Brady v. North Western Insurance

11 Mich. 425 | Mich. | 1863

Lead Opinion

Martin Ch. J.:

The plaintiff in this case was insured by the defendants in the sum of two thousand dollars, upon his warehouse, on the first day of January, 1856, for one year. The policy of insurance' contained, among others, this provision: “This'insurance (the risk not being changed) may be continued for such further time as shall be agreed on; the premium therefor being paid and indorsed on this policy, or a receipt given for the same.” The obligation of the defendants seems to have been renewed every succeeding year, under this stipulation; and upon such renewed obligation, dating from the first day of January, 1861, this action arises.

Between the years 1856 and 1861, certain ordinances were adopted .by the Common Council of Detroit, for preventing the restoration or reconstruction, within certain boundaries, of wood buildings which might be injured or destroyed by fire. After the passing of these ordinances, the policy was renewed on payment of the premium originally stipulated, and after being countersigned by the resident agent. The question now presented is, whether the liability of the defendant is under the promise of 1856 or that of ] 861; in other words, was the undertaking of 1856 made a continuous undertaking, to be construed by the laws and ordinances as they existed in 1856 solely, or, by the renewal, were the parties bound by the laws and ordinances existing at the time of such renewal.

We have no doubt that each renewal of the policy was a new contract. Each was upon a new consideration, and was optional with both parties. At the expiration of the year over which the original policy extended, the obligation of the insurer was ended, and it was only by the concurrence of the will of both parties that the obligation could be continued. This concurrence is manifested by the payment of a consideration by the one party, and a renewed promise by the other; and an obligation revived or continued under such circumstances, is an original obligation. It must be asked for by the one, and may be assumed or refused by the other; and the policy, which is its evidence, is therefore only continued by the positive act of both parties. This is according to the terms of the policy, and of the certificate of renewal; and the fact that the insurance company, by the very terms of the certificate of renewal, required payment therefor, and that such certificate should be countersigned by the resident agent before it should become operative, shows that the company regard the renewal as a new contract, made at their option, and dependent in some degree upon the judgment and knowledge of such agent. Thus, if the agent should find the property depreciated in value, or the risk increased from any cause, he could refuse to countersign the renewal receipt, and the promise by the company to renew the policy would be thereby terminated. Now, it is very clear that all such contracts must be mutual, and that where a right is reserved to a party to renew or dissolve an obligation, the determination of such party to renew an expired contract, if accepted by the other, makes an original contract.

This contract of insurance is one of indemnity against loss by fire; and the whole loss of which the fire is the actual cause, is within its terms to the extent of the indemnity'promised. Much is said by Judges of the proximate and remote cause of the loss; and the distinction was very elaborately discussed by counsel in the present case. But, after careful consideration, I must confess that, to my mind, the word '■'■proximate ” is unfortunately used, and serves often to mislead the inquirer, and to produce misapprehension of the real rule of law. That which is the actual cause of the loss, whether operating directly, or by putting intervening agencies — the operation of which could not be reasonably avoided — in motion, by which the loss is produced, is the cause to which such loss should be, attributed. in the effort to extinguish fire, property is damaged or destroyed by water, the water may be said to, be the proximate cause of the injury or destruction; yet in no just sense can it be said to be the actual cause. That was the fire. The fair and reasonable interpretation of a policy of insurance against loss by fire, will include within the obligation of the insurer, every loss which necessarily follows from the occurrence of the. fire, to the amount of the actual injury to the subject of the risk, whenever that injury arises directly and immediately from the peril, or necessarily from incidental and surrounding circumstances the operation and influence of which could not be avoided.

