Hartford Fire Insurance v. Shlenker

Whitfield, O. J., delivered the opinion of the court. The act under construction is as follows: “An act to amend section 1 of chapter 63 of the laws of 1894, known as the ‘Valued Policy Law,’ and to reduce the cost of fire insurance, and to prevent insurance trusts and combines, and to fix the amount of taxes to be paid by fire insurance companies. “Section 1. Be it enacted by the legislature of the state of Mississippi, that section 1 of chapter 63 of the laws of 1894, be so amended as to read as follows: In suits brought upon policies of insurance against loss by fire, hereafter issued or renewed, the. insurer shall not be permitted to deny that the property insured was worth, at the time of issuing the policy, the full value upon which the insurance was calculated. And in case the policy contains a three-quarter valuation clause, the insurer shall not deny that the amount of the policy was but three-fourths the valuation at the date of its issuance, and a similar rule shall apply, it matters not what proportion the amount of insurance bears to valuation, according to the terms of the policy. In case of total loss of the property insured, the measure of damages shall be the amount for which the property was insured. In case of partial loss, or damage by [680] fire, the measure of damages shall be an amount equal to the damage done the property, not to exceed the amount written in the policy, and in case of losses on stocks of goods and merchandise, and other species of personal property, where the same, after the issuance of the policy, is constantly changed in specifics and quantity, in the usual course of trade, only the actual value of the property at the time of the loss may be recovered, not to exceed the amount expressed in the policy.” Laws 1896, ch. 56. The scheme of this statute, it seems to us, after the most careful consideration, is this: To provide that in case of total loss of property, real or personal, except personal property constantly changing in specifics and quantity, the company shall pay the amount named in the policy, the amount on which, as a basis, the premium has been calculated and received, and that in case of partial loss of real or personal property, except personal property constantly changing in specifics and quantity, the company shall pay the amount of actual damage, not to exceed the amount of the policy; again making the company possibly liable, according to the extent of the damage, on the basis of the amount on which it has received premiums. It could not be known in advance how great or small the-damage would be in case of a partial loss, and hence no sum could be named as the measure of a partial loss; and consequently, since there was no sum the parties could agree on as the measure of the partial loss, there could be no contract to pay any specific sum, but the amount to be paid must be measured by the actual damage — not to exceed, in the case of any company, the amount named in the policy. The insured might recover up to the amount on the basis of which the premiums had been calculated, but could never recover from different companies two or three times the value of the property destroyed, as in case of total loss, since there could be, in the nature .of things, no fixation of the amount of partial loss, as there easily could be of the amount of a total loss^ And lastly, the statute provided [681] that, in case of personal property constantly changing in specifics and quantity, the company should pay the actual value of the property destroyed, not to exceed the amount of the policy. The same thought, precisely, is manifest here as in the two previous cases. The insured must be made whole. The actual value of the property destroyed may be recovered, provided that amount does not exceed the amount named in the policy— the amount, again, on the basis of- which the premium has been calculated. The two things clearly deducible from the statute are these: First. The insured must, at all events, in each of the three cases named, recover the amount of his actual loss; that loss being fixed in the first class, but not susceptible of fixation in the two second classes of property. Second. That the company must always pay on the basis of the amount on which it has received premiums, only the actual damage or loss, of course, in the two last cases, but, nevertheless, that whole loss up to the limit named; the amount of the policy; the amount on which the premium has been calculated. In the first class— real or personal property — as to which the value could be agreed, it is provided that that value shall be the measure against each company, no matter how many, and the insured might recover many times the actual value. Why? Because each company can agree for itself what the value is, and if it does so,' and receives premiums on that basis, during the life of the contract, it does nothing but comply with the contract it makes, when it pays the whole value, for it had received premiums on the whole value. It could always know whether there was other insurance, and it might decline the insurance if it did not wish to run the moral risk in such a case. The very life of the statute is that the company shall not receive premiums on one basis, and pay losses on another. They can, in the first class of property, know the value, and insure just such part of the value as they please; but, having insured a certain part, they must pay on the basis of the value of the whole or that part as named in the contract, since they have received [682] premiums on such agreed value. In each of the last two classes of property the amount of the damage cannot be known in advance, so as to be contracted about; and, since no contract has been made to pay a fixed sum, the company can only be bound to pay such loss as proof may show. But while it cannot know in advance what the loss will be, it can agree to be bound up to a certain limit; and, naming such limit, and receiving premiums on such sum as the basis, it is required to pay the actual loss, not to exceed that limit. If the loss be less than such named limit — the amount of the policy, the basis on which the premiums are received — the company escapes with paying less than its possible liability. It has possibly been a very profit-fable contract in such ease. If it has to pay the full amount of the policy, it is simply paying the amount on the basis of which it has all along received premiums. Twice does the statute carefully repeat that in the last two cases the measure of recovery should be the actual loss, not to exceed the amount named in the policy. Why this careful repetition, if it was not meant that the amount of the policy might be always recovered where the proof showed actual loss to that amount? Is it not clear that the legislature meant to impose a liability measured by the basis on which premiums were received? Twice it is said (once in case of personal property constantly changing in specifics and quantity) that the actual damage (the actual value of the property destroyed) should be recovered. Why this repetition if it did not mean that the insured should be made whole, up to the amount named in the policy ? It is said the legislature meant to leave “personal property constantly changing in specifics and quantity” as it had been. TIow can this be meant, when plainly it does deal with that sort of property, does name the measure of recovery, “the actual value of the property destroyed, not to exceed the amount named in the policy?” This express and specific dealing with the subject matter excludes utterly the contention that it was to be left as before. The one thought in the legislative mind was to make [683] the insured whole, up to the limit of the amount named in the policy, in the two last classes; and it was thought only just that, receiving premiums on the basis of the amount named in the policy, they should pay, also, on that basis — pay the loss up to that limit. It may be said that if the view of the appellant is correct, the policy is avoided wholly by failure to comply with the stipulation for full insurance. With the wisdom of the law we have nothing to do. All considerations of that character should be addressed to the legislative department. It is plain there were great evils to be remedied — evils brought on by the unjust efforts on the part of the insurance companies to contract for less than fair liability. If, in attempting to cure confessed evils brought on by the insurance companies themselves, the legislature has gone too far, it is a matter for the legislature, and not for the courts. It must be clear that to permit coinsurance clauses, or three-quarter valuation clauses, or any other clauses which cross the plain purpose of this enactment, to stand, is to blot it out. In this very case the insured would get less than his actual loss, in that this insurance company would only pay two-fifteenths of the value of the property, about one-half the amount on which it has received premiums. Our duty is discharged when we enforce the law as it is written. Amendments or repeals are for the legislative department. Affirmed.