Powers Dry Goods Co. v. Imperial Fire Ins.

The property for the loss of which a recovery is sought on the defendant’s policy of insurance consisted of a wholesale stock of dry goods, contained in two contiguous buildings in the city of St. Paul, one of which is distinguished as the “three-story building.” Two grounds of defense are to be considered. The first is that, as to the goods contained on the third floor of the three-story building, the plaintiff did not comply with the express terms of the policy, which required the insured, in case of loss, to “make a complete inventory of the same, stating the quantity and cost of each article, and the amount claimed thereon.” The second ground o^ defense is that the plaintiff did not comply with another provision of the policy, to the effect that, in case of disagreement of the parties as to the amount of the loss, the same should be ascertained by appraisers, one of whom should be selected by each of the contracting parties. The two appraisers so selected were to choose an umpire. In fact no such particular inventory as is specified in the policy was made of the goods on the third floor of the three-story building; but the plaintiff’s position in the ease is that it complied with this requirement of the policy as far as could be done, and that the extent and nature of the damage done by the fire in this apartment was such that an inventory of the goods could not be made. The court submitted it to the jury to determine whether the fact was in accordance with the contention of the plaintiff, instructing the jury, in effect, that the failure to make such an inventory would not preclude a recovery if, by the exercise of all reasonable effort and diligence, the plaintiff could not have complied with the express requirement of the policy. This instruction was not excepted to, and may be ae*387cepted without comment as the law of the case. The evidence upon this point was such that the issue was properly submitted to the jury. Not only was there direct evidence in support of the verdict, but there was evidence going to show that, after the defendant had demanded that a complete inventory be made in accordance with the requirement of the policy, it received without objection an inventory which declared on its face that it did not include the goods on the third floor of the three-story building, and stated the impossibility of making an inventory of such goods as the reason for the omission. The defendant’s agent, who acted in its behalf, was then personally acquainted with the condition of the goods, and the failure to object to the omission from the inventory might be considered by the jury as an assent to or admission of the fact stated in the inventory, — that those goods were damaged to such an extent that it was impossible to make an inventory of them.

In considering the second ground of defense above referred to, we shall assume, in accordance with the ruling at the trial, that the plaintiff would have no right to maintain this action if it had refused or neglected to comply with the provisions of the policy with respect to an appraisal or arbitration. In fact there was no such appraisal, but it is claimed on the part of the plaintiff that this was not by reason of its fault or neglect, but is to be attributed to the misconduct and bad faith of the defendant, and that the latter is hence precluded from putting forward as a defense the fact that there was no appraisal. There was evidence reasonably supporting this position of the plaintiff, and from which the jury might conclude that, after there came to be a disagreement as to the amount of the loss, and after the plaintiff demanded that an appraisal be speedily made, the defendant unreasonably delayed such action on its part as was necessary to that end, for the purpose of postponing an adjustment, and subjecting the plaintiff to such embarrassment and loss from the interruption of its business during the process of adjustment as to prompt it to a settlement of its claim upon terms which would not otherwise be accepted. And, further, there was evidence reasonably tending to show that after each of the parties had selected an appraiser, and after such appraisers had met to choose an umpire, the

*388defendant unduly influenced the conduct of bhe person whom it had selected in respect to the choosing of an umpire, and so opposed the free exercise of his judgment and discretion thaf he refused to accept for that position persons whom both the arbitrators deemed acceptable and fit to be chosen, and with the result that no umpire was agreed upon by them, and the arbitrator selected by the defendant declined to act further in the matter. The finding of the jury upon these matters cannot be set aside for want of evidence to support- it. Ilf the defendant did exercise such bad faith and misconduct in respect to proceedings for an appraisal by arbitrators, its defense that the plaintiff refused to enter upon another attempt to secure an appraisal cannot be allowed.' One of the reasons for the insertion of provisions of this kind in policies of insurance is to provide a means for the speedy settlement and adjustment of the loss; and, as such a provision can only be carried into effect by the concurrent action of both parties, neither can rightfully refuse to act with reasonable promptness, when the other demands that such action be taken. .Neither can rightfully postpone his concurrent action for the purpose of forcing the other to a settlement. If one in bad faith prevents or postpones unreasonably the carrying into effect of this stipulated method of adjusting the rights of the parties, by refusing to participate where his participation is necessary, he ought not to be heard to plead, in defense of an action to recover upon the contract, that the stipulated mode of adjustment has not been pursued. Uhrig v. Williamsburgh Fire Ins. Co., 101 N. Y. 362, (4 N. E. Rep. 745.)

