Non-Royalty Shoe Company v. Phoenix Assurance Company, Limited, of London

• Decision Date: 17 March 1919
• Parties: NON-ROYALTY SHOE COMPANY v. PHOENIX ASSURANCE COMPANY, LIMITED, OF LONDON, ENGLAND, Appellant
• Court: Missouri Supreme Court

210 S.W. 37

277 Mo. 399

NON-ROYALTY SHOE COMPANY v. PHOENIX ASSURANCE COMPANY, LIMITED, OF LONDON, ENGLAND, Appellant

Supreme Court of Missouri, Second Division

March 17, 1919

Appeal from Pike Circuit Court. -- Hon. Edgar B. Woolfolk, Judge.

Affirmed After Remittitur Filed.

Reynolds & Harlan and Hosetter & Haley for appellant.

(1) Sec. 7068, R. S. 1909, is unconstitutional as denying to the insurance companies penalized thereunder the equal protection of the law, and as depriving said insurance companies of their property without due process of law, and is not a proper classification, under the Constitution of Missouri or of the United States. Paddock v. Railroad, 155 Mo 524; Gulf, etc., Railroad v. Ellis, 165 U.S. 150; West v. Railroad, 118 Mo.App. 432; Williamson v Liverpool Insurance Co., 105 F. 31; St. Louis v Wynne, 224 U.S. 354; Oligschlager v. Stephenson, 104 P. 345; Connolly v. Union Sewer Pipe Co., 184 U.S. 540; Wilder v. Railroad Co., 70 Mich. 382; Railroad v. Polt, 232 U.S. 165. (2) The fact that the Supreme Court in Keller v. Home Life Insurance Co., 198 Mo. 440, held the statute in question to be constitutional does not forever oust this court of its jurisdiction to determine that question, as it is still a fairly debatable one, and the decisions of the State and United States Supreme Courts on similar statutes are in great confusion, with frequent dissenting opinions. Littlefield v. Littlefield, 168 S.W. 841; Ash v. City, 145 Mo. 120; Hilgert v. Paving Co., 173 Mo. 319; Brown v. Railway, 175 Mo. 185; State ex rel. v. Smith, 177 Mo. 69. (3) While the courts of this State have held that formal affimative proof of vexatious delay in paying an insurance loss is not required, such delay, to justify the infliction of a penalty, must have been wilful, and without reasonable cause, and this question of wilfulness will not be determined by the outcome of things at the trial, but by the appearance before the trial as judged by a reasonable and prudent man seeking to ascertain the fact as duty would require. Blackwell v. American Central Insurance Co., 80 Mo.App. 75; Patterson v. American Ins. Co., 174 Mo.App. 37; Utz v. Insurance Co., 139 Mo.App. 153; Corson v. Neatheny, 9 Colo. 212; Empire Life Ins. Co. v. Allen, 81 S.E. 120. (4) The appraisal and award provisions of the policy have been repeatedly held to be valid and binding on the parties, and a condition precedant to the liability of the defendant unless waived. Townsend v. Insurance Co., 39 Misc. (N. Y.) 87; Murphy v. Insurance Co., 61 Mo.App. 323; McNees v. Insurance Co., 61 Mo.App. 335; McNees v. Insurance Company, 69 Mo. 232; Carp v. Queen Insurance Co., 104 Mo.App. 502; Paint Co. v. Insurance Co., 165 Mo.App. 30; Stevens v. Insurance Co., 120 Mo.App. 89; Fire Association v. Allesina, 45 Ore. 154; Chippewa Lumber Co. v. Insurance Co., 80 Mich. 116. (5) And before evidence can be introduced to impeach such an award, the party attacking it must assert facts which, if true, will declare said award void; or, if the facts relied on to impeach it be such as to render it voidable only, then it must be set aside in equity for fraud or mistake, before suit can be maintained on the policy. Robertson v. Insurance Co., 68 F. 173; Ruckman v. Ransom, 35 N.J.L. 565; Perry v. O'Neil & Co., 78 Ohio St. 200; Blair v. Railroad, 89 Mo. 383; Girard v. Car Wheel Co., 123 Mo. 358; Homuth v. Street Railway, 129 Mo. 629; Och v. Railroad, 130 Mo. 27; Hancock v. Blackwell, 139 Mo. 440; Courtney v. Blackwell, 150 Mo. 545; Yeatman v. Clemens, 6 Mo.App. 210; Kaufman v. Railway Co., 95 Mo.App. 459; Turner v. Railroad, 114 Mo.App. 539; Magnuson v. Casualty Co., 125 Mo.App. 206. (6) But whether attacked at law or in equity, the proceedings of the appraisers and the umpire in a proceeding under a policy of this kind are not to be judged by the strict rules applicable to arbitration and award; they are not required to hear evidence or hold formal sessions, but it is enough if they proceed in good faith under the terms of the submission, and the award cannot be avoided for mere irregularities. American Steel Co. v. Insurance Co., 187 F. 733; Whalen v. Goldman, 115 N.Y.S. 1006; Paint Co. v. Insurance Company, 165 Mo.App. 30; Michels v. Underwriters' Association, 129 Mich. 417; Barnard v. Insurance Company, 101 F. 36; Remington v. Insurance Corp., 12 A.D. 218; Aetna Insurance Co. v. Reed, 33 Ohio St. 283; Ordway v. Insurance Co., 35 Mo.App. 426; Indiana Insurance Co. v. Brehm, 88 Ind. 578; Georgia Home Insurance Co. v. Worten, 113 Ala. 479; Sebree v. Board of Education, 254 Ill. 438. (7) It is competent for an insurance company and the assured to fix the measure of damages in case of loss or damage by fire, and when they do agree upon a method of determining the loss, that method will control. The measure of damages fixed by the terms of this policy is limited to the cost to respondent to repair or replace the property mentioned in the policy and found from the evidence to have been lost or destroyed, with materials of like kind and quality. This provision in the policy has been repeately held valid. Cooley's Insurance Briefs, p. 3085; Machine Co. v. Insurance Co., 201 Pa. 645; Malin v. Insurance Co., 105 Mo.App. 625; Chippewa Lumber Co. v. Insurance Co., 80 Mich. 116; Commonwealth Ins. Co. v. Sennett, 37 Pa. 205; Sun Fire Office v. Ayerst, 37 Neb. 184; Lipman v. Liability Assur. Corp., 170 Ill.App. 379; Burdette v. Insurance Co., 105 Tenn. 548; Miller v. Insurance Co., 95 Mo.App. 211; Insurance Company v. Board of Education, 49 W.Va. 360; Plow Company v. Insurance Company, 39 Tex. Civ. App. 168; Kerr on Insurance, p. 435; Insurance Company v. Allen, 80 Ala. 571; Brinley v. Insurance Co., 11 Metc. (Mass.) 195; Insurance Co. v. Hamilton, 5 Md. 170; Williamson v. Insurance Company, 122 F. 59.

