Roquette v. Farmers Insurance Co.

CiiRIstiaNsoN, J. On January 22, 1921, the defendant issued to the plaintiff an insurance policy, of the usual standard form adopted in this state, whereby it insured the plaintiff against loss or damage by fire, lightning, windstorm, cyclone, and tornado, in the sum of $1,500, upon a certain frame bam situated on plaintiff’s farm, in Stark county, in this state. On June 25, 1921, the barn was injured by a severe windstorm. On June 27, 1921, the plaintiff filed a written notice of loss, claiming that there was a total loss. A controversy arose between the plaintiff and the defendant as to the extent of damage caused by the storm. The principal difference arose with respect to the concrete foundation under the barn. The plaintiff claimed that certain cracks in the foundation had been caused by the windstorm. The defendant claimed that they were not so occasioned. The parties were unable to agree upon an adjustment, and the plaintiff, thereupon, brought this action. In its answer, defendant admitted the execution of the policy, also that the barn was injured by the windstorm on June 27, 1921, but specifically alleged that the damage caused did not exceed the sum of $400. The defendant admitted the presentation by the plaintiff of written notice and proof of loss under the policy; but in connection therewith alleged, affirmatively, that the same was false, and untrue, in this, that in such notice and claim the plaintiff wilfully and intentionally represented the loss to be $1,500, whereas the amount of the loss, in truth and fact, did not exceed the sum of $400. The answer further averred that the policy authorized the defendant to repair or restore the property; that, on or about September 15, 1921, it offered to repair the barn, and at all times since has been ready, willing, and able to do — 481 — so; but that plaintiff lias refused to allow defendant to make sucb repairs. The answer further averred that the plaintiff, subsequent to June 27, 1921, Avas adjudged a bankrupt; that a trustee has been appointed in the bankruptcy proceeding, and that, hence, said trustee, and not the plaintiff, is the proper party plaintiff. The answer further averred that the written application of the plaintiff, on which the policy was issued, represented that there was outstanding against said property mortgages amounting only to the sum of $1,000; that said representation ivas untrue; that the mortgages against the property aggregated about $2,000 ; that such additional encumbrances increased the risk and hazard, and that said false representations in regard to the encumbrances were made wilfully, and intentionally, for the purpose of deceiving and defrauding the defendant; that by reason of said fraudulent representations, the policy never became effective. The plaintiff replied denying all the new matter set forth in the answer, except the allegations with regard to the additional encumbrances ; and as regards such defense, the reply averred that the plaintiff truthfully represented the amount of outstanding encumbrances; that the agent who prepared the application, and who issued the policy to the plaintiff, had personal knowledge of, and in fact, had personally taken, the mortgage on the premises, which constituted the additional encumbrance, referred to in the answer. The cause was tried to the jury upon the issues thus framed. The jury returned a verdict in favor of the plaintiff in the sum of $800, and interest. Defendant has ap-pealed from the judgment entered upon the verdict. The first error assigned, and argued, in appellant’s brief is that the trial court erred in refusing to permit the defendant to amend its answer so as to allege that the plaintiff had assigned the claim under the policy to Everett Neal Estate & Loan Company, or to W. N. Everett. The proposed amendment ivas based upon "the following letter written by the plaintiff to the defendant: “Dickinson, N. Dak., Dec. 16, 1921. “Farmers Insurance Co., “Dickinson, N. D. “Gentlemen: “Please attach to your records of Policy No. E. 1824, loss if any, — 482 — payable to Everett Neal Estate & Loan Co., or W. R. Everett, as tlieir interest may appear. “Jacob Roquette.” While tbe trial court refused tbe amendment, tbe letter was received in evidence, and Mr. Everett, wbo is also the principal officer of the Everett Real Estate & Loan Company, testified as a witness for tbe defendant. Tbe undisputed evidence shows that tbe proposed loss payable clause was intended only as security for tbe payment of some $200 to $300, and was not intended as an assignment of tbe entire claim. And Everett specifically disclaimed that be or tbe company bad or made any claim against the defendant so far as any part of tbe cause of action was concerned. Upon tbe record here it is not at all apparent that tbe proposed amendment would have constituted