Case Name: KAUFMAN JEWELRY COMPANY v. INSURANCE COMPANY OF STATE OF PENNSYLVANIA; KAUFMAN JEWELRY COMPANY v. AGRICULTURAL INSURANCE COMPANY OF WATERTOWN, N. Y.
Court: Minnesota Supreme Court
Jurisdiction: Minnesota
Decision Date: 1927-08-05
Citations: 172 Minn. 314
Docket Number: Nos. 25,907, 25,908
Parties: KAUFMAN JEWELRY COMPANY v. INSURANCE COMPANY OF STATE OF PENNSYLVANIA. KAUFMAN JEWELRY COMPANY v. AGRICULTURAL INSURANCE COMPANY OF WATERTOWN, N. Y.
Judges: 
Reporter: Minnesota Reports
Volume: 172
Pages: 314–319

Head Matter:
KAUFMAN JEWELRY COMPANY v. INSURANCE COMPANY OF STATE OF PENNSYLVANIA. KAUFMAN JEWELRY COMPANY v. AGRICULTURAL INSURANCE COMPANY OF WATERTOWN, N. Y.
August 5, 1927.
Nos. 25,907, 25,908.
Harry A. Hageman, for appellant.
Doherty, Rumhle, Bunn & Butler, for respondents.
Reported in 215 N. W. 65, 431.

Opinion:
Stone, J.
Two actions, tried together, to recover on an award of arbitrators of a fire loss under the Minnesota standard fire insurance policy. After verdict for defendants, plaintiff appeals from the orders denying its motions for judgment notwithstanding or a new trial.
In 1924 plaintiff was conducting a wholesale jewelry business in St. Paul. It suffered a fire loss on March 23. Defendants are two of the insurers, the action against one of the others having been here already. Kaufman Jewelry Co. v. Firemen's Ins. Co. 168 Minn. 431, 210 N. W. 289. There was a failure to agree upon the amount of the loss, and an appraisal by appraisers or arbitrators appointed pursuant to the provisions of the standard policy, which require a finding by such appraisers of sound value and loss and damage. In this case, the appraiser appointed by the insurers refusing to join therein, the appraiser for the insured and the umpire fixed the sound value of plaintiff's jewelry stock immediately pre ceding the fire at upwards of $83,000. (For convenience of discussion we use round rather than exact figures.) The loss and damage "occasioned by said fire" was fixed at $38,000. The award itself goes no further, but it is conceded that $18,000 was allowed for damage to stock which survived the fire and that $20,000 is the amount fixed as the value of goods totally obliterated or which were at least in stock just before the fire and not to be found thereafter. The fire was of short duration. There being relatively slight destruction of the shelves, trays, and other containers in which the goods were kept, it is hardly possible that $20,000 worth of jewelry was destroyed. No physical evidence of such destruction'in the way of molten fragments, 'metallic or otherwise, was found. The strong implication is that if this item of $20,000 was lost it was through theft perpetrated during or after the fire.
The preliminary and controlling issue was whether the goods disappeared during the fire or so soon afterwards and under such circumstances as to result in a fire loss under the policies, or whether, on the other hand, the loss was so far independent of the fire as not to have been one resulting therefrom and therefore not a risk insured against. The award, unexplained, indicates, a consideration of that question and a decision of it in favor' of plaintiff. In fact the award is explainable on no other hypothesis.
The first claim for appellant is that the answers, in their attack upon the award, are so general in their allegations as not to present any issue within the rule of McQuaid M. H. Co. v. Home Ins. Co. 147 Minn. 254, 180 N. W. 97. There the answer consisted of general allegations of "bias and prejudice" on the part of an appraiser and the umpire "with no specific fact tending to support. the conclusion of misconduct." Such generality of pleading, unaided by any charge of specific wrongdoing, was held insufficient to refute "the presumption of verity surrounding the award." The answers in the instant cases avoid that fatal error. It is averred that the appraiser and the umpire included in the award "the value of articles ® " * believed by" them "to have been stolen from the custody'of the insured at a time subsequent to the fire, and that the value of such articles so included by the said appraisers amounted to upwards of $20,000." The reference is to the large item of jewelry which disappeared during or after the fire, and is sufficiently specific to avoid the rule of the McQuaid case and raise the issue which has been the whole subject matter of this litigation. There was no motion to make the answers more definite and' certain.
The appraiser and umpire who made the award testified in support of it for plaintiff. The umpire said frankly that he did' not consider at all the fact issue whether the $20,000 worth of jewelry-was lost as a result of the fire or simply disappeared afterwards .and because of an unrelated cause. No other construction can be put upon his testimony, a portion of which is as follows: .
"Q. What did you consider had happened to those goods, that $20,000? 9
"A. I did not consider what had happened to it.
"Q. You didn't consider that at all?
"A. No. I didn't understand that the appraisers were to determine what may have happened."
It does not appear clearly whether the appraiser for plaintiff did or did not consider and decide the vital issue. So as to him we give the award the benefit of sustaining presumption. But, .only the appraiser and the umpire having joined therein, the award falls as a matter of law for the declared omission of the umpire even to consider the issue, only the decision of which for plaintiff could support any allowance for the $20,000 worth of jewelry which was lost and not burned.
Judges have not yet agreed upon any general rule for the avoidance of awards. They concur only as to some of the elements of the problem. They agree, for example, that awards cannot be lightly -set aside and that they are attended with every presumption of validity. McQuaid M. H. Co. v. Home Ins. Co. 147 Minn. 254, 180 N. W. 97. This court holds that while an award cannot be vacated for mere inadequacy, there may be inadequacy so gross as to justify invalidation on the ground of fraud. Baldinger v. Camden Fire Ins. Assn. 121 Minn. 160, 141 N. W. 104. There is general agreement in the proposition, whatever it may mean, that when an. award is so grossly inadequate or excessive as to amount to fraud it may be vacated. It is the Avriter's opinion that it is a mistake in such cases to pretend adherence to the concept of fraud in delimiting the grounds for impeachment. In the instant case, for example, there is not the slightest suggestion that either appraiser or umpire Avas guilty of fraud. But it does appear, as already indicated, that the umpire at least did not consider at all the principal fact issue — Avithout the consideration of Avhich and its decision for plaintiff there was no basis for the allowance of $20,000. However it may be characterized as a matter of terminology, that was fundamental error, an omission of such character that the result cannot stand, Avhether it be considered in effect fraudulent or othenvise. While the aAvard in terms covers the issues submitted, it now appears plainly that the more important issue as to amount involved was not even considered by the umpire. However, therefore, we may characterize the operation by which it was reached, the aAvard is not responsive to the issues submitted and should be vacated as a matter of laAv.
The actions being on the aAvard as such, it folloAvs not only that the verdict of the jury was right, but also that the motion of defendants for a directed verdict should have been granted. There is therefore no occasion to consider alleged errors in the charge or the admission of evidence. As to the claim that the record of the proceedings before the arbitrators Avas inadmissible for any purpose, see Larson v. Nygaard, 148 Minn. 104, 180 N. W. 1002.
Orders affirmed.