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RULE 76. Meaning of misconduct by appraisers. 77. Duty of parties when award objected to on ground
of fraud or misconduct. 78. Award void for uncertainty. 79. Award not limited by two-thirds clause in policy. 80. Not necessary to return or tender money received
under a void award before suit in equity. 81. Recovery of interest when award set aside. 82. Remedy of insured when award claimed to be void. 83. Remedy when distinction between common-law and
equity practice prevails — Burden of proof — No
cause of action on award itself. 84. Competency of evidence of appraiser. 85. Remedy of insurance companies in equity to enforce
award. 86. Insured may obtain relief from effect of limitation
clause by cross-bill in same suit. 87. Waiver of appraisal. 88. Insured may by notice create evidence of waiver. 89. Denial of liability as waiver. 90. Denial of liability when coupled with demand for
appraisal. 91. Omission or refusal to join in appraisal does not estop
company from insisting on competent evidence
Ex parte appraisal. 92. No waiver when demanded in proper time. 93. When policy provides for written request. 94. Failure to demand as evidence of waiver. 95. Appraisal may be made evidence of waiver. 96. No waiver by appraisal under standard form — Effect
of other acts in connection Waiver of options or
time — Appraisal agreement.
Appraisal as Imposed by Contract.
In the event of disagreement as to the amount of loss the same shall be ascertained by two competent and disinterested appraisers, the insured and the 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 parties thereto shall pay the appraiser respectively selected by them and shall bear equally the expense of the appraisal and umpire.
This rule is imposed by above terms in the standard form of policy prescribed in: New York,
Rhode Island. New Jersey, The standard form of policy prescribed in Michigan provides as above except the clause “shall be prima facie evidence of the amount of such loss ” is substituted for shall determine the amount of such loss."
In Wisconsin the provision reads as follows:
“In the event of disagreement in the amount of loss the same shall, as above provided, be ascertained by two competent and disinterested appraisers, who shall be residents of this State unless otherwise agreed by the parties hereto; the insured and this company each selecting one, within thirty-five days after the mailing of proof of loss to said company, as herein stated, and in case either party fails to select an appraiser within such time the other appraiser and the umpire selected. as herein provided, may act as a board of appraisers and whatever award they shall find shall be as binding as though the two appraisers had been chosen ; and the two so chosen shall first select a competent and disinterested umpire, provided that
* See note to “Duty to Save and Preserve Property,” Rule 1, if after five days the two appraisers cannot agree on such an umpire, the presiding judge of the Circuit Court of the cou ty wherein the loss occurs may appoint such an umpire, upon application of either party in writing by giving five days' notice thereof in writing to the other party. Unless within thirty days after proof of loss has been mailed to the company, either party, the assured or the company, shall have notified the other in writing that such party demands an appraisal, such right of an appraisal shall be waived; 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 parties thereto shall pay the appraiser respectively selected by them and shall bear equally the expenses of the appraisal and umpire.” In Maine,
Massachusetts, the provision reads as follows:
“In case of loss under this policy and a failure of the parties to agree as to the amount of loss, it is mutually agreed that the amount of such loss shall be referred to three disinterested men, the company and the insured each choosing one out of three persons to be named by the other, and the third being selected by the two so chosen; the award in writing by a majority of the referees shall be conclusive and final upon the parties as to the amount of loss or damage, and such reference unless waived by the parties shall be a condition precedent to any right of action in law or equity to recover for such loss; but no person shall be chosen or act as a referee, against the objection of either party, who has acted in a like capacity within four months."
In Minnesota, same as in Maine and Massachusetts, except the clause is inserted “except in case of total loss on buildings.”
In New Hampshire the provision reads as follows:
“In case difference of opinion shall arise as to the amount of any loss under this policy other than on buildings totally destroyed, unless the company and the insured shall, within fifteen days after notice of the loss, mutually agree upon referees to adjust the same, either party may, upon giving written notice to the other, apply to a justice of the Supreme Court, who shall appoint three referees, one of whom shall be thoroughly acquainted with the kind of property to be considered, and their award in writing, after proper notice and hearing, shall be final and binding on the parties.” The South Dakota form provides: “Except in cases of loss
: where the amount thereof is fixed, as hereinbefore provided, in the event of disagreement as to amount of loss, the same shall be ascertained by two competent and disinterested appraisers, the insured and this company each selecting one, and the two chosen shall 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 difference to the umpire; and the award in writing of any two shall determine the amount of such loss; the parties thereto shall pay the appraisers respectively selected by them, and shall bear equally the expenses of the appraisal and umpire.”
