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ASTRICH v. GERMAN-AMERICAN INS. CO. OF NEW YORK.
1. FIRE INSURANCE-CONDITIONS-VIOLATION AFTER LOSS-UNDESTROYED PROP
One of several policies insuring plaintiff's merchandise to the extent of actual loss provided that in case of disagreement as to the amount of loss the same should be ascertained by an appraisement, and that the loss should not be payable, or an action maintained to recover the same, until after 60 days after due notice, ascertainment, estimate, and satisfactory proof of loss had been received by the company in accordance with the terms of the policy; that the insured, as often as required, should exhibit to any person designated by the company all that remained of any property described in the policy, and should submit to examinations under oath, and produce books of account, etc., and that it should be optional with the company to take all or any part of the articles at such ascertained or appraised value, and to replace the property lost or damaged with other of like kind or quality at any reasonable time within 30 days after the receipt of proofs of loss or the giving notice of his intention to do so. After loss the property was separated as required, and, the parties failing to agree, insured, after filing, but before the receipt of proofs of loss by the insurers, and over their protest, advertised and sold the property remaining. Held, that such sale deprived the insurers of their substantial rights to further examination of the goods after proof of loss furnished, to adjust the loss by appraisement, and to replace the goods damaged with other goods of like character, and therefore precluded a recovery on the policy.
Where plaintiff, having several policies, some of which insured both merchandise and fixtures and others insured fixtures only, had a conversation with one of the adjusters of the companies in interest after loss and after a forfeiture as to the merchandise had been incurred, in which such adjuster requested plaintiff to furnish proofs of loss as to the fixtures and furniture, such request, though complied with by plaintiff's sending such proof to all of the insurers, did not operate as a waiver of the forfeiture as to the merchandise insured by an insurer whose policy covered merchandise only.
In Error to the Circuit Court of the United States for the Middle District of Pennsylvania.
For opinion below, see 128 Fed. 477.
C. H. Bergner, for plaintiff in error.
Before ACHESON, DALLAS, and GRAY, Circuit Judges.
GRAY, Circuit Judge. The suit in the court below was an action of assumpsit, on a policy of fire insurance. The plaintiff in error, who was the plaintiff below, was the proprietor of a large store in the city of Harrisburg, Pa., wherein he conducted a retail business in ladies' millinery, coats, furs, and furnishing goods. His stock of merchandise was insured for $22,000, in 13 companies, and his fixtures and furniture for $2,500 in certain of the said 13 companies. The German-American Insurance Company, the defendant, was one
11. See Insurance, vol. 28, Cent. Dig. § 1292.
of the companies which insured merchandise, and the amount of its policy was $4,500. Some of the other companies insured both merchandise and furniture and fixtures, the latter being contained in a clause in the policy separate from the clause by which the merchandise was insured. A fire occurred in the storeroom of the plaintiff, December 16, 1902, by which the building was considerably burned, and the entire stock of merchandise was either destroyed or injured, and the furniture and fixtures damaged.
The policy of insurance, upon which suit was brought in the court below, was issued by the defendant company to the plaintiff. It is in the usual form, and insured the plaintiff in the sum of $4,500, for the term of one year, against all direct loss or damage by fire, except as therein provided. Among the exceptions, stipulations and conditions attached to said policy, those having any bearing on the present case are as follows:
"1. This company shall not be liable beyond the actual cash value of the property at the time any loss or damage occurs, and the loss or damage shall be ascertained or estimated according to such actual cash value, with proper deduction for (2) depreciation however caused, and shall in no event exceed what it would then cost the insured to repair or replace the same with material of like kind and quality; said ascertainment or estimate shall be made by the insured and this company, or, if they differ, then by appraisers, as hereinafter provided; and, the amount of loss or damage having been thus determined, the sum for which this company is liable pursuant to this policy shall be payable sixty days after due notice, ascertainment, estimate, and satisfactory proof of the loss have been received by this company in accordance with the terms of this policy. It shall be optional, however, with this company, to take all, or any part, of the articles at such ascertained or appraised value, and also to repair, rebuild, or replace the property lost or damaged with other of like kind and quality within a reasonable time, on giving notice, within thirty days after the receipt of the proof herein required, of its intention so to do.
