Shawnee Fire Insurance v. Pontfield

Thomas, J., delivered the opinion of the Court. Morris Pontfield received from the Shawnee Fire Insurance Company of Topeka, Kansas, on the fourth of December, 1906, a policy of insurance, insuring him against loss or damage by fire on certain merchandise and fixtures in the building No. 712 South Broadway, Baltimore City, to the amount of $1,500.00. The policy contained the following provisions: “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 each select a competent and disinterested umpire; the appraisers together shall then 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 expense 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 assured with all the foregoing requirements, nor unless commenced within twelve months next after the fire.” On the third of September, 1907, while this policy was in force, the property mentioned therein was consumed or dam ³⁵⁸ aged by fire. Proper notice and proofs of loss to the amount of ,$1,272.95 were duly .furnished by the insured.

He and. the insurance companies interested, including 1he appellant,, being unable to agree as to the amount of the loss, pursuant to the above provisions of the policy, entered into’an agree-, ment submitting the matter to appraisers. The insured sef lected William Waldorf and the insurance companies selected Samuel Pattison, and they were required by the terms of the agreement to appoint a competent' and disinterested umpire, to whom they were to submit “matters of difference only.” On the 11th of January, 1908, no umpire having been appointed by the appraisers, and no appraisement having been made, the appellee brought suit on the policy to recover $258.03, the amount of loss for which he claimed the appellant was liable. The appellant¿ in addition to the general issue plea,'set up in a special plea the provisions of the policy referred to and the agreement submitting the .matter of the amount of loss to appraisers, and averred that it “did and performed all that was required and could be done by and in behalf of the defendant to procure and perfect such submission, award and determination. * * * and at the time of the commencement of this suit the award was not ready to be delivered and no award had been obtained, but the said arbitration was then pending and undetermined — whereof the said plaintiff-'had notice,” etc. ' ’ • ■ The appellee joined issue on the- first plea, and replied to the second plea — first, that the appraisement was abandoned by the appellant before suit; second, that the failure to appraise was not caused hy the fault of the appellée ;■ and,’ third, that the aiapraisers failed to select an umpire and the appraisement was abandoned before suit without-fault on" the part of the appellee. To these replications the appellant filed the-following rejoinders, on which issue was joined by the appellee: 1. “That the said appraisement was not abándoned by' the defendant prior to the suit.” 2. “That the failure to appraise said loss was caused by the fault of the plaintiff.” 3. “That’ the ap ³⁵⁹ praiser appointed by the defendant in this suit never refused to select an umpire, but, on the contrary, endeavored by all means in his power to arrive at an agreement with his co-appraiser to select an umpire mutually ag’reeable to both, and that at the time this suit was instituted he was waiting further advisement from his co-appraiser who had been appointed by the plaintiff in this case, and that so far as the defendant and his appraiser are concerned they had no intimation that there was any intention to abandon the appraisement, and that the abandonment of the same was entirely the fault of the plaintiff.” The only questions presented by the record relate to the right of' the appellee, under the provisions of the policy referred to, to maintain the suit.

The second exception was to the refusal of the Oourt below to grant the following prayers of the defendant: 1. The defendant prays the Oourt to instruct the jury that from the evidence in this case there has not been such a compliance with the terms and conditions of the policy, of insurance, which was issued to the plaintiff by the defendant, and under which the suit against the defendant was instituted, as to entitle him to any recovery against the defendant under the pleadings, and their .verdict must be for the defendant. 2. The defendant prays the Oourt to instruct the jury that there is no evidence in this case showing that the arbitration and appraisement of the loss by fire suffered by the plaintiff had at the time of the institution of this suit been either abandoned or waived by the defendant; but that, as shown by the undisputed evidence in this case, the said arbitration was pending at the time the said suit was' so instituted, and had not been determined or concluded, and that therefore the plaintiff is not entitled to recover under the pleadings in this suit, and their verdict must be for the defendant. 3. The defendant prays the Oourt to instruct the jury that from the undisputed evidence in this case, the appraisement of the loss by fire suffered by the plaintiff was submitted by him and the defendant to arbitration, in accordance with the ³⁶⁰ terms and provisions of the policy of insurance issued by the defendant to the plaintiff, and that at the time of the institution of this suit the same was pending and had not been abandoned by the defendant, and that, therefore, the plaintiff is estopped from maintaining this suit, and their verdict must be for the defendant.

