Goodwin v. Merchants' & Bankers' Mut. Ins. Co.

• Decision Date: 20 December 1902
• Citation: 118 Iowa 601,92 N.W. 894
• Court: Iowa Supreme Court
• Parties: GOODWIN v. MERCHANTS' & BANKERS' MUT. INS. CO.

118 Iowa 601

92 N.W. 894

GOODWIN

v.MERCHANTS' & BANKERS' MUT. INS. CO.

Supreme Court of Iowa.

Dec. 20, 1902.

Appeal from district court, Polk county; C. A. Bishop, Judge.

Action at law upon a fire insurance policy. Judgment for plaintiff, and defendant appeals. Affirmed.Read & Read, for appellant.

I. M. Earle, for appellee.

WEAVER, J.

It is conceded that plaintiff held a valid policy of insurance, issued by defendant, upon certain hotel property in Boone, Iowa; that in June, 1895, while said policy was in force, the insured property was to some extent damaged by fire; that the proofs of loss were duly furnished to defendant, and that no part of plaintiff's damages has been paid. It further appears from the record that the parties, not being able to agree upon the amount of plaintiff's loss, submitted the matter, under a clause of the policy providing therefor, to arbitration, which resulted in an award in plaintiff's favor, but for an amount materially less than she claimed. Thereafter, and within less than six months from the date of the loss, plaintiff brought an action in the district court of Boone county to set aside the appraisement as having been obtained by fraud. To this petition the defendant, among other things, pleaded and offered its consent to set aside the award upon the condition that plaintiff would enter into a new agreement to ascertain the extent of her loss by arbitration and appraisement. On October 15, 1896, plaintiff filed in said cause her written acceptance, and thereupon dismissed her action without prejudice. She now alleges that, since securing the dismissal of her said action, the defendant, though often requested so to do, has refused to perform its said offer and agreement, and refused to enter into any arbitration of her claim, and that she has performed all the conditions of the agreement on her own part. She further alleges that, while the policy issued to her by the defendant provides that no action can be maintained thereon unless commenced within six months after the loss for which recovery is claimed, yet defendant, by reason of its acts and agreements already related, has waived its right, and is estopped to plead or rely upon said limitation as a defense to her demand for damages. The defendant, by way of answer, admits the original arbitration, the award, the suit to set same aside, the offer made to rearbitrate, but denies all other allegations in respect thereto, and admits that it has refused, and still refuses, to do anything further in the matter of ascertaining the amount of plaintiff's loss. It further pleads that plaintiff did not bring the present action within six months after the fire; that defendant herself fraudulently caused the fire which occasioned her alleged damage; that plaintiff, in violation of the terms of the policy, increased the hazard and risk of the fire by permitting the use of the insured building as a gambling house; that in making her proofs of loss, and in her testimony before the arbitrators, plaintiff falsely and fraudulently misrepresented the amount and value of the property lost or injured by the fire; and that there was other insurance upon the property, by reason of which defendant's liability was only in the proportion which the amount insured by its policy bore to the combined or aggregate insurance. By reply the plaintiff admits having a policy of $500 in another company, the loss under which has been fully settled, and denies all other matters in the answer.

1. It may be said at the outset concerning the allegations of the answer which charge the plaintiff with fraud, arson, and perjury, there is not a shadow of proof in the record, and the only suggestion of the kind in the argument is based upon the statement of a fireman that in going through the building at the time of the fire he discovered a box of paper in which were some partly burned matches. This item, with the reported hearsay statement, attributed to one of the arbitrators, that the plaintiff's case was “loaded” (whatever that may mean), constitutes the entire foundation of this branch of the defense, and does not even tend to support the answer. When there is just ground for believing that an alleged loss has its origin in the crime or fraud of the assured, it is not only the right of the insurer, but a duty which he owes to society, to resist payment, and expose the wrongdoer; but charges of such grave and serious character should not be recklessly made, and, if made in good faith, and the evidence produced is found insufficient to justify them, they should be frankly disavowed.

2. Much insistence is placed by the appellant upon that clause of the policy which limits the right to institute action thereon to the period of six months after the date of the fire. We think the defense cannot avail. As we have already seen, an arbitration was had between the parties. The award was repudiated by the plaintiff within the six-months period, and action brought to set it aside and recover upon the policy. In answering this demand, defendant offered to consent to the setting aside of the award and enter upon a rearbitration. Again, pending the trial defendant offered plaintiff her choice to accept $550 or a new arbitration. Plaintiff closed with the offer thus repeatedly made, and elected to proceed to another arbitration, and thereupon the trial was arrested, and the suit dismissed without prejudice. It is perhaps true that, had such been defendant's offer, or the parties had so agreed, the suit need not have been dismissed, and the award of the arbitrators, when made, could have been returned therein after the manner of a verdict. But such was not the offer or agreement, and, the parties having agreed to take their dispute into another tribunal, the natural and proper thing to do was to dismiss the suit without prejudice. The general rule, however, is that an agreement to arbitrate the subject-matter of litigation is equivalent to an agreement to dismiss the pending suit for a good consideration, and in itself operates as a dismissal. Bowen v. Lazalere, 44 Mo. 383;Vanderhoof v. Dean, 1 Mich. 463;Reeve v. Mitchell, 15 Ill. 297;Draghicevich v. Vulicevich, 76 Cal. 378, 18 Pac. 406;Larkin v. Robbins, 2 Wend. 505;Grosvenor v. Hunt, 11 How. Prac. 355;McNulty v. Solley, 95 N. Y. 242. There is, however, another class of cases adhering to the rule, not so well grounded in reason, that a party may proceed with the pending suit even after an agreement to arbitrate, leaving the other party to his remedy in damages for failure to carry out the arbitration agreement. 2 Am. & Eng. Enc. Law, 566. Applying the doctrine first stated, the voluntary offer of the defendant to set aside the original award and enter into another arbitration was tantamount to an express request to the plaintiff to dismiss her suit, and accept the proposed method of determining the amount of her recovery; and when she accepted the invitation, and acted upon it, the agreement constituted a contract which neither could...