Dufresne v. Marine Insurance

Holt, J. Plaintiff’s automobile was insured by defendant against theft. It was stolen. The policy provided for an appraisal of the loss by three disinterested persons, one to be named by the assured, one by [392] the assurer, and the two to name a third. This was done. The appraisers met and determined plaintiff’s loss to he $600. Plaintiff was not informed of the meeting and was not present or represented thereat. He sued, asking that the award be set aside upon the ground, among others, that he had had no opportunity to present his case to the appraisers, and also that he recover the actual loss sustained. The amount of the loss was submitted to a jury. Their verdict was $1,200, the amount for which the car was insured. The court made findings, setting aside the award and directing judgment to be entered in favor of plaintiff for $1,200, the loss as fixed by the jury. Defendant appeals from the judgment. The main controversy centers around the validity of the appraisal. Defendant contends that the appraisers selected were experts who could decide the amount of the loss without notice to the parties or. a hearing, and, even if not so, that the plaintiff waived notice and a hearing before the appraisers. Admittedly he was not present. He lived in St. Cloud; the appraisers in Minneapolis. The law appears to be well settled that in appraisals under the provisions of insurance policies the parties are entitled to be heard and to an opportunity to present evidence. Schreiber v. German Am. Hail Ins. Co. 43 Minn. 367, 45 N. W. 708; Mosness v. German-Am. Ins. Co. 50 Minn. 341, 52 N. W. 932; Janney, Semple & Co. v. Goehringer, 52 Minn. 428, 54 N. W. 481, approving the rule stated in R. O. Wood & Co. v. Helme, 14 R. I. 325; Schoenich v. American Ins. Co. 109 Minn. 388, 124 N. W. 5; Am. Central Ins. Co. v. District Court, 125 Minn. 374, 147 N. W. 242, 52 L. R. A. (N. S.) 496; Carlston v. St. Paul F. & M. Ins. Co. 37 Mont. 118, 94 Pac. 756, 127 Am. St. 715; and Aetna Ins. Co. v. Jester, 37 Okla. 413, 132 Pac. 130, as reported and annotated in 47 L. R. A. (N. S.) 1191. In McQuaid Market House Co. v. Home Ins. Co. 147 Minn. 254, 180 N. W. 97, it was said that an appraisement under a policy such as this “takes the form of the common law arbitration, and the procedure of inquiry and investigation, together with the award and its contents, are governed by the general rules of law upon that subject.” And certainly, under common law rules relating to arbitration, the parties are entitled to notice and an opportunity to be heard, as is [393] also indicated in the opinion just quoted from. See also 2 R. C. L. 379 and Morse, Arbitration & Award, p. 117. Defendant does not dispute this general rule, but contends this case falls within an exception, namely, where persons are so clearly selected as appraisers because of the expert knowledge and skill possessed by them concerning the subject of the appraisal that it is apparent that the parties intended to rely entirely upon their personal knowledge, in-vestitgation and judgment. In Continental Ins. Co. v. Garrett, 60 C. C. A. 395, 125 Fed. 589, the rule is thus stated: “If the character of the matter submitted and the arbitrators chosen is such as to justify an inference that the appraisers were selected to act as experts, and adjudge the matter from their own knowledge, it is not essential that notice shall be given or evidence heard unless the submission so provides.” Morse, Arbitration & Award, p. 143. But since the universal idea of a proper determination of a controverted matter between man and man rests upon a fair hearing of both sides, it would seem to follow that an arbitration without such hearing should not be upheld, unless it satisfactorily is made to appear either that a hearing was not contemplated or else that it was waived. The court expressly found that plaintiff did not waive notice of the hearing, and that he expected and intended to be present and give evidence, but was prevented from attending and presenting his evidence because of lack of notice and knowledge of the meeting of the appraisers. The finding is sustained, we think., The claim cannot be successfully maintained that this is a case where no hearing was contemplated either because of the character of the subject to be appraised or because of the expert qualifications of the appraisers selected. Two of the appraisers had never seen the automobile. It could not be produced. They could therefore act only upon information obtained from others. And naturally, in such a case, the owner who has sustained the loss should have an opportunity to adduce evidence as to the value and qualities of the