Case Name: Post v. American Central Insurance Company, Appellant
Court: Superior Court of Pennsylvania
Jurisdiction: Pennsylvania
Decision Date: 1912-07-18
Citations: 51 Pa. Super. Ct. 352
Docket Number: Appeal, No. 37
Parties: Post v. American Central Insurance Company, Appellant.
Judges: Before Rice, P. J., Henderson, Orlady and Head, JJ.
Reporter: Pennsylvania Superior Court Reports
Volume: 51
Pages: 352–364

Head Matter:
Post v. American Central Insurance Company, Appellant.
Insurance — Fire insurance — Appraisers—Failure to select umpire.
1. Where a policy of fire insurance provides that each party may select an appraiser, and if the appraisers fail to agree they shall submit their difference to an umpire, and after a fire and the appointment of appraisers in good faith, the appraisers are unable to agree upon an umpire, the insured may maintain an action at law on the policy notwithstanding the arbitration clause.
Insurance — Fire insurance — Election to take articles at appraised value — Waiver.
2. Where a policy of fire insurance on a stock of goods gives the company either the right to pay a loss in money, or to take the articles at their appraised value, or to replace them, the insured may, in an action on the policy, show that the adjuster of the company had agreed to pay the amount determined by the appraisers and that the appraisers had met, examined the goods, but had failed to agree; and the company cannot allege as a defense that the insured two days after the meeting of the appraisers had taken possession of the goods and began selling them to the public.
Insurance — Fire insurance — Forfeiture—False swearing as to value.
3. Where a policy of fire insurance provides that the entire policy shall be void in the case of any fraud or false swearing by the insured touching any matter relating to the insurance, the false swearing which will create a forfeiture must be done willfully and knowingly with a view to defraud the company. The mere fact that the jury found the value of .the goods considerably less than that stated by the insured will not avoid the policy, if there is evidence from which the jury might find, and did find, that the insured had erred in his opinion, without being guilty of any dishonest intention.
Argued March 6, 1912.
Appeal, No. 37, March T., 1912, by defendant, from judgment of C. P. Luzerne Co., Oct. T., 1909, No. 51, on. verdict for plaintiff in case of George S. Post v. American Central Insurance Company.
Before Rice, P. J., Henderson, Orlady and Head, JJ.
Affirmed.
Assumpsit on a policy of fire insurance.
At the trial the jury returned a verdict for plaintiff for 714.
On a motion for judgment for defendant n. o. v. Jones, J., filed the following opinion:
Suit in assumpsit on a policy of fire insurance, which contains the following stipulations and conditions, bearing on the present case:
The loss or damage shall be ascertained or estimated by the insured and this company, or, if they differ, then by appraisers as hereinafter provided. ... It will 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 or like kind or 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. . . . This entire policy shall be void in case of any fraud or false swearing by the insured touching any matter relating to this insurance or the subject thereof, whether before or after a loss.
in the event of a disagreement as to the 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 so chosen shall first select a competent and disinterested umpire. The appraisers, together, shall then estimate and appraise the loss, .... and failing to agree, shall submit their difference to an umpire.
A fire occurred by which the goods insured were either damaged or destroyed.
The jury found a verdict in favor of the plaintiff.
Counsel for the defendant now moves for judgment for the defendant upon the whole record, for the following reasons:
1. Because the suit was prematurely brought.
2. Because the plaintiff, after the fire, deprived the defendant of its option to take all or any part of the articles damaged or to replace the same with other of like kind and quality.
3. Willful and false statements by the plaintiff concerning his loss.
The fire occurred on the night of December 9, 1908, and the company was notified immediately.
Three days later, Mr. Royer and Mr. Heinz, adjusters, examined the stock, requested the plaintiff to make an inventory of the same, which he did, giving them a copy which they checked up; they returned in about ten days, and made an offer of settlement, which the plaintiff refused to accept. Appraisers were appointed, by an agreement, dated December 16, or 19, 1908.
