Snapp v. State Farm Fire & Cas. Co.

• Decision Date: 06 February 1964
• Citation: 388 P.2d 884,36 Cal.Rptr. 612,60 Cal.2d 816
• Court: California Supreme Court
• Parties: , 388 P.2d 884 Kenneth M. SNAPP et al., Plaintiffs and Appellants, v. STATE FARM FIRE AND CASUALTY COMPANY, Defendant and Respondent. L. A. 27283.

Page 612

36 Cal.Rptr. 612

60 Cal.2d 816, 388 P.2d 884

Kenneth M. SNAPP et al., Plaintiffs and Appellants, v. STATE FARM FIRE AND CASUALTY COMPANY, Defendant and Respondent.

L. A. 27283.

Supreme Court of California, In Bank.

Feb. 6, 1964.

Roger Bentley, Beverly Hills, for plaintiffs and appellants.

Bert W. Levit, David C. Bogert and Long & Levit, San Francisco, for defendant and respondent.

PETERS, Justice.

The sole point involved on this appeal is whether, under the circumstances of this case, after the judgment was reversed with directions, and, pursuant to such directions a revised judgment was entered, interest should start to run from the date of the original judgment or from the date of the revised judgment. We have concluded that under the rules announced in Stockton Theatres, Inc. v. Palermo, 55 Cal.2d 439, 11 Cal.Rptr. 580, 360 P.2d 76, in such a case, interest should be awarded from the date of entry of the original judgment.

The problem arises under the following circumstances. The Snapps had a policy of insurance in the amount of $25,000 with the State Farm Fire and Casualty Company, insuring them against all but certain excepted risks not here involved, for any physical loss to certain described real property. During the term of the policy the insured house began to slip due to a faulty fill, and was badly damaged. After the insurance company had denied liability, the insured brought an action for declaratory relief. In that action the questions involved were whether the policy covered the injury involved, and, if so, the extent of liability. The trial court held that the policy covered the injury, that the insured had suffered damage far in excess of the $25,000 limits of the policy, but that the company was only liable to the extent of damage that had occurred up to the termination date of the policy. It fixed such damage at $8,168.25. Judgment was entered for that amount on October 31, 1960. This is the original judgment. Although the trial court limited the recovery, it also found that plaintiffs had actually suffered a loss far in excess of $25,000, the amount of the policy, and, on substantial evidence, found that the damage occurring after the termination date of the policy, for which it denied recovery, was a continuation of the damage that had started during the term of the policy, and was caused by factors existing before the termination date. The Snapps appealed.

The appellate court held that the policy covered the kind of damages suffered. That determination is now final, and is not challenged. The appellate court then held that the insurance company was liable, under the findings, and as a matter of law, not only for the $8,168.25, the amount of damage that and occurred before the termination date of the policy, but was also liable, up to the full amount of the policy, for the damage that occurred after the termination date caused by factors existing and operative before the termination date. Since the findings were explicit that the damage occurring after the termination date exceeded $25,000, and was caused by factors existing and operative before the termination date, the appellate court ruled that, as a matter of alw, the insurance company was liable not only for the $8,168.25 but for the full amount of the policy, that is for $25,000. Instead of directly ordering that the findings and judgment should be modified by increasing the judgment to $25,000, and affirming the judgment as so modified, the appellate court provided '* * * the judgment is reversed with directions to enter judgment for plaintiffs in the amount of $25,000.00.' (Snapp v. State Farm Fire & Cas. Co., 206 Cal.App.2d 827, 834, 24 Cal.Rptr. 44, 48.)

The trial court, acting pursuant to that order, on November 23, 1962, without the taking of further evidence, entered its judgment against the insurance company for $25,000. This is the revised judgment. The trial court, however, over plaintiff's objection, allowed interest only from the date of entry of the revised judgment, that is from November 23, 1962. Apparently, out of an abundance of caution, the trial court also provided that 'said judgment (is) to be without prejudice to the right of plaintiffs SNAPP to appeal from the denial of interest from the date of entry of the original judgment.'

As already pointed out, the sole question now presented is whether interest on $25,000 should be allowed from the date of the original judgment or only from the date of the revised judgment. This in turn depends upon whether the reversal of the original judgment was, in fact and in law, a mere reversal, or was, in fact and in law, a modification. (For a general discussion of the differences between a reversal and a modification see 4 Cal.Jur.2d, Appeal and Error, § 661, p. 543; § 662, p. 546; § 666, p. 550; § 669, p. 558.) The law on this subject was summarized in the Stockton Theatres case, supra, 55 Cal.2d 439, 442, 11 Cal.Rptr. 580, 582, 360 P.2d 76, 78, as follows:

A judgment bears legal interest from the date of its entry in the trial court even though it is still subject to direct attack. Bellflower City School Dist. of Los Angeles (County) v. Skaggs, 52 Cal.2d 278, 280, 339 P.2d 848. When a judgment is modified upon appeal, whether up ward or downward, the new sum draws interest from the date of entry of the original order, not from the date of the new judgment. Beeler v. American Trust Co., 28 Cal.2d 435, 438, 170 P.2d 439; Barnhart v. Edwards, 128 Cal. 572, 575, 61 P. 176; 1 A.L.R.2d 479, 510-512, 520-521. On the other hand, when a judgment is reversed on appeal the new award subsequently entered by the trial court can bear interest only from the date of entry of such new judgment.'

These rules are not challenged by the parties. Thus the question presented is whether the original judgment was 'reversed' or 'modified.'

The respondent insurance company argues that, on the first appeal, the appellate court had the election to reverse or to modify; that it elected to reverse; and that a general reversal, with or without a direction, vacates the original judgment so that there is no judgment in existence until a new judgment is entered in conformity with the remittitur. This position finds some support in the broad and general language of Cowdery v. London etc. Bank, 139 Cal. 298, 73 P. 196. Respondent and the trial court rely on the language appearing in that case, 139 Cal. at page 304, 73 P. at page 197, where it is stated: 'We are bound to assume that this court in this case acted advisedly and deliberately, and had good reason for ordering a reversal rather than a modification and affirmance. The part of the order directing the entry of a new judgment related solely to the proceedings after the reversal and the return of the case to the court below, and was not intended to, nor could it, change the reversal to a mere modification. Neither can the fact that it may now appear to us that the same result could have been reached by a modification justify this court in now changing the effect of the mandate.'

That language, when applied to the facts of the Cowdery case, embodies sound principles of law, but it is much too broad when applied to facts such as are involved in the instant case. In referring to that very language in the Stockton Theatres case, supra, 55 Cal.2d 439, 446, 11 Cal.Rptr. 580, 584, 360 P.2d 76,...