If fire occur the insured shall give immediate notice of any loss thereby in writing to this company, protect the property from further damage, forthwith separate the damaged and undamaged goods, personal property, put it in the best possible order, make a complete inventory of the same, stating the quality and cost of each article and the amount claimed thereon; and within sixty days after the fire, unless the time is extended, in writing by this company, shall render a statement to this company, signed and sworn to by said insured. stating the knowledge and belief of the insured as to the time and origin of the fire; the interest of the insured and all others in the property; the cash value of each item thereof and the amount of loss thereon," etc.
The insured, as often as required, shall exhibit to any person designated by this company, all that remains of any property herein described, and submit to examinations under oath by any person named by this company, and subscribe the same; and as often as required, shall produce for examination all books of account, bills, invoices, and other vouchers. or certified copies thereof, if originals be lost, at such reasonable place as may be designated by this company or its representative, and shall permit extracts and copies thereof to be made.
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 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.
This company shall not be held to have waived any provision or condition of this policy or any forfeiture thereof by any requirement, act, or proceeding on its part relating to the appraisal or to any examination herein provided for; and the loss shall not become payable until sixty days after the notice, ascertainment, estimate, and satisfactory proof of the loss herein required have been received by this company, including an award by appraisers when appraisal has been required.
No suit or action on this policy, for the recovery of any claim, shall be sustainable in any court of law or equity until after full compliance by the insured with all the foregoing requirements, nor unless commenced within twelve months next after the fire.
This policy is made and accepted subject to the foregoing conditions and stipulations, together with such other provisions, agreements, or conditions as may be indorsed hereon and added hereto, and no officer, agent, or other representative of this company shall have power to waive any provision or condition of this policy except such as by the terms of this policy may be the subject of agreement indorsed hereon or added hereto, and as to such provisions and conditions no officer, agent, or representative shall have such power or be deemed or held to have waived such provisions or conditions unless such waiver, if any, shall be written upon or attached hereto, nor shall any privilege or permission affecting the insurance under this policy exist or be claimed by the insured unless so written or attached."
At the trial, after testimony on both sides had been submitted to the jury, the court instructed the jury that its verdict should be taken, subject to a reserved point, which was read. Accordingly, the verdict of the jury was rendered in favor of the plaintiff for $1,300, with interest, subject to the point reserved, which was as follows:
"It being the undisputed evidence that the plaintiff's stock of goods was insured to the extent of twenty-two thousand dollars ($22,000) in thirteen (13) different companies, of which the defendant was one, the insurance in such company being $4,500; that a fire occurred on December 16, 1902, during the life of the said policy, by which a large part of the said stock was entirely consumed and other parts damaged by fire, smoke and water; that immediately after the fire the plaintiff put in order the stock that was left, separating the damaged from the undamaged goods; that on December 29th and 30th, after due notice, agents and adjusters representing the said several insurance companies, including the defendant, went upon the premises and investigated the loss, and, for the purpose of ascertaining the extent of the same, examined the books, bills and accounts of the plaintiff, carefully and thoroughly, and inspected the damaged and undamaged stock, being occupied in such examination more or less for two (2) days; that as a result of the same they collectively offered, on behalf of all the said companies, to pay the plaintiff in settlement of his said loss the sum of twenty-two thousand dollars, the aggregate amount of his insurance, the said companies to take the stock which remained and wreck the same that is to say, ship it to New York or some other general market and there have it put in order by persons experienced in such business, and then and there sell it by auction or otherwise for such price as it would bring, the plaintiff to receive all that it brought up to five thousand dollars, after deducting expenses, and the insurance companies to receive the excess above that sum; which offer the plaintiff refused; and that the said agents then and there made a further offer to pay the plaintiff in settlement of his said loss, the sum of $17,500, he retaining for his own benefit the said stock on hand; which offer the plaintiff also refused; that thereupon he was told by the said agents to read his policy and observe its terms, on which the parties then and there separated; that, afterwards, the plaintiff made out due proofs
of loss, which he forwarded to the defendant company on January 9th following, which were duly received by said company; that on January 8th, the day before he furnished said proofs, after first having advertised the stock for sale, the plaintiff, without notice to said companies, began to make private sale thereof and continued to sell the same for the three days next following, unul the said goods were disposed of, realizing therefrom the gross sum of about sixty-two hundred dollars ($6,200) and being at the expense of about two thousand dollars ($2,000) in so selling them; that the insurance companies, including the defendant, having learned that such sale was about to be made, notified the plaintiff, by telegram and letter, that he should not dispose of the said goods, that they desired to exercise the rights given them by the policies of insurance which he held of further examining said goods to determine their value and the loss or damage sustained thereon, and calling attention to the fact that the said companies had the right if they desired to, to take the stock, or in case of disagreement as to the extent of the loss to have the same determined by appraisement; and thereupon notifying plaintiff that if he proceeded with the sale, his policies would be rendered null and void; and that notwithstanding such notice the said plaintiff proceeded to make sale of the said goods.
