Court Opinion

ID: 3682282
Source: CourtListenerOpinion
Date Created: 2016-07-06 06:27:50.173365+00
Date Added: 2024-06-11T15:29:37.893129
License: Public Domain

On a rehearing the principal argument on behalf of the defendant and appellant dealt with the effect of the failure of the appraisal on the optional rights of the company to take all or any part of the goods at an ascertained or appraised value or to replace the damaged goods. It is said that the effect of the non-waiver provision is to keep alive the option to replace notwithstanding the failure of the appraisal. The record shows that the company promptly repudiated the attempted appraisal and refused to be bound by it and that the proof of loss submitted was one based upon this appraisal. We think it so clear that the option to take all or any part of the articles insured at an ascertained or appraised value is only available where there is an ascertained or appraised value prima facie binding upon the company that it needs no further argument to demonstrate that this option was not available, and we shall give no further consideration to this phase of the matter.
That portion of the original opinion which holds that neither option was any longer available to the defendant in the circumstances disclosed by the record was especially criticized with reference to the option to replace the damaged goods. Did the option to replace still exist after the ineffectual effort to appraise the loss, or does it exist wholly apart from an ascertainment by agreement, appraisal, or otherwise, of the loss? This is the question to be determined.
An insurance contract is an obligation to compensate for a loss. The obligation is limited to a stated amount of money and is ordinarily considered to be payable in money. The standard policy contains provisions governing the method to be pursued, in case of loss, in arriving at the amount of the loss if the parties do not agree. The insured fulfills every duty he owes under the contract when he sets in motion the machinery for arriving at a determination of the loss. If the effort is abortive, through no fault of his, he has not lost his insurance. The obligation to pay the loss remains. The parties could not legally contract to deprive the ordinary tribunals of jurisdiction to determine their rights under the contract. Section 5927, Compiled Laws of 1913. An insurance contract is not a contract to submit a *Page 850 
matter for arbitration; it is a contract to pay a loss. In view of the disadvantage to the insured of further delay incident to the failure of one appraisal, we are not inclined to impose upon the insured, through interpretation of the policy, an obligation to resort to another attempt at appraisal; for it will be noted that, under the contentions of the company, the insured is bound, during the thirty-day option period after the receipt of the proofs of loss, to take no steps which would interfere with the full enjoyment by it of the options if it should elect during that period to exercise either of them. Meanwhile, the insured may be sustaining additional losses due to interruption of his business, to the continuity of overhead expenses, etc. The interpretation contended for by the insurance company places in the company, practically speaking, the power to compel the closing of a large mercantile establishment for the option period at the peril of forfeiting a claim for a small loss under the policy. The parties having disagreed, the policy method fixed as a condition precedent having failed without the fault of the insured, and the company having rightly repudiated the invalid appraisal, we see no further obstacle to the pursuit of the ordinary legal remedy to recover the loss. 14 R.C.L. p. 1361, ¶ 532 and cases cited.
To us it seems clear that the insurer, while repudiating all steps that have been taken to arrive at an estimate of the loss, is not in position, under the policy, to await the outcome of some later voluntary attempt at adjustment and then claim that it has thirty days' time within which to determine whether it will replace the damaged property. It seems to us that the purpose of the option to replace, as well as the option to take the damaged goods at an ascertained or appraised value, is to protect the company against excessive appraisals which are binding upon them or to protect it from excessive claims contained in proofs of loss otherwise furnished by the insured and upon which it elects to act. Where proofs are submitted which the company for a legally sufficient reason rejects, it in effect says that the claim is not liquidated at the amount stated and, consequently, that the basis has not been fixed upon which it may later determine whether or not to exercise one of its options. After so rejecting proofs of a claim or a proof of loss, it is not in a position to contend that it was prejudiced through inability to later exercise an option. We are of the opinion that these provisions *Page 851 
are not inserted for the purpose of protecting the company against an ascertainment of a loss in legal proceedings. They have to do wholly with the steps which are in the nature of conditions precedent to legal proceedings being brought.
The order of reversal will stand.
NUESSLE, Ch. J., and BIRDZELL, CHRISTIANSON, BURKE, and BURR, JJ., concur.