Hill v. Star Ins. Co. of America

• Decision Date: 25 March 1931
• Docket Number: 50.
• Parties: HILL et al. v. STAR INS. CO. OF AMERICA et al.
• Court: North Carolina Supreme Court

157 S.E. 599

200 N.C. 502

HILL et al. v. STAR INS. CO. OF AMERICA et al.

No. 50.

Supreme Court of North Carolina

March 25, 1931

Appeal from Superior Court, Wilson County; Cranmer, Judge.

Actions by D. M. Hill and another against the Star Insurance Company of America, the Mercury Insurance Company of St. Paul, Minn and the Ætna Insurance Company, of Hartford, Conn., which actions were consolidated. From a judgment in favor of plaintiffs, defendants appeal.

No error.

In action on fire policy, whether appraiser's relation to insurer made him interested held for jury.

In action on fire policy, evidence sustained allegation of bias of insurer's appraiser and fraud and undue influence upon insured's appraiser.

These are actions brought by plaintiffs against the defendants to recover on certain insurance policies, in the aggregate of $6,500 on the home of plaintiff D. M. Hill, which was practically destroyed by fire on the 27th day of October 1928. The plaintiff John F. Bruton was trustee to secure certain indebtedness on the property, and the policies had attached the New York Standard mortgage clause in his favor as trustee. The loss and damage under said policy was payable to him as his interest may appear. The policy had attached what is known as a 75 per cent. coinsurance clause. The actions were consolidated, and plaintiffs' claim for damage the minimum amounted to $5,174.

Defendants in their answer set up that, under the terms of the policy when no agreement could be arrived at between the parties, as to the amount of the loss, an appraisal should be had and the method fixed by the policy. The assured selected R. D. Gladding, and the defendants selected W. B. Barrow, and the two selected as umpire one D. J. Rose. That Gladding and Barrow appraised the sound value at $4,500, and loss and damage at $2,445.79. That said amount was tendered to plaintiffs on January 28, 1929, which plaintiffs declined to accept. That "said award in writing was signed by each of the appraisers selected by the assured and by the company and is binding under the terms of the said policy upon the said plaintiff and upon the defendants, and by reason thereof and of the matters and things herein set forth, the said plaintiffs are estopped to claim that the said loss and damage to the property insured, by the said fire occurring on or about October 27th, 1928, is in excess of $2445.79."

The plaintiff in reply stated that the terms of the policy provided: "In case the insured and this Company shall fail to agree as to the amount of loss or damage, it shall, on the written demand of either, select a competent and disinterested appraiser. " That W. B. Barrow was not a disinterested appraiser, but "the said W. B. Barrow, for a long time prior thereto, had been practically a regular appraiser of the Southern Adjustment Bureau, and in making appraisals, and in making this appraisal, the said W. B. Barrow acted as the representative of defendant companies, and not as a disinterested appraiser." This was unknown to plaintiff. "That the said W. B. Barrow, instead of considering himself an impartial appraiser, considered himself as the direct representative of the defendant companies in making said appraisal; that he entered into the said appraisal, not for the purpose of ascertaining the true loss and damage, but for the purpose of reducing the loss and damage to the very lowest possible figure, regardless of whether or not such lowest possible figure should represent the true and correct loss and damage or not. *** That the said W. B. Barrow soon ascertained that R. D. Gladding was inexperienced, and took advantage of the inexperience of the said R. D. Gladding, in making said appraisal; that the said R. D. Gladding declined to sign the appraisal report until he was assured by the said W. B. Barrow that the final estimate of loss and damage would be passed upon by D. J. Rose, the umpire selected, and that it was only upon the assurance given him by W. B. Barrow that D. J. Rose would pass upon and make the final estimate of loss and damage, that the said R. D. Gladding signed the said appraisal agreement. *** The said W. B. Barrow taking advantage of the inexperience of R. D. Gladding, assured him that the said D. J. Rose would make the final estimate of the loss and damage, and procured his signature to the said appraisal agreement by such assurance, although the said W. B. Barrow knew at the time of making such assurance, that under the strict letter of the appraisal agreement, the same were false and untrue. *** That the purported appraisal and award signed by the appraisers, R. D. Gladding and W. B. Barrow, constituted a fraud upon the rights of these plaintiffs, and for the further reason that the amount arrived at therein was so grossly and palpably inadequate and unjust and so out of proportion to the amount of actual damages as to be inequitable and unconscionable. The actual amount of the damage was a minimum of $5,174.00, whereas, the figure arrived at by the methods employed by the said W. B. Barrow amounted to only $2,445.79, a discrepancy of more than $2,700.00 between the actual and the awarded damages and an amount less than one-half of the actual amount of the damage. These plaintiffs aver that the purported appraisal arrives at such an outrageously and palpably inadequate conclusion as to be apparent that it is a fraud upon these plaintiffs."

