Delaware Underwriters v. Brock

• Decision Date: 23 April 1919
• Docket Number: (No. 3289.)
• Citation: 211 S.W. 779
• Parties: DELAWARE UNDERWRITERS et al. v. BROCK.
• Court: Texas Supreme Court

Page 779

211 S.W. 779

DELAWARE UNDERWRITERS et al. v. BROCK.

(No. 3289.)

Supreme Court of Texas.

April 23, 1919.

Error to Court of Civil Appeals of Fourth Supreme Judicial District.

Action by C. R. Brock against the Delaware Underwriters and the Westchester Fire Insurance Company, resulting in judgment for plaintiff, which was affirmed by the Court of Civil Appeals (206 S. W. 377), and defendants bring error. Judgment reformed and affirmed.

John Sehorn, of San Antonio, for plaintiffs in error.

T. G. Jackson and R. P. Ingrum, both of San Antonio, for defendant in error.

GREENWOOD, J.

The defendant in error recovered a judgment in the district court, which was affirmed on appeal, upon a policy of fire insurance on defendant in error's property, issued by plaintiffs in error.

It is contended by plaintiffs in error that neither the pleadings nor the evidence warranted the submission to the jury of the question as to whether the appraiser of their selection, to estimate the damage to the insured property, was disinterested.

By way of special defense to defendant in error's suit on the policy, plaintiffs in error averred that after the fire a disagreement arose as to the amount of the loss thereby sustained by the insured, and that plaintiffs in error demanded that the loss be ascertained by two competent and disinterested appraisers, one to be selected by plaintiffs in error and one to be selected by defendant in error, as provided in the policy, and that plaintiffs in error selected Henry T. Phelps, and that defendant in error selected F. R. Young, who was not disinterested and to whom objection was made on that ground, and that thereupon defendant in error declined to permit the loss to be estimated by appraisers, unless F. R. Young acted, and that defendant in error thereby wrongfully refused to permit an appraisement as stipulated for in the policy, and hence was not entitled to maintain his suit.

For replication to this matter of special defense, defendant in error pleaded that, upon demand by plaintiffs in error, he had agreed to an appraisement of his loss and had named F. R. Young as one appraiser and had objected to Henry T. Phelps, upon his selection by plaintiffs in error, for the reason that Phelps was reported to be an unfair appraiser, and because Phelps, in selecting the umpire, would not agree to any one unless it were a party over whom he had some control, but that defendant in error had offered to select some other appraiser instead of Young if plaintiffs in error would select some other appraiser instead of Phelps, which offer was rejected by plaintiffs in error, and hence defendant in error had not wrongfully refused to go into an appraisement, but was compelled to sue to enforce his demand.

The policy in evidence provided that, in the event of disagreement as to the amount of loss, the same should be ascertained by two competent and disinterested appraisers, the insured and the insurer each selecting one, and the two so chosen selecting a competent and disinterested umpire, and the appraisers should then estimate and appraise the loss, submitting any difference to the umpire, and that the award of any two should determine the amount of the loss.

There was evidence that F. R. Young, who was selected as an appraiser by defendant in error, had previously made an estimate of the loss for which he had been paid by defendant in error; that Henry T. Phelps, who was selected as an appraiser by plaintiffs in error, had been used as an appraiser by their agent at San Antonio more than any other, how often said agent could not tell; that said agent paid Phelps $10 a day; and that Phelps had made an estimate which was thought to be against the insurer, and in that instance he was representing the insured.

It was an undisputed fact that defendant in error proposed to withdraw F. R. Young and to name another appraiser, to whom plaintiffs in error had no objection, if plaintiffs in error would name another appraiser instead of Phelps, and plaintiffs in error declined to accept the proposition.

The jury found, on special issues, that F. R. Young was not a competent and disinterested appraiser, and that Henry T. Phelps was not a competent and disinterested appraiser.

It seems plain to us that the finding of the jury that Phelps was not a disinterested appraiser is amply supported by both the pleadings and the evidence.

The answer of plaintiffs in error recognized the rule that—

"If the insurer relies for a defense upon non-compliance with the arbitration and award clause in a policy, such clause must be specially pleaded to be available as a defense." 5 Joyce on Insurance, § 3264; Manchester Fire Ins. Co. v. Simmons, 12 Tex. Civ. App. 607, 35 S. W. 723; Phœnix Assur. Co. v. Deavenport, 16 Tex. Civ. App. 283, 41 S. W. 400; Kahn v. Traders' Ins. Co., 4 Wyo. 419, 34 Pac. 1059, 62 Am. St. Rep. 57-59.

The substance of plaintiffs in error's special defense was that they had been deprived of their contract right of arbitration through the wrongful act or default of defendant in error, in refusing to arbitrate the amount of his loss, unless allowed to select a disqualified appraiser, notwithstanding that plaintiffs in error had demanded an arbitration and selected an appraiser in accordance with the policy. The court properly called upon the jury to determine whether this defense was sustained by determining whether Phelps was a disinterested appraiser. The facts were uncontradicted that defendant in error really did nothing to defeat an arbitration, save to withhold his consent to Phelps' selection. If Phelps was disqualified, such consent was rightfully withheld, and the act of plaintiffs in error in wrongfully refusing to select another appraiser in Phelps' place defeated the arbitration. In Manchester Fire Ins. Co. v. Simmons, 12 Tex. Civ. App. 612, 35 S. W. 723, in speaking of the same form of appraisement clause as that here involved, Associate Justice Finley said:

"It is a provision in the contract inserted for the company's benefit, and it should have at least shown a willingness to go into the matter of the ascertainment of the amount of the loss in the manner provided, before complaining that it has not been so ascertained."

A similar declaration was made in Continental Ins. Co. v. Vallandingham, 116 Ky. 302, 76 S. W. 24, 105 Am. St. Rep. 218, when the Court of Appeals of Kentucky said:

"But, if a person for whose benefit a clause in a contract is inserted would have the advantage of it, he must bring himself within its terms, and will not be excused because the other party has likewise failed. Unless the insurer asks for the arbitration or appraisal before suit brought, the failure to appraise is not a defense. Sun Mutual Ins. Co. v. Crist (Ky.) 39 S. W. 837; Bergman & Co. v. Commercial Union Ins. Co., 12 Ky. Law Rep. 942; Chenowith v. Phœnix Ins. Co., Id. 232; Scottish Union & National Ins. Co. v. Strain (Ky.) 70 S. W. 274. And when the insurer demands the appraisal, it must in good faith nominate a competent, disinterested person as appraiser, before it can defend upon the ground that the insured has failed to keep that part of his contract."

The conclusion that the jury were warranted, on the evidence recited, to find against the qualifications of both Young and Phelps, results from a right conception of the duties to be performed by appraisers under policies such as the one involved in this suit. The Alabama Supreme Court clearly gave the right construction to the appraisal clause in these policies, when it said:

"The purpose of the clause is to secure a fair and impartial tribunal to settle the differences submitted to them. In their selection it is not contemplated that they shall represent either party to the controversy or be a partisan in the cause of either, nor is an appraiser expected to sustain the views or to further the interest of the party who may have named him. And this is true, not only with respect to estimating the amount of the loss, but also with reference to the selection of an umpire. They are to act in a quasi judicial capacity and as a...