Stephenson v. Agricultural Insurance Co.

Maeshall, J. This appeal calls for tbe solution of two •questions concerning tbe construction of significant words in 'ibis part of sec. 1941 — 58, Stats. 1898. “This company shall not be liable under this policy for a ■greater proportion of any loss on tbe described property . . . than tbe amount hereby insured shall bear to tbe whole insurance, whether valid or not.” These are tbe questions: (1) Do tbe words “amount hereby insured” refer to the face of tbe policy, — tbe maximum ■amount of risk assumed under any and all circumstances? (2) Do tbe words “-whole insurance” refer to tbe aggregate of tbe maximum risks assumed by all insurers in respect to tbe property? Affirmative answers will lead to an affirmaance of tbe judgments. ' Courts elsewhere have bad tbe subject before us up for con-sideration to some extent. In respondents’ favor we are referred to Armour P. Co. v. Reading F. Ins. Co. 67 Mo. App. 215, and Farmers’ F. Co. of New Jersey v. Scottish U. & N. Ins. Co. 12 N. Y. Supp. 132. Tbe language of tbe insurance •contracts was tbe same, substantially, as here. In tbe first — 282 — case tbe effect of a provision like tbe eighty per cent, clause of tbe Milwaukee Mechanics’ Insurance Company policy, as. regards features of tbe contract similar to those of our standard policy, required by sec. 1941 — 58, Stats. 1898, was considered. It was to tbe effect that in case of a loss, tbe part apportioned to a particular company should be on tbe basis of there being insurance on tbe property to tbe extent of eighty per cent, of tbe cash value thereof, and if there was not that amount of insurance in fact, that tbe loss as to the deficiency should fall on tbe assured as a co-insurer. The-court, in reaching a conclusion, seems to have ignored the-plain language in that regard. It held that the liability of the company was the amount of the insurance under the policy; that the amount of the insurance was not the face of' the policy, but the face scaled down in proportion to the failure of the assured to comply with the eighty per cent, clause that the reduced amount was the proper sum to be considered in making up the “whole insurance” and in apportioning the loss between the several companies concerned so as to give-the assured full indemnity for his loss within the range of the-policies. That cast a burden on some of the companies which the assured expressly stipulated to bear himself, receiving ai consideration therefor in the form of a reduction of the premium paid. In the second case the court held that the amount of the insurance was synonymous with the amount of the loss, and the latter synonymous with the liability; that a determination of the amount of the insurance necessarily-waited upon the adjustment of the loss. “It- might not be,”' said the court, “the maximum amount named in each of the-policies. How much insurance was effected by each policy depended upon the sound value of the property covered at che time of the loss, diminished by twenty per cent.” The policy contained a clause similar to that in those under consideration, here, and required by sec. 1941 — 43, Stats. 1898, fixing the amount of the insurance at a sum sufficient to cover — 283 — all loss not exceeding a specified amount. Tbe words' “and not' exceeding,” etc., specifying tbe maximum amount of tbe risk assumed, inclined tbe court to bold that tbe true amount of’ tbe insurance was determinable only in tbe event of a loss.. We cannot agree with that view. It seems to violate tbe plain meaning of tbe language of tbe policies. We will endeavor to show that such is tbe case. In that part of tbe policy corresponding to sec. 1941 — 43,, Stats. 1898, tbe word “loss” is used, not as a limitation upon tbe amount of tbe insurance, but primarily as a limitation upon tbe amount of tbe liability. That is obvious, since payment of one loss does not cancel tbe policy unless it equals the-maximum amount of risk assumed. If it is less, it is only a fro tanto satisfaction of tbe policy. Tbe company remains-liable thereafter to be called upon time after time during the-policy period, the policy being kept alive by compliance with its provisions, till an amount equal to tbe face thereof shall' have been paid. It must follow that tbe amount of insurance-effected by a policy is one thing, tbe amount of tbe loss in any particular instance another, and tbe liability to pay on account thereof another. Tbe amount of tbe insurance is the-maximum amount of tbe risk assumed, the face of tbe policy; the amount of tbe loss is tbe adjusted damage by fire to the-property covered by tbe policy; tbe amount of tbe liability as to any particular loss is tbe amount of tbe adjusted damages-properly apportionable to tbe policy. What has been said as to what constitutes tbe amount of tbe insurance under that part of tbe standard policy, as regards sec. 1941 — 43, Stats, 1898, applies to that part embodying sec. 1941 — 58, Id. Note tbe plain distinction in the-latter .section between “amount hereby insured,” or “whole insurance,” and “loss:” “This company shall not be liable under this policy for a greater proportion of any loss . . . than tbe amount hereby insured shall bear to tbe whole insurance To say that tbe terms “liability,” “loss,” and “amount in — 284 — •sured,” or “whole insurance,” are synonymous, or that the .amount of insurance is undeterminable in advance of loss, is •well-nigh if not quite absurd. The language of the section .as a whole is too plain to admit of any resort to rules for judicial construction to determine its meaning. As indicated, “loss” refers to the damages of the assured measured in money, “liable,” or liability, to the amount of such loss which the sufferer under the insurance contract may recover upon the policy, and “amount hereby insured” to the risk assumed under the policy, — the amount which, regardless of .any loss paid, remains subject to be drawn upon from time to time to satisfy other losses till it shall have been wholly exhausted. The amount insured on the face of the Milwaukee Mechanics’ Insurance Company policy is $7,500. It was not •competent for such company to limit its liability so as in any way to vary the insurance contracts made by respondents. We are unable to see any evidence in its policy of an attempt •to do so, or