Western Assurance Co. v. Phelps

• Decision Date: 09 April 1900
• Citation: 27 So. 745,77 Miss. 625
• Court: Mississippi Supreme Court
• Parties: WESTERN ASSURANCE COMPANY v. MARY B. PHELPS

27 So. 745

77 Miss. 625

WESTERN ASSURANCE COMPANY v. MARY B. PHELPS

Supreme Court of Mississippi

April 9, 1900

March 1900

FROM the circuit court of Warren county, HON. WILLIAM K. MCLAURIN Judge.

Mary B Phelps, the appellee, was the plaintiff in the court below the Western Assurance Co., the appellant, was defendant there. The suit was upon a policy of fire insurance, issued September 3, 1896, which contained, among others, the following clauses:

"Three-fourth clause.--It is understood and agreed that, for and in consideration of the rate of premium fixed in this policy the assured become a co-insurer with the company to the amount of one-fourth of any loss or damage which may occur to the property hereby insured, and hereby agrees to maintain this proportion throughout, not only the term of this policy, but also any renewal thereof with this company, and in event of other insurance permitted, this company shall be liable only for its proportion of three-fourths of any loss or damage from fire. The assured furthermore covenants and agrees with this company not to insure any item under this application and policy for over three-fourths of its actual cash value during the continuance of this insurance.

"Concurrent insurance clause.--This company shall not be liable under this policy for a greater proportion of any loss on the described property, or for loss by and expense of removal from premises endangered by fire, than the amount hereby insured shall bear to the whole insurance, whether valid or not, or by solvent or insolvent insurers, covering such property, and the extent of the application of the insurance under this policy, or of the contribution to be made by this company in case of loss, may be provided for by agreement or condition written hereon or attached or appended hereto."

There were two trials in the court below. On the first one the verdict and judgment was for defendant, which, upon motion for a new trial, was set aside; on the second trial a peremptory instruction was given for plaintiff, directing the finding of the full sum of the policy, and verdict and judgment having been rendered thereon, the defendant appealed. The opinion of the court shows the contentions.

Affirmed.

Theodore McKnight, for appellant.

Klein, the then agent of the company, and now principal witness for appellee, says that he got the policy from Dr. Phelps after the fire, and that he placed the indorsement thereon allowing additional insurance after the fire.

If the policy was delivered and accepted before the fire, what business had Klein with it after the fire?

Why did Phelps place it in the hands of Klein, the agent of the company after the fire?

The only answer, not speculative and within the record, is that the policy was given to Klein by Phelps for the purpose of having that done which was done, to wit, to place thereon the indorsement allowing additional insurance.

I most respectfully submit that the facts and circumstances above mentioned, together with all the facts and circumstances of record in this case, raise a question of fact which should have been submitted to the jury, as to whether Phelps had notice of the limitation upon the power of the agent to allow additional insurance. Railroad Co. v. Boehme, 70 Miss. 11; Holmes v. Simon, 71 Miss. 245; Tribelte v. Railroad Co., 71 Miss. 212.

The instruction on this feature of the case asked by the appellant and refused by the court, was correct, and should have been given, being supported by the opinion of the court in the case of Rivara v. Ins. Co., 62 Miss. 728, where Judge Arnold said: "The power of insurance agents to bind their companies are varied by the character of the functions they are employed to perform. Their powers in this respect may be limited by the companies, but parties dealing with them as to matters in the real or apparent scope of their agency are not affected by such limitations, unless they had notice of the same. Phoenix Ins. Co. v. Bowdre, 67 Miss. 633.

The peremptory instruction as to the sum awarded plaintiff is in the face of the terms of the policy. See three-fourth clause and concurrent insurance clause.

Miller & Baskin, on the same side.

We call the court's attention to the following authorities as to whether the present policy of insurance was a complete contract: Idaho Forwarding Co. v. Firemans' Funds Insurance Co., 29 P. 826 (8 Utah, 41); Baumgartel v. Insurance Co., 136 N.Y. 547 (32 N.E. 990); National Life Insurance Co. v. Minch, 53 N.Y. 150; Smith v. Insurance Co., 24 Pa. 320; Centennial Mutual Life Association Co. v. Parham, 80 Tex. 518 (16 S.W. 316).

