Case Name: German American Insurance Company v. McBee et al.
Court: Supreme Court of Ohio
Jurisdiction: Ohio
Decision Date: 1911-12-12
Citations: 85 Ohio St. 161
Docket Number: No. 12086
Parties: German American Insurance Company v. McBee et al.
Judges: Spear, C. J., Price and Donahue, JJ., concur.
Reporter: Ohio State Reports, New Service
Volume: 85
Pages: 161–174

Head Matter:
German American Insurance Company v. McBee et al.
Building totally destroyed — Except foundation — Settlement of loss by insurers — Section 3643, Revised Statutes — Insurance of cellar not prohibited — By Section 3691, Revised Statutes — Cellar must be insured for specific sum — Section 3643, Revised Statutes, may apply — In case of more than one policy.
1. Where a building or structure, is totally destroyed except the foundation walls, the fact that the description in an insurance policy, covering the property, includes the foundation, does not prevent the application of Section 3643, Revised Statutes, in the settlement of the loss.
2. Section 3691, Revised Statutes, does not prohibit the insurance of the cellar and foundation walls under a building or structure, but does provide, that such walls shall not be included or considered a part of the “building or structure” in settling losses, and where the building or structure is also insured in the same policy, the cellar and foundation walls must be insured for a specific sum, and described separately, from the building or structure.
3. Where a building or structure is totally destroyed by fire, the fact that there is more than one policy of insurance on the property, does not prevent the application of Section 3643, Revised Statutes, in the settlement of the loss.
(No. 12086 —
Decided December 12, 1911.)
Error to the Circuit Court of Hamilton county.
A policy of insurance was issued by plaintiff in error November 30, 1906, on the dwelling house, smoke house, chicken house and coal house of defendants in error for sums aggregating $2,080. Suit was brought in the common pleas court of Hamilton county to recover on the policy for the total loss of the buildings by fire. The petition averred that the plaintiffs below had complied with all the terms and conditions of the policy.
There were three defenses in the answer, the first of which was substantially a denial of the total loss of the buildings, and that the foundation of the dwelling house was only slightly damaged.
The second defense alleged that the foundation of the dwelling was slightly damaged, but not destroyed, and sets out various provisions of the policy for ascertaining the loss by appraisement in the event of disagreement between the parties; that there was disagreement as to the amount of the loss and that the company demanded an appraisement which the plaintiff refused. The purpose of this defense was that even if it should appear that there had been a total destruction of the property except the foundation under the dwelling, nevertheless the company would be entitled to an appraisement for the reason that the foundation is insurable, although by statute it is made no part of the building, and' that therefore, the valued policy law, Section 3643, Revised Statutes, would not apply.
The third defense sets out certain provisions of the policy as to concealments and misrepresentations, and avers that plaintiffs did conceal certain matters referred to when the policy was issued, which if they had not concealed would have- precluded the issuance of the policy. An amendment was filed to the second defense which is, in • substance, that the policy sued on contained a provision that the company should not be liable under the policy for a greater part of any loss on the property than the amount thereby insured should bear to the whole insurance, whether valid or not, or by solvent or insolvent insurers; that at the time of the loss the plaintiffs had other insurance on the dwelling house in the sum of $2,000, and that the cash value of the dwelling at the time of the fire did not exceed $2,000.
A reply was filed which in effect denied generally the defenses set out in the answer.
A demurrer was filed and sustained to the amendment to the second defense of the answer.
On the trial of the case in the common pleas court the jury. returned a verdict for the full amount of the policy as for a total destruction of the property insured. Judgment was entered on this verdict and the circuit court on error affirmed this judgment. Error is now prosecuted here to reverse the judgments of the courts below. Exceptions were reserved to the admission and to the rejection of evidence and to the refusal of the court to give certain charges requested by the com-' pany, and to the charge of the court which will be noticed in the opinion.
Mr. J. W. Mooney, for plaintiff in error.
This court has had occasion to define what constitutes a total loss to a building • or structure under Section 3643, Revised Statutes, in the case of Insurance Co. v. Drackett, 63 Ohio St., 41.
The record in the case at bar shows that the loss and damage to the property has never been ascertained by appraisement as provided by the provisions of the policy. In fact, it is conceded that the plaintiff in error demanded of the defendants in error that the loss and damage be ascertained by appraisement under the provisions of the policy, and that the defendants in error refused to ascertain the loss and damage by appraisement.
