Court Opinion

ID: 7941495
Source: CourtListenerOpinion
Date Created: 2022-09-08 23:15:24.414868+00
Date Added: 2024-06-11T16:33:44.600742
License: Public Domain

Grant, J.
(after stating the facts). 1. It was insisted upon the hearing in the court below that all the insurance companies who were parties to the arbitration should have been made parties to one suit brought to set it aside, and that, therefore, the bill should be dismissed for lack of indispensable parties. The contention is sound, and, if this objection had not been waived, it should prevail. The learned circuit judge recognized the rule, but held that the same object could be accomplished by a consolidation of the cases. Whether that opinion be sound we need not determine. The bill set up all the facts in regard to the agreement of submission, and showed that all the companies now defendant were parties to that submission. The necessity of such parties, therefore, appeared upon the face of the bill, and, under the holding in Powers v. Hibbard, 114 Mich. 533 (12 N. W. 339), this objection should have been raised by demurrer. It was too late to raise it upon the hearing.
2. Complainants were permitted to testify to conversations with one Smitha, who was the agent and general adjuster for the defendants. Smitha had died long before the hearing. A third party was present at those conversations. Counsel for complainants admit that the testimony should have been excluded under section 10212, 3 Comp. Laws, prohibiting parties from testifying to facts equally within the knowledge of the deceased, if a third party had not been present. The admission of such testimony would be in plain violation of the statute. The third person is the only one competent to testify to what passed between the parties, one of whom is dead. This was expressly decided in Taylor v. Bunker, 68 Mich. 258 (36 N. W. 66). Although this is a chancery case, the circuit judge was under no obligation to admit such evidence, and should have excluded it.
3. It is next urged that complainants are not in position *423to raise the question of fraud in procuring the submission contrary to the terms of the policy, because their letters and those of their attorneys made no such claim, and no such claim was made until the bill was filed. Several authorities are cited which seem to support this proposition, but it is unnecessary to pass upon it. The contract of submission can be set aside only for fraud or mistake. We find no evidence of fraud on the part of the agents of the defendants who executed it, and no mistake is claimed. The agreement was very short, and both complainants had it in their possession and signed it. Aside from the description of the property on which the loss was to be determined, it does not fill a page of the record, and entire it fills only two pages. Both appraisers, who were disinterested, and one Loeb, an adjuster for the defendants, testified that complainants read it. They had ample opportunity to read it, and it was their own fault if they did not. The only basis for setting aside tho submission is that the complainants did not choose to read it, but supposed it was in accordance with the policy. Mr. Michels testified that he knew there was a provision for arbitration, but did not know its terms. Contracts cannot be set aside simply because one of the parties thereto did not choose to read them over. If complainants had prepared the submission, and submitted it to the defendants for their approval and execution, and the defendants had been dissatisfied'with the award and complainants satisfied, would these defendants be permitted to say, “The award is fraudulent, because our agents signed it without choosing to read it ? ” A contract of submission between an insurer and its insured is governed by the same rules as a similar contract between any other parties. The circuit judge found there was no actual fraud, but that there was a legal fraud upon 'the complainants, in that they were not informed by defendants of the effect of the agreement. Where the effect of the contract is so patent upon its face that any layman can understand it, there is no occasion for either party to inform the other of its effect. This precise question, under *424a state of facts very similar, and under a Michigan standard policy, was raised in Montgomery v. Insurance Co., 108 Wis. 146 (84 N. W. 175). The agreement for submission is almost identical with this. It made the award binding and conclusive. The court, speaking through Chief Justice Cassoday, said:
“ In the absence of fraud or mistake, Mollie Montgomery was conclusively presumed to know the contents of the appraisal agreements, and must be deemed to have entered into such agreements understandingly. ”
The contract of submission must be held valid.
