Gowans v. Northwestern Pacific Indemnity Co.

489 P.2d 947 (1971) Shelley M. GOWANS and Patricia Y. Gowans, Appellants, v. NORTHWESTERN PACIFIC INDEMNITY COMPANY, Respondent. Supreme Court of Oregon. Argued and Submitted September 13, 1971. Decided October 20, 1971. Rehearing Denied December 30, 1971. *948 Gerald R. Pullen, Portland, argued the cause for appellants. With him on the brief was Martin J. Howard, Portland. Edward H. Warren, Portland, argued the cause for respondent. With him on the brief were Hershiser, Mitchell & Warren, Portland. Before O'CONNELL, C.J., and McALLISTER, HOLMAN, TONGUE and HOWELL, JJ. TONGUE, Justice. This is an action against an insurance company under a policy insuring for "loss by theft" to recover money paid by the insured as a reward for the return of stolen jewelry covered by the policy. Defendant admitted the theft of the jewelry and payment of the reward for its return, but denied that plaintiffs were entitled to recover the amount of that payment as a "loss by theft." It is stipulated that both the value of the stolen jewelry and the amount of the reward paid for its return were in excess of the $2,000 limit of the coverage provided by the insurance policy. The case was tried before the court, sitting without a jury. Plaintiffs appeal from an adverse judgment based upon the conclusion that the money paid by plaintiffs as a reward for recovery of the stolen jewelry was paid voluntarily and with knowledge that defendant would not participate in offering such a reward and was not a "loss by theft" under the terms of the policy. Neither party has cited any case directly in point and we have found none. We must, therefore, examine this insurance policy to determine whether plaintiffs' claim is within its coverage. In doing so we must apply the rule that if the terms of an insurance policy are clear and unambiguous the insurance company is entitled to have it enforced as written (Ausman v. Eagle Fire Ins. Co., 250 Or. 523, 530, 444 P.2d 18 (1968)), but that if the terms of an insurance policy are ambiguous, any reasonable doubt as to the meaning of such terms will be resolved against the insurance company and in favor of the insured. Farmers Mut. Ins. Co. v. United Pac. Ins. Co., 206 Or. 298, 305, 292 P.2d 492 (1956). In our view, the term "loss by theft" is legally ambiguous in that, depending upon the intent of the parties in the use of that term, it can be given either a narrow meaning, so as to be limited to the value of the property stolen, or a broad meaning, so as to extend to all loss resulting from theft of the insured property. In the absence of any evidence to the contrary, we are constrained to hold that at least a reasonable doubt exists whether by the use of that term the parties intended to adopt such a narrow and limited meaning, rather than such a broad and liberal meaning, and we therefore must resolve that doubt in favor of the insured. It is an established rule of insurance law that where a peril specifically insured against sets other causes in motion which, in an unbroken sequence and connection between the act and final loss, produces the result for which recovery is sought, the insured peril is regarded as the proximate cause of the entire loss. 5 Appleman, Insurance Law and Practice 309, § 3083. It is our opinion that in this case the payment by plaintiffs of a reward for recovery of their jewelry was a natural and direct consequence of the theft of the *949 jewelry and followed naturally, although indirectly, from that act under the facts of this case and in the absence of evidence to the contrary. It is also our opinion, under these facts, that the dominant cause of the loss incurred by plaintiffs as a result of the payment of that reward was the theft of the jewelry. Accordingly, we hold that plaintiffs are entitled to recover that amount from defendants as the measure of their "loss" from the theft of their jewelry. If stolen goods are later recovered, but damaged, the expense incurred by the insured to restore them to their former condition is ordinarily recoverable, although specific policy provisions may be controlling in such cases. See 15 Couch, Insurance 2d 464, § 54:243, and Housner v. Baltimore-American Ins. Co., 205 Wis. 23, 236 N.W. 546 (1931). Similarly, the expense incurred by the insured in recovering stolen goods is also ordinarily recoverable, although, again, specific policy provisions may be controlling. See 6 Appleman, Insurance Law and Practice 243, § 3885, and Alamo Casualty Co. v. Laird, 229 S.W.2d 214, 218 (Tex.Civ.App. 1950). For the same underlying reasons, it is our opinion