Insurance Co v. Ries

• Decision Date: 27 April 1909
• Docket Number: 11173
• Citation: 88 N.E. 638,80 Ohio St. 272
• Parties: The Royal Insurance Company v. Ries.
• Court: Ohio Supreme Court

88 N.E. 638

80 Ohio St. 272

The Royal Insurance Company v. Ries.

No. 11173

Supreme Court of Ohio

April 27, 1909

Condition in insurance policy - That disagreement as to loss be determined by appraisers - Insured may sue on disagreement as to appraisement - Cannot recover larger amount than appraisement, when - Difference between appraisement and arbitration - Effect of appraisers refusing to hear evidence.

1. Where in a policy of insurance it is made a condition precedent that in case of disagreement as to the amount of loss it shall be determined by appraisement, the insured may bring suit upon the policy, averring in his petition the performance of all conditions on his part, and when the insurer pleads in its answer the disagreement and the determination of the amount by appraisement, and the provisions of the policy as to concurrent insurance, the amount the plaintiff may recover is limited to a proportionate amount of the loss so determined, and he cannot recover a larger amount unless the appraisement is void or is set aside. If it is void, he may plead its invalidity in his reply, but if it is only voidable he should in his petition unite a cause of action to set it aside.

2. The provision in a standard fire insurance policy that "In the event of disagreement as to the amount of loss the same shall, as above provided, be ascertained by two competent and disinterested appraisers, the insured and this company each selecting one, and the two so chosen shall first select a competent and disinterested umpire; 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 such loss; the parties thereto shall pay the appraiser respectively selected by them and shall bear equally all expenses of the appraiser and umpire," is a pro- vision for an appraisement and not for an arbitration, and such submission is not to be judged by the strict rules applicable to arbitration and award, and where the appraisers and umpire have before them a list of the property destroyed, and the insured's statement in detail in respect to his loss, it is not ground for setting aside the appraisement that they refuse to hear evidence.

The plaintiff in error insured one Henry Ries for the term of one year, against loss or damage by fire, in the sum of two thousand dollars on agricultural implements and other personal property, while contained in a frame storage building in Bowling Green, Ohio. The building and property were destroyed by fire, and at the time of the fire there was concurrent insurance in the sum of four thousand dollars. In January, 1905, he commenced this action upon the policy issued by the plaintiff in error to recover the full amount of the insurance therein specified, averring that he had complied with and performed all of the conditions in the policy of insurance to be by him performed; that immediately after the fire he had given notice in writing to the plaintiff in error of the loss, and that he had furnished plaintiff in error with due proofs of loss. The answer, in addition to other matters of defense, averred that the policy provided that in the event of disagreement as to the amount of loss and damage to the property, the same should be determined by three competent and disinterested appraisers the insured and the insurer each to select one, and that the two so chosen should first select a competent and disinterested umpire; that the appraisers should then estimate and appraise the loss, stating separately sound value and damage, and failing to agree should submit their differences to the umpire; and that the award in writing of any two should determine the amount of the loss. It is then averred that the parties disagreed and that they entered into a written agreement for the submission to appraisers of the amount of the loss and damage; that each selected an appraiser and that the two, so selected, selected an umpire, and that the appraisers and the umpire, acting under the agreement, made an award in writing, by which they determined the sound value to be $1312 and the loss and damage to be one thousand dollars. It is also averred that at the time of the loss, Henry Ries had other concurrent insurance in the sum of four thousand dollars; that it was provided by the policy that the plaintiff in error should not be liable for a greater proportion of any loss on the property insured than the amount thereby insured should bear to the whole insurance, and that the plaintiff in error had tendered to Henry Ries the sum of $333.34 in payment and full settlement of all liability under the policy of insurance and the award

