Reilly and others vs. The Franklin Ins. Co. of St. Louis.

judgment would surely be a pregnant source of what Judge Story not inaptly calls poisonous consequences. Story's Eq., S$ 310, 322; Greenfield's Est., 14 Pa. St., 489.

By the Court. The judgment is reversed, and the cause remanded to the court below for judgment for the appellant in accordance with this opinion.

REILLY and others vs. THE FRANKLIN INSURANCE COMPANY OF ST. LOUIS.

INSURANCE AGAINST FIRE. (1) Measure of damages under ch. 347 of 1874, in case of total loss. (2) Stipulations in policy for a different measure of damages, invalid.

1. Ch. 347 of 1874 provides that where real property, in this state, insured against fire, shall be totally destroyed by fire without criminal fault of the assured, the amount of insurance written in the policy "shall be taken and deemed to be the true value of the property at the time of such loss, and the amount of the loss sustained," and as the measure of damages. Held, that, in an action upon a policy issued since the statute took effect, in a case coming within its terms, the amount of insurance written in the policy is conclusive as to the amount of the damages (if any) for which the insurer is liable by reason of the loss.

2. As the statute rests upon grounds of public policy, the conclusive effect of the amount of insurance written in the policy upon the measure of damages, is not altered by a stipulation in the same instrument that the damages should be established "according to the true and actual cash marketable value" of the property when the loss happened.

APPEAL from the Circuit Court for Winnebago County. Action upon a fire insurance policy, issued August 1, 1876, upon a three-fourths interest owned by the plaintiff Thompson in a certain hotel in the city of Oshkosh, in which the other plaintiffs were interested as mortgagees. The total insurance upon the property, in various companies, was $10,000; the amount insured by the policy in suit was $1,000;

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Reilly and others vs. The Franklin Ins. Co. of St. Louis.

and, by the terms of the several policies, each company was to bear its proportion of any loss. The property was totally destroyed by fire, without fault of the plaintiffs. The complaint is in the usual form, with a copy of the policy annexed. The answer alleges that it was provided by the policy that the loss or damage should be established "according to the true and actual marketable value" of the property at the time the loss should happen; that at the time of the fire the true and actual cash marketable value of the property insured, and the interest of Thompson therein,.did not exceed $7,469.42, and plaintiffs did not suffer loss or damage exceeding that sum; and that defendant is therefore only liable to pay one-tenth part of that amount.

Plaintiffs demurred to the answer as not stating a defense; and defendant appealed from an order sustaining the de

murrer.

For the appellant, a brief was filed by Finch & Barber, and the cause was argued orally by Mr. Barber. They contended, 1. That as the policy of the law is to do away with conclusive presumptions, and substitute those which are rebuttable; as many presumptions once deemed conclusive, "have by the opinions of later judges, acting upon more enlarged principles, become conclusive only in the absence of proofs to the contrary" (1 Phillipps on Ev., 5th ed., 522; Wharton on Ev., § 1236); as, in those statutes which have created conclusive presumptions, such as the statute of limitations and the statute of frauds, the nature of the presumption appears from the plain and explicit language of the statute itself, nothing being given by intendment or left to inference; as ch. 347 of 1874 does not expressly provide that the amount of insurance written in the policy shall be conclusively taken and deemed to be the true value of the property or measure of damages; as there is nothing else in the statute which shows such to have been the legislative intention; and as every just and reasonable purpose of the legislature will be secured without that construction the

Reilly and others vs. The Franklin Ins. Co. of St. Louis.

statute should be construed as meaning merely that the amount written in the policy shall be taken prima facie as the value of the property and the amount of the loss. 2. That if the statute be otherwise construed, still the parties to the contract may, by express stipulation therein, limit the liability of the company; though, in the absence of such a stipulation, the statute would fix the measure of damages; that the rate of insurance depends upon the existence or absence of such stipulations; that owners of property carrying heavy insurance prefer to accept policies with these special stipulations, thereby lessening the premiums to be paid; and that the court should enforce the contract as it is made. Jennings v. Ins. Co., 2 Denio, 75: Chase v. Ins. Co., 20 N. Y., 52; Foote v. Ins. Co., 61 id., 576; Rohrbach v. Ins. Co., 62 id., 62; May on Ins., 3. The contract is like those agreements between shippers and common carriers, by which the latter limit their common-law liability as insurers. Dorr v. N. J. Steam Nav. Co., 11 N. Y., 492; N. J. Steam Nav. Co. v. Merchants' B'k, 6 How., (U. S.), 344; Wells v. Railroad Co., 24 N. Y., 180; Express Co. v. Caldwell, 21 Wall., 266; Bank of Kentucky v. Adams Ex. Co., 3 Otto, 176; D. & M. Railroad Co. v. Bank, 20 Wis., 123; Boorman v. Express Co., 21 id., 152. The statute here does not prohibit insurance companies from thus restricting their liability, either by express terms or by necessary implication; it does not appear to be remedial in its nature, since it does not point out, nor does there otherwise appear to have been, any specific existing evil which it is designed to remedy; it is plainly and directly in derogation of the common and commercial law; and it must therefore be strictly construed, and not presumed to alter the common law further than it expressly declares. Sedgw. on Stat. & Con. Law, 2d ed., 267, and note; Burnside v. Whitney, 21 N. Y., 148; Esterley's Appeal, 54 Pa. St., 193: Crowell v. Van Bibber, 18 La. An., 637; Bennett v. Holman, 54 Miss., 323; Blackman v. Wheaton, 13 Minn., 326. The restriction of the company's liability

