Rutherford v. Royal Ins. Co.

• Decision Date: 20 April 1926
• Docket Number: No. 2462.,2462.
• Parties: RUTHERFORD et al. v. ROYAL INS. CO., Limited, et al.
• Court: U.S. Court of Appeals — Fourth Circuit

12 F.2d 880 (1926)

RUTHERFORD et al. v. ROYAL INS. CO., Limited, et al.

No. 2462.

Circuit Court of Appeals, Fourth Circuit.

April 20, 1926.

Julius C. Martin, of Washington, D. C. (J. G. Merrimon, Martin, Rollins & Wright, and Merrimon, Adams & Adams, all of Asheville, N. C., on the brief), for plaintiffs in error.

Daniel MacDougald, of Atlanta, Ga. (R. R. Williams, of Asheville, N. C., King, Spalding, MacDougald & Sibley, of Atlanta, Ga., and Jones, Williams & Jones, of Asheville, N. C., on the brief), for defendants in error.

Before WADDILL, and PARKER, Circuit Judges, and McDOWELL, District Judge.

PARKER, Circuit Judge.

Two actions were instituted by Mrs. Laura W. Rutherford and the United Cigar Stores Company, one against the Royal Insurance Company to recover on a fire insurance policy, insuring a building of Mrs. Rutherford for the sum of $4,000, and the other against the Liverpool & London & Globe Insurance Company to recover on two policies for the aggregate sum of $15,000 insuring the same building. The two actions involved the same issues and were by consent tried together as one action. The jury, under the instruction of the court, returned a verdict for the plaintiffs in the consolidated cases for the sum of $4,000, and plaintiffs bring this writ of error.

The policies in suit were issued on a three-story brick building in the principal business section of the city of Asheville, N. C. It belonged to Mrs. Rutherford, and was leased to the United Cigar Stores Company for a term of 15 years from May 5, 1915, at an annual rental of $5,000. It was occupied by the Cigar Stores, a shoe store, a barber shop, a tailoring establishment, a dentist, and a men's furnishing store. A fire occurred on February 14, 1924, which so damaged the building that it was no longer habitable or usable for any purpose. On February 16th, two days after the fire, a committee appointed by the board of commissioners of Asheville inspected the building and recommended its condemnation and removal. On February 18th the board adopted and approved the report of this committee and directed that Mrs. Rutherford be notified to raze and remove the building at once. This notice was served on her the following day. On March 7th she made application to the board for a permit to repair and restore the building, but on the following day this application was denied, and she proceeded shortly thereafter to tear down and remove the building in accordance with the notice which had been served upon her.

The contention of Mrs. Rutherford was that she sustained a total loss of the building as the result of the fire; that before the fire occurred she had a building full of tenants bringing her in an annual income of $5,000; that after the fire, and as a result thereof, the building was uninhabitable and in such a condition that it had to be torn down. The contention of the defendants was that Mrs. Rutherford had not sustained a total loss as a result of the fire; that the fire, as a matter of fact, had caused but little damage; and that it had merely revealed, and not caused, the condition which led to its being torn down. An agreement was entered into between Mrs. Rutherford and the companies, in which the sound value of the building prior to the fire was fixed at $21,000, and the physical damage to the building was fixed at $4,000, but with the express reservation on the part of Mrs. Rutherford that she should not be precluded thereby from claiming a total loss under the policies.

The policies were in the standard form. Defendants rely particularly upon the language of the insuring clause, which provides that the company "does insure Laura W. Rutherford and legal representatives to the extent of the 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 within a reasonable time after such loss or damage, without allowance for any increased cost of repair or reconstruction by reason of any ordinance or law, regulating construction or repair and without compensation for loss resulting from interruption of business or manufacture, * * * against all direct loss and damage by fire." They also rely upon the clause as to hazards not covered as follows: "This company shall not be liable for loss or damage caused directly or indirectly by invasion, insurrection, riot, civil war, or commotion, or military or usurped power, or by order of any civil authority."

Defendants admitted liability under the policies for the sum of $4,000, the amount of the physical damage agreed upon, and the court directed a verdict for that amount. This writ of error, therefore, presents but one point for our consideration: Was there sufficient evidence to go to the jury on the question of total loss? We think that there was.

The question in the case, which is one of fact, is whether, as a result of the fire, the building was so damaged that it could not be repaired under the building laws of the city, and consequently had to be torn down, or whether the fire merely...