R. E. Jones & Co. v. Northern Assurance Co.

• Decision Date: 14 January 1919
• Citation: 182 Ky. 701
• Court: Kentucky Court of Appeals
• Parties: R. E. Jones & Company v. Northern Assurance Company, Limited.

182 Ky. 701

R. E. Jones & Company v. Northern Assurance Company, Limited.

Court of Appeals of Kentucky.

Decided January 14, 1919.

Appeal from Warren Circuit Court.

SIMS, RODES & SIMS and G. DUNCAN MILLIKEN for appellants.

T. W. & R. C. P. THOMAS and GORDON & LAURENT for appellees.

OPINION OF THE COURT BY JUDGE SAMPSON — Affirming.

The partnership firm of R. E. Jones & Company, composed of R. E. Jones and E. H. Adams, was engaged in general merchandising in Bowling Green, in 1914 and 1915. In the first year appellees, Northern Assurance Company, Ltd., of London, England, New Hampshire Fire Insurance Company, Scottish Union & National Insurance Company, Citizens Insurance Company of Missouri, and Great Southern Fire Insurance Company, in five several policies for different sums insured the stock of goods of appellants against loss by fire. In February, 1915, and while said policies were in force the store house was damaged and a large part of its contents was destroyed and the remainder, more or less, damaged by fire. Each of the policies contained an arbitration clause, and shortly after the fire an arbitration agreement was duly executed between the insured and the aforesaid five companies, and arbitrators were selected, one by the insured, one by the companies jointly, and the two so selected agreed upon a third who, in case of disagreement, was to act as umpire. The arbitrators, after qualification, met on the premises and made the following award:

"We, the undersigned, in accordance with our appointment and the conditions hereinabove set forth, do hereby declare that we have estimated and appraised the sound value of the property herein described and the loss and damage thereto caused by said fire, and our award is as follows:

                    Total sound value................  $8,726.91
                    Total loss and damage............   7,526.91
                

"Witness our hands and seals at Bowling Green, Ky., this 27th day of April, 1915.

                                               "E. B. BASSETT
                                                E. BROWN
                                                SAM PUSHIN."
                

Immediately thereafter the insurance companies offered to pay Jones & Company the amount fixed by the board of arbitrators as the sound value of the stock, and take the salvage or remnant of the stock undestroyed as provided in the policies of insurance, but this was refused. Several weeks later the five actions styled above were commenced in the Warren circuit court by Jones & Company to recover on the policies, alleging that the stock was almost wholly destroyed by fire; that the actual cash value of the merchandise at the time of its destruction was $12,234.19, and that the companies had failed to comply with the conditions of the insurance contracts by paying the full face of the policies which amounted to $10,000.00. In the meantime, the salvage or damaged goods saved from the fire and valued by Jones & Co. at $750, and by the board of arbitrators at $1,200, was sold at auction for $1,900, R. E. Jones bidding $1,850 therefor. The nineteen hundred dollars was promptly paid over to Jones & Company.

The answers denied the entire stock was destroyed or was worth $12,234.19, or any sum in excess of $6,500, or that the actual total loss was in excess of $4,000, but admitted that the stock had been damaged by fire on February 7, 1915. By a second paragraph defendants averred that: "`That there was a disagreement between this defendant and plaintiffs as to the amount of the loss and damage and this defendant in good faith attempted to reach an agreement with plaintiffs as to the amount of the loss and damage sustained to said building. It states that there was a substantial difference between it and plaintiffs as to the amount of the loss, as this defendant was insisting that the loss and damage did not exceed the sum of $4,000, while plaintiffs contended that the amount of loss and damage exceeded $11,000, and defendant furnished to plaintiffs the facts and figures upon which it based its conclusion as to the amount of said loss, but that, notwithstanding these facts, this defendant and plaintiffs could not agree as to the amount to which defendant was indebted to plaintiffs under said policies. It states that thereafter, by reason of such disagreement, it demanded of plaintiffs that they agree to submit to appraisers the amount of loss and damage sustained to said insured property as required by the provisions of the policy above quoted. It states that thereupon the plaintiffs entered into an agreement with this defendant and the other companies which carried policies of fire insurance on this property, to-wit (naming the companies), whereby all the parties concerned agreed to submit to two competent and disinterested appraisers the question of the amount of loss and damage caused by said fire, and also of the question of the actual value of the insured property immediately before the fire, and said agreement provided that one of the appraisers should be selected by the plaintiffs, one by the defendant and other insurance companies mentioned, and that the appraisers so selected should first select a competent and disinterested umpire, to whom the appraisers should submit their differences in case they should fail to agree. . . . It states that pursuant to the terms of the policy and of the said agreement this defendant and the other insurance companies above mentioned, nominated and selected in good faith a competent and disinterested appraiser, one E. B. Bassett, and that thereupon plaintiffs nominated an appraiser of their choice and selection, one E. Brown, and the said appraisers so selected were agreeable to the parties, and the appraisers signed an affidavit as to their competency and qualifications." The defendant further pleading relied upon the award of the arbitrators as binding and conclusive upon the plaintiffs, Jones & Company, and as a bar to the prosecution of the five, or any actions.

By replies Jones & Co. denied that the defendant insurance companies, in good faith nominated or selected a competent or disinterested appraiser and charged that Bassett, who was selected by the company as an appraiser, was an interested, incompetent and disqualified person to act in such capacity, and that the companies and their representatives who made the nomination of Bassett did so with the fraudulent intent and purpose to obtain an advantage in the arbitration, and further that Bassett after his nomination and qualification acted in bad faith, and while so acting as an appraiser fraudulently estimated the salvage at too high a price and the sound value of the goods at too low a price and the depreciation of the stock at too great a per cent, and therefore the arbitration and award being obtained by fraud were invalid and without force or effect.

The pleadings being similar and the issues identical the five several actions were consolidated. A motion was then entered by defendants to transfer the consolidated action to the equity side of the docket for preparation. This was objected to by Jones & Company, but while the matter was pending the following agreement with respect to the transfer was made between the parties:

"Pending the decision upon said motion, it was, and is, agreed between plaintiffs and defendants that each and all of the above-styled causes shall be, and the same are hereby, transferred to the equity docket of the Warren circuit court, without either plaintiffs or defendants waiving their right, if any, to thereafter have any issues out of chancery tried by a jury."

The burden being upon Jones & Company they proceeded with the taking of depositions in support of their several contentions and when they were through in chief the companies took sundry depositions, whereupon Jones & Company took several depositions in rebuttal, and the evidence was closed. At this point Jones & Company moved for a transfer of the consolidated action to the common law docket for a trial of certain questions of fact. To this the companies...