221 Mass. 518 | Mass. | 1915
This is an action of contract upon a policy of fire insurance in the Massachusetts standard form. The material allegations of the declaration, after averring the issuance of the policy, a total loss by fire of the building insured, and the inability of the parties to agree upon the loss resulting from the fire, are that there was a reference of the amount of damage to arbitration as provided in the statute and an award by a majority of the referees only, and a refusal by the third to join in the award because of a belief that it did not contain all the loss suffered by the fire, and further that the award so made is invalid because the referees (1) failed to give to the plaintiff notice of hearings held by them, (2) “refused to hear any evidence from the plaintiff, and gave the plaintiff no opportunity to present any evidence bearing on the question of its loss or damage occasioned by the fire,” (3) refused to take into account loss caused to the plaintiff by the tearing down of a part of the walls of the building by the city of Boston at the expense of the plaintiff, but for the safety of the public, after the fire was under control but before it was extinguished, (4) would not consider loss sustained by the plaintiff by being required at its own cost to tear down a part of the walls of the building, (5) refused to estimate as a part of its loss the increased cost of rebuilding due to the fact that under the building laws the plaintiff must rebuild a new structure to take the place of the one destroyed, of much more expensive materials, and (6) returned an- award for a sum “grossly inadequate, unjust and inequitable.”
The first of these allegations of invalidity is not sufficient to overturn the award. It is merely that no notice of hearings was given to the plaintiff by the referees, but not that no hearings were given as required by the terms of the reference, nor that the plaintiff did not in fact have notice of the hearings and was not heard. For aught that appears, the plaintiff in truth may have known all about the hearings and been heard at length. This allegation does not go far enough to show that any sub
The next averment is that the referees refused to hear evidence as to the loss. The amount of loss was the only matter submitted to them. It was quite disconnected with general liability of the defendant to the plaintiff, and with all other questions. Rockwell v. Hamburg-Bremen Fire Ins. Co. 212 Mass. 318. The reference was in writing. It was not in the brief words of the policy, but it expressly incorporated into its terms by reference Pub. Sts. c. 188, §§ 6, 7 (now R. L. c. 194, §§ 6, 7).
That there shall be a hearing does not mean that the referees must be bound by the strict rules of evidence. They may proceed by the summary methods implied in an arbitration. But they could not arbitrarily reject all material evidence under such a reference as the present.
An award regularly made is not lightly to be set aside, even though there were informalities and irregularities. An award should stand “unless it plainly appears that the acts of alleged misconduct have prejudiced or may have prejudiced the party complaining, or have violated those well settled rules which justice requires should be observed in order to ensure the fair determination of the matters in dispute.” Farrell v. German American Ins. Co. 175 Mass. 340, 347. Jones v. Boston Mill Gorp. 6 Pick. 148. Smith v. Boston & Maine Railroad, 16 Gray, 521. But a refusal to hear parties when the submission requires a listening to evidence goes to the root of a reference like the present. See Hills v. Home Ins. Co. 129 Mass. 345.
It is not necessary to determine the effect of St. 1910, c. 489, which makes it the duty of referees “to meet within ten days after the appointment of the third referee to hear the evidence in the case,” nor to decide how far that statute affects Hanley v. Ætna Ins. Co. 215 Mass. 425, which arose under a policy to which it was not applicable. The terms of the reference in the case at bar made imperative the hearing of evidence and distinguish it from Hanley v. Ætna Ins. Co. Indeed, it is pointed out in the opinion in that case, 215 Mass. 430, 431, that, ordinarily, when the building insured is wholly destroyed (as it is alleged to have been in the case at bar), it would be the wise course for referees to receive evidence and “to determine the amount of loss in the usual way in which civil cases are tried.”
