Continental Ins. Co. v. Titcomb

• Decision Date: 04 September 1925
• Docket Number: No. 6950.,6950.
• Citation: 7 F.2d 833
• Parties: CONTINENTAL INS. CO. OF NEW YORK v. TITCOMB.
• Court: U.S. Court of Appeals — Eighth Circuit

7 F.2d 833 (1925)

CONTINENTAL INS. CO. OF NEW YORK v. TITCOMB.

No. 6950.

Circuit Court of Appeals, Eighth Circuit.

September 4, 1925.

Nathan H. Chase, of Minneapolis, Minn., for plaintiff in error.

Harry A. Hageman, of St. Paul, Minn., for defendant in error.

Before KENYON and BOOTH, Circuit Judges, and AMIDON, District Judge.

AMIDON, District Judge.

This action is brought on a standard "use and occupancy" policy of insurance for $5,000 on a lunchroom and restaurant conducted by the insured. The liability under the policy was "* * * for the actual loss sustained, consisting of net profits on the business which is thereby prevented, and such fixed charges and expenses pertaining thereto as must necessarily continue during a total or partial suspension of business, and such expenses as are necessarily incurred for the purpose of reducing the loss under this policy, for not exceeding such length of time (commencing with the date of the fire and not limited by the date of expiration of the policy) as shall be required with the exercise of due diligence and dispatch to rebuild, repair, or replace such part of said building and machinery and equipment and stock as may be destroyed or damaged."

The parties being unable to agree as to the amount of damages, appraisers and an umpire were duly appointed under the usual provision on that subject. Their duties are prescribed by the policy as follows:

"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 the loss."

The appraiser selected by the insured and the umpire, by their award in writing in due form, fixed the loss at $3,509.80. The other appraiser declined to sign the report. The company refused to pay the award, and the present action was brought by an assignee of the insured. The complaint is in the usual form, setting out the award in full. The answer alleges that the award is invalid, because in the general sum found as damages are included the following items: (1) $868, as wages of the insured and his wife at $10.85 per day for a period of 80 days during the alleged total suspension of business. (2) $345, loss of net profits after resumption of business, being the difference between the net profits before the fire, and the net profits subsequent to the fire, down to the time when the net profits of the resumed business equaled those made before the fire. (3) $740, being the amount allowed as the wages of a day cook and a night cook for 80 days' alleged total suspension of business. The answer charges that these items were allowed "erroneously and by and through a mistake of law," because they do not come within the terms "net profits" and "fixed charges and expenses," as those terms are used in the policy.

The plaintiff moved for judgment on the pleadings. For the purposes of the motion, defendant admitted the assignment of the claim, and that the above defenses could only be proven by the testimony of the nonconcurring appraiser. It is also admitted in the brief that the umpire and appraiser were not chargeable with either fraud, misconduct, or partiality. The motion was granted, and defendant brings error.

Some authorities make a distinction between an appraisement and an arbitration (Phœnix Ins. Co. v. Everfresh Co. C. C. A. 294 F. 51), but the Supreme Court of Minnesota has uniformly held that these proceedings to ascertain the amount of damages under standard policies constitute a common-law arbitration. It says in McQuaid Market House Co. v. Home Ins. Co., 147 Minn. 254, 257, 180 N. W. 97, 98:

"The appraisement of the loss provided for by this and other standard form policies takes the form of the common-law arbitration, and the procedure of inquiry and investigation, together with the award and its contents, are governed by the general rules of law upon that subject."

See, further, American Central Ins. Co v. District Court, 125 Minn. 374, 147 N. W. 242, 52 L. R. A. (N. S.) 496.

It is also true that the policy with the appraisement provision is a contract voluntarily made by the parties, notwithstanding the form is prescribed by the...