It is the duty of both parties to a contract of insurance which provides, in case the insured and insurer cannot agree as to the amount of loss, for the submission of the question of loss to arbitration, to act in good faith and to make a fair effort to carry out such provision and accomplish its object, and it has been accordingly held in a number of cases where the failure to secure an award after submission to arbitration is due to the fault of the insured the absence of an award is a bar to an action on the policy, but where it is due to the fault of the insurance company or its appraiser the insured may bring suit on his policy without an award. These cases are collected in an extensive note to Bernhard v. Rochester German Ins. Co., 79 Conn. 388 , reported in 8 Am. & Eng. Annotated Cases on pp. 302-304, and some of them are there cited as going to the extent of holding that where the arbitration fails because of the fault of the appraiser appointed by the insured suit cannot be maintained; but since the cases of Caledonian Ins.

Co. v. Traub, 83 Md. 533 ; Conn. Fire Ins. Co. v. Cohen, 97 Md. 294 , and Home Life Ins. Co. v. Schiff’s Sons, 103 Md. 648 , the established rule in this State-is that unless the insured is responsible for the failure of the appraisement he is entitled to recover on his policy.

The reason of the rule is both obvious and sound. The right of the insured to bring the suit is not derived from the agreement to submit to appraisement. His policy is the source of his title, and if he in good faith complies with its terms and is in no way chargeable with the failure of the appraisers to malm the appraisement, his right to maintain the action is complete. The primary obligation of the insurer is to pay the loss, and it is the right of the insured to enforce that obligation.

The agreement to submit to appraisement only provides ³⁶¹ a means of ascertaining the loss. If that means fails without his fault, the rights of the insured under his policy are not by reason thereof forfeited. If such a result is contemplated by the parties to a contract, they should be required to so stipulate in clear and positive terms. All that the law exacts is a compliance with the terms of the contract.

It is the duty of the insured to select a competent and disinterested appraiser. If he does so in good faith, the person so selected is in no sense his agent. On the contrary, he is required to abstain from any interference with the appraisement. He cannot be held responsible for the conduct of one whom he is forbidden to influence and with whom he- has not interfered in the discharge of his trust.

If, on the other hand, no award is obtained by reason of the fault of the appraiser selected by the insurer, the insured has a right to sue, not because the appraiser so in fault is the agent of the insurer, but because the means provided by the contract of ascertaining the loss failed without any fault on the part of the insured. There may, of course, be circumstances under which it would be the duty of the parties to select new appraisers, but, so far as the appellee is concerned, no such question is presented in this case. There is not a suggestion in the record that the appellee did not act in good faith in the selection of an appraiser, nor is there any evidence to show that either the appellee or his adjuster did anything to prevent an appraisement, unless, as contended by the appellant, it was prevented by the bringing of the suit. If, therefore, there was any evidence in the. case tending to show that before the suit was brought the submission to appraisement had failed, the prayers of the defendant were properly refused.

These prayers present the proposition, and learned counsel for the appellant contend, that suit cannot be brought, after submission to appraisement, until the appraisement is either abandoned or waived by the defendant. We cannot give our assent to this proposition. As we have said, the right of the appellee to bring the suit was not based upon the agreement to submit the question of loss to apprais ³⁶² ers, and if, af-ter he, in good faith, complied with the terms of his policy, the appraisers failed, without any fault on his part, to agree upon an umpire, after having had a fair and reasonable opportunity to do so, he had the right to sue. To hold otherwise would enable the insurer to postpone indefinitely the recovery by the insured of the benefits of .his policy. ' J. George Baetjer, appellee’s adjuster, states that the agreement appointing appraisers was executed about the first of November, 19 07; that about the middle or latter part of December he learned from Waldorf, the appraiser selected by the insured, that Pattison, the appraiser selected by the appellant, had left the city in bad health and had gone to Florida, and that they had not agreed upon an umpire, and that he then went to see Mr. Bond, appellant’s adjuster, and told him what he had learned and that he didn’t know when Pattison would return, and asked him to appoint some one in his place and that he refused to do it, and on the 11th of January he brought suit on the policy; that sometime after suit was brought Waldorf handed him a letter from Pattison, dated the 16th- of January, in regard to the appointment of an umpire, and that he took the letter to Mr. Bond and told him that suit had been entered but that he was willing to go on with the appraisal again provided he would agree that