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FARBER v. PERKIOMEN MUTUAL INSURANCE COMPANY (05/26/52)

May 26, 1952

FARBER
v.
PERKIOMEN MUTUAL INSURANCE COMPANY, APPELLANT



Appeals, Nos. 79 and 80, Jan. T., 1952, from judgments of Court of Common Pleas of Bedford County, Nov. T., 1950, Nos. 122 and 123, in case of Raymond A. Farber v. Perkiomen Mutual Insurance Company and National Mutual Assurance Company. Judgments affirmed.

COUNSEL

Douglass D. Storey, with him Paul A. Koontz and Storney & Bailey, for appellants.

Stanley G. Stroup, with him John A. Minnich, for appellee.

Before Drew, C.j., Stearne, Jones, Bell, Chidsey and Musmanno, JJ.

Author: Jones

[ 370 Pa. Page 481]

OPINION BY MR. JUSTICE JONES

These appeals are from judgments for the plaintiff against the defendant companies, respectively, in separate actions on policies of fire insurance issued by the defendants to the plaintiff. Both appeals raise the same question of law under identical facts and will, therefore, be disposed of together.

The plaintiff, being the owner of a three-story building in Hyndman, Pa., insured his interest therein with the defendant insurance companies against loss by fire under similar policies, each for one year and "to the extent of the actual cash value of the property at the time of loss" but "not exceeding Five Thousand ($5,000) Dollars." Both policies contained the following clause, -- "Co-Insurance Clause: In consideration of the reduced rate and (or) form under which this policy written, it is expressly stipulated and made a condition of this contract that in the event of loss this company shall be liable for no greater proportion thereof than the amount hereby insured bears to 80% of the actual cash value of the property described herein at the time when such loss shall happen, nor for more than the proportion which this policy bears to the total insurance thereon."

During the term of the policies, the building was damaged by fire which caused a partial loss. The figures hereinafter used were stipulated by counsel at trial and are not in dispute. The reproduction cost new of the building immediately before the fire was $39,435.83. Because of the building's age and condition, it had already suffered a depreciation of 60%

[ 370 Pa. Page 482]

    which gave it an "actual cash value" of $15,774.34. Accordingly, it was incumbent on the plaintiff under the co-insurance clauses of the policies to carry insurance of a total amount of $12,619.46, being 80% of $15,744.34, the actual cash value of the property immediately before the fire. If the plaintiff carried less than the amount of insurance so required, then in case of damage by fire, he would be subjected to a diminution of loss proportional to the amount that the insurance actually carried was less than the amount required to be carried according to the co-insurance clauses. The reproduction cost new of the labor and materials required to repair the damage done by the fire in order to restore the building to its prior use was $17,225.44.

The plaintiff claims that the amount of his loss against which he was insured was 10,000.00/12,619.46 of $17,225.44, or $13,650.00, but inasmuch as the maximum limit of the two policies was $10,000, the total of his recoveries is restricted to the face amount of the policies with interest. The defendants, on the other hand, contend that the $17,225.44 reproduction cost new of the labor and materials necessary to restore the building should be depreciated by 60%, the extent of depreciation applied to the reproduction cost new of the building in determining its actual cash value immediately prior to the fire. Thus, the defendants assert that the way to figure the plaintiff's loss is to depreciate the $17,225.44 value for labor and new materials by 60% which produces a net loss to the plaintiff of $6,890.18 on account of which he is entitled to recover from the defendants on the two policies 10,000.00/12,619.46 thereof or $5,459.16.

The learned trial judge did not adopt the contention of either the plaintiff or the defendants but left it to the jury to find specially what they estimated the damage to the plaintiff to be. The jury, by ...


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