Appeal from Court of Common Pleas, Columbia County; Charles C. Evans, President Judge.
Argued before Moschzisker, C. J., and Frazer, Walling, Simpson,
Kephart, Sadler, and Schaffer, JJ.
The opinion of the court was delivered by: Kephart, J.
This was an action on an insurance policy for the partial destruction of a dwelling and household goods. Recovery was denied in the court below because the proof of loss had not been filed within the time limited by the contract.
The company was duly notified of the fire, and, through its agent, the owner met the adjuster, who stated to her that the company would not pay the loss because she was criminally responsible for the fire. Action to establish that liability was taken by the authorities but later dropped for want of proof. In the action to recover damages for the loss, the court below held that, by filing the proof of loss several months after the time required by the policy, appellant was estopped from setting up the company's waiver of the requirement to file proof of loss in 60 days. The insured appeals.
The utmost fair dealing should characterize the transactions between an insurance company and the insured. If the insurer, having knowledge of a loss, by any act throws the insured off his guard as to the necessity of performing some duty enjoined by the policy, the insurer should not be permitted to take advantage of the failure to act. It has been held many times that an insurance company may waive filing a technical proof of loss.
Waiver may be inferred from any act evidencing a recognition of liability, or from a denial of liability on other grounds than failure to file proof of loss. Pennsylvania Fire Ins. Co. v. Dougherty, 102 Pa. 568; Simons v. Safety Mutual Fire Ins. Co., 277 Pa. 200, 203, 204, 120 A. 822; Roe v. Dwelling-House Ins. Co., 149 Pa. 94, 23 A. 718, 34 Am. St. Rep. 595; First Nat. Bank of Mildred v. Home Ins. Co., 274 Pa. 129, 118 A. 17. Waiver may be shown by parol in express language, or, as in this case, it may appear by necessary implication. Bush v. Hartford Fire Ins. Co., 222 Pa. 419, 71 A. 916.
Appellee had prompt notice of the loss, as its agent visited the place where the fire occurred. It had through its adjuster refused payment on other ground than failure to file the proof of loss. Of what avail was it thereafter? A 'proof of loss' is to acquaint the insurance carriers with the amount of loss from the insured's viewpoint. If its representative adopts another method of ascertaining the loss, or states that it will not pay any loss, what would be the use of filing a proof of loss? A policyholder need not do a vain thing; nor is he to be prejudiced for failure to observe a technicality, the performance of which would be useless. The court below, however, acted on the authority of two Superior Court cases (Edelson v. Norwich Union Fire Ins. Co., 59 Pa. Super. Ct. 379, and Ulysses Elgin Butter Co., Ltd., v. Hartford Fire Ins. Co., 20 Pa. Super. Ct. 384) to sustain an estoppel to assert the waiver.
An estoppel exists where one by his words or conduct causes another to believe in the existence of a state of facts, inducing reliance thereon in some act of mutual concern, and the inducing person wishes to assert, prejudicially, facts in opposition to those first held out to be true, on which action was taken. This cannot be done; the one making the inducement is estopped. But one is not estopped unless the contemplated action would prejudicially injure another. Wherein was the insurance company injured, or in what respect did it alter its position after the waiver, by receiving the proof of loss, or in what aspect could the receipt be a 'waiver of a waiver,' as suggested? It declined to pay for a reason that afterward turned out to be without foundation. The rights of the parties were fixed. The company had contracted to pay the loss; must suit be instituted or should the insured ask for payment and submit his bill? The idea of a waiver of the waiver would dispel all ideas of amicable settlement; and if a later presentation of proofs operates to bar the remedy, then logically the statement of claim filed in the action at law, containing the same information, would have the same effect. The policyholder is not to be punished for voluntarily taking a step which tends to avoid litigation.
Where a company waives the requirement of a technical proof of loss, and the insured thereafter furnishes it, he does not lose his rights under the original waiver. 26 C. J. 393; Warshawky v. Insurance Co., 98 Iowa, 221, 67 N. W. 237. See, also, Jenkins v. Insurance Co., 282 Pa. 380, 127 A. 836. The court below was in error in so holding, and, if the two Superior Court cases conflict with this view, they are overruled.
Because of our conclusion on this subject, it is necessary to pass on
another question as to the measure of damages where
there has been a partial destruction. The policy reads: 'Actual cash
value (ascertained with proper deductions for depreciation)
on the property at the time of loss or damage, but not exceeding the
amount which it would cost to repair or replace the same with
materials of like kind and quality within a reasonable time after such
loss or damage.' We stated in Penna. Co. v.
Contributionship, 201 Pa. 497, 51 A. 351, 57 L. R. A. 510, that, in
ascertaining the loss resulting from the partial burning of a
building, the true result is to be reached by taking the cost of
reconstruction according to the conditions existing and lawfully
imposed at the time when the fire occurred. And where a manufacturer of
machinery insured machinery under a similar policy, we
held that the measure of damages was not the market value of the
property destroyed, but what it would cost the insured as a
manufacturer to replace it. Standard Sewing Machine Co. v. Insurance
Co., 201 Pa. 645, 51 A. 354. But this rule is not
invariable. A policy should be interpreted so that it may cover the
intention of the parties (Humphreys v. National Benefit Ass'n,
139 Pa. 214, 20 A. 1047, 11 L. R. A. 564); and where property is of a
peculiar character and the intent of the policy is to protect
the insured against its loss, the policy should be construed to effect
that purpose. Thus, where the subject-matter insured
is a machine, a house, a manufacturing establishment, or property of
that character, the rule above stated, 'the cost of repairing
or replacing such property as of the date on which it is injured or
destroyed,' applies, because the proof is readily accessible;
but where property is peculiar, such as whisky, the market price may
control, since whisky, from circumstances of make and
age, by the widest stretch of imagination could not be susceptible of a
proof such as required for a building. Frick v. United
Firemen's Insurance Co., 218 Pa. 417, 67 A. 743, 746. 'Whisky has a
distinctive character and quality of its own,' at least this
court said so years ago.
Appellee contends for market value. The policy provides for indemnity to the extent of the actual cash value, with allowance for proper depreciation of the property at the time of loss, not exceeding cost of repair or replacement.
Generally speaking, 'actual cash value' does not mean market value, as the term is understood. 'Market value,' as here urged, embodies what a purchaser willing to buy feels justified in paying for property which one is willing but not required to sell. 'Market value' includes factors of time, place, circumstance, use, and benefit; depreciation is included, but one figure is the result of these considerations, the price to be paid. Ordinarily actual cash value has no relation to any of these factors; it is value under all times, such as the cost of manufacturing or building or book value. The policy intended something different from market value; the latter includes 'depreciation,' while the 'actual cash value' of the policy is to be diminished by 'depreciation.' Actual cash value in a policy of insurance means what it would cost to replace a building or a chattel as of the date of the fire.
Where a building is entirely destroyed, the application of the rule is simple; where a building is partially destroyed, it may be difficult to arrive at actual cash value, less depreciation if it is to be considered; but difficulties cannot prevent the right to compensation. There enters into actual cash value of the part destroyed the fact that it was a part of an entire property and the use made of it. It is summed up in the idea 'the cost of replacing in as nearly as possible the condition as it existed at the date of the fire.'
The actual cost of new material, with deduction for depreciation, which is not sufficient to replace the building as nearly as it could be as of the date of the fire, does not comply with the policy, which was to insure ...