277 Mo. 399 | Mo. | 1919
This is an action on a contract of insurance for a loss sustained by fire. Jurisdiction herein by reason of the amount involved lay originally in the St. Louis Court of Appeals, but that learned court, after filing an opinion reversing and remanding it for errors, certified it up to us, because Reynolds, P. J., deemed the holding in the opinion, upon the point of allowing an attorney’s fee as damages for an alleged vexatious refusal to pay the loss, in conflict with the decisions both of. the Kansas City Court of Appeals and of this court.
The facts of the case, so far as concern the pleadings and issues, are carefully and clearly stated by the Court of Appeals, thus:
“This is an action on one of -eleven policies insuring the plaintiff for one year against all direct loss or damage by fire, the total amount of insurance being $28,500, the amount carried by plaintiff in the defendant company, $3000. The property insured was personal property, machinery, power appliances, etc., contained in and on the brick building occupied by plaintiff and situated in the City of St. Louis. Insurance in companies other than the defendant is permitted in the policy. Alleging the total loss of all the property insured, in the amount of at least $31,981.32, plaintiff asked judgement against defendant in the sum of $3000 with six per cent interest, and for reasonable attorney’s fees and ten per cent damages for vexatious refusal to pay, as provided by statute.
“The answer, admitting the execution and delivery of the policy, sets up a provision in it that the company ‘shall not be liable beyond the actual cash value of the property at the time any loss or damage occurs, and the loss or damage shall be ascertained or estimated according to such actual cash value, with proper*409 deduction for depreciation, however caused, and shall in no event exceed what it would then cost the insured to repair or replace the same with material of like kind and quality; said ascertainment or estimate shall be made by the insured and this company, or, if they differ, then by appraiser, as hereinafter provided; and, the amQunt 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 is further provided that in the event of the disagreement as to the amount of loss, it shall £as above provided,’ be ascertained by two competent and disinterested appraisers, each party selecting one, and the two so chosen, first selecting a competent and disinterested umpire, the appraisers together shall then estimate and appraise the loss, stating separately sound value and damage, and failing to agree, shall submit their differences to the umpire, and the award in writing of any two shall determine the amount of such loss, each party paying the appraiser respectively selected by them and bearing equally the expense of the appraisal and umpire; it being further provided that £the loss shall not become payable until sixty days after the notice, ascertainment, estimate and satisfactory proof of the loss herein required have been received by this company, including an award by appraisers where appraisal has been required,’ and that the insuring company shall not be liable under the policy for a greater proportion of any loss on the described property, or for loss by and expense of removal from premises endangered by fire, than the amount insured shall bear to the whole insurance. The answer, setting up these clauses in the policy, avers that, after the occurrence of the fire, plaintiff and defendant entered into an agreement for submission to appraisers, the agreement dated March 24,1913; that under this agreement William*410 Pay and Chester T. Drake were appointed appraisers; that they selected Fred E. Briner as umpire; that Pay and Drake qualified as appraisers and Briner as umpire and proceeded to and did estimate and appraise the loss caused by the fire, stating- separately sound value and damage in conformity with the provisions of the policy, and on April 7, 1913, made their award in writing, placing the sound value of the property at $34,732.80, and the loss and damage at $9547.08. Claiming that this fixed the amount of the total loss, and as the total amount of insurance was $28,500, it is averred'that the amount due under this policy by this defendant was $1004.95, which sum, it is averred, defendant has always been ready and willing to pay, but that plaintiff, notwithstanding the agreement above set out, had failed and refused to receive that sum,, and which sum defendant now, by its answer, again tenders.