Under this rule, what was the plaintiff’s loss in the present case? - The property insured was situated within the fire limits of Detroit, within which the reconstruction or repair of any wood building injured by fire was prohibited, unless by leave of the Common Council. The charter andj ordinances of the city upon this subject, and the refusal of the Common Council to permit the repair of the building injured, were offered in evidence to show the extent of the plaintiff’s loss, and rejected. This charter and these ordinances were in existence at the time of the last renewal of the policy. They were local laws affecting the property, and the risk which the defendant assumed, and of which the latter is presumed to have had knowledge, and to have estimated in renewing the policy. Whether, therefore, in case of damage or partial loss, the Common Council would permit a repair of the building, was a risk which the company took upon itself, because the loss and injury to the plaintiff might depend in amount upon such action of the Council, while such loss and injury would be absolutely and actually the consequence of the fire; and because by the terms of the policy the company reserved the right to repair or not at option, thus taking the risk of the power to repair, and of all loss which should accrue if repairing should be impossible from any cause. To hold that for an injury to the property, which results, without the fault of the insured, in a total loss to him, so far as value and use are concerned, the insured can only receive compensation to the extent of the appraised damage to the materials of which the building was constructed, and which were destroyed, would establish a narrow, illiberal and illogical rule. The value of the building consisted in its adaptation to use, as well as in the materials of which it consisted; and if it could not be restored to use after the fire, the loss was total, less the value of the materials rescued. In the very pertinent language of the plaintiff’s counsel, “The contract was not simply an agreement to pay for so much material as might be damaged by fire — to pay such amount as the material might actually be worth. Fixed by the conditions of the policy as the most hazardous of all structures, and with a premium adjusted accordingly, the insurer took the risk upon a ‘three-story wood warehouse,’ actually in use as such. The risk was not taken upon a mere collection of beams, boards and other materials, thrown together without purpose or special adaptation'. It was upon a building for trade, situated within a particular locality, within the jurisdiction of municipal authorities vested with legislative powers for special purposes, and subject to the exercise of those powers;” and the parties must be regarded as contracting with a full knowledge of all the facts and the law, and the risk to which the property was thereby subjected.

Of the power of the Common Council to pass the ordinances in question, we have no doubt. They contravene no provision .of the Constitution as we read it, and they were made in the exercise of a police power necessary to the safety of the city. A regulation of the use of property, or a prohibition of its repair when partially destroyed, cannot, to my mind, be regarded as a condemnation to public use.

The Court erred in excluding the testimony offered, and in the rule of damages given to the jury.

The judgment is reversed, and a new trial ordered.

Manning and Christiancy JJ. concurred.

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Concurrence Opinion

Campbell J.:

As I do not concur in all the views expressed by the Chief Justice, and have arrived at a different conclusion upon the validity of the action of the Circuit Court, I proceed to state the reasons upon which I have formed my opinion.

I concur in holding that if the by-law of the city of Detroit is valid and applicable, the plaintiff should recover on the basis of the claim which he sets up. If that bylaw governs the case ho had no right to repair his building without the leave of the Common Council, which has been refused; and the matter stands so far as he is concerned on the same footing as if he had been forbidden to repair by an ordinance leaving no room for such permission.

It was claimed on the argument, that where the inability to repair arises from a by-law, such loss, so far as it is thereby enhanced, is caused by the by - law and not by the fire. Some cases were cited which may possibly favor such a construction. In the case of Devaux v. Salvador, 4 A. & E. 420, where an insured vessel, in an accidental collision, was injured less than the vessel which she struck,' and was obliged by a decree in admiralty to contribute enough to equalize the injuries, it was held by the Queen’s Bench that the loss by reason of this contribution was not a necessary or proximate consequence of the collision, and was due simply to the provisions of law. The American cases cited to the same point hardly go so far as this, and are distinguishable on the fact's. I do not propose to refer to the somewhat inconsistent authorities. If by the very fact of the collision all these consequences became fixed, I am unable to perceive upon what ground it can be claimed, that the collision was not the responsible cause of all of them. If they were occasioned by subsequent events they might be too remote and contingent. But if determined absolutely by the collision itself, they must, as it appears to me, stand on the same footing with the other damages, unless, what is possibly the real difficulty in^that case, the liability was not supposed to exist except for specific injuries to the body of the ship.