article. There is nothing in the appraisal clause of the policy indicating the selection of experts or negativing a hearing of the parties. Some of the cases cited by defendant do not at all support the contention that a hearing was unnecessary in the instant case. In Vin [394] cent v. German Ins. Co. 120 Iowa, 272, 94 N. W. 458, plaintiff was asked by one of tbe arbitrators to attend, but refused. This, of course, was a waiver of formal notice. In Hall v. Norwalk Fire Ins. Co. 57 Conn. 105, 17 Atl. 356, tbe arbitrators were selected because of their expert knowledge, and, moreover, it was found that plaintiff accompanied them during examination and investigation of tbe building, partially destroyed, and gave information concerning it. Tbe same situation' appeared in Liverpool and London and Globe Ins. Co. v. Goehring, 99 Pa. St. 13. Tbe architect for tbe construction of tbe building was selected to settle a dispute concerning extra and omitted work between tbe owner and contractor in Wiberly v. Matthews, 91 N. Y. 648, 15 N. E. 438, and in good reason it was contemplated that be should determine tbe matter upon bis own judgment and without a bearing. Tbe same is equally clear in Cobb. v. Dolphin Mnfg. Co. 108 N. Y. 463. Tbe case of Home Ins. Co. v. Walter (Tex. Civ. App.) 230 S. W. 723, supports defendant, but we are not willing to follow that decision. Tbe technical objection is made that sworn proof of loss bad not been presented, and tbis was a condition precedent to suit by tbe terms of tbe policy. Full proof of loss was furnished. It was signed by plaintiff, but not verified, as required by tbe policy. It was accepted and retained by defendant without objection. Thereby verification was waived. Both parties relied on its sufficiency; tbe appraisers were selected, and an appraisal was bad. Tbis waived any defect in tbe proof of loss. Jacobs v. St. Paul F. & M. Ins. Co. 86 Iowa, 145, 53 N. W. 101. No question is made of tbe theft of tbe car or its loss. Defendant has at all times insisted on tbe validity of tbe award as made. Neither prior to suit nor since has there been a request for a new appraisal by it. In that situation when tbe appraisal was set aside, a recovery for tbe loss was proper without regard to whether or not tbe conditions subsequent to loss bad been complied with by tbe insured. Defendant has taken tbe precise course taken by tbe insurer in Levine v. Lancashire Ins. Co. 66 Minn. 138, 68 N. W. 855, where it was said [at page 149]: That tbe insurer’s conduct after tbe insured rejected tbe award “clearly constituted a waiver of tbe right to a new appraisement. Not only [395] did it never ask for or even suggest a new appraisement, but in its communications with plaintiffs it expressly insisted on the award already made, and notified them that any claim under the policy must be on that basis and no other. It took the same position in its answer.” So did defendant here. The insistence upon a binding award for a loss necessarily admits that all which is to be performed by the other party up to such award has been fully performed. That must include proper proof of loss. See also Christianson v. Norwich Union Fire Ins. Soc. 84 Minn. 526, 88 N. W. 16, 87 Am. St. 379; Produce Refrigerating Co. v. Norwich Union Fire Ins. Soc. 91 Minn. 210, 97 N. W. 875, 98 N. W. 100. The complaint having alleged an invalid appraisal, and the answer insisting on its validity, there was no departure by the reply alleging a waiver of a sworn proof of loss, pleaded in the answer as a condition precedent to suit. The verdict is assailed as' excessive. There was evidence that the car was worth more than the sum fixed by the jury, also much less. In that situation it was solely for the jury to settle the amount. When the policy was issued the defendant had information as to the model of the car, the factory price, and the price paid by plaintiff. This was incorporated in the policy as a warranty. There is no claim that it was false. Defendant saw fit to insure the car for $1,200 and accept a premium upon that basis of value. The “blue book” was no doubt as available to defendant then as after loss to ascertain the second hand values of automobiles. The jury cannot be severely censured for adopting the value upon which the premium was accepted. There is nothing in the record to indicate that the price of automobiles at St. Cloud is materially different from that at Minneapolis, hence no reversible error in the charge in respect to the place of valuation of the loss. The above considerations dispose of the merits of the appeal, and must result in an affirmance. It is therefore not necessary to discuss other assignments of error. ■ Judgment affirmed.