Farmers' Mutual Insurance v. Graybill

Tlie opinion of the court was delivered, July 2d 1873, by Sharswood, J. — It is clear both upon principle and authority, that by sale of the premises insured under the proceedings in the Orphans’ Court, there was no such alienation before confirmation as avoided the policy ; and the loss having occurred between the sale and the confirmation, the legal title was then in the heirs of Forney, and the action on the policy was rightly brought in the name of the administrator to the use of the vendee: Insurance Company v. Updegraff, 9 Harris 513; Reed v. Lukens, 8 Wright 200; Hill v. Cumberland Valley Mutual Protection Co., 9 P. F. Smith 474. It is equally clear that the vendee had sufficient interest to entitle him to give notice to the company of thp loss. As was well remarked by the learned judge below, if the clause be literally taken, in case the member insured was dead at the time of the fire, no one could give notice. His personal representative, succeeding to his legal right as covenantee, is a trustee for the heirs of the vendee, and either the trustee or the cestui que trust sufficiently represent the party for that purpose. In the case before us, it appeared that both joined in the notice, which was received by the secretary of the company without objection. It must he conceded that there is some difficulty as to the legal construction of the agreement given in evidence, signed among others, by the insured member, Graybill B. Forney. This paper was drawn up in pursuance of certain resolutions of the directors of the insurance company, to a copy of which it is attached. The whole must be considered as one instrument, and be construed together. The principle intended to he adopted by the company, was that every member insured, should stand his own insurer to the extent of one-fourth of any loss which should occur. This was for the safety of the company, to induce care as well as honesty on the part of the insured, as he must himself be a loser by every fire, and could not throw- his entire loss upon the insurers. The sixteenth section of the by-laws had declared, that not more than three-fourths of the actual cash value of any building or property should be insured. In all cases of total loss, this accomplished the purpose. But it is evident, that when the loss was only a partial one, the insured might still claim his entire loss, provided it did not exceed the sum insured. This was not their meaning, and it did not secure the result at which they aimed. The directors, therefore, adopted a resolution that, in all policies thereafter issued, it should be plainly stipulated and expressed that only three-fourths [24] of the actual loss should be paid by the company, and also resolved that the assent of the holders of existing policies should be procured to this as the true construction of their contracts. The agreement, however, which was to carry out this last resolution, was not confined to the exact words of the directors, but added a clause which has given rise to the question here. By it the subscribers “ agree that (to avoid all doubt and difficulty) in case any loss should occur to our respective properties by fire, wTe will only claim and receive three-fourths of the amount of the actual loss, provided three-fourths of the amount, as aforesaid, does not amount to more than three-fourths of the sum insured.” It is plain that the insertion of this proviso was altogether unwarranted by the resolutions, and had the directors been so inclined, they might have repudiated the entire agreement in consequence of it. But they have approved it, and now insist that it is to be construed as if it had read “ provided, and it is further agreed, that in no case shall any more than three-fourths of the sum insured be paid.” .That is, if a person having exempli gratia, a property, the cash value of which is $4000, has insured it according to the sixteenth by-law for $3000, if the entire property is consumed by fire, he shall be entitled to receive, not three-fourths of his actual loss, namely, $3000, but only $2250. Yet if he suffers only a partial loss of $3000, he shall still be entitled to recover the same sum of $2250. Instead, then, of the insured being limited to three-fourths of his actual loss when his loss is total, on the construction now contended for, he is entitled only to three-fourths of three-fourths or nine-sixteenths, little more than one-half. This could not have been the intention of the parties, and it is not the proper grammatical construction of the writing. A simple proviso, without other words extending its operation, so as to make it a distinct and independent covenant, is a condition on the performance of which the validity of the deed or writing depends: Wharton’s Law Lexicon, ad verbum. The agreement was not, therefore, to apply where three-fourths of the amount of the actual loss shall exceed three-fourths of the sum insured. In the case before us, three-fourths of the actual loss does amount to more than three-fourths of the sum insured. The agreement then is inapplicable. The insured is entitled to recover the w'hole sum insured, but as, by the sixteenth by-law, this is only three-fourths of the actual value, the spirit of the agreement is maintained. This must be so in every total loss, the sum insured being only three-fourths of the actual cash value, the loss must of necessity be more than three-fourths of the sum insured. We hold the agreement not to have been intended to reach the case of a total loss, already provided for sufficiently by the sixteenth by-law. It is to be observed also, that the agreement was executed to give a construction to the existing contracts, not to make an entirely new rule. It declares that it is “ to avoid doubt or diffi [25] culty.” Now, the construction of the contract in connection with the by-laws, was without doubt or difficulty, in case of total loss. The insured bore one-fourth of it, which, upon a fair interpretation of the whole paper, resolutions and agreement, was what we think was intended. What the effect of the proviso may he in case of partial loss, is not now before us for determination. We express no opinion upon the subject. It is not easy to understand what the penman meant; it is certainly obscurely and unhappily expressed so as to convey any clear meaning. If I might hazard a conjecture (which, however, is entirely my own), it would be that by “sum insured,” was meant the sum which was the basis of the insurance, in other words, the valuation of the premises in the policy, a change of phraseology which makes the whole simple and just.. It perhaps occurred to the writer, that the broad words, “ three-fourths of the actual loss,” might entitle the insured to demand more than three-fourths of the valuation. There can be no question that the offers of parol evidence to explain the writing were rightly rejected. Judgment affirmed.