4. The circuit judge, in a written opinion, said, “I have no reason to think there was any corruption on the part of the appraisers.” We thoroughly agree with this conclusion. They were experienced men; had no interest in the matter; and spent between two and three days in the examination of the property, listening to the statements of the complainants and their foreman, and in making up their award; were furnished a list of the property which complainants claimed was lost and damaged, and made such an examination and investigation as they deemed necessary to pass upon the matters submitted to them. They were under oath. Complainants naturally chose their appraiser from Detroit. The defendants naturally chose a man from the outside. Both acted honestly. The charge made by complainants and their counsel that the appraiser Mr. Caryl, chosen by them, “sold them out,” is unjust, and has no foundation whatever. Mr. Caryl may have been mistaken in judgment, but there is nothing in the record worthy of belief to impeach his honesty, or to show that he was improperly controlled in his judgment by his co-appraiser. Neither is there anything to show that Mr. Douglas did not act honestly, and according to his best judgment. He had frequently been employed, both by insurers and insured, in services of this character. In order to convict men of untruthfulness, dishonorable and corrupt conduct, courts must be able to find some convincing evidence in the record. The learned counsel for *425the complainants in their brief assert, “We believe no jury could be found that would not declare from the evidence that this was a corrupt and partial award.” A court of equity cannot abdicate its duty or submit its conscience to what a jury might do in any case, not even that of an individual against a corporation. Under the Consti-' tution and laws of this State, a court of law is not the proper forum to determine whether an award under an arbitration, agreed to by the parties thereto, was corruptly and fraudulently made. Courts of equity alone are clothed with the power to'set them aside. The learned counsel recognized this rule in withdrawing a juror and commencing proceedings in equity. The contention that this award should be set aside as fraudulent and corrupt fails.
5. Counsel urge that the appraisal must be set aside because the appraisers refused a proper hearing to the complainants. This claim is based upon the testimony of Mr. Michels that, on the evening of the 30th of June, he went to Mr. Caryl’s house to talk with him about the award, — a proceeding of at least doubtful propriety. He testified:
‘ ‘ I told him I understood there was a question on their part whether the patterns we claimed were burned were in that vault, and I came up to tell him that, if he would bring Douglas down in the morning, I would show the patterns, and that their condition was badly burned; that they were no good. He said, ‘All right, we will be down early in the morning.’”
Mr. Caryl denies this conversation.
Mr. Bresee testified that Friday (the 30th) afternoon, about half past 4, he went to the Bussell House, and saw Mr. Douglas; that the question had arisen as to whether two large planer patterns were in the vault; that Bresee told him he thought he could furnish him evidence — some parts — to show him that they were there; that Douglas replied he wished he would, and wished he would be down in the morning about 10 o’clock. Bresee testified that he reported this conversation to Michels, and this offered the occasion for Michels’ visit to Caryl.
*426It was a matter of no great importance whether these patterns were in the vault or not. They were on the schedule of property lost and damaged furnished by complainants to the appraisers. The appraisers had examined the damaged property, and were upon the premises two or three times a day for two or three days. No demand for sworn testimony or for an open hearing was made by either party to the submission. It was evidently not contemplated; at least neither had demanded it. The appraisers found the remains of nearly everything except the two large planer patterns. The insurance companies left the appraisers to go to the scene of the fire, view the property, and take whatever statements they chose from the complainants. There was no such refusal to give the parties a hearing as, under the authorities, justifies the setting aside of the award.
