Schwier v. Atlas Assur. Co.

• Decision Date: 08 May 1924
• Docket Number: No. 114.,114.
• Parties: SCHWIER v. ATLAS ASSUR. CO.
• Court: Michigan Supreme Court

227 Mich. 104

198 N.W. 719

SCHWIER

v.ATLAS ASSUR. CO.

No. 114.

Supreme Court of Michigan.

May 8, 1924.

Error to Circuit Court, Wayne County; Majory L. Dunham, Circuit Judge.

Action by Henry F. Schwier against the Atlas Assurance Company. Judgment for plaintiff, and defendant brings error. Reversed, and new trial granted.

Argued before CLARK, C. J., and McDONALD, BIRD, SHARPE, MOORE, STEERE, FELLOWS, and WIEST, JJ.

Bird, Moore, and Wiest, JJ., dissenting.

Max J. Kozlow, of Detroit, for appellant.

Arnold F. Zeleznik, of Detroit, for appellee.

BIRD, J.

On the 10th day of March, 1922, defendant, for a consideration, insured plaintiff against loss by fire and theft on his five-passenger sedan, in the sum of $2,300. At a later date the amount of the policy was reduced to $2,000. On April 30, 1922, his car was stolen, and claim was made by plaintiff for the full amount of the policy. The amount of the loss was discussed by the parties, and defendant offered $1,350 in settlement of the claim. Plaintiff refused to accept this sum. This was followed by a demand by defendant for an appraisal by arbitration, in accordance with the terms of the policy. Plaintiff refused to join in this on the advice of his attorney, because the loss was a total one, and later commenced this suit. After the suit had been pending for a time, plaintiff receded form his position and advised defendant he was ready to join in an arbitration, and appointed and tendered an arbitrator. By this time defendant was in a different mood, and it refused to join in the arbitration because plaintiff had theretofore refused to do so, and had commenced this suit. After defendant's refusal, plaintiff went forward with his suit, and the principal defense made was that plaintiff had refused arbitration, which, when demanded, was a condition precedent to bringing suit. The trial court submitted to the jury the question whether defendant had waived its right to insist upon an appraisal by arbitration, and they found on that issue with plaintiff, and judgment passed for him. Defendant is now in this court insisting on the same defense that it made in the circuit court.

1. The following provisions of the policy are material to the controversy:

‘ Appraisal. In case the assured and this company shall fail to agree as to the amount of loss or damage, each shall, on the written demand of either, select a competent and disinterested appraiser. The appraisers shall first select a competent and disinterested umpire; and failing for fiteen (15) days to agree upon such umpire then, on request of the assured or this company, such umpire shall be selected by a judge of a court of record in the county and state in which the property insured was located at time of loss. The appraisers shall then appraise the loss and damage stating separately sound value and loss or damage to each item; and failing to agree, shall submit their differences only to the umpire. An award in writing, so itemized, of any two when filed with this company shall determine the amount of sound value and loss or damage. Each appraiser shall be paid by the party selecting him and the expenses of appraisal and umpire shall be paid by the parties equally.’

‘ Suit Against Company. No suit or action on this policy for the recovery of any claim hereunder shall be sustainable in any court of law or equity unless the assured shall have fully complied with all the foregoing requirements.’

When the parties were unable to agree on the value of the automobile, and defendant demanded an appraisal, and appointed and tendered an arbitrator, it was the duty of plaintiff, under the foregoing provisions, to appoint an arbitrator and join in the arbitration. When plaintiff refused to do this, he waived any right he had to demand an arbitration. Schrepfer v. Insurance Co., 77 Minn. 291, 79 N. W. 1005. Later, when plaintiff indicated to defendant that he was ready to join in the arbitration, and appointed and tendered an arbitrator, and defendant refused to join, it also waived its right to demand and have arbitration. Up to the time when defendant refused to join, it had an absolute defense to plaintiff's suit. Had the suit come to trial before defendant refused to join, plaintiff's suit would have been abated. But when defendant refused to join, this defense was broken down, and plaintiff was entitled to proceed with his case because both had waived the right to demand arbitration. The mere fact that plaintiff had resorted to a remedy which could not be maintained did not furnish a valid excuse for defendant's refusal to join in the arbitration when tendered by plaintiff.

It was said in Schrepfer v. Insurance Co., supra, that--

‘A waiver of the right to an appraisal by either party to the contract releases the other from all obligation to enter into an appraisal. Doubtless the refusal of the plaintiff to enter into an arbitration on demand of the defendant amounted to a waiver on her part of the right of an appraisal, so that thereafter she would have no right to insist on defendant's submitting to an appraisal. On the other hand, the subsequent refusal of the defendant to enter into an arbitration when plaintiff offered to do so amounted to a waiver on its part of the right to an appraisal, so that, as the trial judge remarks, both parties stand, so far as the present question is concerned, precisely as if no provision for arbitration had been in the policy.’

The only distinction there is between the facts of this case and the case of Schrepfer v. Insurance Co., supra, is that in the case cited plaintiff's first suit was dismissed before defendant refused to join in the arbitration, as would have been the fate of this suit had it gone to trial sooner.

It is suggested that plaintiff had no cause of action when he commenced his suit. This is an error. He had a cause of action and two remedies, by suit at law and by arbitration. If defendant did not plead arbitration, that defense would be waived, and plaintiff would go to judgment. On the other hand, if defendant did plead arbitration, the suit would abate. The defense of arbitration was one that could be waived by the parties, and, if not pleaded, it would be waived. There is a tendency to confuse a ‘cause of action’ with the ‘remedy.’ If A. sued B. on a promissory note which had run more than six years without payment, it could not be said that A. had no cause of action. A. would have a cause of action, but it would abate if B. should choose to plead the statute. If he did not plead the statute, A. would go to judgment. If it were true, as contended, that A. had no cause of action, then we would have a concrete instance of A. getting a judgment when he had no cause of action.

So, in the present case, plaintiff had a cause of action and two remedies, one of which...