The appraisers met on December 19, 1908, examined the goods, checked them up on the inventory, and tried to agree on an umpire. Many names were submitted by both appraisers, and so far as it appears, each acting in good faith, they were unable to agree.
Neither the plaintiff nor the defendant attempted to appoint any other appraisers, and no appraisal was ever made.
Suit was instituted on June 9,1909. Defendant claims that suit was prematurely brought, because no award had been filed by the appraisers.
The case of the Western Assurance Co. v. Decker, 98 Fed. Repr. 381, was an action of a policy of fire insurance, which contained the same provisions respecting the selecting of appraisers and an umpire as the suit at bar. The company and the insured selected appraisers, but they were unable to agree upon an umpire. It was contended that when the appraisers failed to agree it was the duty of the insured to propose a new selection of appraisers, and that not having done so, and not having appointed an appraiser a second time, he could not maintain his action.
The court held that when the insured, acting in good faith, appoints an appraiser, if the appraisement falls through by disagreement of the appraisers without any fault of the insured, he is not required to propose the selection of other appraisers, but may resort to the courts to have his damage assessed.
In the case of the Caledonian Insurance Co. v. Traub (Md.), 35 Atl. Repr. 13, it was said: “That if the appraisement failed without the fault of the insured, the failure would not be any impediment to their right of recovery if they could maintain their suit on other grounds.”
And to the same effect is the case of Pretzfelder v. Insurance Co., 21 S. E. Repr. 302, and Harrison v. German American Fire Ins. Co., 67 Fed Repr. 577, wherein it was said: “That where the arbitrators, or a majority of them, failed to agree upon an award, the plaintiff (unless he is shown to have acted in bad faith in selecting his arbitrator) is not compelled to submit to another arbitration and another delay, but may forthwith bring his action in the courts.”
In the case of Commercial Union Assurance Co. v. Hocking, 115 Pa. 407, arbitrators were appointed, but being unable to agree, filed no award. The company contended that plaintiff had no right of action until that condition of the policy had been complied with. The court held: “That where an agreement to arbitrate does not provide for submitting matters in dispute to- any particular person or tribunal named, but to one or more persons to be eventually chosen by the parties, it is revocable by either party, and the fact that two arbitrators had been chosen, and having failed to agree, .... the bringing of the suit was a plain revocation of the submission.”
For these reasons we cannot say that the suit was prematurely brought.
The fire occurred on December 9, 1908; the agreement to arbitrate is dated December 19; on December 21, plaintiff opened his store and began selling the goods, damaged and otherwise, and continued in business until April 1, 1910.
Did the plaintiff, by opening his store on December 21, 1908, deprive the defendant company of its option to take all or any part of the articles at the appraised value, or replace the same with other of like kind or quality. .
If he did, then there can be no recovery in this case.
Courts do not favor forfeitures and are liberal according to circumstances in finding a waiver; such waiver may be either express or implied.
In 3 Cooley’s Briefs on the Law of Insurance, 3827, it is stated, “That a submission to arbitration on a demand for an appraisement is a waiver of an option to repair or rebuild.” And in a footnote in 19 Cyc. 881, it is said: “Where the policy provided that the company should take the undestroyed stock at its appraised value, that the right to take did not attach in the absence of an appraisement, regardless of whose fault caused the failure to appraise”; citing as authority for this proposition the case of Swearinger v. Pacific F. Insurance Co., 66 Mo. App. 90. (This report not being in our library, we were unable to consult the same.)
In the same volume, at page 888, it is said that the privilege usually reserved to the company to restore or repair the property, instead of paying the amount of the insurance, must be exercised by some unequivocal act indicating its intention to avail itself of the provisions of the policy in this respect, and the option must be exercised within the time prescribed by the policy.
In the case of Insurance Company of North America v. Hope, 58 111. 75, it is held that the provisions of the policy in this respect must be strictly followed. And in 3 Cooley’s Briefs on the Law of Ins. 3825, it is held that the burden is on the insurance company to prove it has made an election.
