Commercial Union Assur Co. v. Dalzell

• Decision Date: 29 January 1914
• Docket Number: 1,793.,1,792
• Citation: 210 F. 605
• Parties: COMMERCIAL UNION ASSUR. CO., Limited, v. DALZELL. LONDON & LANCASHIRE FIRE INS. CO. v. SAME.
• Court: U.S. Court of Appeals — Third Circuit

210 F. 605

COMMERCIAL UNION ASSUR. CO., Limited, v. DALZELL.

LONDON & LANCASHIRE FIRE INS. CO. v. SAME.

Nos. 1,792, 1,793.

United States Court of Appeals, Third Circuit.

January 29, 1914

Jennings & Jennings and S. S. & C. B. Mehard, all of Pittsburgh, Pa for plaintiffs in error.

Richard H. Hawkins, of Pittsburgh, Pa. (Dalzell, Fisher & Hawkins, of Pittsburgh, Pa., of counsel), for defendant in error.

Before GRAY, BUFFINGTON, and McPHERSON, Circuit Judges.

J. B McPHERSON, Circuit Judge.

These two cases were tried together in the District Court, and do not need separate attention here. They arise under the following circumstances:

In June, 1907, the plaintiff, who owned a large building in Wilkinsburg, Pa., insured it for $45,000 in several companies; each of the defendants writing a policy of $2,500. In March, 1908, a fire occurred, and much damage was done. A dispute arose immediately about the amount of the loss; the plaintiff asserting the damage to be nearly $35,000, and the defendants contending for a much lower sum. In such a situation, if we turn to the contract-- as we must--in order to ascertain the rights of the respective parties, we find the following provisions:

The sum covered by the policy is not to exceed $2,500, and the company is not to be liable--

'beyond the actual cash value of the property at the time any loss or damage occurs, and the loss or damage shall be ascertained or estimated according to such actual cash value, with proper deduction for depreciation however caused, and shall in no event exceed what it would then cost the insured to repair or replace the same with material of like kind and quality.'

And, as disputes arise continually between insurer and insured concerning the amount of a loss, the policy goes on to provide:

'Said ascertainment or estimate shall be made by the insured and this company, or, if they differ, then by appraisers as hereinafter provided.'

The subsequent provisions thus referred to are 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 chosen shall first select a competent and disinterested umpire; the appraisers together shall then estimate and appraise the loss, stating separately 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 expense of the appraisal and umpire.'

It will be observed that this award is to 'determine the amount of such loss, ' and obviously no suit can be brought until the amount to be sued for shall be thus determined. And, indeed, the suit cannot be brought immediately, even after an award has been made; for in two places the policy expressly provides as follows:

' * * * And, the amount of loss or damage having been thus determined, the sum for which this company is liable pursuant to this policy shall be payable in 60 days after due notice, ascertainment, estimate, and satisfactory proof of the loss, have been received by this company in accordance with the terms of this policy.

'An the loss shall not become payable until 60 days after the notice, ascertainment, estimate, and satisfactory proof of the loss herein required, have been received by this company, including an award by appraisers when appraisal has been required.'

It will thus be seen that the office of the award is to determine the amount of the loss; for reasons not connected with the award, the company may not be liable at all, but if liable it must pay the amount thus determined. And this amount is binding upon both parties; they so agree, and of course they are bound by their contract.

Other preliminary conditions must also be complied with by the insured, before he can acquire a right to sue. Especially, he must give immediate notice of the loss-- this is not in dispute, and need not be considered-- and he must also--

'within 60 days after the fire, unless such time is extended in writing by this company, render a statement to this company, signed and sworn to by such insured, stating the knowledge and belief of the insured as to the time and origin of the fire, the interest of the insured and of all others in the property, the cash value of each item thereof, and the amount of loss thereon, etc.' (specifying what is usually required in proofs of loss).

As all these preliminary conditions are for the company's benefit, the company may waive them, and this possibility is expressly recognized in other clauses of the policy. One clause guards against the contingency that the mere fact of agreeing to an appraisement may be construed as a waiver:

'This company shall not be held to have waived any provision or condition of this policy, or any forfeiture thereof, by any requirement, act, or proceeding on its part relating to the appraisal or to any examination herein provided for.'

And another clause attempts to ordain a particular method by which waiver is to be proved:

' * * * No officer, agent, or other representative of this company shall have power to waive any provision or condition of this policy, except such as by the terms of this policy may be the subject of agreement endorsed hereon or added hereto; and, as to such provisions and conditions, no officer, agent, or representative shall have such power or be deemed or held to have waived such provisions or conditions, unless such waiver, if any, shall be written upon or attached hereto.'

After a right to sue has been acquired by the performance of the stipulated conditions precedent, the insured is required to sue within a specified time:

'No suit or action on this policy for the recovery of any claim shall be sustainable in any court of law or equity until after full compliance by the insured with all the foregoing requirements, nor unless commenced within twelve months next after the fire.'

Each policy was accepted subject to these stipulations and conditions; it is the voluntary contract of the parties by which they have chosen to be bound. Courts have differed concerning the effect of the condition concerning appraisal. The Supreme Court of Pennsylvania holds it to be revocable. Its position will appear by the following extract from the opinion in Commercial, etc., Co. v. Hocking, 115 Pa. 414, 8 A. 591, 2 Am.St.Rep. 562.

'It is undoubtedly true, when the parties to an executory contract agree that all questions of difference or dispute which may arise between them in reference thereto, or that the amount of any claim arising therefrom, shall be first submitted to the arbitrament of a single individual, or tribunal named, they are bound by their contract, and cannot seek redress elsewhere, until the arbiter agreed upon has been discharged, either by the rendition of an award, or otherwise. Monongahela Nav. Co. v. Fenlon, 4 Watts & S. (Pa.) 205; Connor v. Simpson, 104 Pa. 440; Hostetter v. City of Pittsburgh, 107 Pa. 419. But it is equally true that where the agreement in question does not provide for submitting matters in dispute to any particular person or tribunal named, but to one or more persons to be mutually chosen by the parties, it is revocable by either party; and such a provision is not adequate to oust the jurisdiction of the courts having cognizance of the subject-matter of the dispute. Gray v. Wilson, 4 Watts (Pa.) 41; Mentz v. Armenia Fire Ins. Co., 79 Pa. 480 (21 Am.Rep. 80); Hostetter v. City of Pittsburgh, supra.'

See, also, Needy v. Insurance Co., 197 Pa. 460, 47 A. 739.

But the Supreme Court of the United States takes a different view. In Hamilton v. Insurance Co., 136 U.S. 242, 10 Sup.Ct. 945, 34 L.Ed. 419, the court said, in considering a policy, not essentially different from those now in question:

'The appraisal, when requested in writing by either party, is distinctly made a condition precedent to the payment of any loss, and to the maintenance of any action.

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