British America Assur. Co. v. Darragh

• Decision Date: 09 February 1904
• Docket Number: 1,262.
• Citation: 128 F. 890
• Parties: BRITISH AMERICA ASSUR. CO. v. DARRAGH.
• Court: U.S. Court of Appeals — Fifth Circuit

128 F. 890

BRITISH AMERICA ASSUR. CO. v. DARRAGH.

No. 1,262.

United States Court of Appeals, Fifth Circuit.

February 9, 1904

Chas P. Cocke, W. W. Howe, John Clegg, and Lamar C. Quintero, for plaintiff in error.

Harry H. Hall, for defendant in error.

Before McCORMICK and SHELBY, Circuit Judges, and SPEER, District judge.

SPEER District Judge.

In August, 1901, Mrs. J. L. Darragh secured from the plaintiff in error and other insurance companies insurance on her sugar house and machinery on Justine plantation in parish of St Mary. The aggregate amount insured by the several policies was $42,000. In December of the same year the sugar house and machinery of Mrs. Darragh were destroyed by fire. The insurance not having been Aid, an action was brought in the Circuit Court for the Eastern District of Louisiana on the policy of the plaintiff in error, it being agreed between counsel for the litigant parties that one case should be tried, and thus determine the controversy.

The ground of defense is based upon a clause of the policy, which is as follows:

'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 separately the 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.'

It does not appear from the evidence that there was any effort to reach an agreement as to the amount of loss, or that there was any disagreement between Mrs. Darragh and the insurance companies on this subject. On January 10, 1902, Mrs. Darragh and Mr. Cooke, who represented the insurance companies, signed what is termed a 'nonwaiver agreement.' The effect of this paper may be gathered from its last clause:

'The intent of this agreement is to preserve the rights of all parties hereto, and provide for an investigation of the fire and the determination of the amount of the loss or damage, without regard to the liability of the party of the first part.'

It appears from this, and otherwise throughout the record, that at no time did the insurance companies admit liability. On the same day on which the 'nonwaiver agreement' was made Mrs. Darragh and the insurance companies entered into the following agreement:

'That A. F. Slangerup and A. N. Hadley shall appraise and ascertain the sound value and the loss upon the property damaged and destroyed by the fire of the 23rd of December, 1901, as specified below.

'Provided, that the said appraisers shall first select a competent and disinterested umpire, who shall act with them in matters of difference only.

'The award of any two of them, made in writing, in accordance with this agreement, shall be binding upon both parties to this agreement as to the amount of such loss.

'It is expressly understood that the said agreement and appraisement is for the purpose of ascertaining and fixing the amount of sound value and the loss and damage only to the property hereinafter described, and shall not determine, waive or invalidate, any other right or rights of the parties to this agreement.

'And it is further expressly understood and agreed that, in determining the sound value and the loss or damage upon the property hereinbefore mentioned, the said appraisers are to make an estimate of the actual cash cost of replacing or repairing the same, or the actual cash value thereof, at and immediately preceding the time of the fire; and in case of depreciation of the property from use, age, condition, location, or otherwise, a proper deduction shall be made.'

Four days later, namely, on January 14th, Slangerup and Hadley were sworn as appraisers, and they selected Lewis Johnson, of New Orleans, to act as umpire 'to settle matters of difference that exist between us by reason of and in compliance with the foregoing agreement and appointment. ' When Mrs. Darragh brought her action, this last agreement was relied upon by the insurance company as a bar to her right of action. An exception, as it is termed under the Louisiana practice, or plea in bar, as it might be termed under the Louisiana practice, or plea in bar, as it might be termed elsewhere, was presented setting out this defense. An issue having been joined on this plea, evidence was submitted, and the jury, under the instructions of the court, found the plea bad. The action then proceeded before another jury, and after full hearing a verdict was rendered for the plaintiff in the court below against the defendant company for $5,000-- that being the full amount of the policy. Under the agreement between the parties, this verdict, if sustained, will entitle Mrs. Darragh to recover upon the several policies the full amount of the insurance thereby granted, aggregating $42,000. After verdict and judgment on the last trial, the plaintiff in error sued a writ of error to this court, not to the action of the court and jury on the last trial, but to the verdict and judgment on the first trial involving the plea in bar.

There are numerous exceptions, but they all depend on the determination of this question: Under the facts of this case, was the plaintiff debarred from prosecuting her remedy at law to have the liability of the insurance companies determined, and to recover insurance for the loss which she had sustained, because of the stipulation for an appraisement in the policy above set forth, or because of the agreement to submit to Slangerup, appointed by the insured, and Hadley, appointed by the insurers, and Johnson as umpire, the question of loss which the insured had sustained? Whatever may be the effect, generally, of a stipulation in a policy of insurance providing for an appraisement of the loss sustained, in which it is also stipulated that no right of action shall inure to the insured until the appraisement has been made, it is quite clear to the court, under the facts of this case, that the agreement upon which the plaintiff in error here relies cannot be regarded as a bar to Mrs. Darragh's right of action. At no time did the defendant companies admit their liability, and as late as February 15, 1902, the general agents of several of the insurance companies wrote to Mrs. Darragh, as follows:

'As a matter of fact, we are not in position, at this time, to admit any liability whatever, under the policies; we are not in possession of all the facts, but from information which we have received, we have been led

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