The refusal of the referees to take into account as elements of loss the cost caused to the plaintiff by the tearing down of the walls of the building during the progress of the fire, at its expense, by public officers, and after the fire, by itself, at its own expense, and the increased cost of rebuilding due to the fact that under the
The final averment is that the gross inadequacy of the award is a ground for setting it aside. This is supported by the further allegation that it arose from the fraud, bias and prejudice of the referees. But this is wholly general, without specification of facts. It is plain that general allegations of fraud, and like-i wise of bias and prejudice, without stating definite acts which constitute a fraud or bias and prejudice, are not enough to require judicial inquiry. Nichols v. Rogers, 139 Mass. 146. Nye v. Storer, 168 Mass. 53, 55. Garst v. Hall & Lyon Co. 179 Mass. 588, 590. Wallingford, v. Mutual Society, 5 App. Cas. 685, 697. Mere inadequacy of an award honestly made without mistake is no ground for setting it aside. The parties, having chosen their tribunal, are bound by its decision no matter what may be its infirmities of judgment. Boston Water Power Co. v. Gray, 6 Met. 131. Rundel v. LaFleur, 6 Allen, 480. As there is no allegation of mistake, that may be laid out of the case. But the plaintiff is entitled to an honest award free from the taint of fraud or prejudice. An award might be so grossly and palpably below the
The inadequacy averred in the case at bar is the difference between an alleged value of $100,000 and the award of $57,604. The value as alleged must be assumed in the absence of other specification to be the estimate of value made by the plaintiff, for no other standard of value is set forth. The difference between the claim or estimate of a party plaintiff and the fact not infrequently is as great in proportion as that here alleged. It would scarcely evoke an exclamation of astonishment from the ordinary person of sound sense to be told that an award in a case of taking under eminent domain was fifty-seven per cent of the claim advanced by the landowner. Inquiries as to value in insurance cases of total loss in general resemble those in takings by eminent domain. The allegation of inadequacy loses some of its force when read in conjunction with the averments that three elements of damage put forward by the plaintiff, one of which is said to be at least $20,000, were disallowed by the referees; all three of these claims have been shown to be unsound in law by what has been said. The inadequacy of the award here alleged, in view of all the circumstances, does not by itself alone show fraud, bias or prejudice by the referees.
The only allegation of invalidity of the award which is sound, is that the referees refused to hear evidence as to the loss. The averment in this respect is sufficient to show invalidity under the terms of the reference.
The contract of insurance set out in the declaration is that the company, within sixty days after the insured shall have notified the company of the fire in writing, or furnished it a sworn statement on request, St. 1910, c. 552, “shall either pay the amount for which it shall be liable, which amount if not agreed upon shall be ascertained by award of referees as hereinafter provided,” or replace the property, or rebuild or repair the property. Only the first of these three alternative courses open to the insurer has any bearing upon the present case.
It is to be noted, also, that, although the amount of liability or loss must be fixed by reference, the return of the award or the making of a valid award is not “a condition precedent to any right of action in law or equity to recover for such loss.” It is “the reference” to these distinterested men and not “the award” by them which is made the condition precedent! Here again the instant policy differs from other insurance contracts
The “reference” or “the appointment of arbitrators” as the condition precedent of the policy, often has been referred to in our cases. Union Institution for Savings v. Phoenix Ins. Co. 196 Mass. 230, 236. Hanley v. Ætna Ins. Co. 215 Mass. 425, 431. Lamson Consolidated Store Service Co. v. Prudential Fire Ins. Co. 171 Mass. 433, 434. In the opinion in the latter case, it was said at page 435: “The policy does not provide that no action shall be brought upon it until or unless (which are the words more commonly signifying a condition precedent) the amount has been ascertained by arbitration.” There is nothing in the decision of Weisman v. Firemen’s Ins. Co. 208 Mass. 577,
The declaration is not defective in failing to allege a valid award. It sets forth a reference, which is the only condition precedent, and a reason why the plaintiff is not bound by the award actually made.
