Gibson Elec. Co. v. Liverpool & London & Globe Ins. Co.

• Decision Date: 06 June 1899
• Court: New York Court of Appeals Court of Appeals
• Parties: GIBSON ELECTRIC CO. v. LIVERPOOL & LONDON & GLOBE INS. CO.

159 N.Y. 418

54 N.E. 23

GIBSON ELECTRIC CO.

v.LIVERPOOL & LONDON & GLOBE INS. CO.

Court of Appeals of New York.

June 6, 1899.

Appeal from supreme court, appellate division, First department.

Action by Gibson Electric Company against the Liverpool & London & Globe Insurance Company. From a judgment of the trial court dismissing plaintiff's complaint, plaintiff appealed to the appellate division of the supreme court, where the judgment was affirmed (46 N. Y. Supp. 1092). From the judgment of affirmance, plaintiff appealed, Affirmed.

A. B. Gardenier and Nelson S. Spencer, for appellant.

John Notman, for respondent.

MARTIN, J.

This action was upon a standard policy of fire insurance, whereby the defendant insured the plaintiff's buildings, engines, machinery, goods, and other property described therein for the period of one year from November 23, 1890. Among others, the policy contained provisions to the effect that the company should not be liable beyond the actual cash value of the property insured at the time any loss or damage should occur; that the loss or damage should be ascertained or estimated according to such actual cash value; that such ascertainment or estimate should be made by the insured and the defendant, or, if they differed, by appraisers, as therein provided; and that the entire policy, unless otherwise provided by agreement indorsed thereon or added thereto, should be void if, with the knowledge of the insured, foreclosure proceedings were commenced, or notice was given of the sale of any property covered by the policy by virtue of any mortgage or trust deed. The policy also included the usual provisions requiring all the property remaining after the fire to be exhibited; that the assured should submit to examination under oath, and produce for examination all books of account, bills, invoices, and other vouchers, or certified copies thereof; and that, when there was a disagreement as to the amount of any loss, it should be ascertained by two competent and disinterested appraisers, each party to select one, the two chosen to select a competent and disinterested umpire, the award of any two to determine the loss, and the parties to pay the appraiser respectively selected by them, and to bear equally the expenses of the appraisal and umpire. It also provided that the company should not be held to have waived any provision or condition of the policy, or any forfeiture thereof, by any requirement, act, or proceeding on its part relating to the appraisal or to any examination therein provided for. When the policy was issued, the premises were incumbered by a mortgage held by Job R. Furman, who, upon his refusal to join as plaintiff, was made a defendant in this action. On the 14th of April, 1891, Furman commenced an action to foreclose his mortgage, which was prosecuted to judgment, and upon the 31st day of October the property was advertised for sale. That judgment was, however, subsequently set aside, a trial was had, and a final judgment entered dismissing the complaint in that action. But subsequently, and in July, 1892, a second action was brought, which resulted in a judgment foreclosing the mortgage, and directing a sale of the property. A sale was had on December 3, 1892, and, the sum realized being insufficient to pay the amount due upon the mortgage, a judgment for the deficiency was entered December 28, 1892. Upon the occurrence of the fire, notice was promptly given to the defendant, and soon after an agreement for submission to appraisers of the amount of the plaintiff's loss was executed by the parties, and appraisers were appointed. At that time the defendant had no notice of the action to foreclose the mortgage, and received none until the 4th of November, 1891. It was then notified by the attorneys for the defendant Furman, to whom the defendant wrote on the next day, ‘The entire matter is now in the hands of our adjuster, who will give the same due attention in accordance with the terms and provisions of the policy.’ When the company ascertained that an action of foreclosure had been commenced, the adjustment of the loss by the appraisers was still pending, and was not concluded until a month afterwards. The record discloses that during the time the appraisal was in progress the defendant examined the plaintiff's books, bills, and vouchers, and that the plaintiff's president was required to and did incur some expenses in the conduct of the appraisal, and subsequently paid one of the appraisers $35. It does not, however, clearly appear whether the examination of the plaintiff's books or the acts performed by the plaintiff's president were after or before the time when the defendant learned of the foreclosure action. Upon the 16th of December, when the appraisal was concluded, and the award made, the plaintiff executed and delivered to the defendant proofs of loss, which were retained by it. Upon the next day it acknowledged receipt of the proofs, and seems to have claimed that the policy was void. All we have found in the record to show what the company did when the proofs of loss were received is contained in the evidence of the witness Gibson, who testified to having received a letter from the defendant on December 17th, acknowledging the receipt of the proofs of loss, and making the comment that the policy was void. The record discloses that, while the defendant became aware of the pendency of the foreclosure action on the 4th of November, and the proceedings before the appraisers were not concluded until the 4th of the following December, yet it made no objections to the award or to the continuance of the appraisal, nor did it in any way claim to the plaintiff that it was not liable upon the policy until after the 16th of that month, when the proofs of loss were served. The trial court dismissed the complaint upon the ground that the policy was void by reason of the commencement of the action to foreclose the mortgage upon the premises. The appellate division affirmed the judgment of the trial court upon the same ground, and also held that the omission of the insurance company to disaffirm the adjustment after knowledge of the forfeiture of the policy did not constitute a waiver of such forfeiture. This is based upon the provision in the policy that the company should not be held to have waived any condition or forfeiture by any requirement, act, or proceeding on its part relating to the appraisal or to the examination provided for, and also upon the ground that the appraisal agreement contained a provision that such appointment and submission were without reference to any other questions or matters of difference within the terms and conditions of insurance, and were of binding effect only so far as the actual cash value of the loss and damage to the property was...