any defense, 26 ■O. J. 483, 484, and it is manifest that tbe defendant was in no manner prejudiced by tbe ruling complained of, as Everett, and tbe Everett Ileal Estate & Loan Company are concluded by tbe verdict here and have no cause of action against tbe defendant under tbe so-called assignment. It is next contended that the court erred in instructing the juiy as to tbe measure of damages. Tbe instruction complained of is as follows : “And if you find for tbe plaintiff, gentlemen of tbe jury, then you will assess bis damages. And tbe measure of damages in this case, gentlemen of tbe jury, is tbe difference in tbe value of tbe barn to tbe plaintiff before tbe windstorm on the 25th day of June, 1921, and the value of tbe same to tbe plaintiff after said storm.” Appellant contends that this instruction is erroneous for two reasons: (1) That it 'permits tbe jury to allow plaintiff damages based upon tbe value of tbe barn to him, that is, “tbe value of the same to tbe plaintiff,” without regard to tbe actual cash or market value thereof. (2) That it is contrary to tbe following stipulation in tbe policy: “This company shall not be liable beyond tbe actual cash value of tbe property at tbe time any loss or damage occurs, and tbe 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 tbe insured to repair or replace tbe same with material of like kind and quality; said ascertainment or — 483 — estimates shall be made by the insured and this company, or, if they differ, then by appraiser, as hereinafter provided; and the amount of loss or damage having been thus determined, the sum for which this company is liable pursuant to this policy shall be payable sixty days after due notice, ascertainment, estimate, and satisfactory proof of the loss have been received by this company in accordance with the terms of this policy. It shall he optional, however, with this company to take all, or any part of the articles at such ascertainment or appraised value, and also to repair, rebuild, or replace the property lost or damaged with other of like kind and quality within a reasonable time on giving notice, within thirty days after the receipt of the proof herein required, of its intention so to do-; but there can. be no abandonment of this company of the property described.” In our opinion, neither contention is well founded. It is true the phraseology of the instruction is not happy, but under the evidence in the case, it is inconceivable that the plaintiff could have been prejudiced by the peculiar language in which the instruction was couched. There was no evidence tending to show that the bam had any peculiar value to the plaintiff. All of the evidence adduced by the plaintiff, as well as by the defendant, had reference to the question of value generally, and the witnesses were examined and cross-examined fully upon the various elements entering into the question of value. The witnesses called on behalf of the plaintiff were cross-examined at great length by the defendant’s counsel as to the cost of construction, the depreciation during the course of the years, etc. It is utterly improbable that intelligent men could have been misled by the language of the instniction. The second contention advanced by the defendant ignores the language of the stipulation in the policy. The stipulation quoted does not say that plaintiff shall be entitled to recover an amount equal to the cost of restoring, or replacing, the property. On the contrary, the provision expressly says that “the loss or damage shall be ascertained, or estimated according to (such) actual cash value, with proper deduction for depreciation, however caused.” The further provisions that the “company shall not be liable beyond the actual cash value of the property at the time any loss or damage occurs,” and that such loss or damage “shall in no event exceed what it would then cost the insured to. — 484 — repair or replace tbe same with material of like kind and quality,” do not purport to fix tbo rule to be applied in determining tbe amount of compensation to wliicb tbe insured will bo entitled in case of loss; they are limitations upon tbe amount wliicb may be awarded, upon ascertainment of tbe amount of loss, under tbe rule prescribed. It would seem t-bat tbe two limitations thus prescribed virtually mean tbe same tiling, and that was, in effect, tbe ruling of tbe supreme court of Iowa, in Erb v. German-American Ins. Co. 98 Iowa, 606, 40 L.R.A. 845, 67 N. W. 583, wherein tbe court said: “To show the damages sustained, the plaintiff was used as a witness, and, for the purposes of the examination, the stock was itemized as goods, chemicals, syrups, etc., patent medicines, lamps, lamp goods, paints and oils, etc. Tbe witness under objections, stated tbe value of tbo different items. The following is a provision of the policy: “ ‘This company shall not be