The rule applicable to such cases as the present is very well stated in Irving v. Manning, the decision of which by the Common Pleas is reported in 1 C. B. 168, and affirmed by the House of Lords in 6 C. B. 391. In that case a ship had been injured but not destroyed, and it was shown she might be repaired and put in as good order as before, but that when so repaired she would be worth less than the cost of the repairs. She was insured for a much larger sum; and the question was, whether the insured could abandon as for a total loss, and recover the full amount, or whether it must be regarded as a partial loss, for which the recovery must be limited to the smaller sum. The case was held to be one of total loss. The opinion of the judges, delivered before the House of Lords, places the subject in a very clear light. They remark, “a vessel is totally lost, within the meaning of a policy, when it becomes of no use or value, as a ship, to the owner, and is as much so as if the vessel had gone to the bottom of the sea, or had been broken to pieces, and the whole or great part of the fragments had reached the shore as wreck: and the course has been in all cases in modern times to consider the loss as total, where a prudent owner, uninsured, would not have repaired:" p. 419.

This rule seems to me very simple, and entirely fair. It is the only rule which can give to the insured the indemnity he bargains for. If for any reason except a personal one the repairing of the property would not be undertaken by a prudent owner, who was not insured, it would not be reasonable to admeasure damages upon another basis practically false. If repairs are absolutely impossible, the remnants are worth nothing except as lumber. It can in my judgment make no difference why the repairing can not be done, if an insuperable obstacle exists. Any one such obstacle affects the owner as severely as any other obstacle. Submission to the law is as incumbent as submission to any other necessity, and must be regarded as equally unavoidable.

I am also of opinion, with the Chief Justice, that the renewal of the policy in controversy was in law a new insurance, and subject to all legal regulations in force at the date of such renewal.

The by-law in question, having been previously enacted, must, if valid, govern the case. I do not, however regard it as valid.

It appears distinctly that the warehouse insured had been erected for several years before the city charter was amended so as to authorize any interference with repairs to wooden buildings, and before the by-law in question was adopted. It also appears that the value of the injured building, for purposes of repair, was more than half of its value before the burning, and amounted to from $2000 to $3000; while, if not allowed to be repaired, the materials were of very trifling value. The effect of this by-law is to deprive plaintiff of property, in the shape of what is precisely equivalent to an unfinished house worth more than two thousand dollars.

It is claimed that this by-law, and the provisions of the city charter under which it was adopted, must be regarded as legitimate police regulations, whereby persons are only restrained from applying their property to injurious uses, and that the use of property may be regulated without infringing upon the enjoyment of it for other -purposes. It is also claimed that the language of the present charter is only an expression of what was implied in the former one. It does not appear whether the building in question was erected before or since the first laws which gave to the city the power to regulate wooden buildings; and if there has been no real change in these laws, there is force in the objection.

The present charter allows the city to prevent the “ location or construction” of wooden buildings, the “ removing” of such buildings, and the “ rebuilding or repairing” of the same, within the fire limits which may be adopted. See Charter of Detroit, Chap. 4 sec. 22, sub. 35; Laws of 1857, p. 102.

The former charter gave the city power to prohibit any person or persons to “erect or cause to be erected” any wooden buildings, “within such parts, streets or districts of said city as the public safety may require.” Act of Feb. 22, 1848, sec. 14; Rev. Charter of 1855, p. 29.

There is no foundation for any claim that these provisions are identical. The erection of a building brings into existence a building which had no existence before; and, if wooden buildings are perilous, creates a peril which never before existed. The repairing of a building neither changes its indentity nor increases the peril from what it was before the injury. And, so far as this peril is_ concerned, it is hardly imaginable that a repaired building can ever be so dangerous as a dilapidated one. But be this as it may, repairing is in no sense the same as “ erecting,” and could not be so construed under the most liberal rules of interpretation.

But these regulations are regarded by the courts as invasions of private privileges, of a character analogous to that of penal laws; and their terms are strictly confined to their literal import. See Stewart v. Commonwealth, 10 Watts, 307.

Thus the removal of a building and placing It with proper supports and repairs upon another lot has been held an erection: — Brown v. Hunn, 27 Conn. 332. Erecting an addition to a wooden building, and then putting up a chimney in the old part for the use of the addition, is held not to be the erection of “ an addition having in it a chimney or fireplace:’’ — Daggett v. State, 4 Conn. 60. So entirely remodelling a meeting-house or shop and converting it into a dwelling, is held not to be erecting a dwelling: — Booth v. State, 4 Conn. 65; Tuttle v. State, 4 Conn. 68. So, a building of wood partially filled in with brick, was held not within a regulation forbidding certain erections of wood: — Stewart v. Commonwealth, 10 Watts, 307.