In the case at bar there is no testimony that the defendant attempted to exercise its option in this respect; it is claimed that it was deprived of its privilege because plaintiff opened his store on December 21, 1908, and that defendant had thirty days after proofs filed in which to exercise its option, and that they were not filed until February 5, 1909.
In a similar case, Palatine Insurance Co. v. Morton, Scott, Robertson Co., 61 S. W. Repr. 787, the aggregate insurance on plaintiff’s stock was $31,000, covered by twenty-three policies issued by seventeen different companies. The court, in charging the jury, said: “The court instructs you that the defendant was only interested in said option, (that is, the right to take the salvage upon the appraisement), in proportion as the policy issued by it bore to the total number of policies and amounts involved, .... and if you should find from the proof that the demand of the defendant for an appraisal was assented to by the plaintiff, who offered to proceed with the same, and that the defendant refused to proceed therewith in conformity with his demand, by reason of the fact of the sale and disposal of part of the damaged goods, and that the amount of said damaged goods was only a small proportion of the total amount of such goods, and that, notwithstanding said sale by the plaintiff, if there should have been enough of said damaged goods left to be valued and appraised, out of which the defendant could have exercised its option, and if the amount sold by plaintiff could still have been ascertained and appraised, notwithstanding said sale, then and in that event the court instructs you that the defendant cannot rely upon that defense; ” and the appellate court approved of such charge as fully covering that aspect of the case.
Upon a suit growing out of the same fire against another company, viz.: North German Insurance Company v. Morton, Scott, Robertson, 67 S. W. Repr. 816, it was claimed that the insured put out of the power of the insurance companies to have an appraisal of the goods by selling and disposing of the salvage, and therefore barred plaintiff’s action.
This question was considered in the Palatine case, supra, and decided in favor of the insured, and it was attempted to have this ruling of the court reviewed.
In the Palatine case, it was held, “That when there are several insurers with the same form of policy, the right of each is to take only his pro rata of the appraised salvage articles; that even if the insured sells a portion of the salvage, it is immaterial, so long as enough remains unsold to enable the complaining company to exercise its option under the policy to take its pro rata of the salvage.
“ It would seem that this is a reasonable rule, and in cases of concurrent insurance perhaps the only practicable one. . . . The salvage had been left in the possession of the assured, and several of the companies had agreed to its sale. It was in a damaging condition and the delay but added to the deterioration. The salvage was the property of the insured, and for its reasonable value he must account, so that it would be unfair to require him to hold it in a deteriorating condition while the companies delayed settlement and thus give opportunity for its further depreciation.”
In the case of Phoenix Assurance Co. of London v. Stenson, 79 S. W. Repr. 866, it was alleged that the plaintiff immediately after the fire sold and disposed of his personal property, thereby depriving the defendant of the opportunity under the policy of taking the salvage. The court said: “The burden rested upon the defendant to show a substantial breach of the provision of the contract relied on;. . . .in the absence of testimony showing unusual conditions, we think three days was ample time for the insurance company to claim the benefit of the provision of the policy relating to salvage, and the company remaining silent all that time, we think it must be held to have waived its rights in reference thereto, and that the plaintiff did not breach the contract by disposing of the salvage as he did.”
See also Hamilton v. Liverpool, etc., Ins. Co., 136 U. S. 242.
In the case at bar, the insurance company, if liable, had the following privileges: (a) payment, (b) taking the articles at their appraised value, or (c) replacing them.
The adjuster for the defendant company admitted that he had the power to settle this loss, and the plaintiff having testified that the adjuster agreed to pay the amount determined by the appraisers (and upon this motion this testimony must be taken as true), then certainly there was a waiver of defendant’s option to take or replace the goods.
Upon the trial we gave the defendant the benefit of the doubt on this subject, and submitted it to the jury as a question of fact.
But even if there was no waiver, by their agreement to pay, they could not exercise the option to take the goods, because they could take only at their appraised value, and no appraisement having been made, their option in this respect was lost.