The issues submitted to the jury, and their answers thereto, were as follows:

"1. Has there been an appraisal and award as to the amount of damages to which plaintiffs are entitled under the Insurance policies sued on in this action? Ans. Yes.

"2. Was the appraiser, W. B. Barrow, at the time of the alleged appraisal and award, disinterested? Ans. No.

"3. Was the appraiser, R. D. Gladding, unduly and fraudulently influenced and controlled in the interest of the defendants by said W. B. Barrow? Ans. Yes.

"4. Was the signature of the appraiser, R. D. Gladding, to the alleged appraisal obtained by the fraud and misrepresentation of said W. B. Barrow? Ans. Yes.

"5. Was the appraiser, W. B. Barrow, partial to and strongly biased and prejudiced in favor of the defendants? Ans. Yes.

"6. What were the damages done by fire to the property of plaintiffs included in the policies? Ans. $5172.98 and interest."

The court below upon the verdict signed judgment. The defendants made numerous exceptions and assignments of error and appealed to the Supreme Court. The material facts and necessary assignments of error will be considered in the opinion.

W. A. Lucas, of Wilson, and Manning & Manning, of Raleigh, for appellants.

H. G. Connor, Jr., M. S. Strickland, and Finch, Rand & Finch, all of Wilson, for appellees.

CLARKSON J.

We think the crux of this action is embodied in the following exceptions and assignments of error made by defendants: "(1) The Court erred in admitting in evidence, over the objection of the defendants, aptly made, testimony tending to prove the sound value and loss and damage to the property otherwise than as shown by said appraisal agreement and award made thereunder, for that both parties were bound by the award thus made; and the said award determined the amount of sound value and the loss or damage;" and (2) the refusal of the court below on motion of defendants at the close of the plaintiff's evidence and at the close of all the evidence for judgment, as in case of nonsuit, and for any further recovery than the judgment tendered in the answer. C. S. § 567.

Under the facts and circumstances of these actions, we think the court below correctly overruled these exceptions and assignments of error. These are actions in effect to set aside the award for fraud, corruption, undue influence, and bias.

In Miller v. Farmers' Federation, 192 N.C. at page 146, 134 S.E. 407, 409, we find: "Parol testimony cannot be admitted to contradict, add to, or vary a written contract, in the absence of fraud, ignorance, mistake, or other available defense, warranting a rescission or cancellation. This rule is intended for the 'protection of the provident,' and not for the 'relief of the negligent.' Patton v. Lumber Co., 179 N.C. 103, 101 S.E. 613; Watson v. Spurrier, 190 N.C. 729, 130 S.E. 624."

We find also in the authorities that, although the contract is in writing and signed, conditions and collateral agreements under certain circumstances are permitted to be shown. In Herndon v. Ins. Co., 110 N.C. at page 284, 14 S.E. 742, 744, it is said: "If the award was signed when it was incomplete, because of the false assurance given by one of the adjusters, the others, who were present, acting in concert with him, will not be allowed to claim for their companies that they shall be permitted to reap the benefit of the falsehood."

In Kelly v. Oliver, 113 N.C. at page 444, 18 S.E. 698, it is said: "This being so, it was competent for the defendant to show that although he signed the instrument, it was not to go into effect as to him until the plaintiff had procured the signatures of 20 others to the same. This does not contradict the terms of the writing but amounts to a collateral agreement postponing its legal operation until the happening of a contingency. Penniman v. Alexander, 111 N.C. 427, 16 S.E. 408." Blackstad Mercantile Co. v. Parker, 163 N.C. 275, 79 S.E. 606; Buie v. Kennedy, 164 N.C. 290, 80 S.E. 445; Thomas v. Carteret County, 182 N.C. at page 378, 109 S.E. 384; White v. Fisheries Co., 183 N.C. at pages 229, 230, 111 S.E. 182; Watson v. Spurrier, 190 N.C. at page 730, 130 S.E. 624. See National Bank of Suffolk v. Winslow, 193 N.C. 470, 137 S.E. 320; Standard Crown Co. v. Jones, 196 N.C. 208, 145 S.E. 5; Stockton v. Lenoir, 198 N.C. 148, 150 S.E. 886.

On this aspect,...