Court Opinion

ID: 3508309
Source: CourtListenerOpinion
Date Created: 2016-07-05 22:18:50.209738+00
Date Added: 2024-06-11T09:36:18.189397
License: Public Domain

A rehearing was granted. The questions involved were reargued and have been reconsidered.
The action is on the award or finding of damages by the appraisers. The claims of the parties may be understood from the following:
(1) The defendant claims that the award was a nullity because one of the appraisers, its own, failed to act, though present, and that there was no submission of differences to the umpire as required by the policy as a condition to an award.
(2) The defendant claims that the plaintiff lost the right to recover any part of its loss because it sold a large portion of the property, or at least lost the right to recover as to the portion sold; and the plaintiff's contention in this connection is that the defendant, by various acts to be noted as we proceed, waived all defenses.
1. The parties argued at length the first point which applies only to the Phoenix policy. The plaintiff's contention may be disposed of shortly. The evidence is meager. It is clear however that the two appraisers did not agree. The defendant's appraiser was not there to work out an agreement as to damages. He did not agree nor particularly oppose. He was negative. He did not make known his position. The award of the appraiser and the umpire, as against the objection made, was valid.
2. It is well to understand at the outset that the defendant does not claim a forfeiture of the policy. There was no misrepresentation when it was issued, nor did anything occur afterwards and before the fire in breach of it. At the time of the fire it was in force and the defendant was legally liable.
There was a disagreement as to the amount of the loss. The defendant demanded an appraisal. The policy provided that the insured should separate the damaged and undamaged property, make *Page 10 
an inventory, and give a right of inspection when demanded by the defendant; and relative to the taking or replacing of the property by the defendant there was this provision:
"It shall 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 of like kind and 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; but there can be no abandonment to this company of the property described."
On the day the defendant demanded an appraisement the plaintiff commenced a sale which in four days resulted in the disposition of 74 per cent of the property. The plaintiff alleges but offers no proof that this was done with the consent and authority of the defendant. The defendant alleges but offers no proof that it was done against its protest.
By making the sale the plaintiff deprived the defendant of the right, to the extent of the property sold, to take it at its appraised value, or to replace it, and cannot recover damages to the portion sold. This is the result of the cases: Astrich v. German Am. Ins. Co. (C.C.) 128 F. 477; Astrich v. German Am. Ins. Co. 65 C.C.A. 251, 131 F. 13; Providence Washington Ins. Co. v. Wolf (Ind.App.) 72 N.E. 606; Oshkosh Match Works v. Manchester Fire Assur. Co. 92 Wis. 510, 66 N.W. 525; Hamilton v. Liverpool L.  G. Ins. Co. 136 U.S. 242, 10 Sup. Ct. 945, 34 L. ed. 419; Johnson v. Hartford Fire Ins. Co. 94 Misc. 163,157 N.Y. Supp. 893. In reaching this conclusion we do not overlook Davis v. Grand Rapids Fire Ins. Co. 15 Misc. 263, 36 N.Y. Supp. 792, affirmed without opinion in 157 N.Y. 685, 51 N.E. 1090.
To combat this result the plaintiff urges that the defendant's right to take the property at its appraised value or to replace it was optional, and so it was. It was the right to take or replace after appraisal and proof of loss if it chose. It was this optional right, a substantial right secured by the contract, of which the plaintiff deprived it. To say that it never offered to take or to replace the *Page 11 
property and might never have exercised its option is no answer to its claim of breach. It was entitled to exercise its judgment after appraisal and proof of loss. The plaintiff, in violation of the contract, took away the defendant's opportunity and of this it complains. What we may speculate that it might or might not have done is unimportant.
If we have proceeded correctly thus far the situation is this: There was liability on the policy at the time of the loss. The liability was to be determined in a specific way, that is, by appraisal, with the right in the defendant to take or replace the damaged property. When the plaintiff disposed of 74 per cent of the property the defendant's right to take or replace, as to the property sold, was gone. The defense of the defendant, as to the property sold, was then complete. It has the defense now unless lost by waiver. By directing judgment for the plaintiff the court determined that the defense was waived as a matter of law. If waived it was waived either by some action in reference to the proofs of loss or the appraisement.
The proofs of loss were submitted. In its answer the defendant alleges that it notified the plaintiff that they were incorrect and not in compliance with the policy. The reply assumes to set forth the terms of the notice but there is no proof. From what is before us no waiver can be found.
The more serious question is in connection with the appraisal. After the sale appraisers were selected and they appointed an umpire. This was after the proofs of loss were furnished and when the defendant knew of the sale. The appraisers met on January 9, 1923, and the one appointed by the plaintiff and the umpire determined the loss. The appraisement was of the entire property, that sold 2 or 3 months before and that remaining unsold.
