Stout v. Phoenix Assue Co. of London

• Decision Date: 08 January 1904
• Parties: STOUT v. PHOENIX ASSUE CO. OF LONDON.
• Court: New Jersey Court of Chancery

56 A. 691

65 N.J.E. 566

STOUT

v. PHOENIX ASSUE CO. OF LONDON.

Court of Chancery of New Jersey.

Jan. 8, 1904.

Bill by James Stout against the Phcenix Assurance Company of London to set aside an appraisement. Decree for complainant.

Martin Wyckoff, for complainant.

William H. Morrow, for defendant.

REED, V. C. The dwelling house of complainant was insured against fire in the Phcenix Assurance Company of London for the sum of $1,800, and the household goods and furniture therein for the sum of $250, under a policy written on March 18, 1898. The house and furniture were burned on December 29, 1901, and an action was brought against the company to recover the full amount of the insurance. The company, among other defenses, set up in that action an appraisement of the loss or damages by the burning of the house, amounting to $1,718 for the house, and $143 for household goods and furniture. This bill was then filed to set aside the appraisement upon several grounds, among which was the allegation that the company had fraudulently imposed an interested appraiser upon the complainant. Kiernan v. Dutchess Co. Mutual Ins. Co., 150 N. Y. 190, 44 N. E. 698. At the trial of this suit it was not proven that the appraiser selected by the company was interested, but the attack upon the appraisement was confined to the objections that, the loss being total, the provision for an appraisement did not apply, and misconduct of the appraisers in agreeing upon the amounts of the loss, and that no notice to the parties was given of the time and place of making the appraisement, and no testimony was taken by the appraisers, and that therefore their award cannot be supported as the award of arbitrators.

The policy is in the standard form fixed by our Legislature. It contains this provision: "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 the 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." It is insisted that this clause provides for an appraisement, merely, and that an appraisement must be made from view alone. It is therefore argued that, inasmuch as there was no property remaining to view—the loss being total—no appraisement could be made, and so the award signed by the appraisers is a nullity. In support of the argument that there can be no appraisement for nonvisible damages, the case of Warne v. Oberly, 50 N. J. Law, 108, 11 Atl. 146, is cited. The Supreme Court in that case was dealing with a certificate of damages done by trespassing swine. The certificate was made under the provisions of an old act providing for an appraisement. The decision can be of no importance unless it is first concluded that the appraisers to be appointed under the terms of this policy are confined within as narrow limits as the statutory appraisers who were held to be viewers only. In my judgment, their function was not so restricted. This appraisement clause is contained in the standard form of policy prescribed in this state, as well as in New York, Pennsylvania, and seven other states. In many other states the clause is also in general use. The clause provides for an ascertainment of the loss or damages in a manner which makes the proceedings sui generis. It is not a simple appraisement, nor is it an ordinary common-law arbitration. Where property is damaged and not entirely destroyed, and there is enough in sight to base a judgment as to the deterioration caused by the fire, a judgment based upon view alone may be sufficient. Where the property is entirely destroyed, and there is nothing in view to show what was destroyed, information must be obtained in some other way than from mere view. This information may be obtained in a variety of ways. It may be possessed by the previous knowledge of the property by the appraisers themselves, or it may be afforded by the description of the property contained in the proofs of loss. The form of the clause seems to be broad enough to include an appraisement for all loss, for its language is that, in the event of disagreement as to the amount of Joss (clearly all the loss), the same shall be ascertained by two competent and disinterested appraisers.

I am aware that there are cases which seem to hold that this language does not empower the appraisers to estimate the loss arising by reason of the total consumption of property. The case of Rosenwald v. Phoenix Ins. Co., 50 Hun, 172, 3 N. Y. Supp. 215, arose under the old form of policy, and the court put its conclusion that the clause in that policy did not intend the appraisement of property entirely destroyed upon the words, "The amount of sound value and all damage to the property shall * * * be submitted to competent and impartial arbitrators." It was said that the submission of the "amount of sound value and all damage" necessarily contemplated that the sound article is in existence, but has been damaged, and that the arbitrators should decide as to the extent of the damage, and that it was quite clear that the provision could have no possible relation to a thing which bad no existence—absolute destruction being distinguished from loss. The view of the court in that case was afterwards applied to the words in the standard policy in the case of Lang v. Eagle Fire Ins. Co., 12 App. Div. 30-43, 42 N. Y. Supp. 539; the words being, as already stated, that the appraisers shall estimate and appraise the losses, stating separately "sound value and damage." The ground upon which this conclusion was reached does not seem to me to be sound. I can perceive no reason why the sound value of an article which has been destroyed cannot be determined—perhaps not so readily, but yet determined—as well as the sound value of an article partially destroyed. The estimate of the loss in the one case would be the entire sound value of the property, and in the other the difference between the value of the property after the fire and its sound value at the time of the fire. In one instance the estimate might be made from view alone, and in the other it might be necessary to acquire extrinsic information. Nor has the view of the New York court in the two mentioned cases received the approbation of other courts. The provision for appraisement in the policy under consideration in Adams v. New York Bowery Fire Ins. Co., 85 Iowa, 6-11, 51 N. W. 1149, was substantially the same as the clause in our standard policy; and it was held in that case that a submission which provided for an appraisal and estimate of the loss and damage of only that part of the property which had been saved in a damaged condition, thereby excluding from...