Tilley v. Camden Fire Ins. Ass'n

• Decision Date: 30 June 1916
• Docket Number: 21989
• Citation: 72 So. 709,139 La. 985
• Parties: TILLEY v. CAMDEN FIRE INS. ASS'N. In re TILLEY
• Court: Louisiana Supreme Court

72 So. 709

139 La. 985

TILLEY v. CAMDEN FIRE INS. ASS'N.

In re TILLEY

No. 21989

Supreme Court of Louisiana

June 30, 1916

Rehearing Denied October 16, 1916

SYLLABUS

(Syllabus by the Court.)

The assured, whose building is totally destroyed by fire, has no right to waive the benefit of the statute (Act No. 135 of 1900, and Act No. 187 of 1908) abolishing the three-quarter value clause, and agree to an adjustment on the basis of three-fourths of the value of the property destroyed, to the prejudice, and without the knowledge or consent, of a mortgage creditor in whose favor the policy contains a rider to the effect that any loss or damage ascertained and proven to be due the assured under the policy shall be payable to the mortgagee as his interest may appear.

When the proof of loss, prepared by the insurance company's adjuster, shows upon its face that the loss due the assured is the full amount of the policy of insurance notwithstanding the insured has, through error of law, consented to settle on the basis of three-fourths of the value of the property, the mortgage creditor, in whose favor the policy bears a loss payable clause, is not required to bring a direct action to set aside the adjustment and settlement agreed to by the insured, before suing the insurance company for the full amount due under the policy.

If the insurance company arbitrarily refuses to pay the amount which its adjuster has admitted to be due under a policy of fire insurance, except as a full and final settlement, the company is liable for 12 per cent. statutory damages on the full amount adjudged to be due under the policy and a reasonable attorney's fee, according to section 3 of Act No. 168 of 1908.

Elias Goldstein, of Shreport, for relator.

J. S. Patterson, of Dallas, Tex., and J. S. Atkinson, of Shreveport, for defendant.

OPINION

O'NIELL, J.

On the 20th of May, 1913, the defendant company issued a policy of insurance to N. G. Stinson for $ 1,350 on his residence in Shreveport. Attached to the policy was a rider or loss payable clause in favor of the plaintiff, mortgagee, as follows, viz.:

'It is agreed that any loss or damage ascertained and proven to be due the assured under this policy shall be held payable to Dr. R. D. Tilley, as interest may appear, subject, however, to all the terms and conditions of this policy.'

The policy was delivered to the mortgagee, Dr. R. D. Tilley, at the time it issued, and remained in his possession until he filed this suit.

The building insured was totally destroyed by fire, from an unknown cause, about the 1st of January, 1914. The insurance adjuster to whom the adjustment of the loss was submitted by the insurance company had an appraisement made of the cash value of the building destroyed, prepared the proof of loss on a blank furnished by the insurance company, and sent it to Dr. Tilley, with instructions to forward it to Stinson, who resided in Arkansas. Without examining or paying particular attention to the document, Dr. Tilley forwarded it to Stinson, with the letter from the adjuster.

It appears that, in preparing the proof of loss, the adjuster subtracted 5 per cent. from the original cost or value of the building, and put down the remainder, in the column under the printed heading, 'Cash Value,' $ 1,412.61. He put the same figures, showing a total loss, under the column headed 'Whole Loss,' $ 1,412.61. He put the amount of the policy in the column intended to show the total amount of all concurrent insurance, under the printed heading, 'Whole Insurance,' $ 1,350; and, there being no other insurance on the property, he put the same figures in the next column, under the printed heading 'Amount Named in this Policy,' $ 1,350. In the next and last column, intended for the figures showing the amount due under each policy, under the three-quarter value clause, or where the amount due is, for any reason, less than the face of the policy, the adjuster put down three-fourths of the cash value of the property, under the printed heading, 'Amount Claimed under this Policy,' $ 1,059.46.

