Western Assurance Co. v. Hall & Brother

SHARPE, J. This is an action upon a fire insurance policy issued by appellant to the appellee, and is in this court upon a second appeal. The main controversy arises out of the clause therein providing for arbitration of differences as to loss. After remandment of the cause, there remained in the record besides the general issue — 554 — .which is numbered 1, the-special pleas numbered respectively 2, 3, 4 and 5; the sixth having been withdrawn. Plea number 2 sets out’ the clause in question, and avers in substance that differences arose as to the loss", that defendant requested that an appraisement be had as provided by the policy and that plaintiffs refused to have the loss so ascertained, wherefore the action was not maintainable. Plea number 3 avers a further stipulation in the policy to the effect that the loss should not be payable until sixty days after, its ascertainment by such appraisement, and that though the appraisement was required by defendant no award as to the loss had been made or furnished to defendant. Plea No. 4 avers a further provision of the policy to effect, that no suit thereon should be maintainable until .after compliance with such provision for appraisement, and that plaintiffs refused, after demand, to have the loss so ascertained. Plea No. 5 sets up substantially that after appraisers had been selected and .had begun to act, plaintiffs induced the one selected by them to refuse to act, and refused inspection of the damaged property to the other appraiser and the umpire ; so disabling them to appraise .the loss. The demurrers were again interposed to . these pleas and overruled. Plaintiffs replied generally and filed ten replications to each of the special pleas, designating them by letters from a to j consecutively, and demurrers were sustained to all excepting e, g, h, i and j, as to each of which demurrers were overruled. Rejoinders, general and special, were filed, upon which the plaintiffs sur.rejoined. The sufficiency of the pleas is not a question before us ; the assignments of error being upon the rulings upon demurrers to replications and upon subsequent proceedings. The replications t'o which the- assignments of error relate each set up in avoidance of the pleas, fault and misconduct on the part of appellant respecting the matter of -arbitration. As the application of the proof to the general issues formed thereon must determine the result of this appeal, it is well to notice them — 555 — particularly. Replication e, after setting out the stipulation in question, avers that the “said defendant wholly failed and refused to comply with its obligation contained in said stipulation in said policy.” Replication g avers that upon appellee’s demand for such arbitration “said defendant failed and refused to select a competent and disinterésted appraiser as by said policy provided.” The substance of replications h and i is the selection by appellant of a partial and interested appraiser to act in the arbitration ; and replication j sets up an attempted arbitration wherein appellant selected an interested appraiser, which fact of interest was unknown to plaintiffs, and a refusal to act with him on the part of the appraiser selected by appellee after learning of such interest. By the opinion rendered upon the former appeal to which we now adhere, the stipulation in question was held valid and binding upon the parties.—Western Assur. Co. v. Hall & Bro., 112 Ala. 318. The provision for arbitration is collateral to the contract for insurance; and if¡it|¡fails of [accomplishment without fault of parties, they are relegated to their legal rights independent thereof.—Pretzfelder & Co. v. Ins. Co., 116 N. C. 491; Brady v. Ins. Co., 115 N. C. 354; Ins. Co. v. Holking, 115 Pa. 416. After disagreement as to the loss and a request by either party for arbitration, both parties were under the duty to act in good faith to have the loss ascertained as provided by the policy; and if either in bad faith prevented such ascertainment by refusing to proceed, or by insisting on the selection of improper arbitrators, or by undue interference with them after their selection, the other party is thereby absolved from further obligation to arbitrate.—Caledonian Ins. Co. v. Traub, 35 Atl. Rep. (Md.) 13; Uhrig v. Williamsburg City Fire Ins. Co., 101 N. Y. 362; Aetna Fire Ins. Co. v. Stevens, 48 Ill. 31; Joyce on Ins., § 3252; May on Ins., 496 D; Biddle on Ins., § 1172. If such fault be attributable to the insured, it is a defense to the action on the policy, but if to the insurer, the lack of an award is not available to defeat a recovery. Tested by these principles the replications in question were each sufficient, and the demurrers thereto were properly overruled. — 556 — Appellees’ rights coiild not be defeated by the act of appellant in wholly refusing to comply with the obligation as averred in replication e ; nor is that averment open to the objection of generality since the fact of wholly refusing is issuable and is the vital part of the averment. By the terms of the policy appellees were not bound to submit to an appraisement by interested or otherwise incompetent persons, since they do not fulfill the requirements of the policy.