“The reply, taking issue on the amount of the loss, admits the stipulations in the policy set out, but denies that pursuant to the provisions of the policy plaintiff and defendant entered into an agreement for submission on appraisers as set forth in the answer, and alleges that under the provisions of the policy plaintiff and defendant undertook to have the loss and damage fixed as hereinafter stated and as provided in the policy. It is then averred that after the fire and loss a disagreement arose between plaintiff and defendant as to the amount of loss and that under the terms of the policy plaintiff selected Fay, a competent and disinterested person, as appraiser, to act for it, and defendant selected Drake, and these two selected Briner, as umpire, but it denies that either Drake or Briner were competent or disinterested or unbiased, alleging the contrary, specifically alleging that Briner was ignorant, inexperienced and incompetent. It further denies that either Fray or Drake or Briner, or any of them, ever correctly or fairly estimated or appraised the loss caused by the fire to the property; denies the award was made in writing oo April 7, 1913, or at any time, and denied that*411 by any award made, the total amount- of loss caused by tbe fire was only $9547.08; avers that after these appraisers and umpire had been selected and started in to investigate and appraise the loss, and that after they had been at work for some time, Fay was of the opinion, and so declared to Drake and Briner, that the sound value of the property was $35,981.65, and that'the amount of loss and damage which was directly caused to the insured property by the fire was at least $28,904.72, but that defendant’s appraiser Drake and umpire Briner wrongfully, fraudulently and illegally proceeded and together pretended to' come to an award in which they pretended to fix the loss at $9547.08, which award Fay refused to sign or agree to. It is further alleged that Drake and Briner failed to take into consideration a large amount of property lost, which was of the value of $1800 and of which the appraiser, Drake and the umpire Briner were notified by Fay, but which they excluded from any award. Eepeating the charges of the incompetency, unfairness and partiality of Briner and Drake and alleging, among other things, that Briner had consulted his own attorney and outside parties, and averring that in arriving at their conclusion neither Briner nor Drake ever ascertained, or knew, or were able or competent to know or to find, nor did either of them ever exercise any independent judgment or opinion as to what loss and damage was occasioned by the fire, but they ‘guessed’ at the amount of loss and damage; had taken opinions thereon, secretly and privately given by parties and attorneys who were not informed in regard to the matters and who were unknown to plaintiff, and before whom plaintiff was unable to appear. Hence it is alleged that the pretended award, by reason of these, facts, was wholly inadequate and insufficient to express or cover the amount of loss and damage which plaintiff suffered by reason of the fire having damaged the insured property, and that this loss was never ascertained by any competent or disinterested appraiser or umpire and was never ascertained or known by*412 either Drake or Briner, and that by reason of these facts, and of the facts before alleged,-plaintiff alleges that the plaintiff’s award is void and of no effect.
“It is further averred that neither Drake nor Briner notified or permitted Fay or plaintiff to know the parties from whom they were seeking private advice, and upon whose opinion they were acting in the matter so that this plaintiff could, as it would have done, have proven by competent and disinterested parties, that the loss which was occasioned to the .property was the amount stated in the petition.
“The cause was tried before the court and a jury and resulted in a verdict for plaintiff, vacating the-award and assessing the damage for loss sustained on the policy in the sum of $2',829-, with interest in the amount of $74.95, and attorney’s fee for services in this action in the sum of $500.”
So far as the facts shown upon the trial are concerned, it is enough to say that the evidence offered by plaintiff tended to prove the allegations of the petition and the reply; while that offered by the defendant tended to prove the allegations of the answer and to contradict- the evidence offered on plaintiff’s part. Further facts will be found in the opinion of the Court of Appeals (Non-Royalty Shoe Co., v. Phoenix Assurance Co., 178 S. W. 246), and if necessary we shall refer in our discussion to any additional matters which are pertinent.
If the case were one sounding in equity we might hesitate to agree that the evidence adduced is sufficient. But we are of the opinion that there was substantial evidence from which unbiased jurors could draw inferences to sustain the charge of fraud. The triers of
The jury did see fit to set aside and disregard the appraisement of the arbitrators as instruction one (referred to in the instruction copied above) advised them they were authorized to do if they found the facts upon which instruction one was hypothesized. Defendant urgently insists that the above instruction is erroneous for that the measure of damages therein set forth is incorrect. And this is so, says defendant, because the policy of insurance sued on here provides, touching the measure'of damages, thus:
‘ ‘ This company shall not he liable beyond the actual cash value of the property at the time any loss or damage occurs and the loss or damage shall he ascertained or estimated according to such actual cash value with proper deductions for depreciation, however caused, and shall in no event exceed what it would then cost the insured to repair or replace the same with material of like kind and quality.”
Plaintiff’s answer to this suggestion of .error is that the above provision of the policy is in conflict with our statute, Section 7022, Eevised Statutes 1909, and that being so in conflict the provision of - the policy must yield to the provisions of the statute. The statute relied on reads thus:
“Whenever there is a partial destruction or damage to property covered by insurance, it shall he the duty of the party writing the policies to pay the assured a sum of money equal to the- damage done to the property or repair the same to the extent of such damage, not exceeding the amount written in- the policy, so that said*418 property shall he in as good condition as before the fire, at the option of the insured.” [Sec. 7022, E. S. 1909.]