Reilly and others vs. The Franklin Ins. Co. of St. Louis.

to the actual loss is just, reasonable, and in accordance with sound public policy. The fundamental principle of the contract of insurance is simple indemnity (May on Ins., § 2; Wilson v. Hill, 3 Met., 66; Franklin Fire Ins. Co. v. Hamill, 6 Gill, 87; S. C., 2 Bennett's Ins. Cas., 567, Appleton's Am. Cyc., "Insurance;" 3 Kent's Com., 273; Fuller v. Ins. Co., 36 Wis., 604); and stipulations in the contract limiting the liability of the insurer to the actual cash value of the property, or even to a less amount, are looked upon with favor by courts and legislatures. Laws of Mass. of 1873, ch. 331, prescribing form of policy; Lee v. Ins. Co., 11 Cush., 324; Stetson v. Ins. Co., 4 Mass., 331; Freeman v. Ins. Co., 14 Abb. Pr., 398; Ruse v. Ins. Co., 23 N. Y., 524; Sawyer v. Ins. Co., 37 Wis., 546; Columbian Ins. Co. v. Lawrence, 2 Pet., 49: Sadlers' Co. v. Badcock, 2 Atk., 554; Kulen Kemp v. Vigne, 1 Durnf. & E., 304; Lucina v. Crawford, 2 Bos. & Pul. (2d ed.), 295; May on Ins., §§ 2, 7, 374, 376; Flanders on Ins., 2d ed., 376; R. S. of Wis., ch. 169, secs. 16-18. 3. That while the statute provides that the amount written in the policy "shall be taken as the true value of the property," the policy provides that the loss shall be established according to the "actual cash marketable value" at the time of the fire; that there is a wide distinction in insurance law between these two things, and the determination of the latter value, when applied to insured property, requires proofs of loss, estimates, etc., to be furnished by the insured; and that this stipulation in the policy makes it an open policy, and entitles the parties to show by evidence the market value of the property- the cost in cash to replace it. Flanders on Ins., 76, 608; Brown v. Ins. Co., 105 Mass., 396; S. C., 5 Bennett's Ins. Cas., 325; Cox v. Ins. Co., 29 Ind., 586; Huckins v. Ins. Co., 11 Foster, 238.

H. B. Jackson, for the respondents, contended that a statute capable of being so construed as to give it effect, will not be so construed as to render it a nullity (Smith's Com., §§ 4867; Brown's Leg. Max., 664); that it is a fact within the gen

Reilly and others vs. The Franklin Ins. Co. of St. Louis.

eral knowledge of the court, and of which it will take judicial notice (1 Greenl. Ev., § 6), that the general form of insurance policies in use prior to the passage of ch. 347 of 1874, was the same as that since used; that the construction of the statute contended for by the defendant, allowing the company, in an action upon such a policy, to set up the defense that the property was not worth the amount of insurance written in the policy, would render the statute a nullity; that the practice of reckless companies in insuring property at an excessive valuation, taking premiums based upon such valuation, and then, in case of a loss, alleging that the property was overvalued, was the evil which the statute was designed to remedy; and that it ought to be so construed as to accomplish that intention. Smith's Com., § 491. 2. That when the act declares that the amount written in the policy shall be "the measure of damages," this is equivalent to saying that it shall be the only measure of damages, since there cannot be two such measures in one case. 3. That any intendment of the policy which would provide a different measure of damages, would "stand against the law," and should not be taken, if by any construction it can be avoided. Co. Litt., 42, 183; Church Wardens of St. Savior, 10 Rep., 66; Shore v. Wilson, 9 Clark & F., 397; Att'y Gen. v. Clapham, 4 De Gex, M. & G., 591; Moss v. Bainbridge, 18 Beav., 478; 31 Eng. L. & E., 142, 565; Archibald v. Thomas, 3 Cow., 284; Riley v. Vanhouten, 4 How. (Miss.), 428. 4. That all contracts must be construed most strongly contra proferentem. Bacon's Max., Reg. 3; May on Ins., 175; Ga. Home Ins. Co. v. Kinnier's Adm'x, 5 Cent. Law J., 127. 5. That, the statute being founded on considerations of public policy, parties to private contracts cannot waive the benefit of it even by express terms, much less by doubtful implication. Melchoir v. McCarty, 31 Wis., 254; Chitty on Con., 598; Staines v. Wainwright, 6 Bing. (N. C.), 174; White v. Conn. Mut. L. Ins. Co., 5 Cent. Law J., 486; 55 N. H., 249, 264; 52 Me., 322.