Action on fire insurance policy issued by defendant upon plaintiff's property situated in the city of San Francisco. A demurrer to the amended answer was sustained and, defendant declining to further amend, judgment passed for plaintiff in the sum of $1,765, from which defendant appeals. The fire which is alleged to have destroyed plaintiff's property occurred April 19, 1906, the day following the earthquake of April 18th of that year.
The company insured the plaintiff for the term of twelve months "against all direct loss or damage by fire except as *Page 505 hereinafter provided," and among other exceptions was the following: "This company shall not be liable for loss caused directly or indirectly by invasion, earthquake, riot, civil war or commotion. . . . " Basing its defense upon this exception, it is alleged in the answer as follows:
"Defendant alleges that in and by the policy of insurance in this action sued upon it was provided, and by and between the plaintiff and the defendant stipulated and agreed, that the defendant company should not be liable for loss caused directly or indirectly by earthquake; and defendant alleges that on the 18th day of April, 1906, the City of San Francisco was visited by a severe earthquake shock between the hours of five and six o'clock a. m., and by other and similar shocks following said first mentioned shock; that on the said 18th day of April, 1906, and at the time of the happening of said earthquake shock and of the fires hereinafter referred to following thereupon, there was in said City of San Francisco a fire department fully and sufficiently equipped with fire-engine and hose and other proper and sufficient appurtenances for the extinguishing of fires in said city, and there was up to the time of the first of said shocks a water system in use in said city, with water mains, pipes and hydrants throughout said city and in and along the streets thereof with an abundant supply of water for the extinguishment of fires and for the extinguishing of all of the fires following upon said earthquake shocks, including those immediately caused thereby and other fires resulting therefrom, and all other fires occurring upon said 18th day of April, 1906, and defendant alleges that all of said fires, and each thereof, could and in the usual and ordinary course of events would have been extinguished if said water supply had been available at the time of the breaking out of said fires, and each thereof, and thereafter during said 18th day of April, 1906, but defendant alleges the fact to be that the said earthquake shocks, or some one or more thereof, broke the mains and piping through which said supply of water was brought to and into said City of San Francisco, and shut off said supply of water from said city and from the portion of said city wherein the property described in the complaint was situate, and wherein the fire by which said property was destroyed had its origin, and that by reason of the breaking of said pipes and the shutting off of the water the said fire department *Page 506 was without water to play upon said fires and upon said last mentioned fire, by reason whereof said fires and said last mentioned fire spread throughout said city and said last mentioned fire reached to said property of the plaintiff and destroyed said property, and defendant alleges that said fire would not have spread and said property would not have been destroyed and said loss would not have resulted if said water supply had not been cut off as in this amended answer set forth."
Assuming, as we must, under the admissions of the demurrer, that defendant could have proven that the cutting off of the water supply caused the loss, but for which no loss would have occurred, the sole question is: Was the loss in legal contemplation caused either directly or indirectly by the excepted peril, earthquake?
Respondent states that the theory upon which the trial court held the amended answer to be insufficient was that it sought to make the "absence of an extrinsic saving power," namely, the water supply, cut off by earthquake, the cause of the loss. It is appellant's contention that "where, as here, there is independently of the first antecedent cause (the lack of water) another cause (the earthquake) but for which such first antecedent cause of the immediate cause (the fire) would not have been operative in bringing about through such immediate cause the final result, and but for which such final result would not have occurred, then, in that case, the independent cause (in this case the earthquake) must, in legal contemplation, be considered the efficient proximate cause to which the result is attributable."
In simple phrase, as we understand the contention, the earthquake broke the water mains and deprived the city of water to fight the fire and the fire subsequently found its way to plaintiff's property and destroyed it and hence the earthquake became "the efficient proximate cause to which the result is attributable." Appellant seeks to support this view by quite a number of adjudged cases of most of which McAffee v. Crofford, 13 How. (U.S.) 447, is a typical example. Plaintiffs in error, assisted by others, carried off and frightened away certain slaves who were working for defendant in error on his plantation. By reason of the forced absence of these slaves defendant suffered the loss of much cordwood, through flood, and also damage to and loss of his *Page 507 crops by intrusion of cattle and hogs. The case went to the supreme court and it was there held, affirming the verdict of the jury for defendant in error, that the taking and frightening away of the slaves, the agency through which the damage complained of would have been obviated, could in law have been considered the cause of the losses suffered and that whether such was or was not the fact was a question for the jury. The application is thus made: The slaves were the saving agency which, if used in the ordinary and expected way, would have averted the injury, as here the water system and water supply would have obviated the injury had it not been cut off, and the plaintiffs in error were related to that case as the earthquake is to the case here. These are cases of recovery based upon the tortious acts of the persons sued.
