Western Assur. Co. of Toronto, Canada, v. Decker

• Decision Date: 27 November 1899
• Docket Number: 1,209.
• Citation: 98 F. 381
• Parties: WESTERN ASSUR. CO. OF TORONTO, CANADA, v. DECKER.
• Court: U.S. Court of Appeals — Eighth Circuit

98 F. 381

WESTERN ASSUR. CO. OF TORONTO, CANADA, v. DECKER.

No. 1,209.

United States Court of Appeals, Eighth Circuit.

November 27, 1899

W. W Morsman, for plaintiff in error.

J. H Broady, for defendant in error.

Before CALDWELL, SANBORN, and THAYER, Circuit Judges.

CALDWELL Circuit Judge.

This was an action on a policy of fire insurance which contained the following provisions:

'Said ascertainment or estimate (of loss) shall be made by the insured and this company, or, if they differ, then by appraisers, as hereinafter provided. 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 then together, shall estimate and appraise the loss, stating separately 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. The parties thereto shall pay the appraisers respectively selected by them, and shall bear equally the expenses of the appraisal and umpire. No suit or action on this policy for the recovery of any claim shall be sustained in any court of law or equity until after full compliance by the insured with all the foregoing requirements, nor unless commenced within 12 months next after the fire.'

A special verdict of the jury found that there was a loss under the policy, and that the company and the insured were unable to agree on the amount of the loss, and that they each, acting in good faith, selected an appraiser as provided for in the policy. These appraisers, each acting in good faith, were unable to agree upon an umpire and were likewise unable to agree upon the amount of the loss, and finally abandoned all effort to agree on either. After it was definitely ascertained that the appraisers had abandoned all effort to agree, and would no nothing further in the premises, the company did not appoint another appraiser, or request the insured to do so, and the insured brought this suit on the policy, and recovered judgment, and the company sued out this writ of error.

The contention of the company is that, when the arbitrators failed to agree, it was the duty of the insured to propose a new selection of arbitrators, and that, not having done so, and not having appointed an arbitrator the second time, he cannot maintain this action. The terms of the policy are satisfied when the insured, acting in good faith, appoints an appraiser. If the appraisement falls through by disagreement of the appraisers without any fault of the insured, he has discharged his covenant, and satisfied the requirements of the policy, and may then resort to the courts to have his damages assessed. 'If the appraisement failed without the fault of the insured, the failure would not be any impediment to their right of recovery if they could maintain their suit on other grounds. ' Insurance Co. v. Traub (Md) 35 A. 13, 16. And the supreme court of North Carolina, in Pretzfelder v. Insurance Co., 21 S.E. 301, say 'that, where the arbitrators, or a majority of them, failed to agree upon an award, the plaintiff (unless he is shown to have acted in bad faith in selecting his arbitrator) is not compelled to submit to another arbitration and another delay, but may forthwith bring his action in the courts. ' One of the fundamental and essential constitutional rights of the citizen is the right to appeal to a court of justice for a redress of his grievances. One of the chief ends of government is to secure this right to the citizen. While some of the courts hold that the citizen may, by contract, bargain away this right, the agreement to do so will not be extended by construction or implication. Even if a second appointment of arbitrators was required by the terms of the policy, there is nothing in the policy, as contended by the defendant in error, which imposes on the insured the obligation to be the first to propose another selection of arbitrators and appoint a second arbitrator. The terms of the policy relating to the appointment of appraisers are that the loss shall 'be ascertained by two competent and disinterested appraisers; the insured and this company each selecting one. ' There is not a line or a word in the policy making it the duty of the insured any more than of the company to demand an appraisement and appoint an appraiser. The policy in suit in the case of Kahnweiler v. Insurance Co., 14 C.C.A. 485, 67 F. 483, 32 U.S.App. 230, provided that, if the company and the assured were unable to agree upon the amount of the loss, 'the same shall then be submitted to competent and impartial arbitrators, one to be selected by each party. ' In that case, as in this, the company contended that it was the duty of the insured to take the initiative, and demand an arbitration, and appoint an arbitrator. That case was exhaustively argued by able counsel, and, after a full consideration of the adjudged cases, this court said:

'Each party is entitled to demand a reference, but neither can compel it, and neither has the right to insist that the other shall first demand it, and shall forfeit any right by not doing so. If the company demands it, and the insured refuses to arbitrate, his right of action is suspended until he consents to an arbitration; and if the insured demands an arbitration, and the company refuses to accede to the demand, the insured may maintain a suit on the policy, notwithstanding the language of the twelfth section of the policy; and, where neither party demands an arbitration, both parties thereby waive it. The clause is to be construed the same as if it read, 'Upon the request of either party.' These words, or their equivalent, are commonly found in similar clauses in policies of fire insurance, and they are necessarily and plainly implied in this policy.'

The judgment of the circuit court is affirmed.

SANBORN Circuit Judge (dissenting). The contract of appraisement in this case is not an agreement to arbitrate all the rights of the parties, but the simple provision, usual in policies of fire insurance, that any difference arising between the parties as to the amount of loss or damage to the property insured shall be submitted to the appraisal of competent and impartial persons, to be chosen as therein provided, whose award shall be conclusive as to the amount of loss or damage only, and shall not determine the question of the liability of the company; and that, until 60 days after such an appraisal is made and such an award is obtained, the loss shall not be payable, and no action upon it shall lie against the company. Such an agreement presents no question of ousting the jurisdiction of the courts. It simply provides a convenient and reasonable method of ascertaining the amount of loss or damage without expense to the government or resort to the courts. It is a valid, legal contract, and it makes the appraisal and award a condition precedent to the payment of any loss, and to the maintenance of any action. Hamilton v. Insurance Co., 136 U.S. 242, 255, 10 Sup.Ct. 945, 34 L.Ed. 419; Scott v. Avery, 5 H.L.Cas. 811, 823, 855; Gasser v. Sun Fire Office, 42 Minn. 315, 319, 44 N.W. 252; Levine v. Insurance Co. (Minn.) 68 N.W. 855, 860; Chippewa Lumber Co. V. Phoenix Ins. Co., 80 Mich. 116, 44 N.W. 1055; Zalesky v. Insurance Co., 102 Iowa, 613, 619, 71 N.W. 566, and cases there cited. There are two forms of this stipulation for appraisal,-- one in which it is provided that there shall be an appraisement 'upon the written request of either party,' and under this form, if neither party seasonably demands an appraisal, both parties waive it, and an action can be maintained without it; and another, which provides, as in the case at bar, that in every case of disagreement as to the amount of loss or damage an appraisement and award must be made before any liability matures and before any action can be maintained, and under this form of contract the appraisal and award is a condition precedent without any request from either party; the burden is on the insured to procure the award, and, until he either does so, or makes every reasonable endeavor to do so, nothing is due him under the policy, and he can maintain no action. This marked difference between policies in which the appraisal is to be made 'upon the written request of either party' and those in which it is agreed that the appraisal must be made before any insurance will become due and before any action can be maintained seems plain upon its face, and it is well sustained and illustrated by the adjudications. Thus, in Nurney v. Insurance Co., 63 Mich. 633, 30 N.W. 350, the appraisal was to be made 'upon the written request of either party,' and the supreme court of Michigan held that the request was optional with either party, and that, as neither party made it, an action could be maintained without an appraisal. But in Chippewa Lumber Co. v. Phoenix Ins. Co., 80 Mich. 116, 44...