Winston v. Arlington Fire Insurance

Mr. Chief Justice Shepard delivered the opinion of the court: The single question for determination is whether this is an action on the contract of insurance so as to bring it within the operation of the limitation clause set out in the plea. The contract of insurance bound the defendant to pay the loss or damage occasioned by fire, not to exceed the stipulated amount. But it reserved an option to the defendant to repair and replace the building. By the exercise of this option and election, in which the plaintiff was bound to acquiesce, the original contract of the parties was converted into a new one on the part of the defendant to repair the building and restore it to its-former condition. The contract to pay the loss was thus superseded by the contract to repair. Plaintiff no longer had a right of action upon the former; his sole remedy was upon the new contract. Wynkoop v. Niagara F. Ins. Co. 91 N. Y. 478, 482, 43 Am. Rep. 686; Heilmann v. Westchester F. Ins. Co. 75 N. Y. 7, 9; Morrell v. Irving F. Ins. Co. 33 N. Y. 429, 437, 88 Am. Dec. 396; Beals v. Home Ins. Co. 36 N. Y. 522, 526; Fire Asso. of Philadelphia v. Rosenthal, 108 Pa. 474, 478, 1 Atl. 303; Hartford F. Ins. Co. v. Peebles’ Hotel Co. 27 C. C. A. 223, 54 U. S. App. 215, 82 Fed. 546, 548. Plaintiff’s declaration set out the contract for insurance, with the [64] ■stipulation therein for the option to contract to repair, and alleged the election so to do; but this was by way of inducement to the statement of the cause of action, which is the failure to perform the new undertaking created by that election. As the action, then, is not upon the contract of insurance, we think that the limitation clause of that contract cannot be made to apply to the action upon the undertaking to repair by which it was superseded. There is no difference in principle between an action of this kind, and one to recover the amount of the adjusted loss or damage under an insurance contract, to which, it has been held, the limitation clause of the policy does not apply. Smith v. Glens Falls Ins. Co. 62 N. Y. 85, 86; Illinois Mut. F. Ins. Co. v. Archdeacon, 82 Ill. 236, 239, 25 Am. Rep. 313. We are of the opinion that it was error to overrule the plaintiff’s demurrer to the plea. The judgment will therefore be reversed, with costs, and the cause remanded for further proceedings in conformity with this opinion. Reversed.