Plaintiff by reply admitted these averments of the answer and averred that the award was unfair to plaintiff, was made improperly was not in accordance with the terms and provisions of the policy, nor of the submission, and was, therefore, illegal void and of no effect; that the appraiser selected by the defendant was neither competent nor disinterested, but was partial, biased and prejudiced in favor of the defendant, and that he exercised undue influence and control over the umpire and the other appraiser; that the appraisers did not permit the plaintiff to offer evidence or to be heard, although he had requested of them that he be permitted to do so before said appraisers began the appraisement; that neither of the appraisers had seen the property destroyed that the property was wholly destroyed and that they never had before them any proper evidence of its value; that neither of said appraisers, nor said umpire, ever viewed the property, nor were they disinterested or competent, and that immediately upon the return of said award, plaintiff notified defendant that the award was void. The plaintiff further avers that if he had been permitted to offer proof of the amount of his loss to the parties making said award that he would have proven his loss and damage in the sum of ten thousand dollars.

At the close of the evidence the trial judge said:

"After the close of all the evidence and before argument, the court holds that the defense to the appraisement and award set up in the answer is invalid on account of the incompetency of one appraiser, C. H. Draper, and the umpire, and misconduct of the company in submitting to the appraisers and umpire the sworn statement of the plaintiff made upon the application of the company after the alleged loss. Also for the reason that the umpire never viewed the remains of the loss, but inquired of newspaper men as to the amount of the loss, whom he said he supposed knew everything, and had no special knowledge as to the fire or the matters in controversy. Also the award is not based upon proper evidence, and that the umpire and appraisers were dominated by the company's appraiser Fred Storm. This award being invalid for the reasons stated, I decline to submit the question to the jury."

The defendant requested the court to submit this issue to the jury and objected and excepted to the ruling of the court. The court then instructed the jury that the proofs of loss were sufficient, and the sole question submitted to the jury was the amount of plaintiff's loss. The jury found the cash value of the property before the fire to be $5015.98, and its value after the fire to be $312, and assessed the amount due plaintiff from the defendant at $1567.66 with $185.77 interest on the same.

The court found the amount of the verdict over and above $1336 excessive, and the plaintiff having remitted all in excess of that amount, the court overruled the motion for a new trial and entered judgment for $1336 with interest thereon from September 26, 1906. On error the judgment was affirmed in the circuit court, the defendant in error having remitted all in excess of $1010 with interest

Mr. J. W. Mooney and Mr. Guy C. Nearing, for plaintiff in error.

Having sought to avoid the award on the grounds of fraud it became a question for the jury. If the award was voidable and not void, then the award would have to be set aside by a court of chancery before a recovery could be had in excess of the award. These propositions have been settled by this court in the recent case of Perry v. O'Neil & Co., 78 Ohio St. 200.

Under the provisions of the policy of insurance providing for an appraisal and under which the award was rendered in this case, the appraisers may examine witnesses under oath, or they may not examine witnesses at all. They may seek information from any source which commends itself to their judgment. They may inspect books. They may examine the premises and remains of the property, and they may base their judgment on the physical appearance of the property, or oral statement, or both.

The appraisers may pursue any method which their judgment approve, and the court, in the absence of fraud, can not set aside the award. The appraisers are the tribunal which the parties have chosen and under whose findings they are concluded. The appraisers may over or under estimate the loss and the court can not control their judgment, nor, in the absence of fraud, change or annul what they have done. Clement on Fire Insurance, 177; Paper Co. v. Assurance Co. 12 A.D. 218, 43 N.Y.S. 431; Stemmer v. Insurance Co., 33 Ore., 65, 53 Pac. Rep., 498, 27 Ins. Law Journal, 972; Insurance Co. v. Traub, 80 Md. 214, 30 A. 904; Brush v. Fisher, 70 Mich. 469; Insurance Co. v. Drackett, 63 Ohio St. 41; Kerr on Fraud and Mistake, 446; Sweet v. Morrison, 116 N.Y. 19; Tucker v. Allen, 47 Mo. 490; 2 Pomeroy Eq. Jur., 349; Thornton v. McCormick, 75 Ia. 285; Masury v. Whiton, 111 N.Y. 679; Joyce on Insurance, Section 3247; Dun v....