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XXVIII. PAYMENT, DISCHARGE, AND SUBROGATION.

1. Insurer's right to repair or rebuild.

(a) In general.

(b) Election, and effect thereof.

(c) Waiver of right.

(d) Election as precluding recovery on policy.

(e) Effect of building laws.

(f) Failure or delay to repair or restore.

(g) Election as contract to rebuild.

(h) Option to take property at ascertained or appraised value.

(i) Questions of practice.

2. Payment and discharge--Insurance other than life.

(a) In general.

(b) Interest on amount due.

(c) Persons entitled to receive payment, and effect thereof.

(d) Application of special funds to payment, and proceedings to compel levy of assessment.

(e) Settlement and release.

(f) Recovery of payments.

(g) Pleading and practice.

(h) Contribution between insurers.

3. Payment and discharge of life and accident policies.

(a) Time for payment.

(b) lnterest on amount due.

(c) Persons entitled to receive payment, and effect thereof.

(d) Settlement and release.

(e) Matters peculiar to mutual benefit associations.

(f) Recovery of payments.

(g) Pleading and practice.

4. Penalties for refusal of, or delay in making, payment—Attorney's fees.

(a) Validity and construction of statutes.

(b) Application to different kinds of insurance.

(c) Operation and effect of statutes.

(d) Attorney's fees.

5. Subrogation.

(a) Subrogation to insured's claim for damages.

(b) Same-Assignment of rights to insurer.

(c) Same-Effect of statutes fixing the liability of railroad companies.

(d) Subrogation under marine policies.

(e) Subrogation in life and accident insurance.

(f) Subrogation in guaranty and indemnity insurance.

(g) Amount of recovery.

(h) Effect on right of subrogation of wrongdoer's payment to or release by insured.

(i) Enforcement of right against insured who has recovered from wrongdoer or released one primarily liable.

5. Subrogation-(Cont'd).

(j) Subrogation to rights of lienholders and mortgagees.

(k) Same-Liability on policy equaling amount of security.
(1) Same-Acts defeating insurer's right.

(m) Action to enforce rights.

(n) Same-Parties.

1. INSURER'S RIGHT TO REPAIR OR REBUILD.

(a) In general.

(b) Election, and effect thereof.

(c) Waiver of right.

(d) Election as precluding recovery on policy

(e) Effect of building laws.

(f) Failure or delay to repair or restore.

(g) Election as contract to rebuild.

(h) Option to take property at ascertained or appraised value.

(i) Questions of practice.

(a) In general.

An insurer has no right to repair or rebuild instead of paying the loss, unless such right is expressly conferred by the policy.

Branigan v. Jefferson Mut. Fire Ins. Co., 102 Mo. App. 70, 76 S. W. 643;
Nordyke & M. Co. v. Gery, 112 Ind. 535, 13 N. E. 683, 2 Am. St.
Rep. 219; Wallace v. Insurance Co., 4 La. 289.

Consequently, a mutual company cannot exercise the option where it is not made a condition of the contract, though there is a subsequent amendment of the by-laws giving it such right (Bradfield v. Union Mut. Ins. Co., 10 Pa. Law J. 550).

A clause in a policy permitting the company, on notice, to rebuild or restore, instead of paying the loss in cash, is sufficiently definite to be valid. It involves an agreement to erect a building of the same general character as to material, size, and form as the one destroyed within a reasonable time. (Beals v. Home Ins. Co., 36 N. Y. 522, affirming 36 Barb. 614.) This case holds that a clause giving the insurers 30 days within which they may elect to rebuild is not repugnant to another clause, declaring that payment - shall be made in 60 days. The 30 days are included in the 60, and -the building is only a mode of payment. Under a policy binding the company to pay a certain loss unless they "shall, within 30 days. after proof of such damage or loss, furnish the insured with a like quantity of any or all of the said goods, and of the same quality as

those injured by the fire, or shall make good the damage or loss by paying therefor," the company has the right to pay the damages in money, or repair within 30 days (Franklin Fire Ins. Co. v. Hamill, 5 Md. 170).

Under the valued policy laws of Ohio and Texas, a clause in a policy giving the company an option to rebuild is void in case of a total loss.

Milwaukee Mechanics' Ins. Co. v. Russell, 62 N. E. 338, 65 Ohio St. 230,

56 L. R. A. 159; Russell v. Milwaukee Mechanics' Ins. Co., 6 Ohio N. P. 325, 8 Ohio Dec. 613; Commercial Union Assur. Co. v. Meyer, 9 Tex. Civ. App. 7, 29 S. W. 93; Phoenix Ins. Co. v. Levy, 12 Tex. Civ. App. 45, 33 S. W. 992; Id. (Tex. Civ. App.) 33 S. W. 995; Orient Ins. Co. v. Same (Tex. Civ. App.) 33 S. W. 995; Merchants' Ins. Co. v. Same (Tex. Civ. App.) 33 S. W. 996; Fire Ass'n of Philadelphia v. Brown (Tex. Civ. App.) 33 S. W. 997; Royal Ins. Co. v. McIntyre (Tex. Civ. App.) 34 S. W. 669.

But it is held that the Wisconsin law is not inconsistent with a statute subsequently enacted providing for a standard policy which gives the option to rebuild, though the buildings be wholly destroyed (Temple v. Niagara Fire Ins. Co., 109 Wis. 372, 85 N. W. 361). The total loss of a building under the Texas statute does not mean the entire destruction of its materials, but that the building has lost its specific character and identity as a house; and the fact that, by the use of the materials remaining, the building could be reconstructed for less than the amount of the policy, is immaterial (Royal Ins. Co. v. McIntyre [Tex. Civ. App.] 34 S. W. 669). Under the Missouri statute providing that in case of a partial loss the insurer must pay a sum of money equal to the damage or repair, at the option of the insured, the company must pay a partial loss in money if the insured wishes, although its policy reserves to it the privilege of repairing.