This made the appraisal provisions of the policy, if the plaintiff in error was entitled to an appraisement, a condition precedent, and the defendants in error could not recover without complying with the provisions of the policy, or showing a legal excuse therefor. Graham v. Ins. Co., 75 Ohio St., 374; Insurance Co. v. Carnahan, 63 Ohio St., 258.
We contend that the valued policy law (Section 3643, Revised Statutes) applies only where the policy of insurance covers a building or structure. Where the policy covers a building or structure and other property in a gross or blanket sum, the valued policy law does not apply, and where there has been a disagreement as to the amount of loss an appraisement must be had. Section 3643, Revised Statutes, applies only to building or structure.
Section 3691, Revised Statutes, expressly provides that the cellar and foundation walls shall not be included or considered a part of the building or structure in settling losses.
The question as to whether or not the valued policy law (Section 3643) applies, where a gross sum is written upon a structure and other property not a part of the structure, has never been passed upon in this state to our knowledge. But this question has been before the supreme court of Minnesota in the case of Ohage v. Ins. Co., 82 Minn., 426.
The valued policy law of the state of Minnesota is the same as the Ohio statute. The description of the insured property in Ohage v. Ins. Co. is identical with the description contained in the policy of insurance herein involved.
To support the construction of Section 3643, Revised Statutes, here contended for by the plaintiff in error, we call the court’s attention to the case of Coffin Co. v. Ins. Co., 8 Dec. R., 422.
Mr. loseph T. Harrison, for defendants in error.
If the construction is given to Section 3643 that counsel for plaintiff in error contends for, it would nullify the plain wording of the Howland law, Sections 3643 and 3644, Revised Statutes (now Sections 9583 and 9586b, General Code), and hold for naught all the decisions of the supreme court of Ohio on the subject of a .total loss. It does not aid the present inquiry to cite law which applies to a case of partial loss — this was a case of total loss. If this section is read in connection with Section 3691, and that construction is correct, that it applies only to a “building or structure” (whatever that may mean) and not to the foundation, then there would have been no use in the legislature adding that part of Section 3691, which says, “anything in the application or policy to the contrary notwithstanding.”
No case of total loss can be found where an appraisement was required as a condition precedent to bringing suit, because, if there was such a case, it would involve an absurdity, viz., to appraise something that would not exist — also to attempt to fix the loss at a particular amount, when Section 3643 says the amount to be paid is the amount named in the policy. The statute excludes consideration of the foundation in the settlement of a loss, no matter what is in the policy, and therefore the foundation walls could not be considered, and there would be no error in excluding such testimony. If the law, therefore, makes it the duty of the agent who places the insurance, to fix a value upon the property, and he does so, and the company receives a premium for the same, it makes the value named in the policy the sum payable in case of total loss.
The construction of Section 3643, Revised Statutes, will be found in the following citations: Insurance Co. v. Leslie, 47 Ohio St., 409; Insurance Co. v. Hull, 51 Ohio St., 270; Moody v. Ins. Co., 52 Ohio St., 12; Webster v. Ins. Co., 53 Ohio St., 558; Sun Fire Office v. Clark, 53 Ohio St., 414; Insurance Co. v. Drackett, 63 Ohio St., 41; Insurance Co. v. Russell, 65 Ohio St., 230; Insurance Co. v. Werner, 76 Ohio St., 542.
The ITowland law which is the statutory rule in Ohio is stated and explained in Insurance Co. v. Russell, 65 Ohio St., 230; Moody v. Ins. Co., 52 Ohio St., 12; Sun Fire Office v. Clark, 53 Ohio St., 414; Insurance Co. v. Kukral, 7 C. C., 356, 51 Ohio St., 609; Insurance Co. v. Bowersox, 5 C. C., 444, 51 Ohio St., 567; Insurance Co. v. Hock, 8 C. C., 341, 56 Ohio St., 735.
The statute cannot be regarded as conferring upon the insured a mere personal privilege which may be waived by agreement. It molds the obligation of the contract into conformity with its provisions and establishés the rule and measure of the insurer’s liability. Insurance Co. v. Fish Co., 14 C. C., 160, 61 Ohio St., 643; Insurance Co. v. Bowersox, 5 C. C., 444, 51 Ohio St., 567; Insurance Co. v. Leslie, 47 Ohio St., 409.

