Court Opinion

ID: 6739532
Source: CourtListenerOpinion
Date Created: 2022-07-20 23:20:53.413514+00
Date Added: 2024-06-11T16:01:54.431261
License: Public Domain

Birdzell, J.
(specially concurring). I concur in the disposition made of this case in the principal opinion, but on grounds that are not fully stated in any of the opinions prepared by my • associates. The case seems to call for an interpretation of the by-laws relating to adjustments. The by-laws read as follows:
“Article XIV. Losses and Adjustments.
“See. 1. Losses must be reported at once to the secretary by registered letter, and no loss will be allowed unless so reported within five days, and unless such loss shall be at least 5 per cent, and if the insured in his notice of loss calls for an adjustment, and it is found that the association is not liable for any loss according to the policy, the assured shall pay all expenses of the adjustment, and no loss to grain after it is cut will be allowed, or after September 15th of each year. All losses payable December 1st, except that where cash premium has been paid the loss shall be paid by September 15th. (When grain is ripe at time of loss, cut at once, as adjustment can be made after grain is cut.)
*432“Sec. 2. An adjuster will be sent within a reasonable time after the loss is reported, and his decision shall be binding upon the assured unless objected to by the loser, when the loser shall immediately notify the secretary by registered letter calling for a readjustment, and- this readjustment shall be final, subject only to review and change by the board of directors. In case of readjustment the expense shall be borne equally by the insured and the association, the insured’s share of expense to be levied as a part of his assessment.”
The foregoing by-laws are referred to on the face of the policy, where it is expressly stated that they are made conditions precedent. The pertinent inquiry is: What are the conditions precedent to be gathered from the sections above quoted? It is certain that they do not provide for arbitration. They provide for notices to the insurance company, and in response to these notices the company agrees to send an adjuster, and as a last step the board of directors may review a readjustment. The adjuster is, of course, the adjuster of the company, and no matter how strong the language used in describing the binding force of the adjustment, it remains only the determination of one of the parties interested, and is in no sense an arbitration. Before there can be an arbitration, there must be. someone capable of sitting in judgment on the matter in dispute between the parties, for “arbitration implies the exercise of the judicial function. An arbitrator ought to be free from prejudice and able to maintain a fair attitude of mind toward the subject of controversy. It would be a travesty upon the ideas of judicial propriety or of judicial work for a man to be an arbitrator to settle the amount of his own liability. It is contrary to natural right and fundamental principles of the common law for one to judge his own cause.” Rugg, Ch. J., in Brocklehurst & P. Co. v. Marsch, 225 Mass. 3—8, 113 N. E. 646. See also White v. Middlesex R. Co. 135 Mass. 216; 3 Williston, Contr. § 1724. In my opinion this principle is as applicable in the adjustment of losses in mutual insurance companies as it is in stock companies, for the interest of the individual claimant is, for purposes of his claim, adverse to' that of every other member.
In so far as the by-laws may be construed as an agreement by the insured to accept as final the adjustment of the board of directors, they *433would bo clearly void. Comp. Laws 1913, § 5921; Huber v. St. Joseph’s Hospital, 11 Idaho, 631, 83 Pac. 768.
Since the by-laws really contain no provision for arbitration at all, or at most contain provisions that cannot be given effect as arbitration clauses, wo must revert to the original question: What condition or conditions precedent are prescribed? It would seem that the only conditions which the insured is bound to comply with are those requiring the giving of the notices of loss and of subsequent dissatisfaction with the adjustment. The giving of tho first notice was admitted, so the only controverted fact regarding notice relates to the notice of the insured’s dissatisfaction with the adjustment. There is ample evidence in the record from which the jury could find that this notice was given. This is referred to in the other opinions, and need not be repeated here, although it may be observed that the claim was promptly put in the hands of the plaintiffs’ attorney, v'ho wrote less than a mouth after the attempted adjustment, advising the defendant of his intention to sue.
Being of tho opinion that the by-laws have only the effect of requiring notices to be given, and that there is ample evidence of a reasonable compliance on the part of the insured, I concur in ordering judgment on the verdict.