Branigan v. Jefferson Mut. Fire Ins. Co., 102 Mo. App. 70, 76 S. W. 643; Ampleman v. Insurance Co., 35 Mo. App. 308; Havens v. Insurance Co., 123 Mo. 403, 27 S. W. 718, 26 L. R. A. 107, 45 Am. St. Rep. 570; Williams v. Insurance Co., 73 Mo. App. 607; Baker v. Assurance Co., 57 Mo. App. 559.

The Branigan Case holds that the insured may insist upon payment in cash of a sum equal to the damage without regard to the

1 Rev. St. § 3643.

2 Rev. St. art. 2971.

8 Rev. St. 1898, §§ 1941-1944.
Rev. St. 1899, § 7971.

insurer's estimate, and, if the parties cannot agree on what will be the indemnity and refuse to arbitrate, a court or jury must decide the dispute on the evidence.

The provision is in the nature of a condition subsequent, available only at the option of the insurers.

Howard Fire & Marine Ins. Co. v. Cornick, 24 Ill. 455; Etna Ins. Co. v. Phelps, 27 Ill. 71, 81 Am. Dec. 217; Union Ins. Co. v. McGookey, 33 Ohio St. 555.

The insurers have the privilege to make repairs if they see fit, but, if they neglect to do so, they are liable only to pay a fair indemnity for the loss (Brinley v. National Ins. Co., 11 Metc. [Mass.] 195). Where immediate repairs were necessary in order to prevent further damage, the fact that the insured began repairs before the expiration of the time in which the company might, by the terms of the policy, elect to repair, is no defense to an action on the policy (Eliot Five-Cents Sav. Bank v. Commercial Union Assur. Co., 142 Mass. 142, 7 N. E. 550).

(b) Election, and effect thereof.

Any decisive act manifesting a deliberate choice is evidence of an election, such as sending workmen, leaving materials, and starting work (Fire Ass'n of Philadelphia v. Rosenthal, 108 Pa. 474, 1 Atl. 303). But consent to an assignment of the insured's claim does not operate as an election to pay the money (Tolman v. Manufacturers' Ins. Co., 1 Cush. [Mass.] 73). An offer to repair cannot be coupled with one of compromise (Rieger v. Mechanics' Ins. Co., 69 Mo. App. 674).

An adjuster sent out by the company to determine the amount of and settle an alleged loss is authorized to exercise the option (Lancashire Ins. Co. v. Barnard, 111 Fed. 702, 49 C. C. A. 559). Where the contract is made by a general agent's chief clerk for repairing a house, the insurance company, and not the general agent, is bound as principal, there being no proof that the agent knew of or ratified the clerk's transaction (Hilton v. Newman, 6 Mo. App. 304).

The option to rebuild may be exercised at any time after the loss, and before the expiration of the time prescribed for its exercise in the policy (Lancashire Ins. Co. v. Barnard, 111 Fed. 702, 49 C. C. A. 559). Where the policy prescribes the time within which such option may be exercised, its provisions must be strictly fol

B.B.INS.-240

lowed. Thus, where the policy gives the right to elect within 30 days after notice of the loss, repairs are unauthorized, unless the election is made, and notice thereof given to the insured, within 30 days after proofs of loss are left with the local agent (Insurance Co. of North America v. Hope, 58 Ill. 75, 11 Am. Rep. 48). So, where the policy provided that, if the insurer should elect to pay the loss, the amount should not be payable until 60 days after receipt of "due notice, ascertainment, estimate, and satisfactory proof of loss," including an award by appraisers when appraisal has been required, but that, if it elects to replace the property, it must give notice of its intention within 30 days after receipt of "the proof herein required," the notice of intention to replace the property must be given within 30 days after receipt of proof of loss, and not within 30 days after service of an award of the arbitrators, where an appraisal was required (McAllister v. Niagara Fire Ins. Co., 84 Hun, 322, 32 N. Y. Supp. 353). If the option is to be exercised within 60 days from proof of loss, and the company waives the proof of loss, the option must be made within 60 days from such waiver (Farmers' & Merchants' Ins. Co. v. Warner [Neb.] 98 N. W. 48). The option terminates when a right of action accrues on the policy at the expiration of 60 days after proofs of loss have been furnished (Clover v. Greenwich Ins. Co., 101 N. Y. 277, 4 N. E. 724). Where the first proofs are returned to assured for corrections, which are made, the time begins from the receipt of the corrected proofs (Kelly v. Sun Fire Office, 141 Pa. 10, 21 Atl. 447, 23 Am. St. Rep. 254).

Under a policy providing that notice of intention to rebuild should be given within 30 days after proof of loss, an application made subsequent to the passage of a decree reforming the contract of insurance, and requiring the defendant to pay the amount of the loss as fixed by the decree will be denied (Maryland Home Fire Ins. Co. v. Kimmell, 89 Md. 437, 43 Atl. 764).

The provision constitutes a contract exclusively between the insurer and the insured. Neither a judgment creditor nor a mortgagee can interpose to prevent its performance; and, if the insurer has not given notice within the time specified, no one but the insured can take advantage of it and require the payment of the insurance money instead (Stamps v. Commercial Fire Ins. Co., 77 N. C. 209, 24 Am. Rep. 443).

An election, once made, is irrevocable, and fixes the rights and duties of the respective parties to the contract (Fire Ass'n v. Rosenthal, 108 Pa. 474, 1 Atl. 303). The insurer cannot rescind its posi

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