Opinion:
Johnson, J.
It is conceded that plaintiffs Delow refused to enter upon an appraisement to fix the amount of the loss, claiming that there was a total loss, and that under Section 3643, Revised Statutes, they were entitled to the full amount of the policy. The courts below sustained this view. The insurance company insists that this was erroneous for two reasons:
1st. That as the policy covered the foundation of the dwelling house as well as the rest of the structure, and as the foundation was not totally destroyed the statute does not apply and the company was entitled to an appraisement.
2nd. There being more than one policy covering the property, it is claimed that the valued policy law, Section 3643, Revised Statutes, does not apply.
A number of special charges embodying these propositions, were requested by plaintiff in error, and refused bjr the trial court, and the questions were also preserved by the tender of testimony on the trial which was rejected.
As to the first proposition it is contended, substantially, that Section 3643, Revised Statutes, applies only where the policy covers a "building or structure," and that if the foundation is a part of the "building or structure" and is not totally destroyed, then there has been no total loss within the meaning of that section; and on the other hand, that if the foundation is not to be considered as part of the "building or structure," then the policy has covered something in addition thereto, and that, therefore, the statute does not apply.
Section 3691, Revised Statutes, is as follows: "The cellar and foundation walls shall not be included or considered as part of the building or structure in settling losses, anything in the application or policy to the contrary notwithstanding."
It is urged by counsel for plaintiff in error that this section does not preclude the company from insuring the foundation, if the parties agree that it shall be done. Doubtless this is true, but such agreement must be separately and sufficiently indicated in the contract itself.
In the policy issued in this case, the description is, "the two story shingle roof brick building and additions thereto attached, including founda tions," etc. That is to say, the policy specifically provides that the "building" insured shall include the foundation. It negatives the idea or the desire for insurance on the foundation separately from, or in addition to the building or structure, referred to in the statute. The section of the statutes above quoted provides that the foundation shall not be "included" as part of the "building or structure" in settling losses, anything in application or policy to the contrary notwithstanding. The manifest purpose of the statute was to prevent entirely the incorporation of the foundation in the description of the building and to prevent the insurance company from using such a description, as a means to avoid the operation of the statute, in cases otherwise applicable, and thus secure a result wholly contrary to its spirit.
In the only case cited by plaintiff in error in support of its view, Ohage v. Union Ins. Co., 82 Minn., 430, it does not appear from the report of the case whether Minnesota has a statute similar to the Ohio statute, Section 3691, Revised Statutes, büt the court remark at page 430: "It is difficult to see what advantage could result from such arbitration, unless it were to make a point upon the technical construction of a portion of the statute for the benefit of the insurance company, and thus allow the statement in the description including the foundation to become a trap for the unwary, against the spirit of the statute, whose purpose was to discourage that object."
The principal and most important question in this case, is that presented by the second of the propositions asserted by plaintiff in error, as above stated. Where more than one policy is issued on a building or structure totally destroyed, does the valued policy law, Section 3643, Revised Statutes, control? That section as in force when the policy was issued reads as follows: "Any person, company, or association, hereafter insuring any building or structure against loss or damage by fire or lightning, by a renewal of a policy heretofore issued, or otherwise, shall cause such building or structure to be examined by an agent of the insurer, and a full description thereof to be made, and the insurable value thereof to be fixed by such agent; in the absence of any change increasing the risk without the consent of the insurers, and also of intentional fraud on the part of the insured, in case of total loss, the whole amount mentioned in the policy or renewal upon which the insurers receive a premium shall be paid, and in case of a partial loss the full amount of the partial loss shall be paid; and in case there are two or more policies upon the property, each policy shall contribute to the payment of the whole or the partial loss in proportion to the amount of insurance mentioned in each policy; but in no case shall the insurer be required to pay more than the amount mentioned in its policy." This court has been called on to consider the above section, known as the valued policy, or Howland law, many times. There has not been constant unanimity in its construction, or application, and in Insurance Co. v. Werner, 76 Ohio St., 551, some of the earlier cases were overruled. But it has not been questioned in any case, that the statute enters into, and becomes part of every fire insurance contract, and supersedes and annuls all terms in any such contract, which differ from its provisions. Insurance Co. v. Leslie, 47 Ohio St., 409; Insurance Co. v. Russell, 65 Ohio St., 255; Insurance Co. v. Drackett, 63 Ohio St., 41, and 19 Cyc., 659.