Having failed to show any election upon their part to replace the goods, or that opening the store on December 21, 1908, deprived them of their privilege of taking or replacing them, or that there was not sufficient goods on the premises within thirty days after the receipt of the proof of loss, to cover the amount of their policy, we cannot say as a matter of law under the authorities herein cited, that the plaintiff violated the conditions of his policy in the respect herein contended.
Was the plaintiff guilty of any fraud or false swearing, touching the value .of his property damaged and destroyed?
In Franklin Fire Insurance Co. v. Updegraff, 48 Pa. 350, the Supreme Court held, “That to create a forfeiture under a clause of this character, the false swearing must be done willfully and knowingly, with a view to defraud the company.”
And in the case of Susquehanna Mutual Fire Ins. Co. v. Staats, 102 Pa. 529, it was said, “That the honest representation of the value of property to be insured, although somewhat in excess of its true valuation, will not invalidate a policy of fire insurance, notwithstanding a provision that any overvaluation of the property or interest to be insured shall render absolutely void any policy issued upon such description or valuation.”
It is now contended that plaintiff was guilty of fraudulent conduct and false swearing, because he stated the sound value of his goods to be $15,167.73, and the loss or damage upon the same to be $7,737.03; whereas the jury found that the sound value of his goods was $8,689.42, and the loss on his goods $4,200.
The defendant company urges this motion, particularly upon the verdict of the jury as proof of false swearing upon the part of the plaintiff.
Considerable testimony was taken in the case upon the question of the value of the goods.
We charged the jury, that if they believed, that the plaintiff knowingly exaggerated his loss, and willfully made false statements concerning the same, or if he knowingly concealed or misrepresented in writing or otherwise, any material fact or circumstances concerning the policy of insurance issued in this case, .... or if they believed that he knowingly concealed or destroyed his bills, vouchers, receipts, or checks, and that these would be material concerning the value of the subject-matter of the insurance, then they would be warranted in saying that he had violated this condition of the policy, and by his conduct the policy became void, and he could not sustain this action.
Further on we said, “You should carefully scrutinize Mr. Post’s testimony on the question of the amount of goods he had in that store, and their value at the time of this fire. ... Do you believe that he exaggerated or put a false value on these goods? ”
It cannot be assumed that the instruction of the court was disregarded without convincing evidence.
The testimony must have produced the conviction in the minds of the jury, under our charge, that Mr. Post had erred in his opinion without being guilty of any dishonest intention. This question was necessarily one of fact for the jury to determine.
For the reasons herein stated, we overrule the motion for judgment non obstante veredicto.
Error assigned amongst others was in refusing motion for judgment for defendant n. o. v.
M. J. Martin, for appellant.
— We submit that the sale of the damaged goods precludes the plaintiff’s recovery: Howard Ins. Co. v. Hocking, 115 Pa. 415; Marino v. Fire Ins. Co., 227 Pa. 120; Platt v. iEtna Ins. Co., 153 111. 113 (38 N. E. Repr. 580); Langan v. AEtna Ins. Co., 96 Fed. Repr. 705.
The privilege reserved by insurers to repair or replace the property destroyed is a reservation for the benefit of the company which they may adopt or not as they think proper: Com. Ins. Co. v. Sennett, 37 Pa. 205; Wynkoop v. Ins. Co., 91 N. Y. 478; Westchester Fire Ins. Co. v. Dodge, 44 Mich. 420 (6 N. W. Repr. 865); Mc-Allaster v. Ins. Co., 156 N. Y. 80 (50 N. E. Repr. 502); Hamilton v. Ins. Co., 136 U. S. 242 (10 Sup. Ct. Repr. 945); Hamilton v. Ins. Co., 137 U. S. 370 (11 Sup. Ct. Repr. 133); Lancashire Ins. Co. v. Barnard, 111 Fed. Repr. 702; Beals v. Ins. Co., 36 N. Y. 522; Kelly v. Sun Fire Office, 141 Pa. 10; Fire Association v. Rosenthal, 108 Pa. 474; Brady v. Insurance Co., 11 Mich. 425; Morrell v. Insurance Co., 33 N. Y. 429; Heilmann v. Insurance Co., 75 N. Y. 7.