Other cases are cited where companies were held liable for fire losses for breach of their contract to have water available to extinguish fires. In New York Express Co. v.Traders' Ins. Co., 132 Mass. 377, [42 Am. Rep. 440], the court said: "So far as the question what constitutes proximate cause is concerned, the same considerations apply equally in actions of contract as in actions of tort." In that case the insurance was against loss by fire. The vessel in which the goods were lost met with a collision and was sunk. "With the collision fire instantaneously broke out," but the fire did not reach the goods which were lost wholly from the sinking of the vessel. The fire, however, so disabled the engine that the pumps could not be operated, and but for this the water flowing into the breach made by the collision could have been pumped out and the vessel driven into shallow water, and also but for which water could have been pumped and the fire extinguished. The court said: "If means and appliances were at hand by which that result (the loss) could have been avoided, and the intervention of a new agency, namely, that of fire, prevented their use, then the fire was the proximate and immediate cause of the loss. It added a new element of destruction which rendered it impossible to control or prevent the consequences which would naturally follow from the collision." It was in this connection that the court stated the rule as to what constitutes proximate cause. It may be doubted whether the fire as an antecedent cause in that case may be likened to the earthquake in the present case, for the *Page 508 fire and collision were nearly, if not in fact, coincident and the effect of the fire was shown to have been so immediate and direct as to differentiate the case from this case in which the alleged antecedent cause preceded the immediate cause many hours. However, the exception here is, as we think, loss by fire caused directly or indirectly by earthquake, and not loss directly or indirectly by earthquake alone. In Yoch v. HomeMutual Ins. Co., 111 Cal. 503, 510, [44 P. 189, 190], it was decided that the words, in a policy of fire insurance, "except as hereinafter provided," in connection with the words "loss or damage by fire," against which the insurance is made, "may be regarded as a limitation upon the causes of fire against which the insurance is made rather than as a qualification of the contract of insurance." And in Williamsburgh City Fire Ins. Co. v. Willard, 164 Fed. 404, [90 C. C. A. 392], the court held that inasmuch as the insurance was against direct loss or damage by fire, occasioned by or through earthquake, there must be read into the exception clause the words "by fire," making the policy cover "loss or damage by fire occasioned by or through any volcano, earthquake, hurricane, etc., for it must be that the sole purpose of the exception is to specify certain losses by fire not insured against." We cannot accept the rule to be in this state as stated in the Massachusetts case, supra. The action in the present case is upon contract and does not sound in tort, and the rule of proximate cause in actions for breach of contract and not for torts is to be invoked to determine whether under the contract the excepted peril directly or indirectly induced the happening of the peril insured against.
The distinction is clearly pointed out in Hunt Bros. Co. v.San Lorenzo Water Co., 150 Cal. 51, 56, [87 P. 1093, 1095], as follows: "It is the well-settled rule of damages for any breach of contract that the damages that can be recovered for a breach are only such as may reasonably be supposed to have been within the contemplation of the parties at the time of the making of the contract, as the probable result of a breach. Other damages are too remote. In this lies the distinction between damages for tort, the rule as to tort being that the injured person may recover for all detriment proximately caused thereby 'whether it could have been anticipated or not.' " (Civ. Code, sec. 3333 See, also, Westwater v. Grace *Page 509 Church, 140 Cal. 339, [73 P. 1055]; Travelers Ins. Co. v.Melick, 65 Fed. 184.) We see no reason why the rule should not equally apply where the plaintiff seeks to recover under a covenant in the contract and where the defendant seeks to evade liability under the contract. The following cases illustrate the application of the rule where consequential damages were sought by the plaintiff but were held to be too remote: FriendTerry Lumber Co. v. Miller, 67 Cal. 464, [8 P. 40], failure of a vendor to deliver building material and piles; Pendleton v. Cline, 85 Cal. 142, [24 P. 659], failure to make an abstract on time; Elder v. Kutner, 97 Cal. 490, [32 P. 563], impairment of credit resulting in inability to sell land or contract a loan; Kenyon v. Western Mine Tel. Co., 100 Cal. 454, [35 P. 75], failure to be appointed to an office because a telegram had not been promptly delivered. Here we have a policy indemnifying against "loss by fire" with the exception where the "loss," or, as we think was contemplated, "loss by fire," was "caused directly or indirectly by earthquake." The averments are that the earthquake broke the water-mains, the water so escaped that the fire department of the city had no water with which to extinguish the fire occurring the next day. It seems to us clear that the averments fail to show that the earthquake was, in legal contemplation, the cause of the fire.