It is contended that the last clause, of the section indicates that the legislature intended that where there is more than one policy on the property the statute shall not apply.
That clause provides, where there are two or more, policies, each shall contribute to the "whole or the partial loss" in proportion to the amount named in each policy. It is urged, that the necessary implication from the use of the words "shall contribute to the whole or partial loss in proportion" etc., is, that there must first be an ascertainment of the amount of the "whole or partial loss," and that as the contract prescribes the method of ascertaining this amount, that method must be followed. The first clause of the section requires any company insuring, to cause the building to be examined by an agent of the "insurer," and the insurable value fixed. The second clause enacts that in the absence of change increasing risk without consent of the "insurers," in case of total loss the whole amount named in the policy on which the "insurers" receive premiums shall be paid, and if the loss is partial the full amount of the partial loss shall be paid. Then the third clause, and that in case there are two or more policies, each shall contribute to the payment of the whole or partial loss, in proportion to the amount of each policy. Taken as a whole the section requires that the examination must first be made and the insurable value fixed in the manner stated, and manifestly contemplates, not only that more than one "insurer" may insure the same property, but that the different "insurers" might insure in different amounts. Then after requiring that in case of total loss the whole amount mentioned on which the "insurers" receive a premium shall be paid, it is provided that in case there are two or more policies each shall contribute in proportion, etc.
We think the clear meaning- is that where the loss is partial the amount shall be ascertained and paid in the proportions named, and where it is total, the proportion of each, is the amount mentioned in its policy.
There is nothing in the statute, from which the inference can be fairly drawn, that the legislature intended that the law should be abrogated where more than one policy had been issued. If such had been the intention it is natural to assume that a simple provision would have been added, that the law should not apply where there was more than one policy on the property. Whereas, the clause that actually was added, as a final provision, is, that in no case shall the insurer be "required to pay more than the amount mentioned in its policy." To hold otherwise would enable insurers to habitually avoid the statute by arranging that some part of their insurance shall be carried by others.
It is a matter of common knowledge that usually the insurance risk on the better "buildings and structures" is carried by more than one com- pa-ny. That is doubtless a wise and safe course and one to be commended, but it suggests no reason why the precautions and procedure of this statute should not be followed.
We are more firmly convinced of the correctness of these views by a consideration of this law as originally passed, in comparison with it, as embodied in the Revised Statutes.
The original statute was passed March 5, 1879, and is found in Yol. 76, page 26, Ohio Laws. The third clause (being the one under consideration here) reads: "In case there are two or more policies upon the property each policy shall contribute to the payment of the whole of the partial loss in proportion to the amount of insurance mentioned in each policy. In the revision of 1880, the phrase "Whole of the partial loss" appears as "whole or the partial loss." That is, the word "of" was in some manner changed to "or" in the revision.
There would of course be no room for discussion as to the meaning of the law as originally passed.
Under well settled rules of construction "Where the general statutes of the state are revised and consolidated, there is a strong presumption, that the same construction which the statute had before revision, should be applied to the enactment in the revised form, although the language may have been changed."
In such case the court is only warranted in holding the construction to be changed when the intent of the legislature to make such change is clear and manifest. State, ex rel., v. Commis sioners, 36 Ohio St., 326; Heck v. State, 44 Ohio St., 536; State, ex rel., v. Stockley, 45 Ohio St., 308. We do not think there is disclosed such intention in this instance, when the statute is viewed as a whole and having in mind the object which is attempted to be accomplished. It is very-apparent that the law is founded on what the general assembly regarded as considerations of sound public policy, the purpose being to require the insurance company to make a full examination of the property, and itself fix the insurable value, and thus avoid over-insurance and improper risks, to prevent disputes as to the amount to be recovered in event of total loss, and to protect the insured, as far as possible, against unreasonable defenses.
These are surely proper and worthy purposes, and while we might be inclined to doubt the efficiency, and the policy of the enactment, by which they are sought to be accomplished, .yet that is a matter within the legislative power, which when exercised must be judicially enforced.
We find no error in the record .and the judgments of the courts below are affirmed.
Judgments affirmed.
Spear, C. J., Price and Donahue, JJ., concur.