■ The plaintiff had made an offer to compromise its claim, and to accept a specified sum if the offer should be accepted within a specified time; but the evidence tended to show that during that time, and while the proposal was still pending, it also urged the defendant to action in the matter of the arbitration, which, as it seems, might be expected to require for its completion a longer time than had been allowed for the acceptance of the offer to compromise. The pendency of negotiations' for a compromise did not excuse the defendant from compliance with the plaintiff’s demand, previously made, but still insisted upon, that the arbitration proceedings go forward. The plaintiff had the right to require the observance of the contract provision for *389an arbitration, and it could annex to its offer of compromise, either •when it was made, or, subsequently, before its acceptance, the condition that the arbitration proceedings should not be thereby delayed. The offer to compromise and the demand for an arbitration were not inconsistent. It may be conceded that defendant might state to the arbitrator whom it had appointed any specific fact showing the unfitness of any person whose selection as an umpire might be contemplated; for instance, that such person was a member, of the plaintiff corporation. But it had no right to assert its mere will, preference, or disapproval, to control the choice, in which, by the terms and spirit of the contract, neither of the parties was to have a voice. The agreement contemplated that the two arbitrators alone should select the umpire in the exercise of their judgment and discretion, uncontrolled by the interested parties. It was of the very essence of the agreement that the latter should not choose or reject, or assert their preference or objections. If the defendant, by expressing to the arbitrator whom it had chosen its disapproval of the selection of particular persons, — as, by saying that such persons would not act impartially, — led him to defer to its will, or so influenced him that by reason of such interference he did not agree with his fellow arbitrator in the selection of an umpire when otherwise he would have done so, the failure of the proposed arbitration is attributable to the fault of the defendant, and the plaintiff had the right to pursue its legal remedy by action. That would be such a violation of the agreement in its spirit as would absolve the other party from the obligation either to go on with the arbitration proceedings commenced or to enter anew upon other like proceedings. Uhrig v. Williamsburgh Fire Ins. Co,, supra. The fact that the plaintiff took part in arbitration proceedings subsequent to any acts of bad faith on the part of the defendant did not constitute a waiver unless the plaintiff had knowledge of such acts.

What has been already said is in part applicable to errors assigned in respect to qualifications of several instructions requested by the defendant. These requested instructions, which were quite voluminous, were to the effect that the plaintiff could not maintain the action if certain specified conditions should be found by the jury, among *390which was the pendency of negotiations for a settlement subsequent to the making of a demand by the plaintiff for an appraisal. The court, in giving these instructions, added to the condition or premise above referred to the proviso that the defendant was acting in good faith in respect to such negotiations for a settlement. We think that there was no error in this, and that the nature of the issue justified the action of the court in that regard. The adjusting agents of many other insurance companies, which had insured the same property, were present to adjust the loss. Many of them agreed upon the appointment of a committee, consisting of several of such, adjusters, to act in their common interest. Brown, the defendant’s adjuster, did not consent to commit the interests of his company to the committee, but indicated that he would co-operate with the committee; and, as the evidence goes to show, he did act with them to a considerable extent in the subsequent negotiations and transactions with the plaintiff. Several assignments of error relate to the admitting of evidence of the declarations or conduct of. the members of this committee when,- as there was evidence to show, Brown was present. The rulings of the court were not erroneous. While the committee may not have represented the defendant, yet the relations of the agent of the latter with the committee were such, his action so far in concert with theirs, that, in view of the fact that all were acting with respect to the same subject and to the same end, — the adjustment of the loss, —it was properly for the jury to consider whether what was said and ■done by the members of the committee in his presence was not to be deemed to have been concurred in by him, in the absence of any expression of dissent. Without referring specifically to some other assignments of error, relating to the admissibility of evidence, we will ■only say that we find in them no substantial error.

Order affirmed.

(Opinion published 51 N. W. Rep. 123.)