Perhaps, when the sale came to the attention of the defendant, it might have renounced liability and refused to proceed with the appraisal and have defended, so far as it was sought to enforce damages for the property sold, upon the ground of the breach. But some property, a substantial fraction, remained which could be appraised. The defendant had to do something. It might put the *Page 12 
plaintiff in the wrong by continuing with the appraisal, and insisting that there could not be an appraisal of or liability for more than that remaining. It could make the claim, we think, that the plaintiff could not have an appraisal of that left, or a recovery of damages to it, that is, that the plaintiff's breach was complete and prevented any recovery, without being charged with a waiver by its participation. In this connection the defendant refers to the provision of the policy, quoted in the former opinion, as to nonwaiver.1 This language was construed in Beauchamp v. Retail Merchants Assn. 38 N.D. 483, 165 N.W. 545, where the court, referring both to a policy nonwaiver clause and an agreement of nonwaiver made after loss, said:
"Such stipulations and agreements should not be extended by implication beyond their exact terms, and the conduct of the insurer after it passes the stage of investigation and ascertainment will be subject to the same rules as though such stipulation or agreement did not exist."
It may be inaccurate to speak of waiving a nonwaiver clause. The cases use such language; and the authorities are that the existence of a nonwaiver clause does not prevent a waiver. Henderson v. Standard Fire Ins. Co. 143 Iowa, 572, 121 N.W. 714; McMillan  Son v. Insurance Co. of N.A. 78 S.C. 433,58 S.E. 1020, 1135; Springfield F.  M. Ins. Co. v. Fine, 90 Okla. 101,216 P. 898; Penn. Fire Ins. Co. v. Hughes, 47 C.C.A. 459, 108 F. 497; Queen of Ark. Ins. Co. v. Malone, 111 Ark. 229,163 S.W. 771; McCollough v. Home Ins. Co. 155 Cal. 659, 102 P. 814,18 Ann. Cas. 862. These cases involve forfeitures of the policy for misrepresentations preventing liability attaching, or breaches afterwards and before loss resulting in a release of liability, as do the cases cited by plaintiff. Home Fire Ins. Co. v. Kennedy, 47 Neb. 138, 66 N.W. 278, 53 Am. St. 521; Hollis v. State Ins. Co. 65 Iowa, 454; Eagle Fire Co. v. Globe L.  T. Co.44 Neb. 380, 62 N.W. 895; Titus v. Glens Falls Ins. Co. 81 N.Y. 410; Kiernan v. Dutchess County Mut. Ins. Co. 150 N.Y. 190,44 N.E. 698. Still, the nonwaiver clause must be given its fairly intended effect. *Page 13 
If at the appraisal the defendant had insisted that by the sale of the property the plaintiff had lost its right of recovery for damages to any of it, or of damages to any of it except that remaining unsold, there would be no difficulty. It did not do this. Its appraiser did nothing. But the plaintiff's violation of the stipulation of the contract was palpable and the defendant should not be penalized by holding that it waived the breach because it did not protest. The damage was done and the plaintiff could not repair it. It should still have the defense that there could be no award as to the property sold.
It is another contention of the plaintiff, if we get its position correctly, that the defendant, by assuming the attitude that the plaintiff could not recover for the property sold, impliedly admitted some liability, and, the contract being an entire one, thereby waived the right to assert a defense against any part of the loss. There are cited Plath v. Minnesota F.M.F. Ins. Assn. 23 Minn. 479, 23 Am. St. 697; Parsons, Rich  Co. v. Lane, 97 Minn. 98, 106 N.W. 485, 4 L.R.A. (N.S.) 231,7 Ann. Cas. 1144; Page v. Rollingstone Mut. F.F. Ins. Co. 166 Minn. 74,207 N.W. 24. These cases involve situations where the policy is for a single premium and specific amounts are allotted to different items of property, and as to one item there is a breach. It is our holding, as illustrated by these cases, that the breach goes to the entire policy. The application of the doctrine is noted in 26 C.J. 101. It is without application here. There was no breach affecting the validity of the policy. It was in force and enforceable at the time of the loss. There is nothing in the cases cited favorable to the plaintiff. If the defendant had conceded liability for the damage to the property not sold, the case would give us no trouble. That would have been as much as the plaintiff could ask. It could not complain, and there would be no ground for asserting a waiver. Besides the plaintiff is basing its claim in this connection upon the facts alleged in the answer which it denies in its reply. There is an issue, there was no evidence, the issue remains and it cannot claim an admission. Mosness v. German Am. Ins. Co. 50 Minn. 341, 52 N.W. 932. *Page 14 
There is a suggestion that the repudiation of the award by the defendant was a waiver. Unless it repudiated the award it should have paid it. The repudiation was a denial of liability and in the way of a defense. The plaintiff is put much in the situation of saying that the defendant by asserting a defense waived it.
In discussing the questions involved we have had in mind the record in the Phoenix case. The point first considered is not involved in the Great American case. Upon the second point we do not understand that the record in the latter case is less favorable to the defendant than in the former.
Our conclusion is that the defendant's first point, involving the Phoenix policy, is without merit; that by selling the damaged property the plaintiff breached materially its contract; that it thereby lost its right to recover damages to the property sold; that the defendant upon such breach had a defense; that it did not waive its defense by the part it took in the appraisal or by other acts; and that it is still liable for damages to the property not sold.
We cannot close the litigation by directing judgment for the damages to the unsold property. It was not appraised separately, nor its value shown. There must be new trials. The former decision is vacated and this opinion stands as the opinion in the case.
Orders reversed.
1 See page 7, supra. *Page 15