Sullivan v. Liberty Mut. Fire Ins. Co.
| Citation | 174 Conn. 229,384 A.2d 384 |
| Court | Supreme Court of Connecticut |
| Decision Date | 07 February 1978 |
| Parties | Philip SULLIVAN et al. v. LIBERTY MUTUAL FIRE INSURANCE COMPANY. |
David M. Reilly, Jr., New Haven, for appellants (plaintiffs).
Mark R. Kravitz, with whom, on the brief, was William J. Doyle, New Haven, for appellee (defendant).
Before HOUSE, C. J., and LOISELLE, BOGDANSKI, LONGO and SPEZIALE, JJ.
The plaintiffs have appealed from a judgment denying their application for the appointment of a disinterested umpire for the purpose of determining a fire loss to property owned by the plaintiffs and insured by the defendant insurance company. The court found the following undisputed facts: On March 22, 1976, the plaintiffs' house, located on Ward Street, New Haven, was damaged by fire. On April 15, 1976, the plaintiffs submitted sworn proofs of loss to the defendant and the defendant denied liability for the loss. In accordance with the terms of the defendant's insurance policy, which incorporated the provisions of § 38-98 of the General Statutes, 1 the plaintiffs made demand for an appraisal of the fire loss. Each party named an appraiser. The appraisers were unable to agree upon an umpire within the fifteen days required by § 38-98 because they were unable to agree upon the meaning of "actual cash value." The plaintiffs' appraiser contended that actual cash value is "replacement cost, less depreciation," while the defendant's appraiser claimed that "fair market value" at the time of the loss is the proper measure of actual cash value. Due to the disagreement the plaintiffs made an application to a judge of the Superior Court to appoint a disinterested umpire under the provisions of § 38-98 and under the terms of the fire insurance policy.
The trial court, after hearing, denied the plaintiffs' application, concluding that the proper test to be applied in determining actual cash value, which is not defined in the statute or in the insurance policy, is one of law for a court and not one of fact for the appraisers or even an umpire. Otherwise, the court reasoned, if the parties were compelled to proceed with an appraisal without having actual cash value defined there would be a possibility of error by the appraisers which could impede the expeditious settlement of the claim. The parties stipulated 2 that the sole issue to be determined by the trial court was whether the plaintiffs were entitled to the appointment of an umpire.
The plaintiffs contend that under the terms of the contract of insurance and under the provisions of § 38-98 they are entitled to the appointment of an umpire as a matter of statutory right enforceable after due hearing. On the other hand, the defendant argues, as decided by the trial court, that unless the statutory and contractual meaning of actual cash value is first defined by a court, the appraisers would be required to make a legal judgment, which they are neither authorized nor competent to make. We agree with the plaintiffs' claim.
The defendant correctly asserts that the scope of the appraisers' powers and duties is limited by the terms of the policy, the statutory provisions of § 38-98, and by judicial precedent, solely to a determination of the amount of the actual cash value of the fire loss. It is well settled that this determination is ordinarily a question of fact which appraisers and umpires can decide upon their own experience and judgment, without taking evidence or hearing argument. See Buck v. Morris Park, Inc., 153 Conn. 290, 293, 216 A.2d 187, appeal dismissed, 385 U.S. 2, 87 S.Ct. 33, 17 L.Ed.2d 2; 45 C.J.S. Insurance § 1123. It is also well recognized that in determining the amount of a fire loss, there are three tests in general use by courts and appraisers to determine "actual cash value": (1) Where property is of such nature that its market value can be readily determined, market value has frequently been applied as the test or criterion of "actual cash value" of the property at the time of loss; (2) "actual cash value" may be replacement or reproduction cost of the property lost, which is generally regarded as merely a limitation on the insurer's liability and not as a substantive measure of damages which the insured can invoke; and (3) under...
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