Court Opinion

ID: 3613647
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:57:18.321512+00
Date Added: 2024-06-11T14:24:27.922336
License: Public Domain

This action was brought to recover damages, occasioned by fire upon plaintiff's premises, upon an alleged contract of insurance. The answer, among other defenses, alleged that after the fire the parties entered into an agreement in writing by which they selected appraisers to determine the amount of loss sustained by the plaintiff, and that the appraisers estimated and appraised the sound value of the property and the damages sustained by the fire, and agreed that the damage to the property was the sum of $49.60, and thereupon they made, executed and delivered their appraisal and award in writing at that sum. The plaintiff replied thereto, denying upon information and belief that there was any appraisal made, executed or delivered by the appraisers as mentioned in the answer, and further, that if any appraisal had been made, it was obtained by fraud and artifice and was a false, fraudulent and void appraisement, nugatory and of no account.
Upon the trial the case was opened on behalf of plaintiff by her counsel, and then the defendant moved for a judgment on the pleadings on the grounds that the complaint did not state facts sufficient to constitute a cause of action, and that there was no allegation that notice of loss had been served on the defendant. Leave was then granted to the plaintiff to amend the complaint in these particulars. Thereupon a discussion took place with reference to the effect of the award alleged in the answer, after which the written award was produced and marked as an exhibit in the case. The court then dictated to the stenographer what purports to be an offer on the part of the plaintiff to show that the award was inadequate; that the arbitrators awarded but forty-nine dollars, and the actual damages were over one thousand dollars; that one of the arbitrators was induced to sign the award without actually knowing what he was doing, and that two days afterwards he signed another award for eight hundred and fifty dollars damages; that there was fraud in the execution of the arbitration because the arbitrators did not examine the property before making the award; that the award does not represent the honest *Page 216 
judgment of the arbitrators; and that their acts were wrongful. The court thereupon excluded the evidence and dismissed the complaint, holding that the award being regular upon its face it was binding upon the parties, and that the claim that it was procured through fraud and artifice could not be litigated in this action. Exceptions were taken by the plaintiff to these rulings.
It is contended on behalf of the respondent that the award could not be annulled, except by an action brought for that purpose. It is conceded, however, that in an action brought to vacate and annul the award on the ground of fraud, an action upon a contract of insurance may be united therewith and a recovery had thereon in case the award is vacated. In this case the plaintiff's complaint is based upon the contract, and demands judgment for the damages sustained by reason of the fire. In her reply she has specifically denied that any award was ever made by the appraisers, and has also alleged that if such an award had been made, it was procured through fraud and artifice. It will thus be seen that by taking the complaint and the reply together all of the matters are alleged necessary for the obtaining of the relief to which the plaintiff may be entitled. It is claimed, however, that the reply served was unnecessary and improper. Assuming that it was unnecessary, it is not apparent that the defendant was injured thereby or deprived of any of its rights. It accepted the reply and did not return it or raise any question upon the trial with reference to its contents. The allegations of the answer in reference to the award were in the nature of a defense and not a counterclaim. No reply thereto was necessary unless the court in its discretion required the plaintiff to reply thereto. (Code C.P. § 516.) "Each material allegation of the complaint, not controverted by the answer, and each material allegation of new matter in the answer, not controverted by the reply, where a reply is required, must, for the purposes of the action, be taken as true. But an allegation of new matter in the answer, to which a reply is not required, or of new matter in a reply, is to be deemed controverted by the adverse party, *Page 217 
by traverse or avoidance, as the case requires." (Code C.P. § 522.) "There is only one form of civil action. The distinction between actions at law and suits in equity, and the forms of those actions and suits, have been abolished." (Code C.P. § 3339.)
In the case of Bates v. Rosekrans (37 N.Y. 409) the action was brought upon several promissory notes. The answer interposed what is claimed to be an equitable defense of payment. Upon the trial defendant insisted that he was entitled to judgment on the ground that the plaintiff did not reply to his answer. It was held that no reply was necessary, and that the plaintiff had the right to show that his notes had not, in fact, been paid. In the case of Arthur v. Homestead Fire Ins. Co. (78 N.Y. 462) an action had been brought based upon a policy of insurance, and the defense interposed was that the property insured was incumbered by a mortgage which was not mentioned in the application for insurance. Upon the trial the plaintiff offered to show that the defendant's agent who made out the application was informed of the existence of the mortgage, and that it was omitted by him from the application by mistake. The court excluded the evidence and the plaintiff was nonsuited. This action was then brought to reform the application. It was held that the evidence excluded in the first action was proper and should have been received; that the nonsuit was improper, and that this action was unnecessary. In the case of Smith v. Salomon (7 Daly, 216) the complaint was for the balance of the contract price of goods sold and delivered. The answer alleged a composition agreement to accept 50 per cent of the contract price as full payment, and that the amount agreed upon had been paid. Upon the trial plaintiff offered evidence to the effect that the compromise agreement was procured and induced by fraud. Upon motion the complaint was dismissed, the court holding that the plaintiff must proceed by separate action to set aside the agreement. Upon review the judgment was reversed. DALY, Ch. J., in delivering the opinion of the court, said: "I can see no reason why *Page 218 
he (plaintiff) should be put to an equitable action. He is seeking no remedy as against the trustee, or as against the assigned property. He is merely seeking in this action to enforce the payment of the whole debt upon the ground that the defendants have never been discharged from it, they having by false and fraudulent representations induced the plaintiff to sign the composition deed. As between the plaintiff and the defendants this question of fraud may as well be passed upon in this action as in any other. The court has all the necessary parties before it that will or can be affected by the judgment whether it is rendered for the plaintiff or for the defendants, and I see no reason why the plaintiff should be turned over to an action for deceit, or any other form of action, but the one brought to determine whether the defendants are, as between them and the plaintiff, discharged from the payment of the residue of the debt."
Under the provisions of the Code to which we have alluded new matter set forth in the answer by way of defense is deemed controverted by the adverse party by traverse or avoidance, as the case requires. It, consequently, was the privilege of the plaintiff not only to show that an award had not been made, but, if made, to also show any facts which would avoid it. No reply was necessary unless the court required it, but this provision does not deprive the plaintiff of the privilege of replying if he so desired, and thus in advance advising the defendant of the claim that will be made to the new matter alleged in the answer. There is but one form of action. The distinction between actions at law and suits in equity has been abolished.
It is now claimed that the award could not have been set aside if the evidence offered had been received. We have already stated the offer as dictated by the court; counsel for the respective parties appear to have taken but little part in the trial. The conduct of the case was taken in hand by the trial judge, who assumed to make up a record for the plaintiff. Under the circumstances, we do not feel called upon to construe the offer too strictly. As we have seen, the offer was *Page 219 
to show not only that the award was inadequate, but that one of the arbitrators was induced to sign it without knowing its contents, and that two days thereafter he signed another award for $853; that the arbitrators did not examine the property; that their acts were wrongful and their judgment not honest. If their acts were wrongful and their judgment not honest, there must have been fraud and a case presented which called for a trial.
We are of the opinion that the plaintiff had the right in this action to establish, if she could, that the award was procured through fraud and artifice, and that the judgment should be reversed and a new trial granted, with costs to abide the event.