The Commonwealth Insurance Co. v. Sennett, Barr & Co.

• Decision Date: 25 October 1860
• Citation: 37 Pa. 205
• Parties: The Commonwealth Insurance Company <I>versus</I> Sennett, Barr & Co.
• Court: Pennsylvania Supreme Court

37 Pa. 205

The Commonwealth Insurance Company versus Sennett, Barr & Co.

Supreme Court of Pennsylvania.

October 25, 1860.

ERROR to the Common Pleas of Erie county.

W. A. Galbraith, for plaintiff in error, contended, 1. That the measure of damages on a fire policy, is the actual value of the property at or immediately before the happening of the loss: Parsons's Merc. Law 530; Angell on Ins. §§ 264, 265; Hoffman v. The Western Marine and Fire Ins. Co., 1 La. Am. Rep. 216.

2. That, even if the rule were different in law, it would not control the stipulations made by the parties in the contract of insurance, which, in this case, fixed the mode of valuing the loss and the time when the valuation was to be made: Broom's Maxims 439; Trask v. State Ins. Co., 5 Casey 198; N. Western Ins. Co. v. The Phœnix Oil and Candle Co., 7 Casey 448.

Church & Marshall, for defendants in error, argued that the policy was an open one — the loss total, and the liability in the policy limited to $3000 — that, under these circumstances, the measure of damages should be the actual cost of the materials used, and of putting them together, which was the real subject sought to be protected by the insurance. The actual amount of cash required to restore them to the insured party, is the loss which was sustained: Park on Ins., ch. 6, p. 132; Niblo v. N. A. F. Ins. Co., 1 Sand. 551; Gahn v. Brown, 1 Johns. Cases 120; Leroy v. W. Ins. Co., 7 Johns. Rep. 343; Ogden v. Columbian Ins. Co., 10 Johns. Rep. 273; 1 Phillips on Ins. 321.

The opinion of the court was delivered, October 25th 1860, by THOMPSON, J.

There is nothing in the policy of the law which abridges the right and power of parties to a contract of insurance from stipulating in regard to the mode and manner of estimating or valuing a loss when it shall occur, or as to the time which shall be the period of the valuation of the property destroyed, or such other matters within the scope of a fair transaction as they may see proper. Insurance is a contract of indemnity, and if the parties stipulate for the manner in which that indemnity shall be made, on the contingency of liability, it is their right to do so, and the law will carry out their contracts as made, if there be no fraud in them, as in other cases: Trask v. The State Fire and Marine Ins. Co., 5 Casey 198; North-Western Ins. Co. v. Phœnix Oil and Candle Co., 7 Casey 448.

Mr. Phillips, in his Treatise on Insurance, cap. 1, § 3, says: "The indemnity intended in insurance is not the putting the party insured into as good a condition as he would in fact have been if no loss had happened; it means the repayment of the expense incurred, and the payment for as much of the insured subject as is lost, at its market value, or its value as agreed upon in the policy."

The policy in this case was an open one, as contradistinguished from a valued policy, and in it the parties have chosen to fix for themselves the standard of valuation, and have stipulated that it should be the "true actual cash value of the property," and the time for ascertaining such value to be the date of its injury or destruction by fire. Now, unless it can be shown that they had not the right so to contract, or have used terms possessing some other than their ordinary meaning and import, this basis for estimating the loss thus established, must control and govern. It is the law of the contract established by the parties themselves. Nothing has or can be shown, we think, to countervail their right so to contract in...