Car Destroyed in Earthquake Fire

Manawatu Times, Volume LV, Issue 6810, 17 March 1932, Page 7

Car Destroyed in Earthquake Fire

OWNERS SUE UNDERWRITERS CASE BEFORE APPEAL COURT Per Pres 3 Association. WELLINGTON, March 16. Further litigation caused by the Hawke’s Bay earthquake is occupying the attention of the Court of Appeal, in an action brought by Wright, Stephenson Co. Ltd., Allan Dutton Powdrell, and the Texas Oil Coy. (Aus.), against Harry Holmes, of London, sued on behalf of himself and other underwriters of a certain Lloyds motor car insurance policy. The plaintiffs were the owners in various interests of a Graham-laige motor car, which they insured at Lloyds, according to their respective interests, in the sum of £440 against (inter alia) damage caused by accidental external means from October 13th, 1930, to June Ist, 1931. On January 30th, 1931, Powdrell wa3 driving the car. to wards Napier and became involved in a collision with another car on a narrow bridge about two miles from Clive, whereby the first car became seriously damaged. That evening the car was towed to a garage in Napier. Notice of the accident was immediately given to the defendants’ agent, who, on February Ist, inspected the car and gave instructions to the garage proprietors to prepare a detailed estimate of the damage. On February 3rd, the garage was damaged by the earthquake and destroyed by the subsequent fire. The car, by reason of its damaged condition, could not be removed, and r.as also destroyed. The defendant having refused J o pay anything in respect of the damage to the car sustained in tho accident, the plaintiff issued a writ claiming £l:z2 6s 7d, the estimated cost of repairing the damage, and costs. The defendant, whilst admitting the facts, denied liability, and a motion for judgment, filed by tho plaintiffs, was removed into the Court of Appeal for argument. On the Bench are the Chief Justice (Sir Michael Myers), Justices Herdman, MacGregor, Blair and Kennedy. Counsel for plaintiffs said in opening that his point in a nutshell was this: There was partial damage covered by tho policy. Then there was total subsequent destruction which was not covered by the policy. The underwriters had refused to pay for the partial damage. Were they liable? By adopting the stand they had taken up in this matter they were driven to contend that if they had issued two separate policies, the prosent one and one covering damage by earthquake, they would pay only tho value of tho car at the time of the earthquake, this being £4Ol. less £122 6/7, so that although the insured had covered every possible risk they would not be paid tho full value of the car before the accident. The policy of insurance gave the underwriters the right either to repair or to pay the insured tho amount of the damage. The fact that after the occurrence of the damage one of the two alternatives. namely, repair, became impossible did not relieve the underwriters from the performance of the other alternative, namely, payment. The principle of the law was that if a person contracted to do one of two things in alternative and one subsequently became impossible, it depended on the intention of tho parties whether he was bound to perform the other. When alternative methods of indemnity were contained in a contract of insurance the intention of the parties plainly was that if one alternative became impossible the other must be performed. Counsel for the defendant, however, submitted that the only obligation under the policy; was to repair or rein-

state. That obligation might be fulfilled in one of two ways—either by the underwriters executing tho repairs themselves or by allowing the insured to repair himself and then paying his bill. There was no alternative duty on the part of the underwriters, but they wero entitled, if they so desired, to relieve themselves of their obligation to repair by settling for the damage in money. That they might do, but were not obliged to do. The Court at this stage adjourned until to-morrow.