There'is the further material and decisive allegation that the plaintiff has offered to resubmit to referees the amount of its loss, but the defendant has refused a new reference and insists upon the validity of the award already made, and has waived further reference. Although the allegation in this regard is not as plain as it might be made, it seems to us as matter of interpretation to mean that the defendant refuses to resubmit the matter of loss to the same referees, and refuses to join in a new reference to another board of referees. Therefore, according to the allegations of the declaration the plaintiff has done all in its power to procure a good award. Hence, the case at bar is distinguishable from Thorndike v. Wells Memorial Association, 146 Mass. 619. This is not a case where on the allegations of the declaration there has been one attempt at reference only and then an action brought on the theory that the requirement of the policy for reference is complied with, although the insured is ready for another reference or further hearings before the same referees. The parties are at a clear and exact issue as to the validity of the award resulting from this reference, the plaintiff saying that it is bad and offering to have another, while the defendant insists upon it and says it is valid, and refuses to join in further proceedings looking
The plaintiff’s cause of action in any event is the policy of insurance and not the award. The award, if valid, is simply the evidence as to damage or loss. Soars v. Home Ins. Co. 140 Mass. 343. There is no occasion, therefore, for resort to equity in order to determine whether the award should be set aside. That question can be determined in the action at law. It is analogous to the determination of questions arising upon an auditor’s report. It is the law of this Commonwealth that “an award may be impeached at law for mistake of fact of the arbitrator not appearing on the face of the award but proved by extrinsic evidence.” Barrows v. Sweet, 143 Mass. 316. There are numerous cases to the effect that the whole matter may be determined in an action on the policy. Sullivan v. Traders’ Ins. Co. 169 N. Y. 213. Canfield v. Watertown Fire Ins. Co. 55 Wis. 419. Davis v. Atlas Assurance Co. 16 Wash. 232. Those decisions appear to rest upon code provisions rather than upon general juridical principles. While apparently the contrary rule prevails in many other jurisdictions, an examination of the cases shows that in most instances the award rather than the reference is a condition precedent to the action, and hence a plaintiff cannot go forward without alleging and proving the award.
However it may be elsewhere, our own practice is well settled. Its origin is in the circumstance that in our early jurisprudence the chancery powers of the courts did not authorize the vacation or correction of an award; and hence, in order to prevent a fail
Numerous cases have gone to the extent of holding that one appointment of referees satisfies the obligation of a policy quite as strong in its terms as the one here in suit, or even that an insured may recover unless it appears that the award has failed through his fault.
The argument of the defendant that the plaintiff has accepted and ratified the award by receiving the amount determined to be the value of a part of insured property finds no support in the record and need not be considered.
The declaration sets out a contract of fire insurance and a total loss of the property thereby insured together with compliance with the condition precedent to the effect that there must be a reference of the loss to referees, and averments that their award is invalid, an offer of the plaintiff to proceed to a new arbitration, and refusal to join therein by the defendant and insistence on its part of the validity of the award already made. This sets out a cause of action on the policy. Christianson v. Norwich Union Fire Ins. Society, 84 Minn. 526. Young v. Ætna Ins. Co. 101 Maine, 294. Fire Association of Philadelphia v. Appel, 76 Ohio St. 1. Bernhard v. Rochester German Ins. Co. 79 Conn. 388, 396.
Questions as to the further procedure in view of what has been decided have not been argued and are not now before us.
Judgment reversed.
Demurrer overruled.
The portion of the agreement for arbitration there referred to was as follows: “It is understood . . . that the provisions of Sections Six and Seven of Chapter 188 of the Public Statutes shall apply as a part of the agreement for this submission. . . .”
Garrebrant v. Continental Ins. Co. 46 Vroom, 577, 584. Michels v. Western Underwriters’ Association, 129 Mich. 417. Continental Ins. Co. v. Garrett, 60 C. C. A. 395, 399. Fire Association v. Allesina, 45 Ore. 154, 158. Early v. Providence & Washington Ins. Co. 31 R. I. 225, 230. Dixie Fire Ins. Co. v. American Confectionery Co. 124 Tenn. 247, 291. North British & Mercantile Ins. Co. v. Lathrop, 17 C. C. A. 175. Georgia Home Ins. Co. v. Kline & Co. 114 Ala. 366, 371.
Western Assurance Co. of Toronto, Canada v. Decker, 39 C. C. A. 383. St. Paul Fire & Marine Ins. Co. v. Kirkpatrick, 129 Tenn. 55, 65. Shawnee Fire Ins. Co. v. Pontfield, 110 Md. 353. Jerrils v. German American Ins. Co. 82 Kans. 320. Pretzfelder v. Merchants Ins. Co. 124 N. C. 164, 165.