American Steel Co. v. German-American Fire Ins Co.

• Decision Date: 06 May 1911
• Docket Number: 44.
• Parties: AMERICAN STEEL CO. v. GERMAN-AMERICAN FIRE INS. CO.
• Court: U.S. Court of Appeals — Third Circuit

187 F. 730

AMERICAN STEEL CO. v. GERMAN-AMERICAN FIRE INS. CO.

No. 44.

United States Court of Appeals, Third Circuit.

May 6, 1911

McKenna & McKenna and Burleigh, Gray & Challener, for appellant.

David A. Reed (William S. Bryan, Jr., and Reed, Smith, Shaw & Beal of counsel), for appellee.

Before BUFFINGTON and LANNING, Circuit Judges, and McPHERSON District judge.

BUFFINGTON Circuit Judge.

In the court below the German-American Fire Insurance Company, a corporation of Maryland, brought a bill in equity against the American Steel Company, a corporation of Pennsylvania praying the latter be enjoined from prosecuting on the law side of that court a suit on an insurance policy. On final hearing the latter company was enjoined, and from a decree so ordering it took this appeal. The pertinent facts are as follows:

On January 1, 1909, certain ferro-manganese of the steel company was injured by fire while lying on a steamship dock in Baltimore. On this ore the respondent insurance company had insured $15,000 and other companies $5,000. On January 14th the parties to this suit met in Baltimore, and, being unable to agree on the damage to the ore, each selected an appraiser in accordance with the policy which provided:

'In the event of disagreement as to the amount of loss, the same shall, as above provided, be ascertained by two competent and disinterested appraisers, the insured and this company each selecting one, and the two so chosen shall first select a competent and disinterested umpire. The appraisers together shall then estimate and appraise the loss, stating separate sound value and damage, and, failing to agree, shall submit their differences to the umpire; and the award in writing of any two shall determine the amount of such loss. The parties thereto shall pay the appraiser respectively selected by them and shall bear equally the expenses of the appraisal and umpire.'

The Insurance Company named one Martin; the Steel Company, one Lavino. Ferro-manganese is not an ore which is kept in stock and sold as a general article of domestic commerce, but is imported on special order. Martin was an employe of the Maryland Steel Company, which has large works near Baltimore, and his name was given to the Insurance Company by the Maryland Company on the insurer's request for a man who was posted in reference to such ore. He was not known to the American Steel Company. An agreement for appraisement was then signed by the parties at the office of Bond, the Insurance Company's adjuster, and the appraisers then openly arranged to visit the scene of the fire that day. Later in the day the two appraisers went to the fire, and in their company were the officers of the Steel Company, who pointed out the insured ore. No one representing the Insurance Company was present at the dock. The testimony as to what was done at the dock by the Steel Company's officers was:

'We went around, sort of helping them as much as we could to get a look at this ferro. Some of it was covered over with tarpaulins, and I don't know what all else, and we just sort of looked around; that is all.'

The appraisers examined the ferro and took samples, and then--

'got off by themselves and discussed the matter quite a good deal. You know we were not near them. Then we had some other ferro in other places, and we sort of walked around and considered whether we might be in danger on account of that.'

This showing of the ferro to the appraisers was the only communication the Steel Company had with the appraisers, and the only questionable impropriety in that intercourse, if such there is, consisted in the fact that it was had in the absence of the Insurance Company. But that the appraisers, and especially Mr. Martin, were entirely free from any intentional misconduct, is shown by the fact that he subsequently went alone to consult the Insurance Company. Of this Mr. Bond says:

'These gentlemen met and were in my office together, and they agreed on an umpire in a few minutes. They went out, and I did not see anything more of Mr. Lavino. A few days afterward Mr. Martin came in and asked me about the weighing of this ferro-manganese. I told him that it had been agreed with Mr. Cottman to weigh it; but, I said, 'I suppose the other appraiser will have to be here when that is done.' ' Oh,' he said, 'no, he has practically left the whole thing in my hands, and I am going to attend to it.' So I gave Mr. Cottman an order to weigh the ferro-manganese, and a copy of the weight was sent to Mr. Martin by Mr. Cottman. I paid the expense of weighing it, and sent the bill to the American Steel Company, and they sent me a check for it, and it was charged in the loss.'

Mr. Martin also made an analysis of the ferro, and on January 20, 1909, he and Lavino joined in a written appraisers' valuation thereof at $15 per ton. At that date the market value of undamaged ferro was $55 per ton. Their award was duly reported to the Steel and Insurance Companies, and on January 28th the latter notified the former that:

'The ferro-manganese appraised is absolutely your property, subject, so far as the insurance companies are concerned, to your disposal, and that, the loss having been settled by appraisal, the companies hold themselves liable for the amount of the award, together with such expenses as have been incurred in the salvage of the metal. Award having been made on 'duty paid' basis, any abatement of duty allowed by the Gov't is, of course, to be deducted.'

In April following the Steel Company made proofs of loss on the basis...