226 S.W. 846 | Mo. | 1920
Lead Opinion
This appeal requires us to decide whether the statute, presently to be quoted, annuls the clause in a contract of insurance for the ascertainment by appraisement of the amount of the damage done by a fire to the property insured if the insured and the company could not agree as to the amount of the loss. The policy is not set out in full in the record, and we must get at the intention of the parties to it by what is before us, part of which we abridge and copy a part.
The policy provided regarding a loss by fire, that it should be ascertained or estimated according to the cash value of the property consumed or damaged, with a proper deduction for depreciation; that the amount of the loss should not exceed what it would cost the company to repair or replace the property with material of like kind and quality, that the estimate of the damages should be made by the insured and the company, and if they should differ, by appraisers; that the amount of the loss having been thus ascertained, it should be payable sixty days after the estimate and satisfactory proof of the loss had been received by the company; but that the company should have the option "to take all, or any part, of the articles at such ascertained or appraised value," or to repair or replace what were lost or damaged, with orders of like kind and quality, on giving notice of the intention to do so within thirty days after proof of loss was received. This clause follows those terms:
"In the event of disagreement as to the amount of loss the same shall, as above provided, be ascertained by two competent and disinterested appraisers, the insured and this 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 *353 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.
The policy covered a stock of merchandise and also the furniture and fixtures in the storeroom. There was a policy written by another company covering the same property, and the defendant is only liable for one-half of the loss.
The first count of the petition was for the loss on the merchandise, which plaintiffs alleged was in excess of $2400, that being the total amount of insurance on the stock, wherefore they asked judgment against the defendant for $1200. In the second count the loss on the furniture and fixtures was alleged to be in excess of $600, or the total insurance on the property, and judgment was demanded against the defendant for $300.
I. The only dispute between the parties was regarding the amount of the loss, and to have this ascertained by the method provided in the policy the company demanded an appraisement, which demand, for the purpose of this case, we may say was refused by the plaintiffs. One of the instructions to the jury was "that the plaintiffs were not required to enter into an appraisal with the defendant as to the amount of the loss." The full amount of damages prayed for in each count was assessed by the jury, and judgment having been entered on the verdict, this apppeal was taken.
The statute to be interpreted is Section 868 and is contained in the revision under the title "Arbitration," and in the Session Laws of 1909 under the title "Contracts and Promises," it having been enacted as an amendment to Chapter 10, Revised Statutes 1899, relating to Contracts and Promises, by adding thereto "a new section to be known as Section 899a." [R. *354 354 So. 1909, sec. 868; Laws 1909, p. 347.] As found in the Session Laws, omitting the title, the enactment reads as follows:
"Section 1. Contract to arbitrate not to preclude filing of suit.
Be it enacted by the General Assembly of the State ofMissouri, as follows:
"Section 1. Contract to arbitrate not to preclude fling ofsuit. — That Chapter 10 of the Revised Statutes of Missouri, 1899, relating to contracts and promises, be and the same is hereby amended by adding thereto a new section, to be known as Section 899a, said section to read as follows: Section 899a. Any contract or agreement hereafter entered into containing any clause or provision providing for an adjustment by arbitration shall not preclude any party or beneficiary under such contract or agreement from instituting suit or other legal action on such contract at any time, and the compliance with such clause or provision shall not be a condition precedent to the right to bring or recover in such action.
"Approved June 14, 1909."
The defendant contends the statute does not operate to annul a stipulation in an insurance policy that, in case the parties do not agree on the amount of the loss, it shall be estimated by two appraisers and an umpire. In support of this position it is argued the statute was intended only to annul a stipulation in a contract for an arbitration; which is a method of settling controversies so long in use that the word "arbitration" has acquired a settled technical meaning different from a mere appraisement or estimate of losses and value — in short, that an appraisement is not an arbitration.
Agreements for the two proceedings have been regarded by the courts well nigh universally as agreements for separate and distinct proceedings, and this for various reasons. Sometimes it has been pointed out that an agreement for an arbitration implies a controversy *355
between the parties at the time of the submission, which is to be the subject-matter of the arbitration; whereas a stipulation for an appraisement of values does not presuppose a controversy. [Garred v. Macey,
But there have been many cases in which the courts held there was not an agreement to arbitrate, although, as in this case, the stipulation for an appraisal was to come into play only in case the parties disagreed about values or the amount of a loss. [Paint Co. v. Aetna Ins. Co.,
It has been held, too, that an appraisal of values or losses does not amount to an arbitration, because it leaves the question of ultimate liability under the contract open, and therefore does not oust the jurisdiction of the court. [Methodist Episcopal Church v. Seitz,
Again it has been held an appraisal was not an arbitration or an agreement for an appraisal equivalent to an agreement to arbitrate, because the appraisers appointed by the respective parties were their agents instead of impartial judges; but that would not often be true. [Bottomly v. Ambler, 38 L.T. (N.S.) 545.]
