Frick v. United Firemen's Insurance

Opinion by Mr. Justice Mestrezat, As stated by the learned counsel for the appellant, the assignments of error properly before us raise but two questions: (1) Does the policy of insurance require the plaintiffs to furnish the defendant company an inventory of the property destroyed, stating the quantity and cost of each article and the amount claimed thereon: and (2) did the court err as to the measure of damages ? 1. The clause in the policy which the defendant company claims requires the plaintiffs to furnish such inventory is the following: “If fire occur the insured shall give immediate notice of any loss thereby in writing to this company, protect the property from further damage, forthwith separate the damaged and undamaged personal property, put it in the best possible order, make a complete inventory of the same, stating the quantity and cost of each article and the amount claimed thereon; and, within sixty days after the fire, unless such time is extended in writing by this company, shall render a statement to this company, signed and sworn to by said insured, stating .... the cash value of each item thereof and the amount of loss thereon,” etc. It will be observed that this clause imposes upon the plaintiffs the duty, inter alia, of making an inventory, but does not require the insured to furnish it to the insurance company. It simply says the insured shall “make a complete inventory.” After he has made the inventory, the policy requires, as will be noticed, that he, “ within sixty days after the fire, unless such time is extended, in writing by this company, shall render a statement to this company, signed and sworn to, by said insured, stating .... [416] the cash value of each item thereof and the amount of loss thereon,” etc. The plaintiffs complied with this provision of the policy in their proof of loss which was “ signed and sworn to by the insured,” and delivered to the defendant company as required by the policy. That shows “ the cash value of the property insured by you and for which claim for loss is hereby made .... as is shown in ‘ Statement of Loss ’ hereto attached.” The statement attached to the proof of loss shows the date of manufacturing the whisky, the number of gallons destroyed, the price per gallon, and the aggregate loss. It is true, that in this statement the word “price” instead of “cash value” is put at the head of the column in which the value per gallon of the whisky is given, but the word is manifestly used as meaning the same as “ cash value,” and the defendant company must have understood its meaning to be such. This is apparent, not only from the fact that in the proof of loss the value given in the “Statement of Loss” is declared to be the “cash value,” but also from the two letters written by the plaintiffs to the defendant company in January, 1906, in which the defendant is advised that “ our proofs of loss are filed upon the basis of actual cash market value at time of fire, as called for by the policies.” The proof of loss was the statement required by the policy and it was entirely sufficient. In addition to the information contained in the statement, the plaintiffs invited the defendant company to inspect their books, which would have disclosed every fact with regard to the whisky which was in the possession of the plaintiffs. If the defendant did not avail itself of the invitation and obtain the additional information in the possession of the plaintiffs, the latter are not at fault, and it is no reason for defeating the plaintiffs’ claim in this action. 2. The policy contains the following provision : “ 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 quantity.” This provision of the contract furnishes the measure of damages and raises the important [417] question in the case. The policy is the contract between the parties, and must be given an interpretation which will carry out their intention. If the language of the policy is doubtful or obscure, it will be construed most unfavorable to the insurer : Merrick v. Germania Fire Insurance Co., 54 Pa. 277. A contract of insurance must have a reasonable interpretation, such as was probably in the contemplation of the parties when it was made ; and when the words of a policy are, without violence, susceptible of two interpretations, that which will sustain a claim to the indemnity it was the object of the assured to obtain should be preferred : Humphreys v. National Benefit Association, 139 Pa. 214. The property covered by this policy is of a peculiar character, but the intention of both parties was to protect the insured against its loss by fire, and the policy must be construed so as to effect that purpose. It is not like a machine, a house, or property of that character. There is no difficulty whatever in ascertaining the cost of repairing or replacing such property as of the date it is injured or destroyed. Proof is readily accessible which will enable the insured to establish “ what it would then cost to repair or replace the same with material of like kind and quantity.” A moment’s reflection will show that