that when stolen goods may be recovered by the advertisement of a reward, as in this case, the expense incurred by the insured in the payment of such a reward is a "loss by theft," in the absence of specific policy provisions to the contrary. It is reasonable to infer in this case that plaintiff would not have recovered the jewelry if the reward had not been offered and paid, so as to require the company to pay $2,000 to plaintiff for such an admitted "loss by theft." It follows, in our judgment that upon payment of the reward and recovery of the jewelry plaintiff suffered a "loss by theft" to the extent that the reward paid was within the coverage limits. That the reward was offered by defendant with knowledge that the company would not participate also provides no defense, in our judgment, at least where, as in this case, there is no contention that the amount paid was an unreasonable amount. Indeed, it was stipulated that the value of the goods exceeded the amount of the reward and that the amount of the reward exceeded the limits of the insurance coverage. Similarly, the fact that an insurance company refused to pay the expense of repairing or otherwise recovering stolen goods, with the result that such expense was paid "voluntarily" by the insured, would provide no defense in such a case, at least in the absence of contention that the amount paid was not a reasonable amount. The trial judge, in holding to the contrary, relied upon Oppenheimer v. Baker & Williams, 225 App.Div. 58, 232 N.Y.S. 5 (1928), one of the two cases cited by plaintiffs. We have read that case and do not consider it to be directly in point. That decision was based primarily upon an interpretation and application of the rights and duties of the insured under a "sue and labor clause" of the policy involved in that case. Such a clause was not included in the policy here under consideration. We have also considered the provision of this policy relating to expenses incurred by the parties in the event of the recovery of property after settlement of a loss. We conclude that it has no application in this case, but that, if anything, it confirms the result of this decision. Defendant's brief on the appeal of this case has cited no cases on the merits of this issue, but relies solely on the contention that in the appeal of this case plaintiffs, instead of filing a transcript of testimony, elected to file a "narrative statement" under the provisions of ORS 19.088 and in that statement stipulated, among other things, that payment of the reward did not constitute a "theft loss" under the policy of insurance. Prior to the argument of this appeal plaintiff's attorneys filed a motion to strike that particular paragraph from the narrative statement upon the ground that it was included by inadvertence and mistake. By *950 affidavit they would excuse such inadvertence by the statement that the "narrative statement" consisted of a copy of the "findings of fact" by the trial judge, in which he had improperly included such a statement, although properly constituting a "conclusion of law," rather than "a finding of fact." Although we do not condone such carelessness by counsel, we have previously held that in the interests of justice this court may, in its discretion, relieve a party from the consequences of a stipulation entered into through mistake or inadvertence. See Kelty v. Fisher et al., 101 Or. 122, 126, 199 P. 192 (1921). See also City of Salem v. Trussell, 3 Or. App. 465, 474 P.2d 371 (1970), and Johnson v. Northwest Acceptance, Or., 92 Adv.Sh. 1045, 1049, 485 P.2d 12 (1971). For all of these reasons, the judgment of the trial court is reversed and this case is remanded with instructions to enter judgment in favor of plaintiffs in the sum of $2,000. O'CONNELL, Chief Justice (dissenting). It is my opinion that money paid by the insured as a reward for the return of the stolen property covered by the policy does not constitute a "loss by theft." I do not think that it is reasonable to construe the policy as binding the insurer to pay an amount of money which would be left entirely to the discretion of the insured and which he might fix on the basis of factors having no objective standard. Thus, the insured might offer a large reward because the stolen property had a sentimental value to him. Since the insurer is obligated to pay for the loss by theft, it would be more reasonable to assume that the insurer rather than the insured would have the right to decide whether it wished to attempt to recoup its loss by offering a reward. I would adopt the view taken by the trial judge and affirm the judgment.