Second Society of Universalists in Town of Boston v. Royal Ins. Co., Ltd.
| Decision Date | 28 June 1915 |
| Citation | 221 Mass. 518,109 N.E. 384 |
| Parties | SECOND SOCIETY OF UNIVERSALISTS IN TOWN OF BOSTON v. ROYAL INS. CO., Limited. |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
Appeal from Superior Court, Suffolk County; William Cushing Wait, Judge.
Action by Second Society of Universalists in the Town of Boston against the Royal Insurance Company, Limited. Demurrer sustained, and judgment for defendant, and plaintiff appeals. Demurrer overruled and judgment reversed.
Gleason & Higgins, of Boston, for appellant.
Warner Warner & Stackpole, of Boston, for appellee.
This is an action of contract upon a policy of fire insurance in the Massachusetts standard form. The material allegations of the declaration, after averring the issuance of the policy, a total loss by fire of the building insured, and the inability of the parties to agree upon the loss resulting from the fire, are that there was a reference of the amount of damage to arbitration as provided in the statute and an award by a majority of the referees only, and a refusal by the third to join in the award because of a belief that it did not contain all the loss suffered by the fire, and further that the award so made is invalid because the referees (1) failed to give to the plaintiff notice of hearings held by them, (2) declined to receive evidence as to the loss sustained by the plaintiff, (3) refused to take into account loss caused to plaintiff by the tearing down of a part of the walls of the building by the city of Boston at the expense of the plaintiff, but for the safety of the public, after the fire was under control but before it was extinguished, (4) would not consider loss sustained by plaintiff by being required at its own cost to tear down a part of the walls of the building, (5) refused to estimate as a part of its loss the increased cost of rebuilding due to the fact that under the building laws the plaintiff must rebuild a new structure to take the place of the one destroyed, of much more expensive materials, and (6) returned an award for a grossly inadequate sum.
The first of these allegations of invalidity is not sufficient to overturn the award. It is merely that no notice of hearings was given to the plaintiff by the referees, but not that no hearings were given as required by the terms of the reference, nor that the plaintiff did not in fact have notice of the hearings and was not heard. For aught that appears the plaintiff in truth may have known all about the hearings and been heard at length. This allegation does not go far enough to show that any substantial right of the plaintiff was affected. No intendment in this respect can be made in favor of the pleader. Bowker v. Torrey, 211 Mass. 282, 97 N.E. 770; Eldredge v. Mutual Life Ins. Co., 217 Mass. 444, 105 N.E. 361.
The next averment is that the referees refused to hear evidence as to the loss. The amount of loss was the only matter submitted to them. It was quite disconnected with general liability of the defendant to the plaintiff, and with all other questions. Rockwell v. Hamburg-Bremen Fire Ins. Co., 212 Mass. 318, 98 N.E. 1086. The reference was in writing. It was not in the brief words of the policy, but it expressly incorporated into its terms by reference Pub. St. c. 188, §§ 6 and 7 (now R. L. c. 194, §§ 6 and 7). That chapter is the general law authorizing reference to arbitration. Section 7 provides that arbitrators shall 'meet and hear the parties.' While it is not specifically stated in either of these sections that evidence must be received, it is implied by every fair intendment. The requirement in a general law touching arbitration that there must be a hearing, of necessity means listening to relevant evidence. All controversies which may be the subject of an action at law or a suit in equity may be submitted to arbitration under the statute. Pub. Sts. c. 188, § 1, now R. L. c. 194, § 1. In most instances it would be impossible in the nature of things for the arbitrators to decide the controversy with any degree of intelligence, except after a hearing where evidence was received. In no other way could a just decision reasonably be expected. This has been the universal practice under general arbitrations. Lincoln v. Taunton Copper Mfg. Co., 8 Cush. 415; Conrad v. Massasoit Ins. Co., 4 Allen, 20, 22; Peabody v. Rice, 113 Mass. 31, 34; Nay v. Boston & Worcester St. Ry., 192 Mass. 517, 521, 78 N.E. 547. By the reference to the procedure under the general law as to submissions to arbitration, the practice as to the kind of hearing there necessary was imported into the reference here under review. The parties might agree to a reference somewhat broader or more detailed in its scope than the policy demanded, and such an agreement is binding upon them. The requirement that the referees should 'meet and hear the parties' implies in this connection that relevant evidence if offered shall be received and considered. Warner v. Collins, 135 Mass. 26; Palmer v. Clark, 106 Mass. 373, 389. That there shall be a hearing does not mean that the referees must be bound by the strict rules of evidence. They may proceed by the summary methods implied in an arbitration. But they could not arbitrarily reject all material evidence under such a reference as the present. An award regularly made is not lightly to be set aside, even though there were informalities and irregularities. An award should stand----
'unless it plainly appears that the acts of alleged misconduct have prejudiced or may have prejudiced the party complaining, or have violated those well-settled rules which justice requires should be observed in order to secure the fair determination of the matters in dispute.' Farrell v. German-American Ins. Co., 175 Mass. 340, 347, 56 N.E. 572; Jones v. Boston Mill Corp., 6 Pick. 148; Smith v. Boston & Maine R. R., 16 Gray, 521.