this is not true of whisky which has been destroyed. From the uncontradicted evidence it appears, and, therefore, it must be taken as a fact, that the age. of whisky materially affects its character and qualify, and hence is an important factor in ascertaining or determining its value. It also appears in the case that this, like other brands of whisky, has a distinctive character and quality of its own, and that no brand of whisky can be substituted in the market for another brand. Now, under the clause of the policy, above quoted, how should the plaintiffs’ loss be measured ? The whisky insured by the several policies issued to the plaintiffs was of different inspections. Theije were 6,910 barrels destroyed. The most of it was manufactured about six months prior to the fire; some of in 1903 and 1904, and some in 1898 and 1899. The defendant company is not liable beyond the actual “ cash value.” What is that value ? That is fixed by the uncontradicted testimony of a number of witnesses. It ranges’ from fifty cents to $1.05 per gallon, according to its age. This was [418] the cash value of the A. Overholt & Company whisky in the wholesale liquor market on November 19, 1905, when it was destroyed. As appears in the evidence there was whisky of that brand of the different inspections on the market at that date. It must be conceded, we think, that if the cash value of the whisky at the date of the loss is the only practical standard for measuring the plaintiffs’ damages, the court and jury must accept the value fixed by the plaintiffs’ witnesses. It will be observed, however, that the policy provides that the cash value of the whisky “ shall in no case exceed what it would then cost the insured to repair or replace the same with material of like kind and quality.” The defendant company contends that the loss could not be estimated at more than it would have cost the insured to replace the whisky. In other words, the position of the defendants is, that under this provision of the contract the plaintiffs’ right of recovery is limited to the cost of material, the expense of manufacturing the whisky, the charges for carrying it in bond, insurance and interest on the amount invested in the whisky. This provision of the policy is simply a limitation on the former provision, which fixes the loss at the cash value of the property. In estimating the loss the insured is entitled to the cash value of the property destroyed, provided it does not exceed what it would cost to replace it with material of like kind and quality at the date it was consumed. How shall this cost be ascertained ? It is doubtless true that the cost of manufacturing a gallon of whisky is easily ascertained. But that does not meet the requirements of this case. The .plaintiffs are not restricted to the simple cost of reproducing the whisky. They are entitled to have the whisky which was destroyed replaced as of the date of the loss with the same material of like kind and quality. The whisky consumed by the fire was, as we have seen, of different inspections. It had age which gave it character and quality. It was of the A. Overholt & Company brand, dissimilar in character and quality from other brands, and for which there is no substitute. The cost of whisky of like character, quality and age is the measure of the plaintiffs’ right of recovery. It is manifest that this cost cannot be ascertained by simply taking into consideration the cost of the elements suggested by the learned counsel for the defend [419] ant company. It omits from the calculation the effect which age has on that particular brand of whisky, which is a most important factor in determining its cost. Nor can any witness, as is apparent, definitely estimate what the age of each of the several inspections in this case will add to the actual cost of the material entering into the particular brand of whisky. It is an important element entering into its value, but the precise extent to which its value is increased cannot be fixed by testimony. There is, therefore, but one way to ascertain the cost of replacing the whisky at the date it was destroyed, considering the brand, character, quality and age of the whisky, and that is to ascertain by competent evidence its actual- cash value on the day of the fire. By that method of computing the cost the whisky destroyed will be replaced “ with material of like kind and quality ” as of the date it was consumed, and that is, therefore, the measure of the plaintiffs’ damages. The rule adopted in ascertaining the cost of replacing the insured property in Standard Sewing Machine Company v. Royal Insurance Company, 201 Pa. 645, is not applicable here for the reasons above stated. To enforce it under the circumstances of this case would deprive the plaintiffs of the protection against loss of their property by fire which the policy stipulates. In the sewing machine case there was no difficulty in applying the rule. Here, owing to the peculiar character of the property insured, the cost of replacing it must be determined by its value at the date of the loss. The judgment of the court below is affirmed.