Palatine Insurance v. O'Brien

The appellee, prior to and at the time of the fire which destroyed a great part of the business section of Baltimore City on the 7th and 8th days of February, 1904, was the owner of three lots of ground located at numbers 4, 6 and 8 East German street in that city. These lots were improved by three brick houses rented and used for business purposes. The houses at numbers 4 and 6 East German street were rented for two hundred and thirty dollars per month, and the one at 8 East German street was rented for eighty-five dollars per month. All three houses were totally destroyed by the fire of that date.

The defendant company had insured the rents of these properties by two policies of insurance, and these policies were in force at the time of the fire. An attempt was made by the assured; the appellee, to adjust and settle the amount of the loss with the defendant company, and an agreement of arbitration was entered into between her and the company, and an award was made by the arbitrators, which award the defendant has pleaded to these suits, and it has also tendered and paid into Court the amounts found to be due by the award, with interest, towit, eleven hundred and fifty dollars in one case, and four hundred and twenty five dollars in the other, in full satisfaction and discharge of the plaintiff's causes of action. In due course of pleading issue was joined upon the plea which set up the award, and also to the plea which tendered and paid into Court the sums found to be due by the arbitrators, the plaintiff replying to that plea that the amount tendered and paid in each case was not sufficient to satisfy her claim.

The plaintiff then filed a bill of complaint in the Circuit Court of Baltimore City for the cancellation of the award pleaded in these cases. This case, upon suggestion of the defendant, was removed to the Circuit Court of the United States for the District of Maryland, and that Court on the 18th of May, 1906, set aside and annulled the award and declared it void, and enjoined the defendant from setting it up, or attempting to set it up in defense of any action or actions at law or in equity on these policies, From this decree the defendant appealed to the United States Circuit Court of Appeals, and that Court on April the 9th, 1907, affirmed the decree. It therefore follows that the award pleaded in these cases cannot be considered, and that the third prayer offered by the plaintiff in each case which took the consideration of the award from the jury was properly granted.

Failing to reach a settlement with the defendant company, the appellee brought two suits against it in the Superior Court of Baltimore City. The suits, by consent, were tried together, and resulted in a judgment against the defendant in each case, and from these judgments the defendant has appealed. The record presents a single bill of exceptions in each case, these exceptions being to the rulings of the Court upon the prayers. With a slight modification which occurs in one of the plaintiff's prayers, the prayers offered by both parties are identical in each case.

Before considering the important questions in the case, we will determine the legal effect of the payment into Court by the defendant of the several sums mentioned in satisfaction and discharge of the plaintiff's causes of action. This tender and payment, which constitute the fourth plea in each of these cases, were made under sections 20 and 21 of Article 75, Code 1904. The effect of these pleas was to admit the liability of the defendant upon the causes of action, and the issue raised upon the pleas was merely as to the extent of the defendant's liability. These sections were considered by this Court in Gamble et al. v.Sentman, 68 Md. 71, where it was said: "These sections are substantially copied from the statutes of 3rd and 4th WilliamIV, ch. 42, sec. 21, and the rules as to costs thereby provided. Their object is to encourage the settlement of suits without the cost and delay of trial. They allow the defendant, except in certain actions, "to pay into Court a sum of money by way of compensation or amends," and such payment may be set up by plea. The plaintiff then, after the money has thus been paid in, may reply by accepting the same "in full satisfaction and discharge of the action," and if he does this he may have his costs taxed, and if they be not immediately paid, he shall have judgment therefore; or he may reply that the sum paid in "is not enough to satisfy the claim of the plaintiff in respect of the matter to which the plea is pleaded and in the event of an issue thereon being found for the defendant, the defendant shall be entitled to his costs of the suit, and the plaintiff to so muchof the sum paid into Court as shall be found for him" * * * The concluding paragraph of the law as above quoted, plainly indicates that where the plaintiff replies that the money paid in is not enough to satisfy his claim, it is the duty of the Court to hold on to the money until the issue on that replication is decided, and then to pay over to the plaintiff only so much of it as the jury may find to be due him."

The insurance of the rents on the buildings located at 4 and 6 East German street was for a sum not exceeding eighteen hundred dollars; and the other policy on the rents of the building at number 8 East German street was for an amount not exceeding a thousand and forty dollars. The conditions in the policies, upon which the main questions in these cases arise, are identical, and are here transcribed:

$1,800. On rents of the three-story brick tin roof building situate

1. No. 4 6 East German street, extending to Wine alley, Baltimore, Md. Owned by assured and occupied for purposes hazardous, non hazardous and extra hazardous. Privilege to use electricity for heat, light or power. The conditions of this insurance are: That if these premises or any part thereof, shall be rendered untenantable by fire so as to cause an actual loss of rents, to the assured, then this company shall be liable for such loss of rents, not exceeding the sum insured. And the assured agrees to rebuild or repair said premises in as short a time as the nature of the case will admit.

Loss to be computed from the date of the fire, and to cease upon the premises again becoming tenantable, and in case the assured shall elect not to rebuild or repair, then the loss of rents shall be determined by the time which would have been required for such other purposes. Other insurance permitted without notice until required.

2. This company shall not be liable beyond the actual cash value of the property at the time any loss or damage occurred, and the loss or damage shall be ascertained or estimated according to such actual cash value, with proper 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 appraisers, as hereafter provided; and the amount 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.