liable beyond tbe actual cash value of tbe property at tbe time any damage or loss occurs, and the loss or damage shall be ascertained and estimated according to such actual cash value with proper deductions for depreciation and shall in no event exceed what it would cost to repair and replace tbe same with materials of like kind and quality/ “It is urged that tbe question asked did not show tbe measure of damage agreed iipon. We think it tended to. Tbe witness was asked •to state tbe value which is presumed to mean tbe actual cash value of tbe goods at the time of tbe loss and that would include any depreciation. Such cash value would also fix, presumably, tbe cost of replacing-in a case where result must be bad to tbe markets for that purpose.” It is also -well to bear in mind, that in this case, tbe plaintiff in bis complaint alleged, and contended upon tbe trial, that there was a total loss. He at no time abandoned this contention, and according to tbe evidence adduced by the plaintiff, tbe barn, as such, was a total loss. Tbe evidence so adduced also tended to show that tbe barn could not be repaired; that tbe structure as a whole was so damaged that it could not reasonably bo adapted for use as a basis for restoration. Of course, there need not be a complete destruction, or obliteration, of a building, in order to constitute a total loss. It is sufficient that it is so destroyed that it is deprived of the character in which it was insured and rendered useless for that purpose. 26 C. J. pp. 349, 350. And .where the por — 485 — tion left standing is not reasonably adapted for use as a basis on wbicb to restore tbe building, tbat is, where a reasonably prudent owner, uninsured, desiring such a structure as tbe one in question before tbe damage, would not use tbe remnant as a basis for restoration, there is a total loss. 26 O. J. p. 350. It is next contended tbat the court erred in failing to instruct the jury as to tbe effect of a good faith offer to repair. Tbe court in substance told tbe jury tbat they might take this into consideration in assessing the damages, but did not make any further instruction. In our opinion, tbe defendant has no cause to complain of tbe instruction given. If anything, it was more favorable than tbe defendant was entitled to under the evidence. In this case, according to tbe contention of tbe plaintiff, the entire building, including both tbe superstructure and tbe foundation bad 'been destroyed. It will be noted tbat the provision in tbe policy gives tbe company tbe right “to repair, rebuild, or replace tbe property lost or damaged with other of like kind and quality, Avithin a reasonable time on giving notice, Avithin thirty days after tbe receipt of the proof herein required, of its intention so to do.” Tbe sole eAÚdence adduced on tbe part of tbe defendant relating to tbe offer to repair consisted of tbe testimony of a builder. He testified tbat in June 1921, tbe manager of tbe defendant company requested him to go out and examine tbe barn and submit an estimate of tbe cost of repairing it. Tbat be went out and made such examination and submitted an estimate. The estimate was $543.10. Tbe witness testified tbat this estimate included only tbe superstructure, and did not include the foundation. Tbe witness further testified tbat on or about September 14, 1921, be was instructed by tbe defendant company to go out and repair the barn. Tbat be proceeded to do so, and upon arriving at the farm informed plaintiff tbat be bad come to repair tbe barn, and that tbe plaintiff said: “You don’t need to touch it.” Tbat be thereupon refrained from repairing tbe bam. Tbe witness admitted tbat he- was sent out, and tbat it Avas bis intention, to repair tbe superstructure only, and tbat be bad no intention of repairing the foundation, — although be said be Avould have made such repairs if be bad found tbe foundation to be in need of repairs. So far as tbe evidence shoAvs tbe only information given to tbe plaintiff tbat tbe defendant intended to exercise tire option to repair Avas tbe statement by tbe builder. According — 486 — to the evidence tliere lias been no ascertainment of damage, nor lias the defendant given any notice of intention to repair. In our opinion, the evidence adduced by the insurance company on this question did not establish any such condition as bars plaintiff’s right to recover in this action. As has been stated, the loss occurred on June 25, 1921; two days after the loss occurred, notice of loss ivas given; later, on or about September 8th or 9th, the plaintiff submitted a formal, written, verified proof of loss. This action was not commenced until February 11, 1922, and it was not tried until March, 1922. Yet, so far as the evidence shows, the insurance company did not make any repairs, nor did it give any notice of intention to do so. The only thing it did was