Opinion
05-26-1893
LEHNEIS v. EGG HARBOR COMMERCIAL BANK.
C. A. Baake and J. J. Crandall, for complainant. A. Stephany, for defendant.
(Syllabus by the Court.)
Bill by Christian Lehneis against the Egg Harbor Commercial Bank. Heard on pleadings and proofs in open court. Decree for defendant.
C. A. Baake and J. J. Crandall, for complainant.
A. Stephany, for defendant.
PITNEY, V. C. The object of the bill is to have a mortgage given by the complainant to the defendant declared to be paid and satisfied, and, with the accompanying bond, to be delivered up and canceled. The bill alleges that in April, 1891, complainant was owner of a small farm with a cottage upon it, which cottage was of the value of $1,000, and that he applied to the defendant for the loan of $800 upon bond and mortgage upon the premises; that the bank agreed to loan that sum upon bond and mortgage, provided "that your orator would permit them, but at his cost and expense, to effect a fire policy of insurance upon the cottage for the sum of $800 against loss by the casualty of fire;" that the defendant undertook as a part of the transaction to procure a good and sufficient policy of insurance upon the premises, and the loan was made upon that understanding, and the amount of the premiums for the insurance was deducted from the amount of the loan; that the bond and mortgage were duly executed, and the money advanced thereon; that afterwards, on the 28th of March, 1892, the cottage was entirely destroyed by fire; that it was worth at the time of the loss $1,000; that the loss exceeds the sum of $800, for which the defendant undertook to procure said Insurance; that the defendant neglected to procure the Insurance, and should therefore be held liable in all respects as if the insurance had been procured; and the prayer is that the bond and mortgage be declared to be paid and satisfied, and that they be delivered up and canceled. The answer admits the material allegations of the bill, except as to the value of the cottage, and as to that it denies that it was worth either $1,000 or $800, and it alleges that it was worth less than $650. It admits that defendant failed to procure the insurance, and substantially it admits defendant's liability to account to the complainant for the value of his house. It alleges that on the 27th of June, 1892, and after bill filed, it offered and tendered to the complainant the sum of $677,35, to be applied as agreed on said bond and mortgage for and on account of the loss by fire. That sum was arrived at as follows: Loss by fire, March 27, 1892, $650; interest from March 27 to June 27, 1892, $9.75; complainant's costs up to that date, $17.60. And the answer alleges that the complainant refused to accept the said receipt, and credit it in payment in full for his loss, and it says that it is and has been at all times ready to allow such credit on the said bond and mortgage. Then follows a cross bill in the ordinary form to foreclose the mortgage. The facts as they appeared at the hearing are that, after the loss, and prior to June 13th, some negotiations occurred between complainant and defendant as to the adjustment of the loss and its application to the mortgage, which resulted in the writing of a letter by the solicitor of the complainant to defendant as follows; "Egg Harbor City, N.J. June 13th, 1892. Dear Sir: Mr. Christian Lehneis, having considered the subject-matter of our conversation on Wednesday last, has come to the conclusion not to accept anything less than the full amount of $800 in adjusting the loss. In other words, he will insist upon having the mortgage canceled and returned to him upon his payment to the bank of such an amount of interest as may be due the bank, if any. 1 shall be at Egg Harbor City to-morrow evening, when you may be kind enough to let me know how much interest may be due. Respectfully yours, Charles A. Baake." On the 14th the defendant, by its president, served on the complainant a notice in these words: "Egg Harbor City, June 14th, 1892. To Christian Lehneis and Chas. A. Baake, his Attorney: I am directed by the board of directors of the Egg Harbor Commercial Bank to notify you, for the purpose of ascertaining and settling the loss by fire sustained by you March 27, 1892, they propose the immediate appointment of appraisers, one to be appointed by them, and one to be appointed by you, and a third one to be appointed by the said two appraisers if they cannot agree. If you agree to this proposition, please name your appraiser in three days from this date; otherwise the said board of directors shall forthwith after the expiration of the said three days cause an appraisement of your loss to be made by appraisers appointed by them. Respectfully, Robert Ohmuiess, Pres. Egg Harbor Commercial Bank." Complainant declined to join in the appraisement, and on the 17th of June the bill herein was filed. Defendant at once called in two reputable builders from Atlantic City to appraise the value of the property destroyed, who, on June 20th, went on the ground in company with the complainant, and he there described to them the character of the house before it was burned, and they made an appraisement, fixing the cost of rebuilding at $650, and offered to rebuild at that price. Defendant then notified complainant of the result of this appraisement, and offered to rebuild the house. Defendant declined to have the house rebuilt, declaring that he did not want to use a house or to live there. Thereupon the defendant, on the27th of June, offered to the complainant in writing to receipt upon the mortgage the sum of $677.35 in full for the complainant's loss by fire. This offer the complainant declined, and the suit proceeded. Evidence was gone into at great length on both sides as to the value of the house and cost of rebuilding. I am satisfied that the appraisement made by the defendant's appraisers was a fair one, with a single exception: they omitted from their estimate one of the chimneys which was in the house when destroyed, and which could have been added for $15. They estimated the value of the house consumed at $600, and cost of rebuilding at $650. The complainant's witnesses made the cost of rebuilding somewhat greater, but I am satisfied that $700 will more than cover the complainant's loss. I am willing to fix it at that sum. The complainant, however, besides contending, as alleged in the bill, that the building destroyed was worth more than $800, took the further point that the value of the building was immaterial, and that the case must be considered in all respects as if the policy contracted for was a valued policy, as distinguished from an open policy, and he rested his argument upon the fact that the defendant, as one of the terms of the loan, required that a policy for at least $800 should be given as collateral to the mortgage, and upon the language of the mortgage itself, which declares that "if the mortgagor shall fail to keep the buildings erected upon the mortgaged premises insured against loss by fire in some safe and responsible insurance company to an amount not less than $800, and assign the policy, or have the loss made payable, to the party of the second part as collateral security for the payment of the money loaned, it shall be lawful for the party of the second part to effect such insurance, and the cost of the premium is to be a lien upon the mortgaged premises." I do not understand this position to be within any allegation of the bill, but, if it were, I do not find it supported by any evidence in the cause. The ordinary meaning of the language, "insured against loss or damage by fire," is insurance against the actual loss within the limit of the sum fixed. A very great majority of the policies of insurance issued in this country are of that class. They are open policies, and, in case of loss, no more can be recovered than the actual loss, no matter what the limit may be as mentioned in the policy. So that, in order to support the contention that the policy of insurance here contracted for was a valued policy, complainant must prove that such a polity was especially contemplated and agreed upon by the parties. No proof of such a special contract was offered. On the contrary, the agent through whom the defendant habitually obtained its insurance, and who was employed to procure it in this case, and through whose oversight it happened that no policy was in this case actually taken out, produced blanks of the policies usually issued by each of the companies for which he acted as agent, and each of them appeared to be open policies, and not valued. Each declared that the company shall not be liable beyond the actual value of the premises, and each contain a clause giving the insurer the privilege to rebuild in discharge of its liability, which option to rebuild is manifestly inconsistent with a valued policy. There was here, then, no contract for a valued policy, and the complainant's case fails in this respect as well as the other. Defendant is entitled to the usual decree of foreclosure. The amount due upon its mortgage is to be arrived at by crediting thereon $700 as of the 27th of March, 1892. It is also entitled to costs.