In the case of Commercial Union Assurance Company, plaintiff in error, v. Pacific Union Club, defendant in error, 169 Fed. 776, the same parties as here, and where the pleadings were not essentially different from the pleadings here, the United States circuit court for the ninth circuit, in a decision rendered May 3, 1909, reached the same conclusion as the trial court in the present case. The opinion is by Mr. Justice Ross and is printed in respondent's brief. We quote: "The insurance was against all direct loss or damage by fire, with the exception that for such loss, that is to say, loss by fire 'caused directly or indirectly by earthquake' the company should not be liable." (The court took the same view of the contract as did the court in Williamsburgh City Fire Ins. Co. v. Willard, 164 Fed. 404, [90 C. C. A. 392], and read into the exception clause the words "by fire.") "What did the parties mean by this express language of their contract? Is it at all reasonable to suppose that where the company stipulated *Page 510 for exemption for loss by fire 'caused directly or indirectly by earthquake' it meant that it should not be liable for any loss or damage by fire which could be prevented by the use of the water supply of the city in the event its use be prevented by the breaking of the water mains by an earthquake shock? As well might it also be said that the company meant that it should not be liable for any loss or damage by fire which could be prevented by the use of the fire department of the city of San Francisco in the event its use be prevented by the destruction of its apparatus, or the killing or disabling of its men or horses by an earthquake shock or shocks. . . . No question of water supply appears to have entered into the contract in question. It contains no clause imposing any obligation on the insurer in respect to water, or specifying any consequences to result from a lack of such supply by the city or any other third party. . . . We think the court below was right in its ruling that the matters set out in the amended answer constitutes no defense to the action." Suppose the effect of the earthquake had been such as to render the streets impassable for the fire-engines, although the water-mains were not disturbed; or that, as suggested by respondent, a "riot" (which is one of the excepted perils mentioned in the policy) of such violence had occurred that the firemen were called out to assist the police in quelling it, and, while so engaged, a fire happened which could not be but would have been extinguished but for the riot, and the fire therefore spread and destroyed the insured property. It certainly could not be contended that the excepted perils would include such a case. Or, suppose by the "invasion" of an enemy (and invasion is one of the excepted perils) the water-mains leading to the city had been cut and a fire ensued which could not be extinguished for lack of water, could it be said that such an occurrence practically worked a suspension of this and all similar policies and would shield the insurer? The insurance being against "loss by fire" when "caused directly or indirectly by invasion," it is unreasonable to suppose that the policies contemplated that an enemy might cut the water-mains; that a fire might occur thereafter which the fire department could not extinguish because the water supply had been cut off. Such consequence is too remote to be deemed to have been contemplated by the parties. *Page 511
Reduced to its simplest form, the contention of appellant is that because the earthquake destroyed the water-mains, thus preventing the water to be used to extinguish the fire, the earthquake was the cause of "the absence of an extrinsic saving force" which could not be applied to extinguish the fire. We cannot, however, regard the earthquake as the indirect cause of the fire loss. Respondent cites, as illustrative,Ionides v. Universal Marine Ins. Co., 14 Com. B., N. S. 259, a case of marine insurance. A ship with a cargo of coffee was insured against perils of the sea, but warranted free from all consequences of hostilities, went ashore. The light at Cape Hatteras, existing there for many years, had been extinguished by the rebel authorities to impede and harass the United States shipping, and in consequence thereof, the captain of the ship, intending to round the cape and then to steer due north, being out of his reckoning and believing that he had passed the cape, ran the ship ashore at Hatteras Inlet, where she was finally lost. The question was whether the loss was a peril of the sea, or whether because of the absence of the light which had been extinguished by the enemy and the insurer thus brought within the warranty. The court held, except as to certain of the cargo which was saved, that the cargo was lost by peril of the sea. After stating that in the construction of the contract of insurance, the proximate or immediate cause of the loss alone is that to which we can look, as the established law in Europe and America, Byles, J., in his opinion, said: "Then, what were the three things which combined to cause the loss — assuming that the captain would have seen the light if there, and so would have been warned in time to save the vessel? First, the original meritorious cause (and in popular language the cause of the loss), was, the captain's being out of his reckoning. He was some fifty miles to the westward of his course, without knowing it. The absence of the light was, as I before observed, merely the absence of an extrinsic saving power. Could that be said to be the cause of the ship's destruction? Suppose a man throws himself into the Serpentine, and the means of rescuing him are not at hand, and he is drowned. Could it be said in that case that the man was drowned because of the absence of the saving power? Apply that here. The absence of the light at Cape Hatteras was but the absence of a warning, *Page 512 leaving the proximate and immediate cause of the loss, the miscalculation of the captain, which is plainly a loss by the perils of the sea." The case of Brown v. St. Nicholas Ins. Co.,61 N.Y. 332, was one of marine insurance upon the cargo of a canal boat, the policy containing a clause that if the boat was "prevented or detained by ice, or the closing of navigation, from