Home Insurance v. M. Schiffs' Sons

Schmucker, J., delivered the opinion of the Court. The appellees in this case sued the appellant in assumpsit, in the Superior Court of Baltimore City, to recover the loss by fire on certain merchandise and chattels covered by one of its policies of insurance. The appellant, as defendant below, filed the general issue pleas and also set up, by an appropriate special plea, that the amount of loss upon the insured property had been determined by an arbitration and award conducted in accordance with the terms of the policy and that, its liability was limited to the amount of the award. The appellees, as plaintiffs, joined issue on the general issue pleas and replied to the special plea that appraisers and an umpire had been appointed pursuant to the provisions of the policy to determine the amount of the loss, but that, without default on the plaintiffs’ part, there had been no appraisal or award thereof in conformity with the provisions of the policy.

The trial of the case resulted in a verdict and judgment for the plaintiffs for a larger sum than that found by the alleged award to be due. From that judgment the defendant took this appeal. No question of pleading, strictly speaking, is presented by the record. The happening' of a loss by damage to the insured property within the terms of the policy is conceded and only the extent of the loss is in controversy.

The contention of the appellant is that the award set up by its plea and produced in evidence conforms on its face to the terms of the submission and is therefore conclusive of the amount of the loss, and that no extrinsic evidence of the extent of the loss or of other matters dehors the award is admissible to defeat it in the present action at law, but that it is impeachable, if at all, only in a separate suit in equity brought for that purpose. The appellees on the contrary insist that the award does not on its face conform to the submission, and that the question of its conformity in fact and. in substance to the submission was one for the jury to whom the appellees-were entitled ⁶⁵¹ to have submitted under proper instructions from the Court the evidence in the record which was admitted at the trial below tending to impeach the award, and also the evidence tending to show that the loss was greater than that found by the award. There is no allegation in the pleadings of fraud on the part of either of the appraisers or the umpire. The testimony, to which the defendant objected, tending to impeach the award, or to show a loss greater than it gave to the plaintiffs, was allowed to go in subject to exception, and tñe question of its admissibility was raised by two motions to strike it out, made at the close of the evidence.

The only exceptions in the record are to the Court’s refusal to grant those motions and to its rulings on the prayers. It appears from the record that the policy on which the suit was brought covered the appellant’s “stock of piece goods, ready-made clothing and tailor’s triumings” to the extent of $1,500 and “paper patterns” to the extent of $500. It was in the New York Standard form and contained the following provision: “In the event of a disagreement as to the amount of loss, the same shall, as above provided, be ascertained by two competent and disinterested appraisers, the insured and the company each selecting one, and the two so chosen shall first select a competent and disinterested umpire; the appraisers tdgether 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; the parties thereto shall pay the appraiser respectively selected by them, and shall bear equally the expense of the appraisal and umpire.” The goods, etc., of the appellants were covered by other policies of insurance some of whith included also the store furniture and fixtures. The fire causing the. loss occurred on November 15th, 1904, and the assured and the underwriters, being unable to agree as to the extent of the loss, provided for its ascertainment by ⁶⁵² appraisal under an agreement of which the following are the material portions: “Appraisal Agreement, “It is hereby agreed by M. Schiff’s Sons of the first part, and the Home Insurance Company, of New York, N. Y., and other insurance companies signing this agreement, each acting for itself and each a party of the second part, they having failed to agree as to the amont of loss and damage by fire, which occurred 15th day of November, 1904, sustained by the parties of the first part herein named, to the property described in the policies of insurance issued to said parties of the first part by the parties of the second part, that John S. Dingle and Charles A. Cooley (together with a third person to be first appointed by them as required by said policies of insurance, who shall act as umpire on matters of difference only), shall appraise and estimate the actual cash value of, and the loss and damage by fire to, the property described in said policies as follows: “On stock of ready-made clothing, piece goods and tailor’s trimmings and “On store furniture and fixtures, contained on the first and second floors and in cellar of the four-story brick building, situate No. 121 North Eutaw street, and on first floor of building No. 123, adjoining and communicating, Baltimore, Md. Building is otherwise occupied for the manufacture of ladies cloaks and suits.

On patterns.’’ The appraisers Dingle and Cooley duly qualified by taking the oath usual in such cases and selected as umpire Henry W. Straus who qualified in the same way. The appraisers and umpire then went together to the insured’s premises on December 5th, 1904, and spent three or four hours in an effort to make the appraisement. They separated about four o’clock in the afternoon without coming to a complete agreement, Dingle going to his home and Cooley and Straus going to the office of the latter where they made the following award in the absence of Dingle: ‘ ‘Appraisers Award. “Having, carefully estimated and appraised the valúe of, and the loss and damage by fire to, the property described in the foregoing agreement, and in accordance with the terms and ⁶⁵³ conditions of the policies of insurance therein referred to, we hereby certify the actual cash value of said property to be ($8,435.33) eight thousand four hundred thirty-five 33-100 dollars, and the loss and damage thereon to be ($2,025), two thousand and twenty-five dollars, divided as follows: On stock..................................................................... 1,568 On furniture and fix..................................................... 25 On patterns.............................................................. 100 On clothing of others.................................................. 332 Witness our signatures hereto this fifth day of December, 1904, at Baltimore. Sound value as follows : Stock.........................................................................$7,070 33 Furniture and fixtures............................................. 225 00 Patterns..................................................................... 500 00 Clothing of others.................................... 415 00 Charles A. Cooley, Appraisers.

