Havens v. Germania Fire Insurance

27 S.W. 718, 123 Mo. 403, 1894 Mo. LEXIS 243

• Court: Supreme Court of Missouri
• Decided: June 25, 1894
• Status: Published

Opinion

Gantt, J.

— All the policies of insurance sued on in this case were written and issued in November, 1884, after section 6009, Revised Statutes, 1879, had become a law of this state. Several of said policies contained a stipulation that in case of loss, the damage should be estimated according to the actual cash value of the property at the time of the loss or fire, which should, in no case, exceed the cost of replacing or restoring the burnt property, whereas section 6009, Revised Statutes, 1879, provided: “Whenever any policy of insurance shall be written to insure any real property, including building or buildings owned separate from the realty, as well as such as are a part of the realty, and the property insured shall be wholly destroyed, and without criminal fault on the part. of the insured or his assigns, the amount of the insurance written in such policy shall be taken conclusively to be the true value of the property when insured, and the true amount of loss and measure of damages when destroyed, and the company may either pay the amount written in such policy, in cash, or rebuild and restore such building to its original condition as to value, size, plan and general finish, such work of rebuilding to commence within sixty days after the destruction of such building and be completed with all possible speed, and to clear and remove all debris from the premises.”

It is assumed by the appellants, Sage and his assignees, that if the conditions as to the subject-matter of the insurance and the nature of the loss bring these policies within the terms of this section, then the stipulations'of the policy must yield to the statute, and this is not seriously controverted by the insurance companies, their only contention being that the case is without the statute. It is now the established rule that, if the facts bring the case within the regulations prescribed by law, the statute enters into and forms a part of the contract of insurance as completely as if written into it.

Thus in White v. Ins. Co., (4 Dillon (U. S. C. C.) 177) Judge Dillon, speaking of certain provisions in life insurance policies issued in this state after the enactment of section 5849, Revised Statutes, 1889, said: “The legislature of Missouri conceived, and we think wisely, that the promises held forth to the assured in the policies in general use were too often a delusion and a snare, and as the courts were powerless to correct the evil, it ought to be corrected by statute. * * * We are of opinion that policies issued and delivered in Missouri, after that act took effect, fall within its protective operation; and as to such policies the act is to be treated as if incorporated therein. * * * The general rule is that laws in existence are necessarily referred to in all contracts made under such laws, and that no contract can change the law. ” To the same effect may be cited Wall v. Society, 32 Fed. Rep. 273; Queen Ins. Co. v. Leslie, 24 N. E. Rep, 1072; Chamberlain v. Ins. Co., 55 N. H. 249; Reilly v. Ins. Co., 43 Wis. 449; Thompson v. Ins. Co., 43 Wis. 388; Bammessel v. Ins. Co., 43 Wis. 463; Cayon v. Ins. Co., 68 Wis. 510; Oshkosh Gaslight Co. v. Ins. Co., 71 Wis. 454; Emery v. Ins. Co., 52 Me. 322; Barnard v. Ins. Co., 38 Mo. App. 106.

Section 6009, Revised Statutes, 1879, by its terms, applies to policies written on “real property” and to cases where the property is “wholly destroyed.”

I. The defendants, the insurance companies, insist that the statute has no application to eases of concurrent insurance, but governs only in cases of single policies. This last contention we regard as untenable.

We hold that where several concurrent policies of insurance upon real property have been written with the consent of the respective companies and the property is wholly destroyed by fire the aggregate amount of such insurance must, under section 6009, Revised Statutes, 1879, be taken, conclusively, to be the true value of the property insured and the true amount- of the loss and measure of damages when so destroyed.

We think there can be no valid reason why the mere fact that several companies assume each a part of the whole risk should affect the operation of the statute. If, in order to induce good faith on the part of the insured, and thus give greater security to the insurer, th§ companies desire to make the owner bear a portion of the risk, this protection can readily be secured by limiting the aniount of concurrent insurance.

