Trull v. Roxbury Mutual Fire Insurance

Shaw, C. J.

This action is brought to recover damages for loss by fire on two stables belonging to the plaintiff, separately insured by the defendants for $1000 each, for the term *266of seven years. The plaintiff, according to the charter and regulations of the company, and conformably to the usual course of proceedings of mutual insurance offices paid the defendants a certain amount by way of premium, on taking the policy, and at the same time gave them his deposit note, by which he became liable to pay such assessments as should be laid thereon by the president and directors of the company.

Two stipulations in the policy are regarded as material. The first is, that the company agreed to pay all losses, which shall happen to the buildings, within the term, “ not exceeding the amount insured thereon.” The other provision is, that “ in case of loss the company may replace or repair within a reasonable time.”

The material facts, stated in the case agreed, are, that after the policy attached, the buildings were both burnt. One was entirely consumed, and the other was burnt down, but some of the sills and other timbers belonging to it were not wholly consumed. The plaintiff claimed for a total loss, but the company elected to repair and replace the buildings, which they did within the time limited; the first mentioned building at a cost of eight hundred dollars, and the other at that of six hundred and fifty dollars. Subsequently, but within the term for which the insurance was made, the new buildings took fire and were wholly consumed; whereupon, after due notice, proof and demand, this action was brought.

The defendants contend, that when the first building was wholly consumed, and was wholly replaced or rebuilt, at their expense, this was in the nature of an adjustment as for a total loss and payment thereof; that although the policy was not cancelled, or surrendered, yet it was at an end by a complete performance on their part; and that although the sum paid by them was somewhat less than the sum insured, still it was a complete indemnity, by placing the buildings in as good a condition as before the fire, and was therefore a fulfilment oí the terms of their contract of indemnity.

But the court are of opinion, that this is a mistaken view of the nature of this contract, and of the rights of the *267assured; arising perhaps from a supposed analogy between this contract and that of a policy of marine insurance. The contract between a mutual fire insurance company and a party insured by it is somewhat peculiar. The assured is a member of the company so long as the policy exists; and the insurance is for a term of time, usually for seven years. He pays a sum in the outset as a premium and deposit, estimated at a rate somewhat more than sufficient to pay probable current losses, and with a right to a pro rata return, at the end of the time, if, upon a statement of an account of all the losses, which have occurred during the whole of such time, the premium and deposits have not been absorbed in the payment of losses. He also makes himself liable to pay assessments, to a limited amount, in order to pay losses to other members, should any occur within the time, which the sums received for premiums and deposit might not be sufficient to cover. Such being the contract between the parties, there seems to be no ground to hold, that it is terminated by the payment of any loss. The assured, by his deposit note, is liable to assessment according to the terms of the policy, during the whole term ; and the land, on which the buildings stand, is subject to a lien for its security. Were it not for the express limitation in the policy as to the amount of the sum insured, we do not see why the company might not be liable for successive losses.

The distinction between the contract of fire insurance, and that of marine insurance, and the mode of adjustment and satisfaction, is marked and obvious. In fire policies, the assured recover the whole loss, if within the amount insured, without regard to the proportion between the amount insured and the value of the property at risk; whereas, in marine policies, the insurer pays only such a proportion of the actual loss, as the sum insured bears to the value of the property at risk. For instance, on fire policies, if the sum insured be $2000, on property worth $10,000, and the assured sustains an actual loss on the whole, he recovers the whole $2000. But in a like case, on a marine policy, he would recover one *268fifth only or $400; being the proportion which the sum insured bears to the value at risk; the assured himself bearing the other four fifths of the risk.

The result is, that every settlement of a loss by fire is m the nature of the adjustment of a partial loss, although it may amount to the whole sum insured. It is the payment of the whole actual loss sustained, on the whole property at risk, not exceeding the sum insured, without regard to any apportionment between the sum insured and the property at risk, or to any abandonment or technical or constructive total loss, or salvage. Liscom v. Boston Mutual Fire Ins. Co. 9 Met. 205; Holmes v. Charlestown Mutual Fire Ins. Co. 10 Met. 211.

We can therefore perceive no analogy between the rebuilding of the stables, though it fully replaced the former structures, and the payment of a total loss. It was clearly not to the amount insured; and it was not competent for the de fendants to say that it was overvalued; the value having been agreed on by the parties. In the absence of fraud, — such fraud as would invalidate the policy, — the valuation is conclusive upon both parties. Fuller v. Boston Mutual Fire Ins. Co. 4 Met. 206 ; Holmes v. Charlestown Mutual Fire Ins. Co. 10 Met. 211.

The sum insured on each building being $1000, the assured is entitled to indemnity thereon to the amount of $1000, and this was not exhausted by paying the several sums of $800 and $650 towards rebuilding, any more than it would have been by paying the plaintiff the like sum in money. The court are therefore of opinion, that he is entitled to judgment for $550, being the difference between the sums insured, and the sums paid for former losses, on the two buildings.