King v. Niagara Fire Insurance

Rugg, C. J. These are actions at law upon ten policies of fire insurance to recover damages for the loss sustained by the plaintiffs from the total destruction by fire of a wooden frame building, situated within the “fire district” so called in Boston, and hence affected by municipal laws and ordinances whereby it is impossible to reconstruct the building with the same materials with which it was originally constructed. It is agreed that the actual value of the building immediately before the fire was $4,503, and that, provided the plaintiffs are entitled to recover on the footing of cost of reconstruction of a building of dimensions and plan like that which was burned, of material such as now is required by St. 1907, e. 550, § 11, judgment is to be entered in their favor for sums aggregating $10,000, being the sum of the policies, with interest. The question-presented is, which of these two amounts are they entitled to recover. The answer to that question depends upon a correct construction of the terms of the policies of insurance. All the policies are in the Massachusetts standard form. Each policy, however, contains two additional or supplemental clauses termed respectively the “Disclaimer Clause” and the “Demolition and Increased Cost of Construction Clause.” The first of these in substance restricts the liability of the insurer in case of loss or damage, unless otherwise modified, to “the actual value of the property” at the time, or to the cost of repair using material of like kind and quality, and excludes “loss occasioned by ordinance or law regulating construction or repair of buildings.” This clause standing alone has the effect of limiting the liability of the insurer, in cases where there is partial loss, to the cost of repairs, eliminating all consideration of any requirements of building laws. It modifies what would otherwise be the liability of the insurer without such a provision as declared in Hewins v. London Assurance Corp. 184 Mass. 177, where it was held that, in assessing damages arising from a partial loss, increased cost of repair occasioned by building laws might be considered. That limiting clause of the insurance policy, however, does not stand alone. There is attached to each policy a further clause called “Demolition and Increased Cost of Construction.” It there is provided that the [306] insurer shall be liable “for loss or damage occasioned by the enforcement of any State or Municipal law or ordinance regulating the construction or repair of buildings . . . which necessitates, in rebuilding, the demolition of any portion of the insured premises which has not suffered damage under this policy, and . . . for the additional cost of repair or re-construction, due to the enforcement of such law or ordinance, of portions of the insured premises which have suffered damage.” These modifying clauses are permitted by St. 1907, c. 576, § 60, cl. 7. They constitute the agreement of the parties in connection with the standard form of fire insurance policies established by said § 60 and accompanying statutory requirements. The construction of the “Demolition and Increased Cost of Construction” clause is plain. It covers two classes of cases. (1) The first class is where fire damages or destroys a part only, of the insured premises and, by reason of requirements of the building law or ordinance, it becomes necessary to demolish the whole or any part of the premises insured but not directly affected by the fire, in order to rebuild the part of the insured premises directly affected by the fire. This class manifestly includes cases where the fire causes either total or partial loss of the portion directly affected by the fire, leaving a portion of the insured premises which has not suffered direct damages by the fire. (2) The second class is where there is additional cost of repair or reconstruction “of portions of the insured premises” damaged by the fire. This class clearly refers only to instances of partial loss of the insured premises. It is only in cases of partial loss that there can in the nature of things be a “repair or re-construction ... of portions of the insured premises which have suffered damage.” Neither of these classes includes the total loss of all the insured premises such as has befallen in the present cases. That class of cases is wholly unaffected by these two supplemental and modifying clauses. Cases of total loss are left to be governed by the other provisions of the policies of insurance. Cases of total loss are covered precisely by a provision in the standard form of insurance to the effect that “This company shall not be liable beyond the actual value of the insured property at the time any loss or damage happens.” That provision in the standard form is but the embodiment of the provisions of § 57 of the insurance act, to the [307] effect that "If buildings insured against loss by fire, and situated within this Commonwealth, are totally destroyed by fire, the company shall not be liable beyond the actual value of the insured property at the time of the loss or damage.” Second Society of Universalists v. Royal Ins. Co. Ltd. 221 Mass. 518, 523. This is the effect also of the “Disclaimer Clause,” to which reference has been made. The circumstance that the aggregate amount of the policies is slightly more than double the entire value of the building is of no significance on the amount of loss recoverable in the event of the total destruction of the building insured, which has occurred in the cases at bar. The result is that the ruling was.erroneous. Judgment should be entered in favor of the plaintiffs in the amounts specified in the stipulation of the parties, aggregating $4,277.85, together with interest thereon from October 22, 1917. So ordered.