3. This company shall not be liable for loss caused directly or indirectly by invasion, insurrection, riot, civil war or commotion or military, or usurped power, or by order of anycivil authority.

It was admitted that the proofs of loss were mailed to the defendant on the 31st day of March, 1904, and were received by it in due course of mail. The evidence shows that the plaintiff did not rebuild upon the property houses of the same general character and size of those insured, but instead erected upon the entire ground upon which the destroyed buildings stood a six-story office building. There is evidence in the record tending to show that the plaintiff was anxious to improve her property at once, but was prevented from doing so partly because of the ruin and devastation in the burnt district caused by the fire, and partly because of the action of the city authorities in refusing building permits until certain street improvements had been definitely decided upon. What these contemplated improvements were, which caused the delay by the city authorities, are shown quite fully by the evidence. There was evidence adduced by both parties as to the time required to reconstruct the destroyed premises.

This outline of the principal subject matter of the testimony is sufficient to enable us to dispose of the legal questions in the case. The contract is to be governed by the same principles which apply to other contracts, and as it is in its nature a contract of indemnity, it cannot be made the subject of profit by the insured. The same rules of construction which apply to other contracts apply to it. The language employed must be understood in its plain, ordinary and usual meaning, and the intention of the parties, as gathered from the language used, is to control. In Riggin v. Patapsco Insurance Company, 7 H. J. 279, our predecessors said: "In construing a policy of insurance, the Court should give it a fair and liberal interpretation, such as, under all the circumstances of the case, appears most consonant to the intention of the parties at the time the contract was formed. The design of the assured, being to provide for themselves an indemnity against loss, from which the insurers engaged to protect them, such a construction should be placed upon their compact as, according to the understanding of the parties and the nature of the transaction, will effectuate that object."

When the clauses of the contract, which we have quoted are examined in the light of these rules of interpretation, the rights and obligations of the parties will seem to be reasonably clear and certain. The contract contemplates that the assured, in case of a destruction of the property by fire, shall take immediate p ssession of the premises.

The subject matter of the insurance is the rent of the buildings mentioned in the policies, and the loss recoverable under the policies is the direct loss of rents of the buildings caused by fire. If the premises, or any part thereof should be rendered untenantable by fire so as to cause an actual loss of rent to the insured, then the company should be liable for such loss of rent to an amount not exceeding the sum insured; and if the assured determined to rebuild he should do so "in as short a time as the nature of the case will admit," and in this event the loss of rent should be computed from the date of the fire, and should cease when the premises again became tenantable. But the contract does not oblige the insured to rebuild, or repair. In case he should elect not to rebuild or repair (and in this case the insured did elect not to rebuild under the provisions of the policy), the insurer agreed to pay an amount equal to the loss of rents which the insured would have sustained from the date of the fire to the time said premises could have been rebuilt, and this time was to be as short as the nature of the case would admit. Had there been no other provision in the policy any loss of rent occasioned by the action of the city authorities in delaying the rebuilding of the premises would have been recoverable under the policies, but the clause, which we have transcribed, expressly forbids such a recovery. The jury, therefore, should have been instructed that the plaintiff could not recover for rent for the time she was prevented from rebuilding by the action of the city.

Objection is made to the action of the Court in directing the jury to allow interest after sixty days from the time the proofs of loss were submitted to the defendant. We have seen that by the terms of the policy the amount due by the defendant was payable after sixty days from the furnishing of the proofs of loss. Under these circumstances, the plaintiff was entitled to interest from that time upon the sum found to be due by the jury. In BaltimoreFire Insurance Company v. Loney, 20 Md. 40, where the question of the plaintiff's right to interest was under consideration, the Court said: "There was no dispute as to the right of the appellees to interest after the time fixed for payment by that condition, it being an established rule that interest may be claimed from the time the principal sum becomes payable by the terms of the policy."

The jury was not properly instructed by the plaintiff's second prayer as to the legal effect of the delays caused by the city to rebuilding in the burnt district as shown by the evidence. Instead of telling the jury, as the instruction did, that the refusal of the city authorities to allow the plaintiff to rebuild for a certain time "was a circumstance proper to be considered" in arriving at the loss of rents, they should have been told not to allow for any loss of rent for such time. With this modification, under the facts in the record, and the elimination of the words "as they may find accrued up to and" from the prayer it would have been free from objection. For the same reason the defendant's third prayer, as modified, should not have been granted.

Had there been evidence that the appellee delayed taking possession of the premises after the fire, the proposition asserted in the defendant's first prayer that there could be no recovery for loss of rent which may have accrued between the date of the fire and the time when she entered into possession, would have been sound, because such a loss was not covered by the policy. But there was no evidence to support this prayer. There is nothing to show that Mrs. O'Brien did not take immediate possession of the property, and in the absence of evidence to the contrary the presumption is that she discharged her obligations under the contract. The defendant's second and third prayers are not in accordance with our interpretation of the contract, and were properly refused.

The evidence sought to be excluded by the defendant's fourth prayer was, for the reasons we have stated, properly in the case, and there was no error in refusing that prayer.

The plaintiff's first prayer, which told the jury that under the pleadings and evidence in this case their verdict must be for the plaintiff, was too general and indefinite, and should not have been granted. For error committed in granting the plaintiff's first and second prayers in each case, and in granting in each case the defendant's third prayer as modified, the judgment in each case must be reversed.

Judgments reversed, and new trials awarded, the appellee topay the costs.