to send a carpenter out there, with directions to go on and make certain repairs in the superstructure. It also appears that negotiations were had looking toward adjustment and payment of the loss. In the schedules attached to plaintiff’s petition in bankruptcy, dated January 23, 1922, — which Avere offered in evidence by the defendant,— it is stated that the defendant had offered $500 in settlement. And on March 13, 1922, defendant served and filed a Avritten offer of judgment for $550, with accrued costs. Where the insurer exercises the option conferred by the policy by electing to repair, replace, or rebuild, the policy becomes in effect a new and independent contract to replace the property or restore it to its former condition, 26 C. J. p. 450, and it becomes the duty of the insurer to carry out the agreement Avithin the time stipulated in the policy, or if no time is stipulated, then Avithin a reasonable time. We do not believe that the evidence in this case establishes any exercise by the insurer of the option to rebuild so as to create such contract. The primary purpose of an insurance contract is to indemnify the insured against loss, not exceeding the amount ■stated in the policy. And, within such limit, the insured, except as-otherwise provided by law or the proAÚsions of the policy, is entitled to be put in the same pecuniary condition in which he Avould have been had there been no fire. The policy under consideration here contemplates that ordinarily the loss or damage sustained shall be paid in cash. The option to repair or rebuild is inserted for the benefit of the insurer alone, and if he desires to avail himself of the provisions he must do so at the time and in the manner prescribed therein. Error is also predicated upon instructions relating to the alleged — 487 — false representations in tbe application for insurance, and tbe alleged false proof of loss. No instructions were requested by tbe defendant upon either of these questions, or upon any other question involved in tbe case. So far as tbe question of false and fraudulent representations in tbe application for insurance is concerned, tbe instruction was, if anything, more favorable to tbe defendant than tbe facts in tbe case warranted, for tbe defendant was not entitled to have this defense submitted at all. Tbe undisputed evidence was to tbe effect that tbe application for insurance was prepared by tbe agent, who issued and delivered tbe policy, and that this same agent bad actual knowledge of tbe then-existing encumbrances. There is no contention that there was any collusion between tbe plaintiff and such agent. It is tbe settled law in this state, that tbe agent of an insurance company, who prepares an application for insurance and issues tbe policy thereon, acts as tbe agent of tbe insurance company and not as the agent of tbe applicant. So far as concerns tbe instruction regarding tbe alleged false proof of loss, we do not believe that tbe plaintiff was prejudiced thereby, although we do not approve of tbe form in which tbe instruction was given. It may, also, be noted that tbe position taken by tbe defendant that it was willing and ready to repair tbe bam, yras wholly inconsistent with the contention that tbe policy bad been forfeited, or rendered null and void either by false representations in tbe application for insurance, or in the proof of loss. According to tbe undisputed testimony, tbe insurance company bad knowledge of tbe outstanding encumbrances at tbe time tbe policy was issued. Two days after tbe storm it received notice from tbe plaintiff claiming total loss. Shortly thereafter it caused personal inspection of tbe barn to be made to ascertain tbe damage inflicted by tbe storm. Yet, according to tbe testimony adduced by tbe defendant, it recognized tbe validity of tbe policy and sought to make repairs on September 14, 1921. Generally, an election by an insurance company to rebuild, or repair, with knowledge of tbe right to declare a forfeiture, will be deemed a waiver of all defenses -of every kind which otherwise it might assort. 2.6 C. J. p. 338. So far as tbe evidence here discloses, tbe defendant at no time disclaimed liability under tbe policy until after suit was brought; but, on tbe contrary, treated tbe policy as a valid and binding contract. — 488 — What bas been said, covers all assignments of error supported by argument, and, as already indicated, we find no error requiring a reversal. In its rulings on evidence, the trial court was eminently fair to the defendant. Viewing the record as a whole, including the verdict, we are satisfied, that the defendant has no reason to complain of the result. The jury viewed the 'barn at defendant’s request. The verdict seems fair and reasonable, and we see no good reason for disturbing it. Affirmed. Birdzell, Oh. J., and BobiNSON, Bronson, and Grace, JJ., concur.