Continental Ins. Co. v. Garrett

• Decision Date: 03 November 1903
• Docket Number: 1,198.
• Citation: 125 F. 589
• Parties: CONTINENTAL INS. CO. v. GARRETT.
• Court: U.S. Court of Appeals — Sixth Circuit

125 F. 589

CONTINENTAL INS. CO. v. GARRETT.

No. 1,198.

United States Court of Appeals, Sixth Circuit.

November 3, 1903

J. C Bradford, for appellant.

G. N Tillman and A. E. Garrett, for appellee.

Before LURTON, SEVERENS, and RICHARDS, Circuit Judges.

Appeal from the Circuit Court of the United States for the Middle District of Tennessee.

This is a bill to set aside an award made by appraisers appointed under the usual clause to that effect in a policy of fire insurance. The subject of insurance was a dwelling house situated in Carthage, Tenn. The contract insured against loss and damage to the extent of $5,000. The loss was appraised at $3,409.72. The insured, claiming that his loss and damage was $5,000, filed this bill, attacking the award upon several grounds. Upon the pleadings and evidence, the court below held the award void, and entered a decree appraising the complainants' damage at $5,000, for which sum, with interest, a decree was directed. From this decree the insurance company has appealed.

LURTON Circuit Judge.

I. The policy provided that in default of an agreement the loss should be ascertained by "two competent and disinterested appraisers," one to be selected by each party, and an umpire selected by the two thus chosen, to whom any differences should be submitted. It also provided that the appraisers should together "estimate and appraise the loss, stating separately sound occurred, appraisers were chosen; the insurers selecting one, and the insured another and these two selecting a third as umpire. The submission was duly signed, and provided, among other things, that the appraisers "should ascertain the sound value of and the loss upon the property damaged and destroyed," etc. For their government in making the appraisement, it was also provided, that, "it is further expressly understood and agreed that, in determining the sound value and the loss or damages upon the property hereinbefore mentioned, the said appraisers are to make an estimate the actual 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 reduction shall be made therefor.' It was further provided that the award of any two of the appraisers thus chosen, 'made in writing in accordance with this agreement, shall be binding upon both parties to this agreement as to the amount of such loss.' The award made was signed by the appraiser chosen by the insurer, and by the umpire. The appraiser selected by the insured refused to sign.

The award is in these words:

'To the Parties Interested: We have carefully examined the premises and remains of the property hereinbefore specified in accordance with the foregoing appointment, and have determined the sound value to be . . . dollars, and the loss and damage to be thirty-four hundred and nine and 72/100 dollars ($3,409.72).

'Witness our hands this the 28th day of January, 1901.

'W. H. Robinson, Umpire. 'H. Griffin, Appraiser.'

Is this award in accordance with the submission? The agreement under which the appraisers were selected was at once the source and limit of their authority, and the award, to be binding, must, in substance and form, conform to the submission. 33 Ency.of Law & Proced. 674; Toomey v. Nichols, 6 Heisk. 159; Palmer v. Van Wyck, 92 Tenn. 397, 21 S.W. 761. The submission required the appraisers to determine two things, and two things only, for the submission was only for the purpose of determining the amount of loss, and no other defense open to the insurer was submitted. The policy itself required that the appraisers should state 'separately sound value and damage,' and the submission, in no less than four distinct paragraphs, required that both the sound value and loss or damage should be estimated or appraised. Sound value is the cash value, making an allowance for depreciation due to use, etc., at the immediately preceding the time of the fire. This definition is plainly implied by the paragraph from the submission set out above. The award is therefore not in accordance with the submission, because the sound value has not been estimated or appraised.

The able attorney who represented the insurance company in this court has attempted to meet this departure from the submission by two suggestions: First that the award should be construed as a finding that the 'sound value' was nothing; second, that the failure to estimate and appraise the sound value is immaterial, and therefore not fatal. But if 'sound value' be the cash value of the insured premises before the damage by fire, the award would be absurd, for it would be equivalent to saying the cash value of the premises before the fire was nothing, but that by the fire a loss and damage has been sustained of $3,409.72. Upon the other hand, a more reasonable implication from the loss and damage appraised is that the cash value immediately before the fire was at least not less than the amount of loss and damages sustained. But was the cash value of the premises immediately before the fire greater than the loss and damage resulting from the fire? If any, the difference must be the value of the remains. If the appraisers had been governed by the agreement of submission, we should not be guessing as to whether the appraisers regarded the loss or damages greater or less than the cash value of the premises just before the damage occurred. The arbitrators have failed to decide a matter which they were required to decide. The cash value before the fire, less depreciations, is all that the insurer was obliged to pay. If the loss and damage was less than this sound value, it could not be required to pay more than the least of the two sums, and the loss and damage could not be greater than the cash value. Hence it was material to the insurer to have both appraised. The award would not conclude the company, therefore, if this sound value was not found and it might refuse to abide by it. An award ought not to be valid or void at the option of one only of the parties. The award should have pursued the...