Denton v. Farmers' Mutual Fire Insurance

Grant, C. J. (after stating the facts). The correctness of the instruction depends upon the construction to be given to the terms of the policy. Does the policy clothe the board of auditors with power to determine all questions of liability under the policies issued, or only to determine the amount of loss or damage sustained? If the former be held, as counsel for defendant contends, the case might then be governed by Raymond v. Insurance Co., 114 Mich. 386, and authorities there cited. If the latter be held, the arbitration clause was waived, under the well-established rule. 2 Beach, Ins. § 1244; 2 May, Ins. § 4966; 2 Bid. Ins. §§ 1174, 1175; Bailey v. Insurance Co., 77 Wis. 336; Western Horse & Cattle Ins. Co. v. Putnam, 20 Neb. 331. Without entering into an extended discussion, we are of the opinion that the sections of the charter above cited do not give to the board of auditors the power to pass upon questions of liability like that in this case, viz., that the plaintiff had intentionally fired his own building. The provisions contemplate a valid loss, and confer upon the auditors only the power to fix the amount. A policy of insurance, under the defenses set up in this case, cannot be valid in part and invalid in part, but there may or may not be any damage. A policy of insurance is usually either valid or void in toto. The term, “liability in-whole or in part,” must be held to refer to the loss or damage. These auditors have no other power than that conferred upon them by the charter. Courts will not read such a power into a charter, and, in the absence of clear and explicit language, will hold that it is not conferred. Sections 22 and 23 give them the authority to determine and decide the amount of the loss, and upon that alone is their decision final, if no arbitration is demanded. It is true that section 22 authorizes the auditors to investigate “the cause or origin” of the fire, .but this is only preliminary to determine whether they shall adjudicate the amount of loss. These officers are chosen by the charter to represent the company, and, when they absolutely deny liability, such action, waives [694] all provisions in regard to ascertaining the loss, and leaves the insured free to resort to the courts. We do not think that any prejudicial error was committed in the admission or rejection of testimony. Judgment is affirmed. The other Justices concurred.