Third Nat. Bank v. American Equitable Ins. Co. of New York

• Decision Date: 10 July 1943
• Citation: 178 S.W.2d 915,27 Tenn.App. 249
• Parties: THIRD NAT. BANK v. AMERICAN EQUITABLE INS. CO. OF NEW YORK et al.
• Court: Tennessee Court of Appeals

178 S.W.2d 915

27 Tenn.App. 249

THIRD NAT. BANK v. AMERICAN EQUITABLE INS. CO. OF NEW YORK et al.

Court of Appeals of Tennessee, Middle Section.

July 10, 1943

Certiorari Denied by Supreme Court November 20, 1943.

Appeal in Error from Chancery Court, Davidson County; Thomas A Shriver, Chancellor.

Bill by the Third National Bank, executor of the estate of Jordan Stokes, Sr., against the American Equitable Insurance Company of New York and another to recover on fire policies for partial loss by fire of a house. From a decree, complainant and defendants appeal in error.

Affirmed and decree entered for complainant in accordance with opinion.

Where there was a legitimate difference between parties as to amount of loss sustained by fire, and insurers as authorized under fire policies demanded an appraisal, and neither party was satisfied with the award which was set aside without objection, chancellor did not err in refusing to allow statutory penalty against insurers. Code 1932, § 6434.

Jordan Stokes, Jr., J. G. Lackey, and James W. Stokes, all of Nashville, for Third Natl. Bank, executor.

Keeble & Keeble, of Nashville, for American Equitable Ins. Co. of New York and Sussex Fire Ins. Co. of Newark, N. J.

FELTS Judge.

The Third National Bank, executor of Jordan Stokes, deceased brought this suit on two fire insurance policies to recover for partial loss by fire of a house at 1713 West End Avenue, Nashville, the former residence of Mr. Stokes.

Both the policies were issued to him by defendant Sussex Fire Insurance Company of Newark, New Jersey, one of them being for $3,500 and the other for $4,000. Defendant American Equitable Insurance Company of New York also assumed the obligation of the policies. Mr. Stokes died October 13, 1938, and his executor, the complainant, had charge of the property when the fire occurred March 18, 1940.

The parties disagreed as to the amount of the loss, complainant's estimate being $8,344.13 and defendants' estimate $2,606.88. Complainant made proof of loss in the sum of its estimate, and defendants objected to it on the ground that it was excessive and on other grounds. They demanded an appraisal, and the appraisers likewise disagreed, the one appointed by complainant appraising the loss at $8,150.63 and the one appointed by defendants and the umpire appraising it at $5,802.32.

On March 17, 1941, complainant filed the bill attacking the award upon numerous grounds, one of them being that defendant's adjuster had intermeddled with the appraisers. The bill charged that defendants had acted in bad faith in refusing to adjust and pay the loss; and a recovery was sought for the full amount of the policies, interest, and the statutory penalty.

In their answer defendants did not rely on the award or insist that it was valid, but stated that they had tried in good faith to adjust the loss and were ready and willing to pay whatever amount the court should find to be the loss. They denied that they had been guilty of bad faith and that complainant was entitled to interest or the penalty.

Chancellor Wade set aside the award. The cause was tried twice below; the first trial was before Chancellor Wade and a jury. The jury reported the amount of the loss to be $7,000. Upon defendants' motion for a new trial, Chancellor Wade suggested a remittitur of $750. Complainant refused to accept the remittitur and the chancellor granted a new trial.

The second trial was before Chancellor Shriver and a jury. He submitted to the jury this issue: "What was the amount of all the direct loss or damage caused by the fire in question to complainant's property located at 1713 West End Avenue, City of Nashville, said property consisting of a twostory brick dwelling house." The jury answered "$6,988.00." Upon the verdict he entered a decree in favor of complainant for $6,988, with interest from March 17, 1941, $485.61, aggregating $7,473.61 and the costs.

Both parties moved for a new trial, which motions were overruled; and both appealed in error. All matters complained of relate alone to the second trial, no question having been saved upon the first trial. We first consider the questions made by defendants' assignments of error.

Defendants insist that the chancellor erred in submitting only the one issue above quoted and in declining to submit to the jury these five issues:

"1. What would have been the cost of replacement or repair using materials of like kind and character?

"2. What was the amount of the depreciation from any cause?