Stinson, not knowing that, under Act No. 135 of 1900 and Act No. 187 of 1908, he was entitled to the full amount of the insurance on the property totally destroyed, did not complain of the adjuster's having invoked the three-quarter value clause, but accepted the figures as correct, except that he thought he was entitled to a return of the unearned premium amounting to $ 7.84. Accordingly the proof of loss was returned to the adjuster, with the request that the amount of the unearned premium be added. It appears that, in the meantime, on account of his absence from the state and as a matter of convenience, Stinson gave a power of attorney to Dr. Tilley to effect a settlement with the insurance company. The adjuster prepared another proof of loss corresponding with the one returned to him by Stinson, except that, by adding the amount of the unearned premium, $ 7.84, the amount in the column headed 'Amount Claimed under this Policy' was written $ 1,067.30. The document was then sent by the adjuster to Dr. Tilley, who, without examining or paying particular attention to it, forwarded it to Stinson, who signed it and returned it to the adjuster. On receipt of the proof of loss signed by Stinson, the insurance company sent to their local agent a check made payable to N. G. Stinson and R. D. Tilley jointly, for $ 1,067.30. In the meantime, Dr. Tilley had learned that the adjuster had, without any right, deducted one-fourth of the cash value of the property from the face of the policy; and he so informed Stinson, who appears to have known that the deduction was made, but did not know that the law had abrogated the three-quarter value clause in cases of total destruction of a building. Therefore, when the local agent notified Dr. Tilley that he had a check for $ 1,067.30, Dr. Tilley declined to accept it, and insisted on the company's paying the full amount of the insurance, $ 1,350. The matter was referred by the agent to the adjuster, who corresponded with Dr. Tilley in an effort to effect a settlement. As a compromise, Dr. Tilley proposed to the adjuster that he might persuade Stinson to consent to a deduction of $ 74.24, that is, 5 per cent. of the original cost or value of the building, if the company would settle on that basis; but the proposition was ignored by the adjuster. Dr. Tilley and Stinson then submitted the matter to their attorney, with instructions to collect the full amount of the policy. In response to the attorney's demand for payment, the adjuster wrote that he considered the matter closed by Stinson's having signed the proof of loss for $ 1,067.30, in full settlement, and said that, if the attorney desired to institute a suit, it would only be necessary for the company to file the proof of loss in court to defeat the action. He suggested that the attorney had dictated his letter in haste and without looking into the law on the subject, and that, after a review of the same, he, the attorney, would concede that a suit on the policy would only result in incurring costs for his clients. Thereafter the adjuster proposed to pay the attorney of Stinson and Dr. Tilley a fee of $ 75, which the attorney promptly refused.

The attorney then wrote the adjuster, requesting that the company pay the amount which the adjuster had admitted to be due, $ 1,067.30, with reservation of the right of Dr. Tilley and Stinson to sue for the difference between the amount paid and the amount of the policy, in accordance with a provision in section 3 of act No. 168 of 1908. The company declined to pay the amount admitted by the adjuster to be due under the policy, unless it should be accepted by Dr. Tilley and Stinson in full and final settlement of all claims under the policy. The attorney then replied that, unless he received payment for the full amount of the policy, he would file suit on the 25th of May, 1914.

This suit was filed on the 25th of May, 1914, more than 60 days after Stinson had signed and returned the proof of loss. On the day after the suit was filed, the insurance adjuster wrote to the plaintiff's attorney, informing him that the state agents had received instructions from the home office to issue a draft for the face of the policy, rather than contest the claim, and that the draft would be forwarded to the local agent for $ 1,350 as soon as it could be put through the home office. The attorney replied that the offer was made too late; that he had given due notice of the exact date on which the suit would be filed unless the amount demanded was paid, and had taken it for granted that the adjuster would not recede from his decision to insist upon enforcement of the three-quarter value clause. The attorney therefore, demanded, in addition to the amount of the policy, 12 per cent. statutory damages and what he considered a reasonable attorney's fee, in accordance with the provisions of section 3 of Act No. 168 of 1908. Although he had demanded a fee of $ 250 in the suit, he consented to accept a fee of $ 100 if the company would pay the full amount of the policy and 12 per cent. statutory damages. The letter from the adjuster, offering to pay the full amount of the policy, was offered in evidence by the defendant's attorney for the sole purpose of showing that the company had not been arbitrary, and as a defense to the demand for damages and attorney's fees, in the event that the court should render judgment for the amount of the policy. Plaintiff's counsel objected to the introduction of the letter on the ground...