The two proceedings have been distinguished by the fact that an appraisal settles a subsidiary and incidental matter and not the main controversy. [Black v. Rogers,
In our opinion the fundamental difference between the two proceedings lies in the procedure to be followed, and the effect of the findings. [Sebree v. Board of Education,
These differences have been pointed out and acted upon in litigation of different kinds, perhaps more frequently in actions on insurance policies than in any other class of cases. We have cited above several Missouri decisions given upon the difference between an arbitration and an appraisal of loss, and cite the following similar cases from other jurisdictions, some of which determine the effect of a stipulation identical with the one before us: American Steel Co. v. Ins. Co., 187 F. 730; Fleming v. Phoenix Assur. Co., 75 Hun, 530, 27 N.Y.S. 488; Royal Ins. Co. v. Ries,
Nowhere has the distinction been more recognized and acted upon than in this State from an early day. [Zallee v. Ins. Co.,
In Harmon v. Ins. Co., ELLISON, J., pointed out the radical differences between an appraisal and an arbitration, namely: appraisers may act on their own judgment without a hearing, whereas arbitrators must act upon testimony; and the award of the latter extinguishes the original cause of action and becomes a new cause, whereas, an appraisal leaves the right of action on the contract unimpaired. Similar views were expressed by the courts of most of the States of the Union and by the Supreme Court of the United States in the cases cited supra. The same distinction has been drawn in litigation involving a controversy identical in principle *359
with the one at bar, but over contracts not relating to insurance. [Holmes v. Shepard,
This case calls for a decision of the point according to the intention of the parties, and the policy, when interpreted according to the natural and legal import of its terms, suggests no intention to submit the determination of the amount of a loss, should one occur, to either a common-law or a statutory arbitration. Manifestly the latter form was not contemplated, for none of the details of procedure presented by the statutes on the subject are required to be observed; for example, a submission in writing, or agreement that some court may enter judgment on the award, or that the arbitrators shall be sworn, etc. [See R.S. 1909, Chap. 7.]
Neither are the terms of the policy suggestive of a common-law submission. Notice to the parties of a hearing is not provided for, or the taking of testimony, or that the award shall extinguish liability in the policy; and plainly this liability was to continue. That the appraisers were free to act on their own opinion without the help of evidence, appears from the provision that the umpire was to decide only when the appraisers disagreed. *360 If witnesses were to be heard, then, by this arrangement, they would be heard first by the two appraisers, and if they did not concur, by the umpire; a plan so complicated that it is unreasonable to suppose the parties to the contract meant to prescribe it. All the details of the scheme indicate that nothing more was intended than what the words used denoted, namely: an estimate according to the opinion of two appraisers, and of an umpire if they differed an opinion reached either from a personal examination alone or an examination plus other evidence as they might prefer.
The parties stipulated for an appraisal in the event of a fire and their inability to concur as to the amount of the loss, and so stipulated for two reasons: first, to have the amount ascertained in that mode and thereby dispense with other evidence on the question if there should be a law suit; a way preferred by them and apparently simple and easy to use; second, the company was accorded the option to take all or any part of the damaged articles at their values when sound, as fixed by the appraisers. This proviso was an integral part of the policy and must be considered part of the consideration for which the company entered into it.
II. What has been said makes clear, we think, the distinction between a stipulation for an appraisal and an agreement to arbitrate, but it does not answer fully the question of whether the statute which undertakes to annul any clause or provision in a contract for "an adjustment by arbitration" applies to the stipulation in the present case. We say "annul," because the effect of the statute is to allow a party to a contract with such a clause in it, to sue on the contract and maintain the action without complying with the condition. It is to be observed that this statute is not leveled at contracts of insurance only, but at all contracts containing the forbidden stipulation. It is wide-ranging, for there are many agreements of the kind in the world of business which relate to other matters than insurance. *361
The argument that a particular interpretation of a statute will work inconvenience, is not forcible, but may be accorded some influence when the meaning of a law is uncertain, for presumably the Legislature intended to remedy instead of entail mischief. In a case like the present one, an eminent judge (Lord CAMPBELL) decleared concerning a contract for the appraisal, or "arbitration" as the policy said, of the loss under a policy of marine insurance, that instead of the plan being contrary to public policy, "it would be a most inexpedient encroachment upon the liberty of the subject if he were not allowed to enter into such a contract." And the House of Lords, after much consideration of the question, decided such an agreement was not one for an arbitration in the proper sense. [Scott v. Avery, 5 H.L. Cases, *pp. 811, 851.]