This amended provision prevents the owner of a house which has been in the smallest degree damaged, by fire or otherwise, from repairing the building. If unroofed, as in the present case, by fire or by wind, and thus rendered untenantable until refitted, although it stands as a valuable erection, built before the law, and entirely capable of completion, this law by prohibiting its repair reduces it to all intents and purposes to a mere pile of materials.

The effect of such a provision is to destroy the building for any use whatever, as effectually as if torn down. It is in no sense a regulation of the use of property. So far as the land alone is concerned, it may perhaps be regarded as such a regulation. But the building - is quite as much property as the land. Were the city to tear down a house, it could not be said there was no property destroyed. If it were instead of violently destroying it to prohibit any one from inhabiting a house at all for any purpose, it is absurd to suppose no right of property is violated. That property of which our Constitution, following Magna Charta, declares no one shall be deprived without due process of law, does not mean the naked title, but signifies, as Blackstone well remarks, “ the free use, enjoyment, and disposal” of it: 1 Bl. Com. 138. Where a highway is laid out over land, it does not in general divest the estate, but no one ever imagined it was not a deprivation of property. The deprivation of the use, is the deprivation of the only value which property has; and is not within the power of tíie Legislature, unless the property is wanted. for public use, or unless taken under due process of law. While, if public policy requires it, future erections may be regulated within fair and honest limits, those already in existence can neither be actually nor constructively destroyed, without violating the rights of private property. As already suggested the law in question does not regulate the use of an injured building, but utterly destroys its use. This question was somewhat discussed jn Welch v. Stowell, 2 Doug. Mich. 332, where the Court animadvert very strongly against the legality of destroying property which was injurious merely from its improper use. The case of the Commonwealth v. Alger, 7 Cush. 53, which was the strongest case cited on the argument in favor of the power of regulating property by confining it in its uses, expressly declares it illegal to interfere with existing structures. In Tonawanda Railroad v. Munger, 5 Denio, 255, and in Williams v. Michigan Central Railroad Company, 2 Mich. 259, the use of property was so far regarded as property itself, that it was said to he incompetent for the Legislature to authorize cattle to. run at large on highways, because the owner of the land was entitled to the pasturage and all other rights, subject only to the public easement. See also Wynehamer v. People, 13 N. Y. 378; Brigham v. Edmands, 7 Gray, 359; Stephens v. State, 2 Pike, 291. I can imagine no principle or semblance of a principle which can justify the entire prevention of the use of any property, under the pretext of regulating its use. And the law now in question appears to me to attempt nothing less than this usurpation of power. It is a prohibition and not a regulation. See Austin v. Murray, 16 Pick. 121.

The power of regulating the use of property is not maintainable as an arbitrary one. It has never been held that the Legislature had an unlimited discretion in this respect. It must be exercised for some purpose of public safety. And, where the facts do not create the danger, a legislative declaration to the contrary can not avail. Thus in Walker v. Board of Public Works, 16 Ohio, 540, it was held that a law directing a dam to be abated as a nuisance, which was not in fact a nuisance, was invalid. It would be somewhat difficult, in most cases, to show an increase of fire risks from mere repairs to an injured building. Certainly there can be no such universal danger.

I am of opinion, for the reasons I have been compelled to give somewhat hastily, that the city of Detroit has no power to prohibit repairs on the building in question.

I am also of opinion that the by-law is not warranted by the law itself. No by-law'is valid which is not reasonable. And I think no by-law is reasonable which does not lay down some rule which will enable persons affected by it to know their rights and liabilities. This by-law does not lay down any rule, of proportion or otherwise, by- which any one can determine what amount of injury, or what other circumstances, will preclude repairs. It absolutely prohibits any repairs whatsoever, so far as the mandate goes, but, by qualifying the prohibition by the words “unless he shall have previously obtained permission of the Common Council,” it is left entirely uncertain. I do not doubt that we should presume that body will act fairly, but it seems to me that the law does not contemplate any such flexible and uncertain rules: — Austin v. Murray, 16 Pick. 121.

I think there was no error in excluding the by-law from the case, and that the judgment should be affirmed.

Judgment reversed, and new trial ordered.