Action upon a policy of insurance for $1,000 covering loss or damage by fire to a dwelling house owned by the plaintiff in the City of Greenwood. A fire occurred on February 15, 1924, during the life of the policy, by which, in the language of the complaint, the house was "partially destroyed."
The policy was a "valued policy," under the statute of South Carolina, Section 4095, Vol. 3, Code of Laws, 1922, the agreed valuation of the property being fixed at $12,000, and the amount of permitted insurance at $8,000.
The plaintiff had procured policies to be issued as follows:
Liverpool London Globe Insurance Company ... $3,000
Rhode Island Insurance Company ................. 4,000
Home Insurance Company ......................... 1,000
______
Total ..................................... $8,000
The plaintiff contends that the value of the portion of the building which remained after the fire was $3,500, and that the loss sustained was the difference between the agreed valuation, $12,000 and this $3,500, namely $8,500, which entitles her to recover upon all of the policies the total amount of insurance, $8,000, $1,000 of which is recoverable upon the policy sued upon in this case.
Pursuant to the terms of the policy, the adjustment of the loss was submitted to three appraisers appointed in the usual way. A majority of the appraisers reported the sound value of the building, that is, its actual value prior to the fire, as $10,500 and the loss and damage $6,650. The third appraiser dissented from the report, holding that the loss must be ascertained by deducting the value of what remained after the fire, $3,000, from the agreed valuation $12,000, leaving $9,000 as the value of the portion lost or damaged by the fire.
The plaintiff, in her complaint, anticipated the defense of the insurance company that the report of the appraisers was *Page 253 conclusive by attacking the report as having been based upon a legally incorrect method of ascertaining the amount of the loss. There is no contest over either of the propositions that the policy in question is a valued policy under the statute, or that the loss was a partial loss. For convenience, the matter will be discussed as if there were a single policy of $8,000 upon the property, instead of three policies aggregating that amount.
The following data were contended for by the respondent:
Agreed valuation .................................. $12,000 Amount of actual loss ............................. 8,500 Amount of insurance ............................... 8,000The insured arrives at the amount of the actual partial loss by deducting from the agreed valuation $12,000, the actual value of the salvage $3,500, leaving $8,500. The insurers arrive at the same item from the report of the appraisers fixing it at $6,650.The appellant contends: Agreed valuation .................................. $12,000 Sound value of building before the fire ........... 10,500 Amount of actual loss ............................. 6,500 Amount of insurance ............................... 8,000
The contention of the insured, as we understand it, is that the agreed valuation of $12,000 upon the building must be taken for all purposes as the sound value of the building before the fire, and that the amount of the partial loss can only be ascertained by deducting the value of the salvage from the amount of the agreed valuation.
We do not agree to this proposition for several reasons. In the first place, if it should appear that the agreed valuation was an overvaluation, for instance, if the sound value should be $10,500 and the agreed valuation $12,000, every dollar of the sound value would by agreement be worth 120 105=8/7 of a dollar, $1.142857, and the actual value of the salvage, $3,500, expressed in terms of the agreed valuation would be worth $3,500 x 1.142857=$4,000. *Page 254 This deducted from the agreed valuation of $12,000 leaves $8,000 as the amount of the partial loss, instead of $8,500 as claimed by the insured. In the second place, if it should appear that the agreed valuation was an undervaluation, for instance, as in the pending case of Columbia R.E. Co. v. Ins.Co., where the sound value was $25,000, the agreed valuation $9,000, and the actual partial loss $12,500, to adopt the rule contended for by the insured would present the impossible problem of deducting $12,500 from $9,000.
Assuming the correctness of the data contended for by the insured in this case, the proper method of ascertaining the proportionate amount of the insurance recoverable by the insured is to formulate a proportion. The agreed valuation is to the amount of the partial loss, expressed in terms of the agreed valuation, as the amount of the insurance is to the amount of insurance recoverable; that is: 12,000: 8,500 x 1.42857: :8,000 : x. x=6,476.19. Or, which attains the same result: The sound value is to the actual partial loss as the amount of insurance is to the amount of insurance recoverable; that is: 10,500 : 8,500 : :8,000 :x.x=6,476.19. Upon this basis the defendant company would be liable for one-eight of $6,476.19=$809.52.
Assuming the correctness of the data contended for by the insurers, the proper proportion would be: 10,500 : 6,650 :: 8,000 :x. x=5,066.66. Or, which attains the same result, expressing both the sound value of and the actual partial loss in terms of the agreed valuation: 10,500 X 1,142857 : 6,650 X 1,142857 :: 8,000 : x. 12,000 : 7,600 :: 8,000 : x. x=5,066.66. Upon this basis the defendant company would be liable for one-eighth of $5,066.66= $633.33.
The trial Judge directed a verdict for the full amount of the policy held in the defendant company upon the ground that there appeared no issue for submission to the jury, and that the appraisal required by the provisions of the policy is in conflict with the statute law of this State; in effect sustaining *Page 255 the correctness of the plaintiff as to the method of ascertaining the actual partial loss.
We think he was in error as to both propositions. The method for ascertaining the partial loss suggested by the insured is clearly wrong as has been shown; the vital issue for submission to the jury was the amount of the actual partial loss which must form one term in the proportion necessary to establish the amount of the recovery; there is nothing of conflict between the statute and the appraisal provision of the policy, as both the sound value and the actual partial loss must be ascertained in order to formulate the proportion; the sound value is to the actual partial loss as the amount of insurance is to the amount of insurance recoverable; or which attains the same result; the agreed valuation is to the actual partial loss, expressed in terms of the agreed valuation, as the amount of insurance is to the amount of insurance recoverable.
We think he was also in error in excluding evidence of the replacement cost. It is difficult to conceive of a more satisfactory method of establishing the actual partial loss from a fire than to establish what it would cost the owner to restore the building to its former condition.
In the case of Bice v. Ins. Co., 1 W.W. Harr., 294 (31 Del). 114 A., 211, the Court construed the statute of Delaware as providing that all policies, whether in the event of a total or a partial loss, must be deemed valued policies, and that the agreed value controlled in the adjustment of a loss of either description.
The Court says:
"The agreed value in the policy is designed, not to fix the value of a part, but to furnish the basis upon which settlement shall be made in case of any loss. And it is not, as defendant contends, destructive of the agreement of the parties that in case of disagreement as to the loss, the same shall be ascertained by appraisers. Even though the agreed value governs in case of partial loss, there would still be *Page 256 reason for the appointment of appraisers in case of disagreement as to the loss. Their duty is not to fix the value of the property destroyed, but the amount of the loss the insured has sustained; and this is done, we apprehend, by estimating what it will cost to repair or replace the property destroyed."
The attack upon the report of the appraisers upon the ground that they adopted an erroneous method of ascertaining the partial loss has failed; the insured is bound by that appraisal; hence the figures as to sound value and actual partial loss are conclusive upon her, and the proportion above stated based upon those figures ends the controversy.
It may be proper to state that the foregoing opinion is in conformity with the opinion of the writer in the case ofColumbia R.E. Co. v. Ins. Co., now pending in this Court. Reference is made thereto for a more elaborate discussion of the principle which under the valued policy law of this State, Section 4095, Vol. 3, Code of 1922, must control in the adjustment of a partial loss.
The judgment of this Court should be that the judgment appealed from be reversed and a new trial had, unless the plaintiff shall within 10 days after the filing of the remittitur indorse upon the record a remission of all of said judgment in excess of $633.33 plus interest, as provided for in the policy, and in that event that the judgment as thus reduced be affirmed.