The insurance is written by the consent of all the companies and it must be presumed that when each consented to the additional insurance by the others, in its opinion and estimation, the total insurance was not excessive or disproportioned to the value of the property. The amount written in each policy is expressly assented to by all the other insurers, and they must be held to agree that the aggregate of their several policies is the value of the property. To hold otherwise is to repeal the statute in every case where there is more than one policy on the same property, whereas it was intended to apply to all. When we consider the well known custom of the different agencies representing often a number of companies, and distributing.the insurance they write equitably among their several principals, we can readily see how easily under this contention they can render the statute nugatory in the most important risks. We think the statute is as obligatory in concurrent as in a single policy. Barnard v. Ins. Co., 38 Mo. App. 106; Oshkosh Gaslight Co. v. Ins. Co., 71 Wis. 454; Ins. Co. v. Ice Co., 64 Tex. 578.

II. We next inquire whether the subject-matter of the insurance brought it within the statute. •

It was and is an elementary principle of common law that land includes all houses and buildings standing thereon; that whatever is affixed to the soil is thereby made a part of it and passes by a grant of the land without other designation. Personal property prepared and intended to be used with the land, having been affixed to it and used with it becomes a part of it by accession. To this general principle are the equally well settled exceptions as to trade fixtures and the relaxation in favor of the tenant as between landlord and tenant and tenants for life and remainder-men, with which we are not concerned in this case. While the diversity of opinions on the subject of fixtures, is bewildering, it is generally held that millstones, hoppers, and bolting apparatus as usually adjusted in a mill or machinery in a factory, constitute a part of the real estate and will pass by deed or mortgage of the mill itself, and descend as real estate to the heirs 'at law. Rogers v. Crow, 40 Mo. 91; Thomas v. Davis, 76 Mo. 72; Teaff v. Hewitt, 1 Ohio St. 528; Winslow v. Ins. Co., 4 Metc. 306.

So that we take it, that a deed or mortgage of the land upon which the Waldron Mill stood would prima facie have passed not only the building but all of the machinery described in the policies in suit.

Affixed as it was and constructed and adapted as it was and placed in the mill to- be used in and as a part of it, it would have passed by a grant of the real estate as a part of it. This we think is not seriously questioned as a general rule, but the contention is that while this is true, yet there are cases in which property so used, has by consent and agreement of the owner and mortgagees been treated as personal property and that in such case the law will regard their agreements and so consider it.

Unquestionably there are many such cases but they depend upon the peculiar facts in each, and do not controvert any positive statute. Smith v. Waggoner, 50 Wis. 155, and cases cited. Two reasons occur to us why this exception should not apply in this case. The. first, and by far the most cogent, is that such a construction, is against the policy and spirit of the statute. In construing this and similar statutes, the authorities already cited announce with great clearness that this statute is founded upon reasons of public policy and where provisions of the policy run counter to those of the statute, the statute controls. Thus when the policies provide that “the loss shall be estimated according to the true and marketable value,” it was held the stipulation could not stand because the statute fixed the amount written in the policy as the amount of recovery and precluded an inquiry into value, nor was an agreement to submit to arbitration allowed in the face of such a statute. Thompson v. Ins. Co., 45 Wis. 388; Thompson v. Ins. Co., 43 Wis. 459-463; Seyk v. Ins. Co., 41 N. W. Rep. 443. And in Queen Ins. Co. v. Leslie, 24 N. E. Rep. 1072, the supreme court of Ohio, discussing a similar statute requiring the companies to examine the premises before issuing their policies, and then providing that the amount named in the policy should fix the damages in the absence of' intentional fraud, in reply to the claim that the parties might make a different agreement, says: “The statute can not be treated as conferring upon the assured a mere personal privilege which may be waived or qualified by agreement. It has a broader scope. It moulds the obligation of the contract into conformity with its provisions and establishes the rule and measure of the insurer’s liability. Terms and conditions embraced in the policy inconsistent with the provisions of the statute are subordinate to it and must give way.”

In Wall v. Society, 32 Fed. Rep. 273, Judge Brewer, in discussing the right of the parties to waive the Missouri statute as to forfeiture after the payment of two annual premiums, held that a provision in a policy which required three annual payments before the insured was entitled to temporary insurance, was void and in contravention of the statute.