anything out of harmony with the conclusion we have come to. The policy contains the same language as the ■other policies respecting the risk assumed. It was limited to a particular sum, $7,500, coupled with a condition requiring ■the assured to carry insurance upon the property to the .amount of eighty per cent, of the cash value thereof or to be ■deemed himself an insurer for the deficiency. That is the effect of the eighty per cent, clause. The maximum amount •of its risk was $7,500. The amount of its liability, as between it and the assured, but not as between it and the other companies, was affected by the eighty per cent, clause. The ■language of the policy indicates that the contracting parties understood the result of a failure by the assured to take out ■sufficient insurance to equal eighty per cent, of the cash value •of the property would not be a reduction of the amount of insurance effected by the policy, but such a division of any .loss apportioned to $7,500 out of the whole insurance be — 285 — tween the company and the assured as would make him bear the burden that would otherwise be cast upon it by his failure-to take out insurance up to the limit specified. The words “amount of insurance” and “amount insured” are used in the eighty per cent, clause in a way to clearly indicate that they refer to the maximum risk assumed, the $7,500. Here is the language: “If at the time of fire the whole amount of insurance on said property shall be less than eighty per cent., this company shall, in case of loss or damage less than said eighty percent., be liable for only such portion thereof as the amount' insured by this policy shall bear,” etc. There can be no mistaking the connection between the significant words in that clause and the maximum risk assumed' by the company and by all the companies. There is abundance of authority supporting the conclusions, that “amount hereby insured” and similar expressions as regards a particular policy, mean maximum amount of' risk assumed; that “the whole insurance” and similar expressions as to any given parcel of property covered by several-policies of insurance, with or without a limitation of liability clause similar to the one in the Milwaukee Mechanics’ Insurance Company policy, mean the aggregate maximum risks-assumed under all the policies; that such a limitation of liability clause in a policy does not operate to vary the terms of’ any other policy; and that the effect of such a clause, and the contractual purpose thereof, is to make the insured a co-insurer to the extent that he fails to place the whole insurance-specified. We will mention in the main only cases cited by-respondents’ counsel. Oshkosh G. L. Co. v. Germania F. Ins. Co. 71 Wis. 457, 37 N. W. 819; Liverpool & L. & G. Ins. Co., v. Verdier. 35 Mich. 395; Page v. Sun Ins. Office, 74 Fed. 203; Chesbrough v. Home Ins. Co. 61 Mich. 333, 28 N. W. 110; Haley v. Dorchester M. F. Ins. Co. 12 Gray, 545; East Texas F. Ins. Co. v. Coffee, 61 Tex. 287; Good v. Buckeye M. — 286 — F. Ins. Co. 48 Ohio St. 394, 2 N. E. 420; Bardwell v. Conway M. F. Ins. Co. 118 Mass. 465; Christian v. Niagara F. Ins. Co. 101 Ala. 634, 14 South. 374. In the last case cited the court referred to the feature of insurance contracts making the assured a co-insurer as reasonable and one that should be enforced by courts rather than avoided by any attempt to read out of it a justification for a different course by rules of judicial construction. In Ghesbrough v. Home Ins. Co. there was a limitation of liability clause similar in all respects to the one in this case, and the court treated the amount of insurance effected by the policy, in apportioning the loss between different companies, as the face thereof; but, as between such conrpany and the assured, held that the latter should bear, as a co-insurer, any loss not regularly insured against by reason of his failure to take out the full amount of insurance agreed upon. Our attention is called to language in sec. 1943a, Stats. 1898, prohibiting the issuance of any policy containing any provision limiting the amount to be paid in case of loss below the actual cash value of the property, if within the amount of insurance for which premiums are paid, and prohibiting the use of any co-insurance clause or rider except under certain conditions mentioned. We are unable to see how such section applies to this case. The policies issued by respondents were free from the prohibited features. They contain only features expressly required by the standard policy law. The circumstances preventing appellants from obtaining full indemnity were the Milwaukee Mechanics’ Insurance Company policy, containing a limitation of liability clause pursuant to sec. 1943a, and the assured’s election to exercise the •option therein stipulated for, to carry a part of the insurance himself. The claim is made that, taking the policies together, the assured was entitled to full indemnity, and language to that effect is quoted from Sherman v. Madison Mut. Ins. Co. 39 — 287 — "Wis. 104. This part of the argument of appellants’ counsel is infirm in this: It fails to give weight to the fact that in the -case cited the court held that the assured was entitled to full indemnity because that was what he paid for and did not -stipulate away. Here the assured did stipulate that he would himself bear such part of the loss apportioned to $7,500 of the whole insurance as should not be collectible of the Milwaukee Mechanics’ Insurance Company by reason of the coinsurance clause of its policy. To that extent he stipulated .•away the right to full, indemnity and received the consideration therefor, as we have before indicated. That no part of such consideration went to enrich the respondents, makes no difference, since their own premium rates were made with reference to the clause of their policies limiting their liability to such proportion of any loss as the amount of the insurance taken by them respectively bore to the whole insurance on the property. They must be held liable according to their own contracts and no further, the same as was held in Sherman v. Madison Ins. Co., supra. It follows from the foregoing that the question suggested at the opening of this opinion must be answered in favor of respondents, and the judgments appealed from affirmed. By the Court. — So ordered.