Brady v. North Western Insurance

Martin Ch. J.:

The plaintiff in this case was insured by the defendants in the sum of two thousand dollars, upon his warehouse, on the first day of January, 1856, for one year. The policy of insurance' contained, among others, this provision: “This'insurance (the risk not being changed) may be continued for such further time as shall be agreed on; the premium therefor being paid and indorsed on this policy, or a receipt given for the same.” The obligation of the defendants seems to have been renewed every succeeding year, under this stipulation; and upon such renewed obligation, dating from the first day of January, 1861, this action arises.

Between the years 1856 and 1861, certain ordinances were adopted .by the Common Council of Detroit, for preventing the restoration or reconstruction, within certain boundaries, of wood buildings which might be injured or destroyed by fire. After the passing of these ordinances, the policy was renewed on payment of the premium originally stipulated, and after being countersigned by the resident agent. The question now presented is, whether *444 the liability of the defendant is under the promise of 1856 or that of ] 861; in other words, was the undertaking of 1856 made a continuous undertaking, to be construed by the laws and ordinances as they existed in 1856 solely, or, by the renewal, were the parties bound by the laws and ordinances existing at the time of such renewal.

We have no doubt that each renewal of the policy was a new contract. Each was upon a new consideration, and was optional with both parties. At the expiration of the year over which the original policy extended, the obligation of the insurer was ended, and it was only by the concurrence of the will of both parties that the obligation could be continued. This concurrence is manifested by the payment of a consideration by the one party, and a renewed promise by the other; and an obligation revived or continued under such circumstances, is an original obligation. It must be asked for by the one, and may be assumed or refused by the other; and the policy, which is its evidence, is therefore only continued by the positive act of both parties. This is according to the terms of the policy, and of the certificate of renewal; and the fact that the insurance company, by the very terms of the certificate of renewal, required payment therefor, and that such certificate should be countersigned by the resident agent before it should become operative, shows that the company regard the renewal as a new contract, made at their option, and dependent in some degree upon the judgment and knowledge of such agent. Thus, if the agent should find the property depreciated in value, or the risk increased from any cause, he could refuse to countersign the renewal receipt, and the promise by the company to renew the policy would be thereby terminated. Now, it is very clear that all such contracts must be mutual, and that where a right is reserved to a party to renew or dissolve an obligation, the determination of such party to renew an expired contract, if accepted by the other, makes an original contract.

*445 This contract of insurance is one of indemnity against loss by fire; and the whole loss of which the fire is the actual cause, is within its terms to the extent of the indemnity'promised. Much is said by Judges of the proximate and remote cause of the loss; and the distinction was very elaborately discussed by counsel in the present case. But, after careful consideration, I must confess that, to my mind, the word '■'■proximate ” is unfortunately used, and serves often to mislead the inquirer, and to produce misapprehension of the real rule of law. That which is the actual cause of the loss, whether operating directly, or by putting intervening agencies — the operation of which could not be reasonably avoided — in motion, by which the loss is produced, is the cause to which such loss should be, attributed. in the effort to extinguish fire, property is damaged or destroyed by water, the water may be said to, be the proximate cause of the injury or destruction; yet in no just sense can it be said to be the actual cause. That was the fire. The fair and reasonable interpretation of a policy of insurance against loss by fire, will include within the obligation of the insurer, every loss which necessarily follows from the occurrence of the. fire, to the amount of the actual injury to the subject of the risk, whenever that injury arises directly and immediately from the peril, or necessarily from incidental and surrounding circumstances the operation and influence of which could not be avoided.

Under this rule, what was the plaintiff’s loss in the present case? - The property insured was situated within the fire limits of Detroit, within which the reconstruction or repair of any wood building injured by fire was prohibited, unless by leave of the Common Council. The charter andj ordinances of the city upon this subject, and the refusal of the Common Council to permit the repair of the building injured, were offered in evidence to show the extent of the plaintiff’s loss, and rejected. This charter and these ordinances were in existence at the time of the *446 last renewal of the policy. They were local laws affecting the property, and the risk which the defendant assumed, and of which the latter is presumed to have had knowledge, and to have estimated in renewing the policy. Whether, therefore, in case of damage or partial loss, the Common Council would permit a repair of the building, was a risk which the company took upon itself, because the loss and injury to the plaintiff might depend in amount upon such action of the Council, while such loss and injury would be absolutely and actually the consequence of the fire; and because by the terms of the policy the company reserved the right to repair or not at option, thus taking the risk of the power to repair, and of all loss which should accrue if repairing should be impossible from any cause. To hold that for an injury to the property, which results, without the fault of the insured, in a total loss to him, so far as value and use are concerned, the insured can only receive compensation to the extent of the appraised damage to the materials of which the building was constructed, and which were destroyed, would establish a narrow, illiberal and illogical rule. The value of the building consisted in its adaptation to use, as well as in the materials of which it consisted; and if it could not be restored to use after the fire, the loss was total, less the value of the materials rescued. In the very pertinent language of the plaintiff’s counsel, “The contract was not simply an agreement to pay for so much material as might be damaged by fire — to pay such amount as the material might actually be worth. Fixed by the conditions of the policy as the most hazardous of all structures, and with a premium adjusted accordingly, the insurer took the risk upon a ‘three-story wood warehouse,’ actually in use as such. The risk was not taken upon a mere collection of beams, boards and other materials, thrown together without purpose or special adaptation'. It was upon a building for trade, situated within a particular locality, within the *447 jurisdiction of municipal authorities vested with legislative powers for special purposes, and subject to the exercise of those powers;” and the parties must be regarded as contracting with a full knowledge of all the facts and the law, and the risk to which the property was thereby subjected.

Of the power of the Common Council to pass the ordinances in question, we have no doubt. They contravene no provision .of the Constitution as we read it, and they were made in the exercise of a police power necessary to the safety of the city. A regulation of the use of property, or a prohibition of its repair when partially destroyed, cannot, to my mind, be regarded as a condemnation to public use.

The Court erred in excluding the testimony offered, and in the rule of damages given to the jury.

The judgment is reversed, and a new trial ordered.

Manning and Christiancy JJ. concurred.