Bergman v. Commercial Union Assur. Co.

• Decision Date: 21 January 1892
• Citation: 18 S.W. 122,92 Ky. 494
• Parties: Bergman et al. v. Commercial Union Assur. Co. Same v. Phoenix Ins. Co.
• Court: Kentucky Court of Appeals

18 S.W. 122

92 Ky. 494

Bergman et al. v. Commercial Union Assur. Co.

Same v. Phoenix Ins. Co.

Court of Appeals of Kentucky.

January 21, 1892

Appeals from Louisville chancery court.

"To be officially reported."

Action by G. T. Bergman and R. T. Colston, trustee, against the Commercial Union Assurance Company, to recover on a policy of fire insurance. Defendant pleaded an arbitration, and tendered the sum awarded. Judgment for plaintiffs for the sum awarded. Plaintiffs appeal. Reversed. Same plaintiffs against the Phoenix Insurance Company. Similar facts and similar judgment. Plaintiffs appeal. Reversed.

Bennett J.

These two cases are to be heard together. It seems that the appellant Bergman took out a fire policy on his residence house situated on his farm in Jefferson county, in each of the appellee companies, for $2,500 each. The appellees indorsed on each policy, by the direction of the appellant Bergman, that the loss on the policy, if any accrued, should be paid to the appellant R. T. Colston, trustee, he holding a mortgage lien on said property to secure a larger sum than the aggregate sum of both policies, which policies were delivered to the mortgagee. The property was totally destroyed by fire. Each policy provides, in substance, that in case of loss, upon the request of either party, the loss shall be ascertained by arbitration, which arbitration shall be a precedent condition to the right to sue for the loss and the value of the property as fixed by the arbitrators shall be conclusive upon the parties. For the reasons hereinafter appearing, it is unnecessary to decide whether the contract to arbitrate is a valid precedent condition to the right of the insured to sue for the amount of the loss or as to whether the amount fixed by the arbitrators is conclusive upon the parties. The appellees called upon the insured, Bergman, to arbitrate said loss, to which he agreed and the loss was arbitrated, which was found to be about $3,800, not, as is contended, and, as we think, is shown by the proof, much more than half the value of the property. To the suit by the appellants, Bergman and Colston, to recover the value of the house, the appellees pleaded said arbitration, and tendered the sum awarded. To this plea the appellants replied that the arbitration made with Bergman was not binding upon either of the appellants; because, (1) as Colston was the payee of the loss, Bergman was not the proper person to arbitrate said loss; and (2) as Colston was the proper person to arbitrate, and as it was made with Bergman without the knowledge or consent of Colston, the same was not binding. On the other hand, the appellees contend that, under said contracts, the persons entitled to arbitrate were the insured and the appellees, and not Colston and the appellees. Consequently the arbitration was valid and binding on the appellants. The lower court concurred in that view, and found for the appellants the sum awarded by the arbitration. If that issue is decided in favor of the appellants, the case without reference to the other issues, must be reversed. There is no doubt that the appellant Colston, as mortgagee without an assignment of the policies, could compel the appellees to pay to him such portion of the insurance money in case of loss, as would be necessary to satisfy the mortgage debt; and, if they paid it to the insured without the consent of Colston, the mortgagee, they, notwithstanding such payment, would...