Friday, July 13, 2012

Harding v Commerical Union August 10, 1918 G.R. No. L-12707

J. Fisher

Smith Bell insured Mrs. Hardings’ Studebaker car for a premium of Php 150. It was insured for Php 3,000, the value of the car. The car was destroyed by fire. Mrs. Harding furnished the defendant the proofs of her loss, but the company didn’t pay. Evidence showed that Hermanos sold the automobile to Canson for P3,200. Canson then sold the car to Harding for Php 1,500. The car was then sold for P2,000. It was then resold to Harding. He gave the car to his wife; Mrs. Henry E. Harding as a present. The automobile was repaired and repainted at the Luneta Garage at P900.
The company averred that they gave false information, particularly that on the price of the vehicle and the ownership of the car. Hence, they aimed to declare the policy void.
The trial court found that there was no fraud.
This was an action by plaintiffs to recover from defendant the sum of P3,000 and interest, alleged to be due under the terms of a policy of insurance. The trial court gave plaintiffs judgment for the amount demanded, with interest and costs, and from that decision the defendant appealed.

Issue: Was the valuation of the car for P3000 done fraudulently, thereby making the policy void?

Held: No.

The policy stated that
 “That during the period above set forth and during any period for which the company may agree to renew this policy the company will subject to the exception and conditions contained herein or endorsed hereon indemnify the insured against loss of or damage to any motor car described in the schedule by whatever cause such loss or damage may be occasioned and will further indemnify the insured up to the value of the car or P3,000 whichever is the greater against any claim at common law made by any person for loss of life or for accidental bodily injury or damage to property caused by the said motor car including law costs payable in connection with such claim when incurred with the consent of the company.”
Defendant contends that the statement regarding the cost of the automobile was a warranty, that the statement was false, and that, therefore, the policy never attached to the risk.
The automobile had in fact cost more than the amount mentioned. The court below found, and the evidence shows, that the automobile was bought by plaintiff’s husband a few weeks before the issuance of the policy in question for the sum of P2,800, and that between that time and the issuance of the policy some P900 was spent upon it in repairs and repainting. The mechanic who testified told that the automobile was practically as good as new at the time the insurance was effected.
The amount stated was less than the actual outlay which the automobile represented to Mr. Harding, including repairs, when the insurance policy was issued. It would be unfair to hold the policy void simply because the outlay represented by the automobile was made by the plaintiff’s husband and not by his wife, to whom he had given the automobile.
The trial court found that Mrs. Harding, in fixing the value of the automobile at P3,000, acted upon information given her by her husband and by Mr. Server, the manager of the Luneta Garage. She merely repeated the information which had been given her by her husband, and at the same time disclosed to defendant’s agent the source of her information. There is no evidence to sustain the contention that this communication was made in bad faith.
Under these circumstances, we do not think that the facts stated in the proposal can be held as a warranty of the insured, even if it should have been shown that they were incorrect in the absence of proof of willful misstatement. Under such circumstance, the proposal is to be regarded as the act of the insurer and not of the insured.
The defendant, upon the information given by plaintiff, and after an inspection of the automobile by its examiner, having agreed that it was worth P3,000, is bound by this valuation in the absence of fraud on the part of the insured. All statements of value are, of necessity, to a large extent matters of opinion, and it would be outrageous to hold that the validity of all valued policies must depend upon the absolute correctness of such estimated value.
Supreme Court v First National- The ordinary test of the value of property is the price it will commend in the market if offered for sale. But that test cannot, in the very nature of the case, be applied at the time application is made for insurance. Men may honestly differ about the value of property, or as to what it will bring in the market; and such differences are often very marked among those whose special business it is to buy and sell property of all kinds.
The assured could do no more than estimate such value; and that, it seems, was all that he was required to do in this case. His duty was to deal fairly with the Company in making such estimate.
Section 163 of the Insurance Law (Act No. 2427) provides that “the effect of a valuation in a policy of fire insurance is the same as in a policy of marine insurance.”
By the terms of section 149 of the Act cited, the valuation in a policy of marine insurance is conclusive if the insured had an insurable interest and was not guilty of fraud.
The valuation of the automobile, for the purposes of the insurance, is binding upon the defendant corporation. 

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