Surely the court below erred in peremptorily instructing the jury to find the entire stun named in the policy for plaintiff. So to do was wholly to ignore the three-quarter clause of the policy and the concurrent insurance clause.

The parties were competent to agree to these clauses as parts of their contract, and the appellee is in no position to deny that they did so agree.

Miller, Smith & Hirsh, for appellee. ^[*]

The act of the legislature of the state of Mississippi, approved March 20, 1896, Laws of 1896), prescribes:

"In suits brought upon policies of insurance against loss by fire, hereafter issued or renewed, the insurer shall not be permitred to deny that the property insured was worth, at the time of issuing the policy, the full value upon which the insurance was calculated. And in case the policy contains a three-quarter valuation clause, the insurer shall not deny that the amount of the policy was but three-fourths of the valuation at the date of its issuance, and the civil rule shall apply, it matters not what proportion the amount of insurance bears to valuation, according to the terms of the policy. In case of total loss of the property, the measure of damages shall be the amount, for which the property was insured. In case of partial loss of damage by fire, the measure of damages shall be in the amount equal to the damage done the property, not to exceed the amount written in the policy, " etc.

In view of this plain declaration of legislative will, insurance companies cannot now be permitted, we respectfully submit, to rely upon the condition in their policies technically known as the three-quarter clause, or similar agreements, to reduce the amount of recovery. These are simply devices to evade the law, and cannot be tolerated.

The insurance company, in accepting a risk, must now determine for itself the valuation of the property. It can insure three-fourths, or one-half, or any proportion of its value, but whatever amount it inserts in its policy is the measure of its liability in the event of total loss, and it cannot escape this responsibility by inserting provisions in its obligations, seeking to impose upon the insured the burden of co-insurer.

When it issues a $ 2, 000 policy and receives the premium therefor, upon a total loss it must pay $ 2, 000, no more and no less. Nor can an insurance company now seek to reduce its indebtedness to the policy holder by conditions diminishing its pecuniary liability in the event of other insurance, to which it has consented. The amount of the policy is practically liquidated damages upon the destruction of the thing insured, and the law, which was enacted to remedy what was considered a mischief or an evil, cannot be impeded, much less defeated, by any contrivances of the insurer, in whatever guise they may appear.

Legislation similar to the statutes in force in Mississippi, has been enacted in other states, and has been the subject of judicial interpretation or construction. One of the leading eases is that of Havens et al. v. Germania Fire Insurance Company et al. (decided by the supreme court of Missouri June 25, 1894), 123 Mo. 403, s.c. 11 Am. Rd. & Corporation Reports, 578, s.c. 27 S.W. 718.

The Missouri statute (§ 6009, Revised Statutes 1879) provided: "Whenever any policy of insurance shall be written to insure any real property, including the building or buildings owned separate from the realty as well as such or a part of the realty, and the property insured shall be wholly destroyed and without criminal fault on the part of the insured, or his assigns, the amount of the insurance written in such policy shall be taken conclusively to be the true value of the property when insured, and the true amount of loss and measure of damages when destroyed."

In that case the court was called upon to determine the validity of five policies of insurance on the "two-story frame shingle-roof building, with additions, and one-story frame engine and boiler house adjoining, occupied as a steam flouring mill in Waldron, Mo." but only four of them embraced "the fixed and movable machinery, shafting, and gearing, except the boiler and engine connections contained in the above described building."

Several of the policies contained a stipulation that "in case of loss the damage should be estimated according to the actual cash value of the property at the time of the loss or fire, which should in no case exceed the cost of replacing or restoring the burned property." The court said: "It is assumed by the appellants, that if the conditions as to the subject-matter of the insurance, and the nature of the loss bring these policies within the terms of this section, then the stipulation of the policy must yield to the statute; and this is not seriously controverted by the insurance companies, their only contention being that the case was without the statute."

The court further said: "The defendant, the insurance company, insists that the statute has no application to cases of concurrent insurance, but governs only in eases of single policy."

It was held: "(1) Where the subject-matter of fire...