But a refusal to hear parties when the submission requires a listening to evidence goes to the root of a reference like the present. See Hills v. Home Ins. Co., 129 Mass. 345. It is not necessary to determine the effect of St. 1910, c. 489, which makes it the duty of referees 'to meet within ten days after the appointment of the third referee to hear the evidence in the case,' nor to decide how far that statute affects Hanley v. AEtna Ins. Co., 215 Mass. 425, 102 N.E. 641, Ann.Cas. 1914D, 53, which arose under a policy to which it was not applicable. The terms of the reference in the case at bar made imperative the hearing of evidence and distinguish it from Hanley v. AEtna Ins. Co. Indeed, it is pointed out in the opinion in that case, 215 Mass. 430, 431, 102 N.E. 643, Ann.Cas. 1914D, 53, that, ordinarily, when the building insured is wholly destroyed (as it is alleged to have been in the case at bar) it would be the wise course for referees to receive evidence and 'to determine the amount of loss in the usual way in which civil cases are tried.'
The refusal of the referees to take into account as elements of loss the cost caused to the plaintiff by the tearing down of the walls of the building during the progress of the fire, at its expense, by public officers, and after the fire, by itself, at its own expense, and the increased cost of rebuilding due to the fact that under the building laws a new structure must be of more expensive materials, was right. The controlling allegation in this aspect of the case is that the building was a total loss. It is provided by St. 1907, c. 576, § 57, that:
'If buildings insured against loss by fire, and situated within this commonwealth, are totally destroyed by fire, the company shall not be liable beyond the actual value of the insured property at the time of the loss or damage.'
This statute was in force at the time when the policy here in question was issued. The standard form of insurance policy is set forth in the same statute. Therefore, it is obvious that the rule of damage in case of total loss established by the section just quoted is the one by which the parties to this action are bound. It is not alleged that the referees through prejudice refused to consider the existence of the building ordinance as bearing upon the actual value of the old building just before its destruction by fire, if it had any effect in this regard. Plainly, the elements of loss contended for had no relation to the actual value of the insured property. Considerations which might be germane to an inquiry as to the amount of damage resulting from a partial destruction of the building insured have no place where there is a total destruction by fire. Hewins v. London Assur. Corp., 184 Mass. 177, 68 N.E. 62.
The final averment is that the gross inadequacy of the award is a ground for setting it aside. This is supported by the further allegation that it arose from the fraud, bias and prejudice of the referees. But this is wholly general, without specification of facts. It is plain that general allegations of fraud, and likewise of bias and prejudice, without stating definite acts which constitute a fraud or bias and prejudice are not enough to require judicial inquiry. Nichols v. Rogers, 139 Mass. 146, 29 N.E. 377; Nye v. Storer, 168 Mass. 53-55, 46 N.E. 402; Garst v. Hall & Lyon Co., 179 Mass. 588-590, 61 N.E. 219, 55 L.R.A. 631; Wallingford v. Mutual Society, L. R. 5 Appeal Cas. 685, 697. Mere inadequacy of an award honestly made without mistake is no ground for setting it aside. The parties, having chosen their tribunal, are bound by its decision no matter what may be its infirmities of judgment. Boston Water Power Co. v. Gray, 6 Metc. 131; Rundell v. La Fleur, 6 Allen, 480. As there is no allegation of mistake, that may be laid out of the case. But the plaintiff is entitled to an honest award free from the...
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