Surface v. Northwestern Nat. Ins. Co.

• Decision Date: 12 June 1911
• Citation: 139 S.W. 262,157 Mo. App. 570
• Parties: SURFACE v. NORTHWESTERN NAT. INS. CO.
• Court: Missouri Court of Appeals

139 S.W. 262

157 Mo. App. 570

SURFACE v. NORTHWESTERN NAT. INS. CO.

Kansas City Court of Appeals. Missouri.

June 12, 1911.

Rehearing Denied June 28, 1911.

1. INSURANCE (§ 389) — FIRE POLICIES— THREE-FOURTHS VALUE.

Under Rev. St. 1909, § 7030, prohibiting issuance of fire policies for more than three-fourths of the value of the property, an insurer sued on a policy covering a mercantile stock is estopped to show that the insurance exceeded such limit when the policy issued, but can show the actual value of the property just before the loss, and discharge its liability by paying three-fourths of that amount.

2. INSURANCE (§ 4)—FIRE POLICIES—THREE-FOURTHS VALUE.

Rev. St. 1909, § 7023, prohibiting insurers from requiring insured to become a coinsurer on the property covered, does not affect section 7030, prohibiting issuance of fire policies for more than three-fourths of the value of the property.

Appeal from Circuit Court, Jackson County; Walter A. Powell, Judge.

Action by Charles E. Surface against the Northwestern National Insurance Company. Judgment for plaintiff, and defendant appeals. Reversed and remanded.

Fyke & Snider and Scarritt, Scarritt & Jones, for appellant. Reed, Atwood, Yates, Mastin & Harvey, for respondent.

JOHNSON, J.

This suit is on a policy of fire insurance of $3,000, issued by defendant to R. L. Cornett, on a stock of general merchandise at Braymer. The policy was issued October 23, 1909, and the property was damaged by fire January 21, 1910. After the fire and before the commencement of this suit, Cornett, for a valuable consideration, assigned the policy and his cause of action thereon to plaintiff.

In the petition plaintiff prayed judgment for the face of the policy and interest, for $300 damages for vexatious refusal to pay the loss, and for $600 attorney's fees incurred on account of such vexatious refusal. In the answer defendant admitted liability under the policy in the sum of $2,188.55, and denied any further liability. The amount in controversy between the parties before the institution of this suit was $811.45, the difference between $3,000, the face of the policy, and $2,188.55, the amount of the liability acknowledged by defendant, and the subject of the controversy was and is the "three-fourths value clause" attached as a rider to the policy.

A trial of the issues made by the pleadings resulted in a verdict and judgment for plaintiff in the sum of $2,973.54 on account of the loss, and of $287.20 allowed as damages for the vexatious refusal of defendant to pay the loss. Defendant appealed.

When the policy in suit was issued, Cornett had other policies aggregating $17,000 covering his stock, and this policy brought his total insurance to $20,000, and it remained at that sum to the date of the fire. Much of the argument of counsel for defendant is based on the assertion that between the date of the policy before us and the date of the fire Cornett increased his insurance without the consent of defendant, but this contention is not supported by the evidence, which shows conclusively that the only policies received by Cornett in that period were renewal policies that did not increase the total sum of the insurance carried on the stock. The three-fourths value clause which, as stated, is the subject of controversy, is as follows: "Three-Fourths Value Clause. It is part of the consideration of this policy, and the basis upon which the rate of premium is fixed, that in the event of loss, this company shall not be liable for a greater amount than three-fourths of the actual cash value of the property covered by this policy at the time of such loss, and, in case of other insurance, whether policies are concurrent or not, then for only its pro rata proportion of such three-fourths value. Total insurance permitted is hereby limited to three-fourths of the actual cash value of the property hereby covered, and to be concurrent herewith."

Immediately after the fire, a representative of defendant and Cornett entered into a written agreement, styled a "nonwaiver agreement," the gist of which appears in the following excerpt:

"In accordance with the within agreement, it is hereby agreed and determined that the sound value of the property immediately preceding January 21, 1910, and the loss and damage which occurred on that date is as follows:

                   Item.         Property.    Sound Value.    Loss and
                                                               Damage
                1st and only      Stock       19,453.82       18,787.08
                

"It is further agreed that the above stipulation as to sound value and loss and damage is not a promise to pay any sum whatsoever and that it creates no liability on the part of the insurance companies signing this agreement, nor does it waive nor invalidate any rights whatever of any party to this agreement."

It appears in evidence that Cornett was doing business as a general merchant; that during the time the policy was in force he added new goods to his stock, costing $3,635.44, and that his total sales on which he realized an average gross profit of 40 per cent. were $6,472.09.

Considered apart from any influence the statutory laws may have over the interpretation and enforcement of the three-fourths clause, the language of that stipulation which the parties incorporated in their contract is clear and unambiguous, and the purpose intended to be subserved is one the courts uniformly have commended as most salutary. To prevent the...