AMERICAN EAGLE FIRE INS. CO. v. LIVELY

AMERICAN EAGLE FIRE INS. CO. v. LIVELY
1926 OK 263
248 P. 313
119 Okla. 53
Case Number: 16439
Decided: 03/23/1926
Supreme Court of Oklahoma

AMERICAN EAGLE FIRE INS. CO.
v.
LIVELY.

Syllabus

¶0 Insurance--Fire Policy--Statutory Provisions -- Validity of Three-Fourths Value Clause.
A rider containing a clause fixing the amount of the recovery at three-fourths of the cash value of the property at the time of loss, attached to the standard form of fire insurance policy, is within the contemplation of the statute permitting the standard form of policy to be modified or added to, and the same is enforceable.

Commissioners' Opinion, Division No. 2.

Error from District Court, Tulsa County; Z. I. J. Holt, Judge.

Action by C. W. Lively against the American Eagle Fire Insurance Company. Judgment for plaintiff, and defendant brings error. Reversed, and remanded, with directions.

Rittenhouse & Rittenhouse, John F. Webster, and Franke E. Lee, for plaintiff in error.
Poe & Lundy, for defendant in error.

JARMAN, C.

¶1 This was an action by C. W. Lively against the American Eagle Fire Insurance Company to recover on a fire insurance policy the sum of $ 4,000, being the amount the plaintiff alleged as the loss suffered by him by the destruction of certain property by fire. Judgment was for the plaintiff for $ 4,000, and the defendant brings error.

¶2 The insurance policy under consideration is the standard form of policy, having a rider attached containing what is known as the three-fourths value clause, limiting the amount of the recovery under the policy at three-fourths of the cash value of the property at the time of loss. The case was tried in the lower court on the theory that the three-fourths value clause was invalid and unenforceable, for the reason that the same was in conflict with the provisions of the standard form of policy. The plaintiff makes the same contention here.

¶3 The question involved is, May the standard form of fire insurance policy, providing that the property is insured "to an amount not exceeding $ " (being $ 4,000 in this instance) be limited by a rider attached to the policy fixing the amount of recovery at three-fourths of the cash value of the property at the time it is destroyed by fire? The plaintiff contends that the three-fourths value clause is in conflict with the provisions of the standard form of policy prescribed by statute, and that the liability provided for in the standard form cannot be changed by a rider attached to the policy, and that, since the property was insured for $ 4,000, he is entitled to recover that amount, provided the same does not exceed the cash value of the property at the time of loss. In the first place, the three-fourths value clause is not in conflict with the provisions of the standard form of policy. The property is not insured for the definite sum of $ 4,000, but "to an amount not exceeding $ 4,000," which merely fixes the maximum amount of insurance at $ 4,000, and, if it were not for the further provision in the policy, "This company shall not be liable beyond the actual cash value of the property," there would be no way to determine, under the provisions of the standard form, the amount the company would be liable for. It is clear, therefore, that the Legislature intended, by inserting the provision "to an amount not exceeding $ ," that riders might be used for the purpose of definitely fixing the liability and the amount of the recovery, provided it did not exceed the cash value of the property at the time of loss. This intention is made more apparent when we take into consideration the last paragraph of the policy, which provides:

"This policy is made and accepted subject to the foregoing stipulations and conditions, together with such other provisions, agreements, or conditions as may be indorsed hereon or added hereto."

¶4 It cannot be said that the rider, fixing the amount of recovery at three-fourths of the cash value of the property, conflicts with the clause in the policy, "to an amount not exceeding $ 4,000," and certainly said rider does not conflict with the clause, "This company shall not be liable beyond the actual cash value of the property." The provisions of the standard form are sufficient, of themselves, we think, to authorize the attaching of the rider containing the three-fourths value clause to the policy, and certainly all doubt on the question is dispelled by section 6766, C. S. 1921, which provides:

"Standard form of policy--Exceptions. No fire insurance company shall issue fire insurance policies on property in this state other than those of the standard form herein set forth except as follows: * * *

"6th. A company may write upon the margin * * * or print * * * upon * * * riders * * * provisions adding to or modifying those contained in the standard form. * * *"

¶5 The standard form of policy referred to is provided for in section 6767. Under section 6766, supra, any of the provisions of the standard form of policy may be modified by riders, but not contradicted. If the rider was in conflict with the provisions of the standard form of policy, then the rider would be ineffectual, but such is not the case, as we have heretofore pointed out. This distinction is made apparent by an examination of the cases cited by plaintiff.

The first case cited and relied upon by plaintiff is L. & L. & G. Ins. Co. v. McLaughlin,

¶6 The next case cited by plaintiff is Fidelity-Phenix Fire Ins. Co. v. School District No. 62,

¶7 In the next case cited by the plaintiff, Palatine Ins. Co. of London v. Commerce Trust Co.,

"Any provision in a policy of fire insurance written since the 25th day of March, 1909, that is in conflict with the provisions of the standard form of policy of this state provided by Act of March 25, 1909, and of section 3482, Rev. Laws 1910, will not be enforced."

¶8 The last case cited and relied upon by plaintiff is Security Ins. Co. v. Baldwin,

¶9 The tenor of all of the cited cases is, that provisions inserted in the policy or in a rider attached to the policy, which are not in accord with, or which conflict with, the provisions of the standard form of policy, are void; but that does not mean to say that the provisions of the standard form of policy may not be modified.

¶10 The true rule is that, where the provisions of the rider do not conflict with, but merely modify or add to, the provisions of the standard form, the provisions of the rider will be enforced. This holding is supported by the language of the court in the case of Corlies v. Westchester Fire Ins. Co., 92 N.J.L. 108, 108 A. 152 as follows:

"What the effect of this provision (referring to a provision in a rider attached to the standard form of policy) is leads to the inquiry whether or not the facts or conditions imposed by the 'farm form' are inconsistent with or a waiver of any of the provisions or conditions of the standard policy, for if this should prove to be the case, then such provisions or conditions of the 'farm form' as are inconsistent or a waiver must be treated as a nullity."