Reilly v. Franklin Insurance Co. of St. Louis

43 Wis. 449

Opinion

Cole, J.

I. The material part of the answer to be considered on the demurrer is, the allegation that the policy provided that in case of fire the loss or damage should be established according to the true and actual cash marketable value of the property when the loss happened; and that the true and actual cash marketable value of the property, at the time of the fire, was less than the amount of insurance on the property. It is claimed that this shows a partial defense to the action. The insured building was a brick hotel, which was wholly destroyed. The policy was issued after ch. 347, Laws of 1874, took effect, and the case therefore necessarily involves a construction of that statute, and its application to the answer. The act of 1874 is entitled “ an act to regulate insurance companies,” and provides that in all cases where an individual or company authorized by the laws of this state to take risks, issue policies and transact the business of insurance in this state, shall insure or issue a policy of insurance against loss by fire upon the real property of any individual or corporation in this state, and the property so insured shall be wholly destroyed without criminal fault on the part of the assured, the amount of insurance written in the policy “ shall be taken and deemed the true value of the property at the time of such loss, and the amount of the loss sustained by the individual or corporation in whose favor the said policy was issued, and such amount shall be taken and deemed the measure of damages.” The words of this statute are neither obscure, doubtful nor ambiguous as to their meaning, and they therefore afford but little room for interpretation. In clear and precise terms they make, in case of total loss of real property without criminal fault of the assured, the amount of insurance written in the policy, the value of the property at the time of loss; and that amount is fixed as the measure of damages. It is analogous to a valued policy; only here the statute peremptorily declares what shall be deemed to be the real value of the property at the time of loss, and what sum shall be paid as indemnity. And as the intention of the legislature is obvious, the statute cíearly prescribing that the amount of insurance written in the policy shall be deemed the true value of the property at the time of loss, it results that the above allegation is bad and shows no defense. For if the statute is to have effect as enacted, nothing is left open in the case to proof; “ the true and actual cash marketable value of the property ” at the time it was destroyed, is not a matter to be inquired into, as the amount of insurance written in the policy determines the amount of loss and fixes the extent of the recovery. The ingenious counsel for the defendant insisted that the statute intends, and should be construed as only to mean, that the amount of insurance written in the policy shall be taken as j? rvina fade the value of the property, so as, in case of total loss, to place the onus of proving the real value upon the insurer instead of the insured. But this construction seems quite inadmissible in view of the language, which expressly declares, not only that the amount of insurance written in the policy shall be taken and deemed as the true value of the property at the time of the loss, but that “ such amount shall be taken and deemed the measure of damages.” It will be seen that the statute adopts the amount of •insurance written in the policy as the rule of damages, or amount of compensation, leaving no question open as to what in 'fact was the real value of the property destroyed. The manifest policy of the statute is to prevent over insurance, and to guard, as far as possible, against carelessness and every inducement to destroy property in order to procure the insurance upon it. "Where property is insured above its value, a strong temptation is presented to an unscrupulous and dishonest owner, either to intentionally burn it, or not to guard and protect it as he ought. Not sharing in the risk, with the insurer, it is for his advantage that it be destroyed; and it often is destroyed with other property, when it would not have been but for the fact of such excessive insurance. And insurance companies, too, actuated by motives of gain, or incited by sharp competition in business, take risks, frequently, recklessly and for amounts in excess of the real value of the property insured; which they would be less likely to do if compelled to pay the amount of insurance written in their policies. It is evident that it was to prevent these évils and guard against these mischiefs, that the statute was enacted. Its policy seems to be wise and wholesome; but if it ¡were not so, it is not the province of the court to emasculate the law by any nice or forced construction of its language. As it stands, it clearly makes the amount of insurance written in the policy the measure of the value of the property and the rule of damages. And, as the meaning and intent of the statute are clear, effect must be given to it, certainly as regards this class of property. The measure of damages, therefore, being fixed by the statute, the company had no right to show that the assured sustained a loss less than the amount written in the policy.

II. But the counsel further contends that, by reason of the stipulation in the policy, the statute does not apply and cannot govern as to the extent of the defendant’s liability. It is said the parties were abundantly able to contract for themselves; that they could restrict or change the rule provided by the statute; and that the assured did expressly waive that.rule, by agreeing that the loss should be established according to the true and actual cash marketable value of the property when destroyed. We have no doubt that the statute applies to the policy; and, so far as there is any conflict or inconsistency between it and the provisions of the policy, the statute must control. A strictly analogous question was presented to the U. S. circuit court for the western district of Missouri, in White v. Conn. Mut. Life Ins. Co. (Central Law Journal, Dec. 7, 1877); and it was so ruled. In that case, it was held that an act of the legislature of Missouri, in respect to policies of life insurance, extended to all policies delivered after the act took effect; and that, where the provisions of the act were in conflict with the stipulations of the policy, the act controlled. The" opinion is by Dillon, C. J., who, among other things, says: “"We are of the 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; certainly, unless there is an express provision in the policy to. the contrary, if it be competent, indeed, to insert such a provision. Our attention has been called to a late decision of the court of appeals of Kentucky, in which a conclusion is reached that seems to be in conflict with the view above expressed. Farmers, etc., Ins. Co. v. Curry, 10 Ch. L. N., 43.” We have carefully examined the decision of the court of Kentucky to which Judge DilloN refers, and like him fail to be convinced by its reasoning, and cannot adopt the doctrine there laid down. For’it seems to us that the decision defeats the very policy and purpose of the statute; and we are therefore unwilling to follow it. See Emery v. Piscataqua F. & M. Ins. Co., 52 Me., 322, and Chamberlain v. Ins. Co., 55 N. H., 249. We have already said that the legislature seems to have enacted the law of 1874 to prevent or do away with, as far as possible, the great evils and mischiefs arising from over insurance. Consequently, on grounds of public policy and in order to accomplish that end, it was provided that the amount of insurance written in the policy should be conclusive as to the value of the real property destroyed. Now the law is well settled, that where a statute is founded upon public policy, a party cannot waive its provisions even by express contract. “ The contracts of private persons cannot alter a rule established on grounds of public policy.” Emery v. Piscataqua F. & M. Ins. Co., supra; Sedgw. Stat. & Con. Law, p. 70. The law of 1874 must be regarded as though written in the policy itself; and the stipulation that the loss shall be established according to the actual cash marketable value of the property when destroyed, being in conflict with, the rule of damages prescribed by the statute, must fall. The counsel argued that the same rule obtains here as in cases where common carriers have restricted their common-law liability by special agreement. But the cases are not analogous, for very obvious reasons. Where the owner, in consideration of paying a less rate, agrees to relieve the carrier from his liability as insurer of the property, no principle of public policy may be violated. But suppose he should contract to exempt the carrier from liability for gross negligence? It would not be difficult to find respectable decisions which would condemn such a contract as unreasonable and contrary to public policy.

It will be noticed that the statute relates solely to insurance upon real property, which the parties can see and fix a value upon when the insurance is effected. If companies exercise the care which it is for the public interest they should use in making the valuation, there will be no. danger of excessive insurance.

We were referred to some cases in Massachusetts bearing upon the question under consideration; but as we do not rest our decision upon them, we will only remark that they hold, for example, that where the policy states that the amount insured is three-fourths of the value of the property as stated by the applicant, the valuation thus agreed upon by the parties is conclusive, in the absence of fraud. See Luce v. Dorchester Ins. Co., 105 Mass., 297; Brown v. Quincy Ins. Co., id., 396.

By the Court. — The order sustaining the demurrer to the answer is affirmed, and the cause remanded for further proceedings.