In the States where no standard form is prescribed and other than those above named, the New York standard form is in general use.
RULE 2. Rights and Duties of Both Parties Must be Exercised Within
Reasonable Time. It is not the duty of the assured to initiate an appraisal, when the condition in the policy is precedent to a recovery only when required by the company. Either party has the right to require an appraisal when there is a disagreement as to the amount of the loss. But that right is not indefinite as to time, but must be exercised within a reasonable period, depending upon the facts of the particular case. Neither party can so use the right as to take undue advantage of the other, but both must act in good faith. It is not a weapon of attack, but of defense, and a party who intends to use
a it must give reasonable notice of such intention, for its omission to do so will be evidence of waiver, more or less conclusive according to circumstances. For instance, if the company knows that the assured desires a prompt appraisal or an adjustment, so that the property may not suffer further injury before being sold or disposed of, it cannot postpone its demand for an appraisal until after the assured, misled by its act, has been placed in a position where one is impossible.
Chainless Cycle Mfg. Co. v. Security Ins. Co., 169 N. Y. 304, 62 N. E. Rep. 392. And see Hamilton v. Phænix Ins. Co. 61 Fed. Rep. 379, 9 C. C. A. 530, 23 Ins. L. J. 561; Connecticut Ins. Co. v. Hamilton, 59 Fed. Rep. 258, 8 C. C. A. 114; McManus v. Western Assur. Co., 43 App. Div. 550, affd., 167 N. Y. 602, without opinion.
Condition Precedent. Where an appraisal has been properly demanded an appraisal or award as to the amount of loss or damage becomes a condition precedent to right to sue, and action cannot be maintained in absence of award, unless the condition is waived or in some way dispensed with; assured has no right at his mere option or volition to revoke the appraisal clause or submission under it.
Chapman v. Rockford Ins. Co., 89 Wis. 572, 62 N. W. Rep. 422; Palatine Ins. Co. v. Morton Scott Co., 106 Tenn. 558, 61 S. W. Rep. 787; Western Assur. Co. v. Hall, 112 Ala. 318, 20 So. Rep. 447, 25 Ins. L. J. 874; Silver v. Western Assur. Co., 164 N. Y. 381, 58 N. E. Rep. 284; American Cent. Ins. Co. v. Landau, 62 N. J. Eq. 73, 49 Atl. Rep. 738; Phænix Ins. Co. v. Carnahan, 63 Ohio St. 258; Guerin v. Manchester Assur. Co., 29 Can. S. C. 139; Fisher v. Merchants’ Ins. Co., 95 Me. 486, 50 Atl. Rep. 282; Raymond v. Farmers' Ins. Co., 114 Mich. 386, 72 N. W. Rep. 254; Caledonian Ins. Co. v. Gilmour (1893), L. R. App. Cas. 85; Dee & Sons v. Key City Ins. Co., 104 Iowa, 167, 73 N. W. Rep. 594; Vincent v. German Ins. Co., 120 Iowa, 272, 94 N. W. Rep. 458; Lamson Consolidated Stove Co. v. Prudential Ins. Co., 171 Mass. 433, 50 N. E. Rep. 943, 28 Ins. L. J. 70; Scottish Union & Nat. Ins. Co. v. Clancy, 71 Tex. 5, 8 S. W. Rep. 630; Old Sancelito Land Co. v. Commercial Union Ins. Co., 66 Cal. 253; Wolfe v. Liverpool, L. & G. Ins. Co., 50 N. J. L. 453, 14 Atl. Rep. 561; Hamilton v. Liverpool, L. & G. Ins. Co., 136 U. S. 242; Hamilton v. Home Ins. Co., 137 U. S. 370; Pioneer Mfg. Co. v. Phænix Assur. Co., 106 N. C. 28; Gasser v. Sun Fire Office, 42 Minn. 315, 44 N. W. Rep. 252; Hanover Ins. Co. v. Lewis, 28 Fla. 209, 10 So. Rep. 297; Mosness v. German-American Ins. Co., 50 Minn. 341, 52 N. W. Rep. 932; Eichner v. Liverpool, L. & G. Ins. Co. (C. P.), 9 N. Y. Supp. 954; Murphy v. North B.