The Supreme Court of California said that to apply the rules regulating arbitrations to all the contracts in which parties regulate their actions by the determination of third persons, would "interfere with the ordinary transactions of mankind and put unnecessary clogs upon business." [M.E. Church v. Seitz, 74 Cal. l.c. 292.]
But the principal rule of interpretation to be applied to the act in question, is prescribed by our statutes, to-wit: "Technical words and phrases having a peculiar and appropriate meaning in law shall be understood according to their technical import;" that is to say, in getting at the intention of the Legislature in enacting a law which contains a technical expression, we must presume the expression was used in its technical sense, unless there is something in the context to indicate that it was not. [R.S. 1909, sec. 8057.] In truth, the statute that technical terms "shall be understood in their technical import," on its face is mandatory; but it has been held to mean, and rightly so, that the context of the word may be regarded, and if it shows another than a technical sense was intended, the other meaning will be adopted. [Ex parte Bethurum,
*362
Is there anything in the statute which requires us to accept other than the legal meaning of the word "arbitration?" For the plaintiff the argument is that the phrase "adjustment by arbitration," shows another meaning was intended. The word "adjustment" is not a technical term. It means to fit, arrange, settle, equalize, and perhaps has other meanings according to the subject-matter where it is used. We are most familiar with the use of the word in connection with claims for insurance, but there are various other adjustments; for example, the values of leaseholds, of property to be sold at another person's valuation, etc. [Curry v. Lackey,
In a former opinion of this court where the statute was discussed, but in an obiter way because the policy *363
therein involved was issued prior to its enactment, it was remarked that the purpose of the Legislature was to strike at contracts like the one before us. The opinion called attention to the fact that Section 899 of the chapter on contracts provided that all parties to a contract which directly or indirectly tended to limit the time in which an action might be instituted, should be null and void (R.S. 1899, sec. 899); and that the statute in hand was designated by the Legislature as Section 899a and naturally, in the compilation of the Revised Statutes, would have followed Section 899. It was argued that the two sections construed together indicated a purpose on the part of the Legislature to render void provisions to enforce "arbitration or settlement by means of appraisers under insurance policies." [Young v. Ins. Co.,
The legislative purpose in passing the law under examination is not to be conjectured, but must be ascertained from the act itself. The agreements the legislators meant to strike at must be determined from what they said, and not surmised, as a probable intention. This court has declared: "It is our duty merely to interpret it (a statute) exactly as made by the legislative department — we cannot properly add to it a meaning not intended by its terms." [Henry Coatsworth Co. v. Evans, 97 Mo. l.c. 55.] The application of this rule is striking in what is called acasus omissus. The court may feel sure the Legislature meant to include something which by oversight was omitted, yet cannot supply it. [Kehr v. Columbia, 136 Mo. App. l.c. 329; Smith v. State,
At common law parties have the right to have losses and values affecting liability under a contract appraised by third persons selected by them. It is a right which tends to prevent litigation, and a statute asserted to be in derogation of it should be construed strictly. As the language of the act before us naturally denotes an arbitration in the legal sense, it seems sound to confine its effect to that kind of a proceeding.
Judgment is reversed and the cause remanded.
Walker, C.J., Blair and Williamson, JJ., concur; Graves,J., dissents in separate opinion, in which Woodson, J., concurs; Williams, J., not sitting.
Dissenting Opinion
I dissent in this case for the reason that I do not believe that the Legislature ever intended by the Act of 1909, now Section 868, Revised Statutes 1909, to refer to arbitration in the sense that it is used at the common law or in our statutory law upon arbitration. I tried to point out this in Young v. Insurance Co., 269 Mo. l.c. 14 et seq. It was never enacted as a part of our law upon arbitration, as pointed out in that case. The statute used the term "an adjustment by arbitration," and not the word "arbitration" alone. As I read this statute, taking its connection when passed, the legislative intent was to strike at just such provisions as we have before us in the instant contract. Adjustment by arbitration, in the legislative *365 mind, was adjustment by appraisal, or any other means which hampered the right to go into a court of justice. The legislative purpose was to give the party to just such contracts as we have before us, the right to sue, irrespective of the fact that somewhere, hidden in a labyrinth of finely printed provisions, there might be one calling for an appraisal. The insured rarely reads or knows what these finely printed provisions of his contract are, and this statute, as well as others which we have, were intended to prevent his acceptance of such a policy from precluding his unfettered right to go to a court of justice.
It may be that what was said in Young's case, supra, was not absolutely necessary for a decision of that case, but it was written upon the point being specifically made in the brief, as appears from the opinion. But, whether it be obiter or not, in my judgment it declares the correct legislative intent of the statute discussed. For this reason I dissent. Woodson, J., concurs in these views.