FIDELITY AND GUARANTY INSURANCE CORPORATION, a corporation of the State of Maryland, Commercial Union Assurance Company, Limited, a corporation of the State of New York, New York Fire Insurance Company, a corporation of the State of New York, and Ohio Farmers Insurance Company, a corporation of the State of Ohio, Appellants,
Elsie MONDZELEWSKI, Appellee.
Action by insured on fire policies covering two frame buildings, which were demolished by insured pursuant to order of city building inspector issued under authority of ordinance after partial destruction of buildings by fire. From order of the Superior Court, New Castle County, granting insured's motion for summary judgment, the insurers appealed. The Supreme Court, Southerland, C. J., held that provision of fire policies excluding from coverage any increased cost of repair by reason of any ordinance did not bar recovery as for total loss, but that order issued by inspector was not necessarily valid.
Cause set for reargument.
Stephen E. Hamilton, Jr., Wilmington (Albert L. Simon, Wilmington, with him on the brief), for appellants.
Charles L. Paruszewski, Wilmington, for appellee.
SOUTHERLAND, C. J., and WOLCOTT and BRAMHALL, JJ., sitting.
SOUTHERLAND, Chief Justice.
Plaintiff brought suit upon policies of fire insurance totalling $7,000 in amount and covering two adjoining frame buildings in the first fire district of the City of Wilmington. She sought to recover as for a total loss. Her motion for summary judgment was granted and the companies appeal, urging that the loss was partial only, and that judgment should have been entered for only $1,550, the amount of the fire damage found by appraisal proceedings under the policy.
[49 Del. 308] Plaintiff's claim of total loss is based upon the fact that after the fire the buildings were condemned by the City Building Inspector and she was forced to raze them. The action of the Building Inspector was grounded upon ordinances of the City of Wilmington regulating the repair and reconstruction of wooden buildings within the first fire district. Its provisions will be considered hereafter. At the moment we merely note that the ordinance, if valid and effective, required the demolition of plaintiff's buildings.
Upon the theory that the total destruction of the buildings was, by operation of law, the direct result of the fire, plaintiff claims the full amount of the insurance under the provisions of the Delaware Valued Policy Law.18 Del.C. § 1102.
In the course of the proceedings below defendants moved for summary judgment. They contended (1) that the loss by fire was partial and was not converted into a total loss by reason of the condemnation; and (2) that in any event the plaintiff was not compelled to demolish the buildings because the ordinance under which they had been condemned was unconstitutional. The motion was denied. The trial court held (1) that because of the condemnation the loss was total; and (2) that the companies could not assert the invalidity of the ordinance, since this assertion involved a collateral attack upon it. See Del.Super., 105 A.2d 787. The trial court's opinion left no issue of fact to be determined, and (we are informed) the court suggested that plaintiff file a motion for summary judgment. This motion was filed, and the court entered judgment for plaintiff for the full amount claimed. The companies appeal.
The companies here renew these contentions. In support of the first contention it is claimed that the risk assumed was that of fire damage solely; loss resulting from the operation of the building laws, it is said, is expressly excluded by the policy.
The policy clause relating to the point reads:
‘ [The company] does insure Elsie Mondzelewski and legal representatives to the extent of the actual cash value of the property [49 Del. 309] at the time of the loss, but not exceeding the amount which it would cost to repair or replace the property with material of like kind and quality within a reasonable time after such loss, without allowance for any increased cost of repair or reconstruction by reason of any ordinance or law regulating construction or repair * * *.’
This clause applies, of course, to partial losses. Admittedly, if the loss by fire is total, the valued property statute applies and all inquiry as to the amount of the loss and damage is foreclosed. That statute reads in part as follows:
‘ Whenever any policy of insurance shall be issued to insure any real property in this State against loss by fire, tornado, or lightning, and the property insured shall be wholly destroyed without criminal fault on the part of the insured, or his assigns, the amount of the insurance stated in such policy * * * shall be taken conclusively to be the true value of the property insured and the true amount of loss and measure of damages * * *.’ 18 Del.C. § 1102.
The question therefore is whether the total destruction by compulsion of law of a building partially damaged by fire is a total loss by fire within the intent of the statute. In considering this question, the constitutionality of the ordinance is assumed.
