Summary
In Strome v. London Assurance Corporation (20 App. Div. 571; affd., 162 N.Y. 627) the court's declaration was: "The appraisement and estimate under the New York standard policy of fire insurance is not the same proceeding as an arbitration and award at common law or under the Code. * * *" Appraisers are not bound to the strict judicial investigation of an arbitration.
Summary of this case from Matter of American Insurance Co.Opinion
October Term, 1897.
Willard Parker Butler, for the appellant.
William M. Benedict, for the respondent.
This action was brought with a two-fold object: (1) To set aside an award or estimate made under the New York standard policy of fire insurance as to the amount of loss suffered by the plaintiff under such a policy issued to him by the defendant corporation; and (2) to recover the sum of $430.56 which the plaintiff alleged to be his actual damage by reason of a fire against which the policy insured him. The plaintiff was successful in both aspects of the case. The trial court set aside the award or estimate of $100 on the ground of its gross and palpable inadequacy, and also because of the misconduct of the umpire, and gave the plaintiff a money judgment for the full amount which he claimed. Upon the present appeal the defendant insists that such an estimate or award cannot be set aside for mere inadequacy; that, even if it could be vacated for that reason, the learned trial judge received evidence on this branch of the case which was inadmissible, and that misconduct cannot be predicated upon the acts of the umpire of which the plaintiff complains.
The insured property which was destroyed by fire consisted chiefly of furniture, carpets, household goods and clothing. Being unable to agree upon the amount of the loss the parties appointed appraisers, Mr. Alfred L. Beatty being selected by the plaintiff, and Mr. Adolph Friedman by the defendant. The former estimated the plaintiff's total loss at $440.22, while the latter made it only about $80. In view of this disagreement the appraisers then chose Mr. Joseph Wechsler to act as umpire under the provisions of the policy. Mr. Wechsler, with Mr. Friedman, the defendant's appraiser, thereupon determined the amount of the loss to be $100, the plaintiff's appraiser, Mr. Beatty, declining to sign the award.
The appraisement and estimate under the New York standard policy of fire insurance is not the same proceeding as an arbitration and award at common law or under the Code. ( Fleming v. Phœnix Assurance Co., 75 Hun, 530; Enright v. Montauk Ins. Co., 15 N.Y. Supp. 893.) Hence the decisions in cases of arbitration and award are not always applicable to the solution of questions arising under a fire insurance appraisement. But even in arbitrations, strictly speaking, the courts do not exercise the power of annulling the determination simply because the amount awarded seems to be inadequate ( Masury v. Whiton, 111 N.Y. 679); and we are of the opinion that no more stringent rule should be applied to insurance appraisements, which are proceedings of a far less formal character. ( De Groot v. Fulton Fire Ins. Co., 4 Robt. 504.) We do not say that an estimate by the appraisers and umpire under an insurance policy might not be so small as to indicate partiality or corruption, when viewed in connection with other circumstances in the case; but, except as tending to establish misconduct, we think that inadequacy, pure and simple, cannot be considered as a ground for setting aside such an appraisement.
If, therefore, the judgment below had no other basis it would lack sufficient support in the decision; and even if mere inadequacy would suffice to avoid the award, the admission of evidence as to what the corporation offered to pay by way of compromise was error which would demand a reversal were there no separate and independent question of misconduct in the case. ( Smith v. Satterlee, 130 N.Y. 677.) But there is such a question, which seems to be wholly separable from the other, and which appears to have been correctly decided in favor of the plaintiff.
We think the evidence may be regarded as establishing an utter refusal and neglect on the part of the umpire properly to perform his duties, and that his neglect and refusal amounted to misconduct in a legal sense, and require the court to withhold its sanction from an award made under such circumstances.
For the obligations undertaken by the appraisers and the umpire we must look to the language of the policy. It provides that, in the event of a disagreement as to the amount of loss, the same shall be ascertained by two competent and disinterested appraisers, the insured and the insurance company each selecting one, "and the two so chosen shall first 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 precise manner in which the appraisers were to proceed was not prescribed by the terms of the policy. As was said in De Groot v. Fulton Fire Ins. Co. ( supra), they "were at liberty to arrive at a conclusion in regard to the value of the articles they were called upon to estimate in such way as they thought proper; they were not bound to the strict judicial investigation of an arbitration." As to the umpire, however, the requirement of the policy that the appraisers in the event of their disagreement should submit their differences to him, carried with it the clearest implication of duty on his part to examine and consider the appraisement of each in arriving at his own determination. But if the evidence in behalf of the plaintiff be true (and the trial court evidently believed it), Mr. Wechsler declined and omitted to do this. The umpire appears to have acted in a hasty and most perfunctory manner in performing his functions under the policy. He went to the plaintiff's residence where the damaged goods were with the defendant's appraiser, Mr. Friedman, and was there half an hour before the plaintiff's appraiser, Mr. Beatty, arrived. He refused to go over the goods with Mr. Beatty, saying that he had already gone over them with Mr. Friedman. He would not even look at Mr. Beatty's list of the articles and the values put upon them. He said he did not have time and he scarcely listened to anything that Mr. Beatty said. Such was the account of Mr. Wechsler's conduct given by Mr. Beatty, and although Mr. Friedman described it differently, the trial judge was authorized to accept the statement of the plaintiff's appraiser. His testimony indicates quite clearly that the umpire reached a determination in favor of the defendant after hearing the defendant's side of the case only, and practically refusing to hear the appraiser for the plaintiff. A decision made in this manner cannot be allowed by a court of equity to stand.
In the opinion at Special Term reference is made to the fact that the umpire was not sworn, but the formal decision does not mention this as one of the grounds upon which the judgment was rendered, nor does the respondent's counsel in his brief cite any authority in support of the objection. It need not be passed upon, in view of our conclusion that the judgment can be and should be sustained by reason of the umpire's refusal and neglect properly to discharge his duties, irrespective of any other point discussed upon the trial or on this appeal.
All concurred.
Judgment affirmed, with costs.