Keeping in view, then, the manifest purpose of our legislature to give greater security to the insured, we hold that it is not competent for insurance companies under this statute to avoid their fixed liability for losses on real property by agreeing with the owner to denominate it personal property, and thus by a mere stroke of the pen deprive its owner of the protection of this statute, when for all other purposes in law it is real estate.

But, secondly, independent of the policy of the statute, it is clear this statute was enacted for the benefit of the insured, and if a waiver be allowed, it ought to clearly appear that it was his intention to give up the protection secured by the statute, and we do not think these policies evince such a design. The separate valuation is the only foundation for this claim; but it will be observed that it nowhere designates it as personal property. While the policy specifies the property insured, it leaves it to the law to define its character, and, by the description given, the law denominates it real property.

Reading the whole policy together it was, after all, simply the insurance of the Waldron Mill and not the several elements that went to constitute it. We think the fair and reasonable construction of the policy is that it was written on real property and is within the protection of the statute’.

III. Was the property “wholly destroyed,” within the meaning of section 6009, Revised Statutes, 1879?

The facts themselves largely determine this question. All the property insured, the mill building and all of the machinery in it, was wholly destroyed, but it so happened that pending the repairs, Sage had removed a part of the machinery and stored it in another building, which was not exposed to the fire. The portion thus saved was found by the circuit court to be of the value of $380. Does the fact that, this small amount was not destoyed under the circumstances take the loss out of the statute? The property was valued at $8,400 in the policies, and the right to repair and make improvements was expressly given. This small amount of machinery was removed for a legitimate purpose, and in strict accordance with the terms of the policies and was a mere trifle compared to the whole. Had it been in the mill at the time of the fire and been saved by the exertion of the owner, or his neighbors, would it have been a total loss? It seems to us there ought to be but one answer to this contention.

If defendant’s contention be carried to its logical conclusion, if a manufacturer should be compelled to remove a piece of his machinery and send it to a repairer and his mill burn before its return, it would not be within the protection of the statute.

The terms of purchase by Sage from Havens stipulated for a change to a roller mill. If in effecting this change some of the old machinery was useless and not adapted to the roller process and hadbeen stored in this other building pending the repairs and the mill had ' burned with all the remaining, machinery, would it be seriously contended that it was not a total loss ? Surely not. The useless machinery that was not exposed to the risk, would reduce the valuation to that extent, but certainly would not affect the risk otherwise,

We do not think that the question of partial loss can arise under these circumstances. All the property covered by the_ policy at the time of the fire was wholly destroyed. The property insured- was a mill and the fire destroyed its identity and specific character as such.

The words “wholly destroyed” have been placed in statutes like this in many of the states of the union, and, so far as we have been able to find, the construction appears to be uniform that, as applied to buildings, they mean totally destroyed as a building, although there is not an absolute extinction of all its parts.

It matters not that some debris remains which may be useful or valuable for some purposes. Such was the construction given in the subjoined cases and such is our construction. Williams v. Ins. Co., 54 Cal. 442; Seyk v. Ins. Co., 41 N. W. Rep. 443; Barnard v. Ins. Co., 38 Mo. App. 106; Oshkosh, etc., Co. v. Ins. Co., 31 Fed. Rep. 200; Ins. Co., v. Sherlock, 25 Ohio St. 59; Wallerstein v. Ins. Co., 44 N. Y. 204; Ins. Co. v. Fogarty, 19 Wall. 640.

We think the circuit court erred in not applying section 6009, Revised Statutes, 1879, to the facts and in not holding that the aggregate of the policies conclusively fixed the value of the mill and machinery and the measure of damages, less the sum of $380, the amount of machinery not exposed to the fire. 1 Wood on Ins., p. 100; Lewis v. Rucker, 2 Burr. 1167. As the circuit court found the insured had complied with all the conditions on their part and the only question-being whether the statute applied, it would appear unnecessary to put the parties to the cost of another trial, hence the judgment is reversed with directions to the circuit court to render a decree for the aggregate amount of said policies, less $380, with interest at six per cent, thereon from the time of filing the cross bill by Sage and his assignees and distribute the fund as the rights of the plaintiffs and Sage, McAdams and Harrington to the same shall appear.

Black, C. J., Brace, Burgess, Macearlahe, and Sherwood, JJ., concur. Barclay, J., dissents.