6. Complainants insist that a wrong method of estimating the loss was adopted, and that the award is void for that reason; citing Dodds v. Hakes, 114 N. Y. 260 (21 N. E. 398); Laurent v. Insurance Co., 1 Hall, 45. Washington Mills Emery Manfg. Co. v. Insurance Co., 135 Mass. 503; McCuaig v. Insurance Co., 18 U. C. Q. B. 130. Those cases are little in point. Washington Mills Emery Manfg. Co. v. Insurance Co. is as favorable to complainants’ contention as any. In that case a grantor of land sold the land, reserving a building, to be removed by a day named, and, if not removed within the time, it was to go to the grantee of the land. Before the expiration of the time for the removal, it was destroyed by fire. The insurance company maintained that the value of the property must be measured by its value for removal, and not by its intrinsic value as it stood upon the land. The court, of course, held the measure of damages to be its value as it stood upon the land. In this case the appraisers exercised their judgment upon the intrinsic value of the property. The submission provided that, in determining the sound value and the loss or damage, the appraisers should estimate the actual cash cost of replacing or *427repairing the same, or the actual cash value thereof; “and, in case of depreciation of the property from use, age, condition, location, or otherwise, a proper deduction shall he made.” Many patterns become what are called “dead” patterns. These are useless, and of no value. Complainants testified that they threw out every year wagon loads of them. They had a fire in November preceding, in which they recovered for loss .of patterns the full amount of insurance, $3,000, lacking $22. The most of, if not all, the patterns for which they now seek recovery were then in existence, and in the building at the time of the fire. Many of them were 10 and 12 years old; many others older. Some were patterns of machines no longer manufactured. There might possibly be an occasion to use some of these old patterns. In fixing the loss the appraisers took these things into account. They allowed nothing for absolutely “dead” patterns, but allowed something for those for which there might possibly be a use. We think this was within the terms of the submission, authorizing them to make a proper deduction for depreciation by use, age, condition, location, or otherwise. Radley v. Seider, 99 Mich. 433 (58 N. W. 366).
7. Counsel also insist that the award should be set aside for its gross inadequacy; citing authorities which hold that, where the assessment is so erroneous or exorbitant as to induce a belief that the arbitrators were corrupt or grossly partial, it should be set aside. Complainants make no case for the application of this rule. Appraisals were made by others subsequent to that under the submission, and, as one of them testified, he depended largely upon what the complainants told him as to the property and its condition. They did not have that opportunity for personal examination that Caryl and Douglas had: Such a finding must, of necessity, be based upon the adoption by the court of the estimates subsequently made by persons employed by complainants and by their own testimony. We must, therefore, in order to so find, take their opinions *428as true, and hold Caryl and Douglas, disinterested parties, acting under oath, as being corrupt or grossly partial. The record will not justify us in coming to that conclusion. Evidently the learned circuit judge could not adopt such a conclusion, after seeing the witnesses for the respective parties.
Complainants’ counsel, in their brief, claim a loss for their' clients, under the proofs, of $6,987.30. They also say that Weiss and Goring, two witnesses employed by complainants to examine the patterns, “estimated the loss on patterns to be $5,571.” I find no testimony in the record to sustain this statement. Neither Weiss nor Goring testified to the amount of damages made by them, except by reference to their schedule, known as “Exhibit Z2,” in the record. This schedule does not pretend to show the loss on patterns. There is a column headed “Sound Value,” and another, “Loss.” There are no figures whatever in the column “Loss,” while the column “Sound Value’’figures up $6,904. There is another part of the schedule without any heading or anything to explain what' it means. The dollars column foots up $408.
But, if their testimony were as stated, there is no reason in saying that it was not as much too large as that of Caryl and Douglas was too small. Nor is there any reason for saying that the judgment of the former was better than the judgment of the latter. If Weiss and Goring had been chosen by the parties as appraisers, and had made an award to the full extent of the loss now claimed by the complainants, and if defendants had then employed Caryl and Douglas to make an appraisal, and they had fixed the damage at $740, would their conclusion as to the value show that the appraisal of' Weiss and Goring was grossly excessive, so as to stamp the award as fraudulent and void ? None of the machinery was destroyed. It was only damaged by water, and this damage was caused mainly by rust. The damage by rust would be greater the longer the machinery stood uncleaned. The patterns of a foundry and machine shop have no market value. *429Their value depends upon their condition, the use to which they can be put, and whether the machines for which they are made are in common use, or whether they are what is known as dead ” patterns. It is one of those cases where honest appraisers may honestly differ, and where prejudiced appraisers would be likely to fix amounts according to the wishes of their employer. In such cases the only safe rule is to sustain that appraisal to which the parties have agreed, especially when such appraisal is under oath, and made at a time when the damages can be most justly appraised.
The decree is reversed, and the bills dismissed.
Hooker, C. J., Moore and Montgomery, JJ., concurred. Long, J., did not sit.