Whereupon, in view of the provisions of the policy in suit, a copy of which is attached to plaintiff's declaration of statement, and is made a part of this point, the question of law is reserved.
Whether the policy, by reason of the said sale so made by the plaintiff, was avoided and whether the plaintiff is entitled to recover thereon in this action; with leave to the Court to enter judgment in favor of the defendant, notwithstanding the verdict if it be found that such is the law."
Motion for judgment for defendant, non obstante veredicto, was accordingly made, and after argument, the court granted said motion, and gave judgment in favor of the defendant on the point reserved.
In considering the questions raised upon the assignments of error, we first advert to the general contention of the defendant, that the insured, by his conduct in advertising and effecting a sale of the damaged goods before the proofs of loss required by the policy of insurance, which he had made out and forwarded to the defendant company, had been received by it, forfeited his right to claim indemnity under said policy. It will be seen, by reference to the paragraphs of the policy heretofore quoted, that there is an express stipulation between the insurer and insured, that in case of disagreement between them, as to the amount of the loss, the same should be ascertained by an appraisement of disinterested appraisers, selected by the parties respectively, and that the loss shall not become payable until sixty days after the same shall have been so ascertained. There is also a stipulation that the insured, as often as required, shall exhibit to any person designated by the company, all that remains of any property described in the policy, as well as submit to examinations under oath, and produce books of account, etc. The insurance contract also provides that it shall be optional with the company to take all or any part of the articles at such ascertained or appraised value, and also to replace the property lost or damaged with other of like kind and quality, at any reasonable time within thirty days after the receipt of proof of loss, on giving notice of his intention to do so.
We agree with the court below, that the right under this policy to an appraisement was absolute, if the insurers found that they
desired it. It was essential to the enjoyment of this right that the damaged stock should be retained by the insured, where it could be examined for the purpose of appraisement. It was in evidence, and not disputed, that there had been, a short time prior to the sale, an effort of the parties to ascertain and amicably settle the loss between them, and that serious differences had existed while this attempt to settle was in progress, and that it had finally been abandoned, with a notice to the insured, that the company would stand upon the terms of its policy. The provisions of the policy, repeated in two different places, are express, to the effect that, in the event of disagreement, and failure amicably to settle the loss between the parties, the right to an appraisement shall accrue, and we fail to see anything in what occurred between the parties, while the efforts to settle were in progress, to impair or at all affect the right of the insurer in this respect. The fire occurred on December 16, 1902. It is true, that due notice of the same was given by the insured to the company; that the insured, under the direction of the agents of the insurance companies, had separated and arranged the goods that were not totally destroyed, for quick and careful examination; that the adjusters of the insurance companies came to the insured premises, and examined the damaged goods on the 29th and 30th of December, and after an examination of the said goods and books of the insured, and making inquiry of the insured himself, made three offers to pay certain sums of money, in full settlement of liability; that on making the last offer to settle the liability of all the companies, by the payment of a lump sum of $17,500, it was said by the adjusters that such offer was the last and final one, and that, it being refused, the adjusters departed. It is true, also, that there was testimony that the goods damaged were deteriorating in value and condition, and that after the final offer on December 30th, the insured expended money and trouble in preparing and advertising the goods for sale, and that the season in which a large number of the goods which had been damaged could be used, or were salable, was nearly ended.
There is nothing, however, in any of these facts, taken singly or together, that in our opinion, has any bearing upon the right of the insuring company, under the circumstances, to an appraisement. They disclose only what seems to be the not unusual situation, when such a settlement between the parties is attempted. Three several offers of payment, in full settlement of the companies' liability, were made and rejected. The statement, that the offer last made was a final one, seems to us only to have made clear the necessity for an appraisement. The fact that the goods were deteriorating, and that the time in which they were salable was passing by, are circumstances inhering in the situation, but of no possible effect as to the right to an appraisement, and could in no way justify the action of the assured in destroying all opportunity for the enjoyment of that right. Nor does the fact, if fact it be, that one of the adjusters told the insured, in the presence of the other adjusters, that there was no use in making the appraisement of the damaged goods, because the in131 F.-2