for $4,322.64. Plaintiff appealed.

Error assigned was in directing verdict for plaintiff, quoting record.

The assignments of error are overruled and the judgment is affirmed.

James S. Woods and H. H. Waite, with them Chester D. Fetterhoof for appellant. -- The actual cash value in a policy of insurance means what it would cost to replace a building or chattel, as of the date of a fire: Fedas v. Ins Co., 300 Pa. 555, 562.

The courts have stated what sound value means in certain cases, and these are in two cases in which the question of the amount of loss did not occur, but where the appraisers had failed to make any report on sound value: Mason v. Fire Assn., 122 N.W. 427; Continental Ins. Co. v. Garrett, 125 F. 589.

The actual cash value for which the company is liable is specifically defined in the policy and is simply a question of indemnity, not to exceed the amount of the policy. The sound value is at the best condition value.

The definition of "sound value," as quoted above, does not make it the same as "actual cash value, with due allowance for depreciation," and it does not make it the same as "actual cash value" used in the rider.

The appraisers should be allowed to state what they meant by "sound value" as assessed by them in their appraisal, and to state that it did not mean "actual cash value" and that they did not assess the "actual cash value": Humphreys v. Benefit Assn., 139 Pa. 264; Nordlund v. Life Ins. Co., 282 Pa. 389, 391; Brown v. Brooks, 25 Pa. 210; Edmonds v. Bank, 215 Pa. 547; Carey v. Bright, 58 Pa. 70; Glatfelter v. Mendels, 46 Pa.Super. 562; Zeigler's Petition, 207 Pa. 131, 136.

W. M. Henderson, of Henderson & Henderson, for appellee. -- The policy is to receive such reasonable construction as will enable the carrying out of the intention of the parties, evidenced by their words and the whole of the insurance contract: Nusbaum v. Ins. Co., 285 Pa. 332; 120 A. 481; Julius v. Ins. Co., 132 N.E. 435.

The appraisal was in accord with terms of policy. Sound value and actual cash value are synonymous: Fedas v. Ins. Co., 300 Pa. 555; Gulf Compress Co. v. Ins. Co., 167 S.W. 859.

The parties construed sound value and actual cash value as synonymous.

Parol evidence is not admissible to avoid the award, or to show the actual cash value: Hostetter v. Pittsburgh, 107 Pa. 435; Boston Water Power Co. v. Gray, 6 Metcalf 131; Ketcham v. Hall Assn., 59 Pa.Super. 213; Liverpool, London & Globe Ins. Co. v. Goehring, 99 Pa. 13, 16; Everett v. Ins. Co., 142 Pa. 332.

Before FRAZER, C.J., WALLING, SIMPSON, KEPHART, SCHAFFER and MAXEY, JJ.

OPINION

MR. JUSTICE SCHAFFER:

This is an action of assumpsit on a policy of fire insurance. The fundamental question to be determined is the meaning of the terms "actual cash value" and "sound value." The trial judge held their meaning to be the same; the plaintiff, appellant, contends it is different.

The policy provides: "In consideration of the reduced rate and (or) form under which this policy is written, it is expressly stipulated and made a portion of this contract that in the event of loss this company shall be liable for no greater proportion thereof than the amount hereby insured bears to eighty per cent (80%) of the actual cash value of the property described herein at the time when such loss shall happen, nor for more than the proportion which this policy bears to the total insurance thereon." At the time of the fire the amount of the insurance was $32,000. The policy contained the following clause: "In case the insured and this company shall fail to agree as to the amount of loss or damage, each shall, on the written demand of either, select a competent and disinterested appraiser. The appraisers shall first select a competent and disinterested umpire . . . The appraisers shall then appraise the loss and damage, stating separately sound value and loss or damage to each item, and, failing to agree, shall submit their differences only to the umpire. An award in writing, so itemized, of any two, when filed with this company, shall determine the amount of sound value and loss or damage."

Following the loss the insured and the company entered into an appraisal agreement in which the 80% reduced rate contribution clause was recited, as was the provision of the policy for appraisement, and the appraisers were appointed "to appraise, in accordance with the terms and conditions of said policy . . . the sound value of said property and the amount of loss or damage directly caused by said fire to and upon the same." The agreement provided: "The said two appraisers shall then appraise the loss and damage . . .; stating separately sound value and loss or damage to each item . . .; such loss or damage shall be ascertained and appraised according to the actual cash value of said property at the time of the occurrence of said loss or damage, with proper deductions for depreciation, and shall in no event exceed what it would cost to repair or replace the same with material of like kind and quality."

In pursuance of this agreement, one of the appraisers and the umpire (the appraiser appointed by the company refusing to sign) made an award fixing the sound value of the property insured at $58,316 and the loss at $19,856. Plaintiff claimed that there was due to it on the defendant's policy which was for $10,000, 10/32ds of the amount of the loss or the sum of $6,205. Defendant set up that under the provisions of the 80% coinsurance clause it was liable for only $4,256.13, being the proportionate share of the loss sustained in the ratio that the amount of insurance carried bore to 80% of the actual cash value of the property. The court on the trial took the defendant's view and directed a verdict for the lesser sum with interest.

Plaintiff argues that actual cash value and sound value are not the same and on the trial offered to prove, by a witness familiar with the value of buildings, what the actual cash value of its building was at the time of the fire. This testimony was excluded upon the ground that the actual cash value had been determined by the appraisers in the establishment of sound value and for the reason that the terms sound value and actual cash value are synonymous. We are of opinion that the conclusion of the trial court was correct. Sound means undamaged. The sound value of anything is its worth, its actual cash value, in an undamaged condition. Actual cash value means what the thing is worth in money, allowing for depreciation. Sound value is the same thing, what the property was worth, allowing for depreciation, in its undamaged state. "Actual cash value means the actual value expressed in terms of money of the thing for the purpose for which it was used, -- in other words, the real value to replace. The rule established by our decisions seeks a result which will enable the parties to restore the property to as near the same condition as it was at the time of the fire, or to pay for it in cash": Fedas v. Ins. Co. of State of Pa., 300 Pa. 555, 563. The policy itself indicates what is meant by actual cash value; it speaks of "Actual cash value (ascertained with proper deductions for depreciation) of the property at the time of loss or damage, but not exceeding the amount which it would cost to repair or replace the same with material of like kind and quality." It would be difficult to point out wherein this differs from sound value. As is convincingly stated in the brief of appellee's counsel, "The term actual cash value as used in the policy is not a value from which deductions shall be made on account of depreciation. It is the result obtained after allowing deductions for depreciation. It is the net result derived from a calculation or valuation in which depreciation was an element considered, and for which allowance was made. It is the value of the insured property in the condition in which it was immediately before the fire. So that, as used in the policy in suit both actual cash value and sound value mean the value of the property as it stood before the fire, when it was sound; when it was undamaged." In Continental Ins. Co. v. Garrett, 125 F. 589, 591, it is said: "Sound value is the cash value, making an allowance for depreciation due to use, etc., at and immediately preceding the time of the fire." See also Mason v. Fire Assn. of Phila., 23 S.D. 431, 122 N.E. 423; Commercial Union Assur. Co. v. Dalzell, 210 F. 605; William H. Low Est. v. Lederer Realty Corp., 35 Rhode Island 352, 86 Atlantic 881; Eberhardt v. Fed. Ins. Co., 14 Ga.App. 340, 80 S.E. 856.

In fixing sound value the appraisers fixed actual cash value. Under the very terms of the appraisal agreement their finding could not be contradicted. It provided that their finding "shall determine the amount...