terminating the trip," the policy should cease. The boat was proceeding down the Delaware river, on its way to the Chesapeake and Delaware canals, where a storm separated her from the towing tugs and she was driven ashore, where ice formed around her so that the tugs could not reach her and she became frozen in and so remained until a thaw came. A wind then arose, and through it and the ice she was driven upon another boat, broke in two and sank. The court held that the proximate cause of the loss was the original stress of the weather which drove the boat ashore, and that the fact that the ice formed and prevented the tugs from reaching her did not bring the insurers within the exception in its policy. Referring to the Ionides case, the court said: "The failure of the tugs to reach the boat was, in the words of Byles, J., the 'absence of an extrinsic saving power.' " We are unable to discover any force in appellant's distinction which it seeks to draw, betweenrescuing the subject of the loss from the peril and preventing the operation of the destructive peril upon the subject of the loss. Respondent cites, in further illustration of its contention, Northwest Transp. Co. v. Boston Marine Ins. Co., 41 Fed. 793. In that case a vessel was stranded in a fog and before she could be got off, a storm arose and, to save the cargo and ship, the master scuttled her, causing the loss in question. It was held that the proximate cause of the loss, arising from the scuttling, was the storm and not the stranding and that the loss was within the policy. It was urged by the answer in that case that the stranding should be regarded as the proximate or efficient cause of the disaster which befell the vessel, because such stranding never ceased to operate until the loss was complete — because it created the necessity for the scuttling — and should therefore be regarded as thecausa causans of the loss, for the reason that if the vessel had not been stranded she would probably have sustained no injury from the storm, or would not have been compelled to resort to scuttling as a *Page 513 means of safety. The opinion is instructive. The court said: "A correct application of the doctrine of proximate and remote cause establishes, in my opinion, the proposition that the storm rather than the stranding should be considered the proximate efficient cause, and the loss resulting from the voluntary scuttling of the vessel. . . . The storm which created the necessity for scuttling the vessel was in no sense set in operation by the stranding, but was a distinct, independent, and intervening cause, nearest to and therefore properly chargeable with the disaster."
Appellant makes the point that the words "directly or indirectly" mean "proximately or remotely," and therefore appellant is not liable for a loss of which an earthquake is the remote cause. Each of the parties refers to certain provisions of the policy to support the contention of each that the true meaning of the words used is to be found in the policy itself. It would not be profitable to explore the cases in order to find just when "direct" is held to mean "proximate" or "indirect" to mean "remote." In Williamsburgh City Fire Ins.Co. v. Willard, 164 Fed. 404, [90 C. C. A. 392], the court held, as we have seen, that the excepted peril, earthquake, as well as the other excepted perils grouped with it, was intended to be such only when operating as a direct or indirect force in causing or starting the fire (see Yoch v. Home Mutual Ins. Co.,111 Cal. 503, [44 P. 189]; and that it was unnecessary to determine whether or not the loss was proximately caused by earthquake, since it was not the direct cause of the plaintiff's loss.
If we resort to other parts of the policy to determine the meaning of the words used in the clause describing the excepted perils, we should only find ourselves in doubt in which case the well-settled rule would require us to construe the words in favor of the insured. Besides, there is this further rule as quoted in Berliner v. Travelers' Ins. Co., 121 Cal. 461. [66 Am. St. Rep. 49, 53 P. 920], from Equitable Ins. Co. v.Osborn, 90 Ala. 201, 207, [9 So. 869]: "Exceptions of this kind are construed most strongly against the insurer, and liberally in favor of the insured. This is now the settled rule for construing all kinds of insurance policies, rendered necessary, especially in modern times, to circumvent the ingenuity *Page 514 of insurance companies in so framing contracts of this kind as to make exceptions unfairly devour the whole policy."
We are unwilling to accept as sound the argument of appellant which may be said to rest primarily upon the assumption that earthquake, as an excepted peril, must be regarded as the cause of the fire, although concededly it is not by the pleadings in any way connected with starting it. We are quite satisfied to follow the rule laid down in Hunt Bros. Co. v. San LorenzoWater Co., 150 Cal. 51, [87 P. 1093], namely, "that the damages that can be recovered for a breach of contract are only such as may reasonably be supposed to have been within the contemplation of the parties at the time of the making of the contract, as the probable result of the breach." We cannot bring ourselves to believe that either one of the parties to the contract here ever dreamed, much less contemplated, that earthquake might cut off the water supply of the city and if this should happen that this and all like policies furnished no promise of indemnity from loss by fire occurring during such dearth of water.
A number of cases have quite recently been tried in the United States circuit court for the United States — Judge Deitrich presiding — in which the insurance companies made successful defense where they were able to show that the fire was directly traceable to the earthquake. In others they failed where, as here, the defense was that the earthquake indirectly caused the loss by cutting off the water supply, but had nothing to do with starting the fire. Numerous other cases have been tried in our state courts as well as in the United States courts and this construction of the policies has held good in all of them. We have found but little difficulty in reaching the same conclusion.
The judgment is affirmed.
Burnett, J., and Hart, J., concurred. *Page 515