Commonwealth Tobacco Co. v. Alliance Ins. Co.

• Decision Date: 27 May 1921
• Citation: 238 Mass. 514,131 N.E. 213
• Parties: COMMONWEALTH TOBACCO CO. v. ALLIANCE INS. CO. SAME v. GENERAL FIRE INS. CO. SAME v. ROYAL INS. CO., Limited.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

238 Mass. 514

131 N.E. 213

COMMONWEALTH TOBACCO CO.

v.ALLIANCE INS. CO.

SAME

v.GENERAL FIRE INS. CO.

SAME

v.ROYAL INS. CO., Limited.

Supreme Judicial Court of Massachusetts, Suffolk.

May 27, 1921.

Exceptions from Superior Court, Suffolk County; Frederick W. Fosdick, Judge.

Three actions by the Commonwealth Tobacco Company against the Alliance Insurance Company, the General Fire Assurance Company, and the Royal Insurance Company, Limited. Verdict for plaintiff, and defendants bring exceptions. Exceptions sustained.

The actions were on policies of insurance in the Massachusetts standard form. There had been an award by referees but the declaration alleged that the award was so grossly and palpably below the actual loss as to be fraudulent, biased, and prejudiced, and that the arbitrators mistakenly refused to consider evidence showing the true value of the property. The court submitted special questions to the jury, in answer to which they found that the award was not made in good faith, but that plaintiff's treasurer during the course of the reference proceedings became aware of bias, prejudice, or fraud and elected not to repudiate the reference but to wait to see if the outcome satisfied him intending to abide by it if it pleased him and repudiated it if it did not. After the jury answered such questions, the court directed them to find a verdict for plaintiff.

James A. Tirrell, of Boston, for plaintiff.

Walter L. Came, of Boston, for defendants.

JENNEY, J.

These actions are upon three policies of insurance in the Massachusetts standard form against loss caused by fire. All the policies covered the same property.

The execution and validity of the policies were admitted; no question was made as to either the happening of the fire or the proofs of loss. The cases were tried by a jury after awards had been made by referees duly appointed.

The plaintiff did not sue upon the awards but based its right of recovery upon the allegation contained in each declaration that the ‘award is so grossly and palpably below the actual loss as to be fraudulent, biased and prejudiced,’ and upon the further allegation therein contained that it has offered to resubmit the question of loss to other referees but that the defendant had refused so to do and had always insisted upon the validity of the award. All the defendants in their answers pleaded the award as a defence; and one of the issues involved was its effect. In each case the judge submitted to the jury the following question:

‘Did the plaintiff's treasurer, Mr. Winslowe, during the course of the reference proceedings become aware of any bias, prejudice or fraud on the part of a majority of the referees and elect not to repudiate the reference then and there but to wait to see if the outcome of the reference satisfied him, intending to abide by the award if it pleased him and to repudiate it if it did not please him?’

The jury answered this question in the affirmative. The record does not show and the plaintiff does not argue that there was any objection or exception to the submission of this issue on the ground that the evidence did not warrant its consideration. After the answer had been made, the judge denied the defendants' motions for the direction of verdicts in their favor, and subject to their exception, he ordered verdicts for the plaintiff, based on answers of the jury to this and other questions, in amounts aggregating $1920 with interest. The award of the referees was for $864. The uncontradicted evidence showed that the plaintiff's treasurer, Winslowe, who is named in the quoted question, represented and had full charge of the plaintiff's interests at the hearings before the referees.

The law is clear that where a party to a proceeding before arbitrators or referees is ‘aware of the existence of conditions which may influence the judgment of the arbitrator or referee * * * but remains silent, be cannot afterwards object to the award or report on the ground of partiality.’ Doherty v. Phoenix Ins. Co., 224 Mass. 310, 315, 112 N. E. 940, 942;Eaton v. Globe Rutgers Fire Ins. Co., 227 Mass. 354, 366, 116 N. E. 536. Said Shaw, C. J., in Fox v. Hazelton, 10 Pick. 275, 277:

‘If parties are content to submit questions in controversy to those, who are known to have formed and expressed opinions upon the subject matter, or who are known to have partialities and...