The general rule is that if repair or reconstruction of a building damaged by fire is prohibited by the municipal authorities acting under proper authority of law, recovery may be had as for a total loss. 6 Appleman, Insurance Law, § 3822; 6 Cooley, Briefs on Insurance, 2d Ed. § 5032; annotation in 49 A.L.R. 817. This is merely a logical extension of the rule of constructive total loss. Under this rule it has been held that a fire loss is total if the building is so damaged that no substantial remnant remains that a prudent uninsured person would use on rebuilding. See annotation in 39 L.R.A.N.S., 1182. The same result logically follows if the insured is prevented by law from making repairs. In the first case the fire loss is total in fact; in the second case it is total in law.
[49 Del. 310] If, however, there is a policy provision, as in this case, excluding from the coverage ‘ any increased cost of repair or reconstruction by reason of any ordinance or law regulating construction or repairs', an additional question is presented. Does this language limit the extent of the loss to actual fire damage, and exclude a claim for a total loss arising from compulsory condemnation? In jurisdictions where no valued policy law exists there is a conflict of authority on this point. See, for example, Rutherford v. Royal Insurance Co., Ltd., 4 Cir., 12 F.2d 880, 49 A.L.R. 814, and Hewins v. London Assurance Co., 184 Mass. 177, 68 N.E. 62. In the Rutherford case it was held that the policy clause refers to partial losses only and not to total losses, land the question whether the loss was in fact total, by reason of the legal impossibility of repair, is still open. In the Hewins case it was held that by the policy provision the insured has contracted away any right to claim a total loss resulting from the enforcement of the building laws.
In cases decided under the valued policy statutes, however, the courts have uniformly held that upon a showing that the demolition was required by law the insured may recover as for a total loss. Dinneen v. American Insurance Co., etc., 98 Neb. 97, 152 N.W. 307, L.R.A.1915E, 618; Palatine Insurance Co., Limited v. Nunn, 99 Miss. 493, 55 So. 44; Scanlan v. Home Insurance Co., Tex.Civ.App., 79 S.W.2d 186; Hart v. North British & Mercantile Ins. Co.,
182 La. 551, 162 So. 177. The policy provision contracting against liability
for enforced demolition is held to be overridden by the statute if the loss
is total by reason of such demolition.
The companies insist that these cases are wrongly decided and should not be followed. Valued policy statutes are said to be concerned with valuation, not with the character of the risk assumed. The policy provision is said to be a limitation of the risk assumed, and as such a lawful subject of contract. A comment in 34 Col.L.Rev. 1149-1150 is cited.
[49 Del. 311] We do not agree with this reasoning. The valued policy statute is concerned not only with valuation but also with the measure of the insurer's liability in cases of total loss. What constitutes a total loss is not defined in the statute. But when the legislature used the phrase ‘ totally destroyed’ it certainly employed it in the light of accepted principles of insurance, which permit recovery for a constructive total loss. If the loss is in law or in fact total, the statute applies and the insurer must pay the face amount of the policy. A policy provision that prevents the insured from showing that the loss is in law or in fact total runs directly afoul of the clear intent of the statute.
The companies concede that the fire was the proximate cause of the demolition, but deny that a total loss so caused is within the scope of the statutory language referring to total destruction by fire. This argument seems to deny that which has been conceded-the rule of proximate cause applicable to fire damage. The insurer is liable not only for fire damage but for damage of a different kind necessarily resulting from the fire, e. g., damage by water used in extinguishing the fire. 4 Joyce, Insurance, § 2824.
It is suggested that in 1889, when the valued policy statute was enacted, there was no fire district in the City of Wilmington and no ordinances of the kind here involved, and that the legislature could not have contemplated as a total loss compulsory demolition of a fire-damaged building. Whether municipal condemnation of fire-damaged buildings existed in the City of Wilmington when the statute was passed is of no consequence. The language of the statute is broad enough to include any case of total destruction directly resulting from a fire, whether the destruction be in fact or in law. It is an elementary rule of statutory construction that legislative enactments couched in general terms broad enough to include conditions that the future may bring forth apply to the new conditions if they come within the general purview of the statute.50 Am.Jur., Statutes, § 237.
[49 Del. 312] The suggestion that the enforced demolition of the buildings was not within the contemplation of the parties because they had contracted to exclude it from coverage is merely a reiteration of an argument already dealt ...