—Biddle on Ins., § 1172; Joyce on Ins., § 3242; Aetna Fire Ins. Co. v. Stevens, supra. On the trial it was shown by the proof that the fire occurred on January 31st, 1894, resulting in damage to part and the total loss of another part of the property insured. Plaintiffs and Adams, the company’s adjuster, disagreed as to the loss, and on February 21st, 1894, entered into an agreement whereby La Coste was selected by appellant and White was selected'by appellees to ascertain the loss as provided by the policy. These appraisers selected Myers as umpire, and proceeded on the next day to examine the property and estimate the damage. After working ah hour or two they disagreed, and White thereafter refused to act further. On the following day La Coste and Myers came to the factory containing the property and demanded admittance, which was refused by the plaintiffs. Plaintiffs notified Adams of White’s refusal to act and the correspondence appearing in the record was had, and from that it appears that on March 16th Adams demanded of plaintiffs that they have White meet La Coste and Myers on the next day to proceed with the appraisement, to which plaintiffs replied on the same day to • the effect that White refused to act with La Coste' and Myers, and that they were unable to coerce his presence and also objecting to La Coste and Myers serving as appraisers on the ground that their views were known, and that La Coste was not disinterested, and that he and Myers had been employed and paid by the insurance company, and proposing to submit the matter “to any two gentlemen of the country who have no interest in the case.’’ On April 22, 1894, Adams wrote plaintiffs demanding that the appraisers and umpire or any two off them be allowed admittance — 557 — to the factory and to make the award. To this plaintiffs replied on May 3, 1894, by letter, stating again White’s refusal, and objecting to La Coste and Myers proceeding alone, professing willingness to arbitrate under the terms of the policy, and proposing the selection of new arbitrators and expressing belief that the company would not object to “our proposition to select any two reputable citizens of Huntsville or Madison county.” The ]oss under the policy was $566.80. There having been no award, the evidence as to loss was properly admitted under the issues tried. Ordinarily the question of the breach of the arbitration clause is for the jury. The evidence here, however, is without conflict, and the question of its effect is raised by the assignments of error upon the giving of the general affirmative charge for the plaintiffs, and refusal of a similar charge asked by defendant. Such effect must be judged- of in view of the issues formed by the pleadings. It will be noticed that the 3d plea stops short of averring any act or conduct on the part of appellee operating to prevent the arbitration ; merely averring in that respect that no award had been received by or furnished to appellant. Under a familiar rule, the defendant succeeds if any plea interposed to the whole complaint is established by the proof, unless matter be replied and proven in avoidance. While such matter is here replied to plea S, the replications are unsupported by proof. It appears therefrom as an undisputed fact that appellant did not wholly refuse to arbitrate, but on the contrary that by agreement of both parties an ai'bitration was actually entered upon and continued until White refused to act further. Neither is there any proof of interest, partiality or other incompetency on the part of La Coste. Mere recitals contained in letters written by the appellees are not proof of such facts. In such state of the pleading and proof the appellant was entitled to a verdict, and there was error in refusing the charge so affirming asked by appellant, as well as in giving the opposite charge for the plaintiffs. Charges 2 and 3 given at request of appellees were likewise erroneous in the principles asserted. Neither the failure to admit liability nor the deinand for arbitration is equivalent to a — 558 — denial of liability which, as is generally held, amounts to a waiver of arbitration, for the reason that in case of such denial the disputeis not about the amount of loss. Biddle on Ins., § 1175 ; May on Ins., 496; Bailey v. Ins. Co., 77 Wis. 386; Phoenix Ins. Co. v. Badger, 53 Wis. 283. Surrejoinder b was but a repetition of what had been averred in replication g, and the motion to ‘strike it out should have been granted.—Hightower v. Ogletree, 110 Ala. 94. For the errors mentioned the cause must be reversed and remanded. If upon another trial the parties see proper to employ the same prolixity of pleading that appears in this record, it will be well for them to note that the statement attempting to assign generally the several surrejoinders to rejoinders is so vague that no effect can be accorded to it. Also that the several statements assigning replications to pleas by general reference thereto, is uncertain in that it mentions the “replication” to plea two in the singular, whereas there are ten replications to plea two. We have treated the case as if the replications remaining after demurrer were assigned separately to the pleas separately for the reason that they appear to have been so treated by the parties in the circuit court and in this court; but the result of the appeal is not affected by such construction. Reversed and remanded.