The company could not after the sale get the stock or offer to replace or restore by trading sound and undamaged articles for the damaged ones: Kelly v. Sun Fire Office, 141 Pa. 10; Dávis v. Grand Rapids Ins. Co., 36 N. Y. Supp. 792; 157 N. Y. 685; Chainless Cycle Mfg. Co. v. Security Ins. Co., 64 N. Y. Supp. 1060; 169 N. Y. 304.
The finding of the jury amounts to a finding that the defendant willfully and knowingly exaggerated and made false statement concerning his loss: Catron v. Ins. Co., 6 Humph. (Tenn.) 176; Anibal v. Ins. Co. of N. A., 82 N. Y. Supp. 600; Sternfield v. Ins. Co., 50 Hun, 262; Wall v. Howard Ins. Co., 51 Me. 32; Levy v. Baillie, 7 Bing. 349.
Where there is a discrepancy between the alleged and the real value it is incumbent on the insured to show that such discrepancy was the result of an honest mistake: Hoffman v. Western Mar., etc., Ins. Co., 1 La. Ann. 216; Israel v. Ins. Co., 28 La. Ann. 689.
C. B. Lenahan, for appellee.
— It has been generally held that if the insurer after a loss has occurred claims a forfeiture for noncompliance with certain conditions of the policy, it cannot be heard afterward to assert further or different breaches as a defense: Shay v. Phoenix Acc. & Sick Benefit Assn., 28 Pa. Superior Ct. 527; Western & A. Pipe Lines v. Ins. Co., 145 Pa. 346; Freedman v. Fire Assn., 168 Pa. 249; McCormick v. Ins. Co., 163 Pa. 184; Earley v. Fire Ins. Co., 178 Pa. 631.
Where the policy provided that the company should take the undestroyed stock at its appraised value, it was held that the right to take did not attach in the absence of an appraisement regardless of whose fault caused the failure to appraise: Swearinger v. Ins. Co., 66 Mo. App. 90.
And the burden is on the insurance company to show its election: Ins. Co. of North America v. Hope, 58 111. 75.
When there are several insurers with the same form of policy, the right of each is to take only his pro rata of the appraised salvage articles; that even if the assured sell a portion of the salvage, it is immaterial, so long as enough remains unsold to enable the complaining company to exercise its option under the policy to take in pro rata of the salvage: Palatine Insurance Company v. Morton, Scott, Robertson Co., 61 S. W. Repr. 787; North German Insurance Co. v. Morton, Scott, Robertson Co., 67 S. W. Repr. 816; Phoenix Assurance Co. of London v. Stenson, 79 S. W. Repr. 866; Hamilton v. Ins. Co., 136 U. S. 242 (10 Sup. Ct. Repr. 945).
No inference of false swearing can be drawn from the verdict of a jury. And the fact that the jury gives a verdict for less than the claim does not sustain the charge of false swearing: Moore v. Protection Insurance Co., 29 Maine, 97; Franklin Ins. Co. v. Culver, 6 Ind. 137; Phoenix Ins. Co. v. Munday, 5 Caldwell (Tenn.), 547.
July 18, 1912:

Opinion:
Opinion bt
Head, J.,
In refusing the defendant's motion for judgment non obstante veredicto and directing judgment to be entered on the verdict, the learned judge of the common pleas filed an elaborate and convincing opinion. In it he reviews separately and fully each one of the legal points advanced by the appellant as ground for a reversal of the judgment.
After an examination of the entire record and due consideration of the arguments of counsel, we are all of opinion the case was properly tried and the judgment should not be disturbed. To undertake to here set forth the reasons that lead us to this conclusion would be to do again what has been done by the learned trial judge. We therefore adopt his opinion. The assignments of error are overruled.
Judgment affirmed.