"3. What was the market value of the property before the fire?

"4. What was the market value of the property after the fire?

"5. What was the actual cash value of complainant's loss after deductions for depreciation however caused?"

As stated, defendants' answer admitted liability, and disputed merely the amount claimed by the bill. Apart from the questions of interest and penalty, the only issue upon the pleadings was the amount of the loss.

Defendants, however, contend that under the policy provisions this issue should have been split up into the five issues tendered by defendants, and that each of such issues should have been submitted by the chancellor to the jury.

Only one of the policies is in the record, the other having been mislaid; but it is stipulated that both were the same except the amounts and dates. In the one before us the company insured Jordan Stokes, Sr., for three years (May 3, 1937 to May 3, 1940) "against all direct loss or damage by fire or lightning, except as hereinafter provided, to an amount not exceeding" $3,500, to the house; and it contained the standard form, the part of it relied on by defendants being as follows: "This company shall not be liable beyond the actual cash value of the property at the time any loss or damage occurs, and the loss or damage shall be ascertained or estimated according to such actual cash value, with proper deduction for depreciation however caused, and shall in no event exceed what it would then cost the insured to repair or replace the same with material of like kind and quality * * *."

And the company had the option "to repair, rebuild, or replace the property lost or damaged with other of like kind and quality."

These provisions related to details for arriving at the amount of the loss. They limited liability to the actual cash value of the property; provided the loss should be estimated according to such value, with proper deduction for depreciation, and should not exceed the cost of repair or replacement; and gave the company the option to repair or replace the property in kind. Thus "actual cash value," "depreciation," and cost of repair or replacement were factors in ascertaining the amount of the loss; but they were only parts of that issue. The chancellor instructed the jury to consider these matters in solving that issue; and it is not claimed that such instructions were not ample and adequate. While it was proper for the jury to consider the evidence as to these several details, we think it would not have been proper to split up the issue into such details and call on the jury for answers to each of them. Such answers, as the chancellor observed, would have left him still "at sea" as to the amount of the loss for which defendants were liable.

The constitutional guaranty of trial by jury, article 1, § 6, refers to actions at law. In suits in equity the right of trial by jury exists only to the extent provided by our statutes, Code sections 10574-10580. Hunt v. Hunt, 169 Tenn. 1, 10, 80 S.W.2d 666, 669. Under these sections the jury does not try the whole case or render a general verdict for one party or the other. It tries only the disputed "issues" submitted to it in the form of questions, and answers them "Yes" or "No," or states the amount or value when the question calls for that. If the chancellor approves such answers, he takes them as the truth of the facts in dispute, and decides the case upon them, the undisputed facts, and the applicable law. Carpenter v. Wright, 158 Tenn. 289, 13 S.W.2d 51; Mutual Life Ins. Co. v. Burton, 167 Tenn. 606, 72 S.W.2d 778.

The proper practice in formulating and submitting issues has been set out in a number of decisions of our Supreme Court. It is the duty of the chancellor to see that none but proper and material issues are submitted to the jury. No question can be a proper issue unless it has been made an issue by the pleadings and the evidence; and no issue is material unless the answer to it is necessary to a decision of the case. Otherwise stated, a material issue is one which is determinative of the whole case or a distinct branch of it. All points of evidence, however numerous, going to prove a material issue should be included and covered by that issue and not submitted separately as so many different issues. McElya v. Hill, 105 Tenn. 319, 59 S.W. 1025; Crisman v. McMurray, 107 Tenn. 469, 64 S.W. 711; Cooper & Keys v. Bell, 127 Tenn. 142, 146, 153 S.W. 844, Ann.Cas.1914B, 980; Wright v. Jackson Const. Co., 138 Tenn. 145, 149, 196 S.W. 488.

In McElya v. Hill a vendee sought to rescind a sale for fraud of the vendors. Complainant's solicitor tendered some 20 issues making each piece of the proof of fraud the basis of a separate issue. The chancellor, however, taking the view that all of them were merely parts of the issue of whether there was fraud in the sale, submitted only this one issue to the jury. This was held proper. The Court said: "We have carefully examined the 19 issues tendered by complainant's solicitor, and find that many of them were wholly immaterial, and that none of them went to the whole case. The gravamen of complainant's suit for rescission was fraud, which question was to be determined upon a consideration of all the facts...