We think there is a conflict between the statute and the terms of the policy, so far as concerns the application of the statute here contended for by defendant. For it will be noted that Section 7022, supra, provides that the insurer, in case of a partial loss (and this was a partial loss, only) shall pay to the assured a sum of money equal to the damage done to the property by the fire, or repair the damage, so that the property shall be in as good condition after the fire as it was before the fire. There are therefore in this statute two alternative duties, which are, either (a) to pay in money a sum equal to the damage done to the property, or (b) to repair the property in such wise as to restore it to the condition it was in before the fire. It is to be noted that this statute does not require the assured either to repair or to accept from the insurer money with which to repair, but it requires the insurer to repair. Nor does the option to elect which one of these things shall be done rest with the insurer, but on the contrary this option of election is plainly conferred on the assured. [Branigan v. Insurance Co., 102 Mo. App. 70.] It is true that in the instant case the assured stipulated in the agreement to submit the question of damages to arbitration, that the measure of its damages should be computable pursuant to the terms of the policy. That is, to quote from this stipulation, that the damages “shall in no event exceed what it would then cost the insured to repair or replace the same with material of like kind and quality.” If this stipulation be binding upon the plaintiff, even if the agreement to arbitrate be found void for fraud, then of course it would constitute an election on plaintiff’s part of the statutory duty of the insurer to repair. But we do not think the agreement can be void as to the arbitration and valid as to this stipulation. Such a view would seem wholly to preclude the maintenance
The books are full of cases which hold that a contract of insurance, which fixes the measure of- damages in case of loss at the cost of repairing the damaged property, is enforceable pursuant to its terms. But such cases merely construe the provision of the policy, unmodified by a statute such as ours (Sec. 7022, supra), which, lacking an election by the assured to have repairs made, renders the. policy prevision, inapplicable. [Branigan v. Insurance Co., 102 Mo. App. 70.] While it is somewhat novel to apply the-partial-loss statute to a fire-damage on personal property, neither reason nor authority has been called to our attention forbidding such application, nor have we been able to find any such after a somewhat careful search. We are of the opinion therefore that this contention of defendant should be disallowed.
The converse of this whole question is presented upon a consideration of instruction numbered 13', which the court below gave for the defendant. This latter instruction, following the terms of the policy and the stipulation in the agreement to arbitrate, fixed the
This is a penal — indeed a highly penal — statute, and so it ought to be strictly construed. No one ought to be allowed to profit by it unless he brings himself strictly within the letter of its provisions. While for other reasons which readily suggest themselves, we ap
But these considerations while important (since for error the case must be tried again), are yet afield from the point most strenuously urged, which is, to-wit: Was there any substantial evidence of a vexatious refusal to pay this loss? We are of the opinion that there was not. One fact alone, which is not disputed, is decisive of this question. The policy is apparently of the standard form, and in common with contracts of this sort provided that “the loss shall not become payable until sixty days after the notice, ascertainment, estimate and satisfactory proof of the loss herein required have been. received by this company, including an award by appraisers when appraisal has been required.” The appraisal was agreed to by a stipulation in writing, so the question whether Section 868,
We are convinced that a vexatious refusal to .pay an insurance loss is not to be deduced from the mere fact that upon suit the verdict is adverse to the defendant. [Patterson v. Insurance Co., 174 Mo. App. 44; Keller v. Insurance Co., 198 Mo. 440.] If the fact of an adverse decision is to constitute the sole and decisive test, it would be fairly plain that this court was in error when it held the statute to be constitutional. For it is only upon the fundamental ground of a vexatious refusal to pay that the penalty inflicted by the statute can be upheld. The defendant is to be allowed to entertain an honest difference of opinion as to. its liabiliy, or as to the extent of such liability under the contract of insurance, and to litigate that .difference;
“And while affirmative proof is not required to show vexatious refusal, yet the penalty should not be inflicted unless the evidence and circumstances show that such refusal was wilful and without reasonable cause as the facts appeared to a reasonable and prudent man before the trial; and merely because the judgment, after trial, is adverse to defendant’s contention, is no reason for inflicting the penalty.” [Patterson v. American Ins. Co., 174 Mo. App. l. c. 44.]
In the case at bar there was no refusal 'to pay after the Time at which by the terms of the policy, defendant became bound to pay. And while lapse of such time would not, of course, always be the true test, since the vexatious and recalcitrant attitude of the défendant might by the proof be shown to be such as .that a delay to sue for the 60 days allowed would be futile, yet there is not in this case any showing of any such attitude. [Young v. Insurance Co., 269 Mo. 1; Pay v. Insurance Co., 268 Mo. l. c. 389.] We are constrained to say that there was not in evidence any substantial facts upon which to base a finding of any penalty for vexatious refusal to pay the loss, and if upon a new trial none be offered, this issue, ought not to be submitted to the jury.
Other alleged errors are urged in the briefs of counsel, but since these are such as will not of necessity occur upon a new trial, we shall not take, up space in discussing them. For the error noted let the case be reversed and remanded for a new trial not inconsistent with what we have herein written. It is so ordered.
PER CURIAM: — Pending the term, respondent comes and enters as of the date of the judgment nisi,