Queen Ins. Co. v. Leslie

Decision Date17 June 1890
Citation24 N.E. 1072,47 Ohio St. 409
PartiesQUEEN INS. CO. v. LESLIE.
CourtOhio Supreme Court

Error to circuit court, Ashtabula county.

On the 1st day of June, 1883, the plaintiff in error, a foreign insurance company doing business in this state, issued and delivered to the defendant in error, a resident of the county of Ashtabula, its policy of insurance, whereby, in consideration of the payment of the premium therein mentioned, it agreed and undertook to insure him to the amount of $700, on his frame building situated in that county, against loss or damage by fire, for the term of one year. The building is described in the policy as a ‘ frame building belonging to insured, and occupied as private dwelling and store building; ’ and the policy contains among others, the following conditions: ‘ The amount of loss or damage to be estimated according to the actual cash value of the property at the time of the fire, and not more than it would cost the insurer or insured to replace or restore the same. This policy shall be and become void * * * in case the assured shall have made any false or fraudulent representation, or concealed any fact material to the risk,’ or if the premises ‘ shall be or become vacant.’ It further provides that in case of loss the value and damage to the property shall, at the written request of either party, be submitted to arbitration, and that no suit against the company ‘ shall be sustainable in any court of law or chancery, for the recovery of any claim by virtue of this policy, until after an award shall have been obtained.’ On the 4th day of June, 1883, the building so insured was totally destroyed by fire, and on the 4th day of April, 1884, the assured brought his action against the company, in the court of common pleas of Ashtabula county, to recover the amount of the insurance specified in the policy. The petition contains all the necessary allegations to entitle the plaintiff to recover. The answer of the company denies that the assured rendered a particular account of the loss, or made proof thereof, in accordance with the policy, and alleges that, in his application for the policy, the assured ‘ falsely and fraudulently stated, represented, and warranted that the building mentioned in the policy was of the value of one thousand dollars, whereas the same did not exceed in value the sum of two hundred and fifty dollars, as he well knew ’ and, further, that in the application ‘ the plaintiff falsely and fraudulently stated, represented, and warranted that the building was then occupied as a private dwelling and store-room, whereas the building was then unoccupied, as he well knew; ’ and also that the agent of the company did not examine the property, and such examination was waived by the plaintiff. The answer also avers that the plaintiff ought not to maintain his action because no arbitration was had concerning the loss, or award made fixing the amount. The reply denies each of the allegations of the answer except those averring there had been no arbitration and award. The case was tried to a jury and a verdict rendered for the plaintiff for the amount claimed.

A bill of exceptions was taken, from which it appears that on the trial the plaintiff gave evidence tending to prove the issues on his part, and the defendant gave evidence tending to prove that the actual value of the property was less than the amount named in the policy, and also that, at the time the policy was issued, the property was unoccupied, and had been for a considerable time before. Upon the close of the testimony the plaintiff moved the court ‘ to take from the jury all evidence of the value of the property insured.’ The bill of exception states that the defendant objected,’ but the court sustained the motion, to all of which defendant excepted. Thereupon defendant requested the court to charge the jury as follows: (1) That, as it is admitted by the pleadings that the building insured was not examined by an agent of the insurer, (the defendant,) the plaintiff can recover no more than the actual loss or damage sustained by him by the destruction of his building by fire as shown by the evidence; ’ which the court refused to give, and did not give, and defendant excepted. (2) That, as it is admitted by the pleadings that no award was had or obtained fixing the amount of plaintiff's loss and damage, the plaintiff cannot recover; ’ which the court refused to give, and did not give, and the defendant excepted. (3) If the jury find from the evidence that the plaintiff stated in his written application that the building insured was occupied as a dwelling and store-room at the time it was insured, when in truth and in fact the building was then vacant, and plaintiff then knew that it was vacant, plaintiff cannot recover; ’ which the court refused to give, and did not give, and defendant excepted In the general charge, the court, among other things, instructed the jury that, if they found for the plaintiff upon the issues, their verdict should be ‘ for seven hundred dollars, and interest thereon from the time when the same became due and payable according to the terms of the policy; ’ to which the defendant excepted. A motion for a new trial having been overruled, and judgment entered on the verdict, the case was taken on error to the circuit court, where the judgment was affirmed; and the reversal of both judgments is now sought in this court.

Rev.St. §§ 3643, 3644 (See Gen.Code, §§ 9583, 9584, 9586), which require insurance agents to personally examine, fix the insurable value, and make a full description of the property, and provide that in case of total loss the whole amount named in the policy shall be paid, cannot be waived by the parties; and a stipulation in a policy that the loss shall be estimated according to the true value of the property at the time of the fire, and that no suit shall be maintained until such amount is fixed by arbitrators, is void.

Syllabus by the Court

1. The act of March 5, 1879, ‘ to regulate contracts of insurance of buildings and structures,’ (now sections 3643 and 3644 of the Revised Statutes,) applies to all policies issued since it went into effect, insuring any building or structure in this state against loss or damage by fire. The neglect or omission of the agent to make the examination of the property, and fix its insurable value, as the statute requires, cannot prevent its application to a policy issued by the company, or defeat or affect the operation of the statute.

2. The statute is founded upon considerations of public policy; its purpose being to exact diligence and care on the part of insurance companies to avoid improper risks and overinsurance, by requiring them to cause their agents to make personal examination of the property, a full description thereof, and fix its insurable value, as well as to protect the insured against unreasonable forfeitures and defenses. The more effectually to accomplish these results, the statute holds the company liable on its policy unless, after its issue, a change occurs, increasing the risk, without its consent, or the insured has been guilty of intentional fraud; and, in case of the total loss of the property by fire, the measure of the liability is fixed at the amount mentioned in the policy, upon which the insurer received a premium. The statute cannot be regarded as conferring upon the assured a mere personal privilege, which may be waived by agreement. It moulds the obligation of the contract into conformity with its provisions, and establishes the rule and measure of the insurer's liability.

3. Conditions of the policy providing for a different rule or measure of liability, being in conflict with the statute, are without any binding force. Of this character are stipulations to the effect that the amount of the loss or damage shall be estimated according to the actual value of the property at the time of the fire, and not more than it would cost the insurer or insured to restore the same, and that no action on the policy shall be commenced until an award of arbitrators, chosen for that purpose, shall be obtained.

4. Where there has been no intentional fraud on the part of the insured, a condition or situation of the property at the time of the insurance, which the examination the agent is required by the statute to make should have reasonably discovered, cannot avail to defeat a recovery on the policy; nor, in such case, if the loss be total, is it competent for the insurer to prove that the value of the property is less than the amount mentioned in the policy. And statements in the application concerning such condition or value are immaterial, and cannot be fraudulent.

Henry Haus and Theodore Hall , for plaintiff in error.

Northway & Fitch , for defendant in error.

WILLIAMS, J.

The plaintiff in error contends for the reversal of the judgments below on the grounds (1) that, as the pleadings admit no award was made by arbitrators fixing the amount of the loss, as provided by the policy, the plaintiff could not maintain the action; (2) that the false statement of the plaintiff, in the application for the insurance, that the building was occupied as a dwelling and storeroom, when in fact it was unoccupied, vitiated the policy; and (3) that the plaintiff, in the application, falsely represented and warranted the property to be of a value grossly in excess of its actual value, which avoided the policy, and, if not, by its terms the plaintiff could recover no more than the actual value of the property at the time of the loss. The questions raised are so intimately connected they may be considered and disposed of together.

The policy expressly provides that the amount of the loss or damage is to be estimated according to...

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