Virgil Rule and Fauntleroy, Cullen & Hay for respondent.

(1) The case of Young v. Pennsylvania Fire Insurance Co., 269 Mo. 1, was decided since this case was argued in the Court of Appeals and since the decision was delivered by that court. In every particular the facts in the Young case are substantially similar to the facts in this, the Young case involving an award by appraisers, an attack upon the award and the appraisers along the same general lines as the attack in this case. Attorneys' fees were allowed in the Young case for vexatious delay and we respectfully submit that the Young case is on all-fours with the case at bar and decides every point presented by the appellant in this case adversely to it. (2) The award is voidable and may be attacked in an action at law. (a) While appraisers may not always be required to take evidence as to the damage to property visible and open to their inspection, but as to property wholly destroyed or not so visible and open to inspection appraisers necessarily act upon evidence, and both the insured and the company should be allowed to offer evidence and receive notice of time and place of hearing, and a refusal in such case to head evidence, or to take evidence secretly and without notice, vitiates the award. Jones v. Orient Ins. Co., 171 S.W. 28; Stout v. Phoenix Assur. Co. of London, 56 A. 681; Kaiser v. Hamburg-Bremen Fire Ins. Co. of Hamburg & Bremen, 69 N.Y.S. 344; Citizens Ins. Co. of Pittsburg v. Hamilton, 48 Ill.App. 593; Continental Ins. Co. v. Garrett, 125 F. 589; Stemmer v. Scottish Ins. Co., 33 Ore. 65; Bangor Savings Bank v. Niagara Ins. Co., 85 Me. 68; Redner v. N.Y. Fire Ins. Co., 92 Minn. 306. (b) The award is void because the appraisers were partial and not disinterested; the company's adjuster secured the appointment of its appraiser, the umpire, by fraudulent misrepresentations and suppression, because the umpire and company's appraiser exceeded his jurisdiction and the appraisers adopted a wrong rule of law and were not qualified to assess values and were professional insurance appraisers, and the award was so inadequate as to shock the consience of fair-minded men. Pierce v. Sun Ins. Office, 147 N.Y.S. 947; Bradshaw v. Insurance Co., 137 N.Y. 137; Hall v. Western Assur. Co., 133 Ala. 637; Bernhard v. Rochester German Ins. Co., 79 Conn. 388; Jerrells v. German-American Ins. Co., 82 Kan. 320; Savings Assn. v. Insurance Co., 87 N.Y.S. 1075; Van Gindertalen v. Insurance Co., 82 Wis. 112; Traub v. Insurance Co., 83 Md. 524; Insurance Co. v. Traub, 83 Md. 524; Perry v. Insurance Co., 137 N.C. 402; Baker v. Assur. Co., 57 Mo.App. 564; Bartless v. Exchange, 116 Wis. 450; Hoffman v. Insurance Co., 1 La. Ann. 216; Insurance Co. v. Taylor, 14 Colo. 499; Insurance Co. v. Johnson, 11 Bush. 587; Bradley v. Northwestern Ins. Co., 11 Mich. (7 Cooly) 455. (c) An appraisement under an insurance policy is not an arbitration, but merely a method, when not waived, for determining a link, that is, the amount of loss, in the chain of evidence necessary to sustain plaintiff's cause of action on the policy. It does not merge the prior cause of action on the policy into the award, but is merely a method of determining the amount of loss. But this can be waived, or when not properly arrived at, the insured is allowed to prove it, as any other fact, when suit is brought on the policy. Young v. Ins. Co., 269 Mo. 1; Zalle v. Laclede Mutual Fire Ins. Co., 44 Mo. 530. (d) The term "settlement" as used in the statute does not necessarily mean payment or satisfaction, though it may mean that. It frequently means adjustment, arrangement. A "settlement" is a contract between two parties by means of which they ascertain the state of the accounts between them and strike a balance. Young v. Insurance Co., 269 Mo. 1; Toombs v. Stockwell, 131 Mich. 633; Beall v. Hudson County Water Co., 185 F. 179. (3) The contention of appellant that error was committed by the court in giving instructions on the...