Rossier v. Union Automobile Ins. Co.

• Decision Date: 23 September 1930
• Citation: 291 P. 498,134 Or. 211
• Parties: ROSSIER v. UNION AUTOMOBILE INS. CO. [a1]
• Court: Oregon Supreme Court

291 P. 498

134 Or. 211

ROSSIER v. UNION AUTOMOBILE INS. CO. ^[a1]

Supreme Court of Oregon

September 23, 1930

In Banc.

Appeal from Circuit Court, Baker County; C. H. McColloch, Judge.

Action by A. P. Rossier against the Union Automobile Insurance Company. Judgment for plaintiff, and defendant appeals.

Affirmed.

Wm. G. Smith, of Portland (Collier, Collier &amp Bernard, of Portland, on the brief), for appellant.

Blaine Hallock, of Baker (Nichols, Hallock & Donald, of Baker, on the brief), for respondent.

BELT J.

This action is based on an insurance policy covering damage to automobile, arising out of accidental collision. It is conceded that the policy was in effect at the time in question and that the automobile of the plaintiff was damaged as a result of a collision. The principal questions presented on appeal are: Has the plaintiff a right to maintain this action in view of the fact that it was commenced prior to the repair of the automobile? (2) What is the measure of damages? Relative to the first question, the insurance company contends that, under the policy, it has the right or option to replace broken or damaged parts and put the automobile in as good condition of repair as it was prior to the collision. Concerning the question of damages, the insurer asserts that its liability is limited, under the policy, to the actual cost of replacement of damaged or broken parts, and the measure of damages is not as the court instructed, namely the difference between the fair cash value of the automobile before and after the collision. Verdict and judgment were had in favor of plaintiff in the sum of $950, together with an allowance of $250 for attorney fees. Defendant appeals.

Plaintiff purchased a Studebaker sedan for $1,535. A few days later defendant issued a policy indemnifying him "against direct loss or expense arising or resulting from claims upon the insured for damages by reason of the ownership, maintenance, manipulation or use of the automobile." By virtue of a full coverage collision clause, the liability under the policy was "extended to include damage to the automobile and/or equipment herein described, if caused solely by being in accidental collision * * *" It was also provided:

"In the event of loss or damage to the said automobile, it is understood and agreed that the assured shall make a report of said loss or damage to the Company in accordance with the terms and conditions of the policy to which this Endorsement is attached, and the Company shall have reasonable time and opportunity subsequent to the receipt of such report to examine the damaged automobile or its equipment covered hereunder before repairs are undertaken or physical evidence removed, but the assured shall not be prejudiced by any act on his part undertaken for the protection or salvage of the damaged automobile or its equipment.

"In the event of loss or damage to said automobile, whether such loss or damage is covered by the policy or not, the liability of this Company for loss or damage resulting from collision in accordance with the terms of this Endorsement shall be reduced by the amount of such loss or damage until repairs have been completed, but shall then attach for the full amount as originally written without additional premium, subject to the provisions of this Endorsement.

"The Company's liability for loss or damage under this Endorsement by reason of any one collision is limited to the actual cost of replacement of the property damaged or destroyed, and in no event, to exceed the true cash value of the automobile current at time loss or damage occurs."

On the afternoon of the day the above policy was issued, the automobile collided with a truck. Plaintiff alleges that, as a result thereof, it was "so bent, crushed, warped, twisted, broken and otherwise injured as to render the same of no greater value than $450." There was evidence tending to support the theory of plaintiff that, on account of the nature and extent of the damages to the automobile, it was not possible to repair it so as to put it in the same condition as prior to the collision. The insurance company offered evidence that it could be so repaired. Aside from the question as to whether the action was prematurely commenced, the vital issue in the case was as to the extent of the insurer's liability.

It affirmatively appears from the complaint that there was not a total destruction of the automobile, and we believe it was contemplated under the policy, although not expressly stated therein, that the insurer had the right to replace or repair broken or damaged parts in an effort to put the automobile in substantially the same condition as it was prior to the collision. If the car was capable of being so repaired, when the plaintiff commenced action without permitting the insurer the opportunity to exercise such right, a plea in abatement would have been proper. In the instant case, however, the defendant did not enter such plea, but joined issue on the merits. Under such circumstances the right of the plaintiff to maintain the action is not open to question.

We turn to consideration of the extent of the insurance company's liability. The decision of this question hinges upon the construction of the contract of insurance. It will be recalled that this is not an action for damages arising out of tort. It is based on a contract. That an insurer may, by contract, limit its liability, is well recognized. It is also uniformly held that, if there is any doubt or ambiguity in the...