Sanford v. Commercial Travelers' Mut. Acc. Ass'n of America

MARTIN, J. This action was to recover upon a policy or certificate of insurance issued by the defendant, and was not an action in which a compulsory reference could have been properly ordered, under the provisions of the Code of Civil Procedure. The order directing a reference was based solely upon a stipulation in the policy or certificate of membership which was as follows: “It is hereby stipulated and agreed by and between this association and the member named herein and his beneficiary that the issues in any action brought against it under this certificate shall, on the demand of this association or its attorney, be referred for trial to a referee to be appointed by the court in which such action is brought.” Thus the single question tó be determined is whether this provision is valid and binding upon the parties. It is well settled by a long line of both American and English authorities that a general covenant or agreement that any differences that may subsequently arise in the performance of a contract, or [513] under an executory agreement, shall be submitted to the decision of arbitrators or referees, will not oust a court of law or equity of jurisdiction, and that judicial powers in regard to the property and rights of parties cannot by such an agreement be conferred upon others, to the exclusion of the jurisdiction of the courts. Kill v. Hollister, 1 Wils. 129; Mitchell v. Harris, 2 Ves. Jr. 129; Thompson v. Charnock, 8 Term R. 139; Street v. Rigby, 6 Ves. 815; Scott v. Avery, 5 H. L. Cas. 811; Horton v. Sayer, 4 Hurl. & N. 643; Roper v. Lendon, 1 El. & El. 825; Cooke v. Cooke, L. R. 4 Eq. 77; Hope v. Society, 4 Ch. Div. 327; Gray v. Wilson, 4 Watts, 39; Stone v. Dennis, 3 Port. (Ala.) 231; Allegre v. Insurance Co., 6 Har. & J. 408; Randel v. Canal Co., 1 Har. (Del.) 234; Robinson v. Insurance Co., 17 Me. 131;. Cray v. Insurance Co., 1 Blatchf. 280, 288, Fed. Cas. No. 3,375; Percival v. Herbemont, 1 McMul. 59; Smith v. Railroad Co., 36 N. H. 487; Leonard v. House, 15 Ga. 473; Hill v. More, 40 Me. 515; Peters’ Adm’r v. Craig, 6 Dana, 307; Tobey v. County of Bristol, 3 Story, 800, Fed. Cas. No. 14,065; Rowe v. Williams, 97 Mass. 163; Haggart v. Morgan, 6 N. Y. Super. Ct. 198; Austin v. Searing, 16 N. Y. 112; Hurst v. Litchfield, 39 N. Y. 377; Delaware & H. Canal Co. v. Pennsylvania Coal Co., 50 N. Y. 258; Poultney v. Bachman, 10 Abb. N. C. 253; Wells v. Monihan, 129 N. Y. 161, 29 N. E. 232; Wicks v. Monihan, 130 N. Y. 232, 29 N. E. 139; Bauer v. Lodge, 102 Ind. 262, 1 N. E. 571; Supreme Council v. Garrigus, 104 Ind. 133, 3 N. E. 818; Insurance Co. v. Morse, 20 Wall. 445; Mentz v. Insurance Co., 79 Pa. St. 478; Wood v. Humphrey, 114 Mass. 185; Insurance Co. v. Etherton, 25 Neb. 505, 508; Reed v. Insurance Co., 138 Mass. 575; Assurance Co. v. Hocking, 115 Pa. St. 407, 8 Atl. 589; Leach v. Insurance Co., 58 N. H. 245; Noyes v. Marsh, 123 Mass. 286. It seems that a condition in a policy of insurance limiting the place where, or the courts in which, an action may be brought, is also invalid. 11 Am. & Eng. Enc. Law, p. 352; 5 Lawson, Rights, Rem. & Pr. § 2085; Bliss, Ins. § 360; Reichard v. Insurance Co., 31 Mo. 518; Nute v. Insurance Co., 6 Gray, 174; Hall v. Insurance Co., 6 Gray, 185; Amesbury v. Insurance Co., 6 Gray, 596, 603; Boynton v. Insurance Co., 4 Metc. (Mass.) 212; Insurance Co. v. Morse, 20 Wall. 445; Barron v. Burnside, 121 U. S. 186, 7 Sup. Ct. 931. In these cases the general proposition was maintained that agreements in advance to oust the courts of jurisdiction conferred by law was illegal and void; and it was held that while any such right might be waived, or its exercise omitted, in each recurring case after the question had arisen, yet a party could not bind himself in advance by an agreeement thus to forfeit his rights. In Greve v. Insurance Co., 81 Hun, 28, 30 N. Y. Supp. 668, a doctrine in conflict with the authorities cited seems to have been held. In that case the policy contained a provision that any suit or action for the enforcement of any claim under it should be brought and maintained only in the courts of Warren county; and the court held that that provision was not in contravention of public policy, but valid, and binding upon the parties. The decision in that case was based upon In re New York, L. E. & W. R. Co., 98 N. Y. 447, which, [514] the court held, conclusively disposed of the question. In the Railroad Case, the. owner of certain real estate, which the company desired to "acquire, entered into a contract to sell and convey the premises to the corporation for a price to be ascertained in proceedings to be instituted under the railroad act. The agreement named the commissioners who should be appointed, and it was held that it was valid. The principle of that case seems to us to be entirely distinct and essentially different from the principle applicable to a case where provisions like the one under consideration have been brought in question. In the Railroad Case there was a present contract to sell, and the parties simply made an agreement as to the manner of determining the price to be paid. Such an agreement was valid, within all the authorities. They might have agreed to have it determined by arbitration or by reference, and such an agreement would have been valid. The principle of the cases cited was entirely "inapplicable to such a question. In that case there was a present issue or question to be determined, and the parties agreed as to the manner in which it should be determined. That they clearly had the right to do. But in this case the provision in the policy was for the determination of such matters and differences as might in the future arise in the performance of this contract, and attempted in advance to designate the tribunal which should determine those rights when they should arise. We think the Railroad Case is clearly distinguishable from this. While we are not satisfied that the decision in the Q-reve Case is correct, yet, as the question in that case is unlike the one under consideration here, it is unnecessary to further discuss it, or to expressly dissent from the doctrine there laid down. We are of the opinion that the weight of authority is to the effect that such a provision as that contained in the policy in this case is a nullity, and in no way ousts or limits the jurisdiction of the court, or affects the law relating to the method in which such an action should be tried. That after the right of action had sprung into existence the defendant might have waived her right to a trial by jury, and consented to a reference, there can be no doubt. Code Civ. Proc. § 1009. But parties cannot, in advance, by a general agreement, provide that their differences shall be submitted to arbitrators or referees, and thus entirely oust the court of its jurisdiction; nor can they by such an agreement oust the court of any part of its jurisdiction, or supersede the law which provides the method of trial, and regulates the proceedings in an action. The plaintiff had a right to a trial by jury. The court, under the law, had control over the proceedings in the action. The agreement under consideration, so far as its effect would be to foreclose or change such right or control, was invalid. Order reversed, with $10 costs and disbursements, and motion denied, with $10 costs. All concur.