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at the time of the fire determines the amount of recovery, it of course under no circumstances exceeding the face of the policy. On this general principle, however, various applications and modifications have been made according to the nature of the property insured.

§ 139. Same: Staple articles. If the property insured is personal property that has a regularly established market value the case presents no difficulty. Obviously, under those circumstances, what the insured is out is represented by the market value of the property insured, at the time and place of loss. This rule is well settled. It has been applied for example in the case of the loss of groceries, dry-goods, lumber, bagging, and tobacco (3).

§ 140. Same: Articles owned by manufacturer. It is immaterial in this class of cases that the insured also manufactures the goods that have been destroyed. He can nevertheless recover the market value of them. This point was well discussed in a recent Michigan case. In that case the insured was a manufacturer of lumber and owned his own forest and mill. The policy which was in the New York Standard form, provided, among other things, that the amount of recovery should "in no event exceed what it would then cost the insured to repair or replace the same." The court said: "We think the word 'then' is significant and must be given weight in determining the true intent and meaning of the contract. If defendant's theory of construction be adopted, the word 'then' must

(3) Huckins v. Insurance Co., 31 N. H. 238; Fowler v. Insurance Co., 74 N. C. 89; Assurance Co. v. Studebaker, 124 Ind. 176; Insurance Co. v. Cannon, 19 Tex. Civ. App. 305; Boyd v. Insurance Co., 111 N. C.

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be dropped out and the contract construed as intending to give to the insurance company the benefit of the time it would take the insured to replace it or reproduce it. Clearly it [the contract] means just what it says, 'what it would then cost the insured to replace it' and not what it would cost the insured to cut from his own stumpage, manufacture lumber at his own mill, and replace after the delay of cutting, also sawing, piling in the yards, etc. We are unable to agree with the learned counsel for the defendant that the contract is to be construed any differently in this case than though the plaintiff had no stumpage of his own and no mill by which he could manufacture lumber. It means that the plaintiff had the right, on the date of the fire to recover from the defendant such an amount of money as it would cost to replace the lumber, or, in other words, the market value of the lumber at the date of the fire” (4).

§ 141. Same: Realty. With realty the value obviously cannot be the market value. In the first place the market value of the building is always necessarily so involved with the value of the land that it is impossible to separate them and say how much each is worth alone. In the second place, to adopt the market value as the measure of recovery would be plainly unfair in many cases, and this unfairness might work either against the insured or against the insurance company. Thus, suppose a lonely farm house was insured, substantial and perfectly satisfactory as a home, but so situated that no one would want to buy it. Clearly the insured ought not to be confined to

(4) Mitchell v. Insurance Co., 92 Mich. 594.

a mere nominal sum in his recovery, but such would be the result if the market value were taken as the measure of damage. On the other hand, suppose the insured owns an extremely cheap tenement house in an extremely desirable locality, so that he is deriving large rents from it. In such a case, the market value of that tenement might be very much more than what it would cost to replace it, and yet plainly, under those circumstances, the company ought not to be held for the larger amount. For these and other reasons, the rule has been generally established, with regard to real estate, that the insured recovers the value of the property at the time and place of the fire. The estimation of this must necessarily rest in the sound judgment of the jury. A helpful test is to ascertain what it would cost to replace the building destroyed, less the depreciation of the building at the time of the fire from wear and tear (5).

§ 142. Same: Non-staple articles. In the case of chattels having no market value the situation is analogous to that of real estate. Take for example household furnishings. They are clearly worth more to the owner than what a second-hand dealer would give for them, and the jury must bear that fact in mind in determining the amount of recovery (6). The same principle has been applied to the case of a valuable thorough-bred stallion.

§ 143. Valued policies. In the case of a valued policy (7), if there is a total loss the owner does not need to

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prove the value of the property, but recovers the amount that has been agreed upon in the policy as being the value of the property insured. The advantage of this for the insured is that it renders his recovery safe and certain, just as soon as he establishes the fact that the fire took place. The advantages and simplicity of this situation have appealed so strongly to many state legislatures that they have passed acts providing, that, in the case of insurance of realty where there is a total loss, all policies shall be deemed to be valued policies. It is to be noted that this applies only to insurance of realty, and only in the case of a total loss. A loss is deemed to be total when the property is so far destroyed that a reasonable, prudent owner would prefer to tear down rather than attempt to repair what is left standing (8). These valued policy statutes have a far-reaching incidental effect in annulling several of the most common clauses found in insurance policies. It has been held that the purpose of the statute is so far a matter of public policy that the benefit of it cannot be waived by the parties, no matter how clear the intention may be to have the policy not valued. From this it follows that an agreement that the company shall pay the "actual value" of the property destroyed is of no effect (9). The same result follows as to the clause providing that the amount of the loss shall be arbitrated. It has also been held that a clause giving the company the right to rebuild is nullified by the valued policy statute, for the reason that, if rebuilding would cost

(8) (9)

Insurance Co. v. McIntyre, 90 Tex. 170.

Reilly v. Insurance Co., 43 Wis. 449; Insurance Co. v. Leslie, 47 Ohio St. 409.

less than the value of the property at the time of the fire, that is an indirect evasion of the statute; and, if the rebuilding would cost as much as the value of the property at the time of the fire, then there is no reason for rebuilding rather than paying (10).

§ 144. Partial loss. In partial loss the principle of co-insurance as it exists in marine insurance, was decided at an early date to have no application to fire insurance. The insured recovers in full for his partial loss, regardless of the ratio between the amount of insurance and the value of the property, until he has recovered up to the whole amount covered by the policy; provided, of course, as always, that that does not exceed the amount of the loss (11). Policies some times contain a clause providing that the company is not to be liable for more than a stated per centage (frequently two-thirds) of the loss, the effect of such a clause being to make the parties co-insurers in that same proportion.

§ 145. General ownership subject to outstanding interests. Thus far, on the question of the amount of recovery, we have been considering cases where only one person is interested in the property insured. There may, however, well be cases in which the insured is not the only one with an interest in the property. These cases may be either of two kinds. The interest of the insured, although not the only one, may be indefinite so far as the exact value is concerned, or it may be definite, and these of course require separate examination. Suppose A owns

(10) Insurance Co. v. Levy, 12 Tex. Civ. App. 45.

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