Henry W. Straus, Umpire.” The plaintiffs offered the testimony of a number of witnesses, which went in subject to exception, tending to prove that both the sound value of the insured property and the loss thereon by 'the fire were greatly in excess of the amounts stated in the award. John S. Dingle, the appraiser, who had been nominated by the plaintiffs, testified on their behalf, subject to exception, touching the conduct and transactions of the appraisers and umpire in making the appraisal and award. His evidence, although not very positive or consistent, tended to prove that the two appraisers and the umpire went together to the plaintiff’s premises where the insured goods were and examined the stock located on the second floor, consisting of clothing wholly or partly completed, tailor’s trimmings and patterns, and came to a practical agreement as to the loss on all of it except the patterns. That they made no thorough or proper examination of the woolen piece goods which were located on the first floor, but they made ineffectual efforts to arbitrarily agree upon the amount of the loss on them before they separated.

That he, Dingle, not having intended to abandon the effort to reach an agreement went to the premises the next morning expecting the appraise ⁶⁵⁴ ment to be continued but found no one except the watchman there and that later in thé day he was informed by Straus of the making of the award on the previous evening. That he refused to sign the award, although on cross-examination he admitted that if his estimate on the loss of the woolen piece goods had been acquiesced in by Cooley and Straus he would have signed it. Cooley, the other appraiser, and Straus, the umpire, both testified on behalf of the defendant insurance company. Their testimony substantially agreed with that of Dingle, as to the transactions of the three at the attempted appraisement on December 5th, 1904, except that it strongly tended to prove that a thorough and complete examination of the woolen piece goods had been made on that occasion and that a final agreement was then and there arrived at as to the loss upon all of the articles covered by the defendant’s policy except the woolen piece goods and the patterns.

It further tended to prove that the amount of loss on the woolen piece goods and patterns was fixed by Straus as umpire after Dingle and Cooley had disagreed on it and' that the award was based upon and was intended to present both the loss agreed upon by the appraisers on all articles except the woolen piece goods and patterns and the loss fixed by the umpire on those two items. At the close of the evidence the plaintiffs offered five ■ prayers, of which the Court granted the fifth and rejected the others. The defendant also offered five prayers, of which the Court granted the fourth with certain modifications and rejected the others. We will now consider the propriety of the Court’s action on the prayers and the motions to strike out the evidence which had been admitted subject to exception.

The substantial controversy in the case being over the amount of the loss we are met at the threshold of our inquiry by the question of the efficacy of the award which the defendant set up as a conclusive ascertainment' of the extent of its liability. This question was raised below by the defendant’s second prayer, which asked the Court to assert that the award was final and conclusive upon the parties because it conformed ⁶⁵⁵ on its face to the submission of November 30th, 1904, and the Court passed upon the question by rejecting the prayer. In order to ascertain whether the award on its face conforms to the submission it is essential to first ascertain what those instruments in fact say. The submission mentioned in the prayer is the appraisal agreement of November 30th, 1904, but, as that agreement provides that the appraisal shall be made according to “the terms and provisions of the policy;” the true terms of the submission must be gathered from the agreement of November 30th and the appraisal clause of the policy taken together.

The appraisal clause of the policy stipulates that in the event of a disagreement between the parties as to the amount of a loss it shall be ascertained by two appraisers one to be chosen by each party, the two to first select a third person, who is there designated an “umpire.” The appraisers are then together to estimate and appraise the loss, stating separately the sound value and damage, and failing to agree are to submit their differences to the umpire. Then follows the provision that the written award of any two shall be final. The power to any two to make the award would, under the circumstances, almost certainly be exercised by one of the appraisers jointly with the so-called umpire who, in order to enable him to properly discharge his duty, would be compelled to consider and pass upon the entire controversy; for it cannot be supposed that, he was intended to co-operate in rendering an award of matters of some of which he was ignorant. The third person to be chosen by the two appraisers under that clause of the policy must have been intended, if the appraisers failed to agree, to act in conjunction with them and not to take the case out of their hands as an umpire would do and arrive at his conclusions alone.

Such a person so chosen is in legal contemplation and effect a third arbitrator and not an umpire, even though he be designated an “umpire” in the submission. Morse on Arbitration and Award, p. 242; 3 Cyc., 655; Mullins v. Arnold, 4 Sneed, 262. In