Scottish Union & National Ins. v. Skaggs

1. Insurance. Agreements to arbitrate. Effect of total loss. Where under a fire insurance policy of one thousand dollars coyering'furniture not described in particular items, but generally as “household goods, furniture,” etc., there was a loss amounting to four hundred and seventy-five dollars. In such ease there was not a total loss, though some of the furniture was totally destroyed, and an arbitration under a provision of the policy for arbitration was not void under the valued policy law, even though such an arbitration might be void in case of a total loss. 2. Arbitration and Award. Talidity of arbitration. It is the policy of this state to permit parties to arbitrate their differences and to give effect to a valid submission and award in such cases. The matter of arbitration 'and award is covered by chapter 6, Code 1906, and the public policy of the state in regard thereto is embraced in section 114, providing that the act shall be liberally construed for the encouragement, of the settlement of disputes and the prevention of litigation.

Appeal from the circuit court of Jones county. Hon. Paul B. Johnson, Judge. Suit hy W. Fred Skaggs against the Scottish Union & National Insurance Company. From a judgment for plaintiff, defendant appeals. The facts are fully stated in the opinion of the court. The subject of the controversy in this law suit was submitted to competent appraisers, who made a valid award, and both parties are bound by it. No question of fraud in the agreement to submit to appraisers, or in the appraisement or in the finding of the appraisers enters into the controversy. It is just a plain case of one of the parties being dissatisfied with the amount of the award; and refuses to abide by it, and brings a suit, thus attempting to entirely ignore it. On page 38 of the record will be found a letter written by Skaggs to the Insurance adjusters in which he says that he is willing to submit it to appraisers. On page 39 he writes that it is satisfactory to have appraisers adjust the claim and he names W. E. Bridges, of Laurel, “who is both competent and disinterested” to act as his appraiser. On page 40, is another letter from Skaggs to the adjusters, enclosing “signed agreement” and asking them to sign one and return to him by return mail; and he hoped that the appraisers would be “up here next Friday, March 26, so we can settle this claim.” The signed agreement to arbitrate and the appointment of the appraisers and the award of the appraisers have already been referred to and appear in the record more times than necessary. We desire here to call the court’s attention to the wording of the agreement for submission to appraisers to the effect that the appraisers “shall appraise and ascertain the sound value of and the loss upon the property damaged and destroyed by fire.” The actual award of the appraisers “determined the sound value and the loss and damage to be as follows: Sound value, three hundred forty-four dollars and twenty-five cents; loss, one hundred sixty dollars and seventy-five cents. It is plain that the articles of submission and the award covered both the loss and damage. The policy sued provides for the appointment of appraisers and the submission to them of the matters in dispute, “and the award in writing of any two shall determine the amount of such loss.” But, aside from the terms of the policy, we subrgit that the parties had a perfect right to submit their differences to appraisers and they would each he bound hv the award, in the absence of fraud, and no suit can he maintained by the insured in this ease on the policy. The only suit he could maintain would he for the amount of the award. In this connection, see Jones v. Harris, 58 Miss. 293, where the court speaking through Campbell, J., held that an award pleaded constituted a bar to the further. prosecution of the action. Another award was upheld by this court in Oil Co. v. Buster, 84 Miss. 91, in the face of numerous objections to it. In the recent case of Insurance Co. v. Kennington, 71 So. 378, this court holds that an insured is not bound to submit to a second appraisement, where the first attempt fails, but the court strongly implies that the provision for an award contained in the policy is valid, and that the insured would he bound by the award if an agreement had been reached by the appraisers. And in the still later case of Insurance Co. v. Coivan, 71 So. 746, this court not only held that the arbitration clause in an insurance policy is valid and binding on the insured, but is valid and binding on a mortgagee, if he had notice of it. We are unable to perceive any reason why Skaggs is not bound by the appraisement and award in this case. It may be said by appellee that the appraisers made no award of the value of the totally destroyed goods; but both the agreement of submission and the award show that they were to consider and did consider both “loss and damage.” The Alabama supreme court, in Georgia Home Insurance Go. v. Kline, 21 So. 958, considered this very point and held (quoting from the syllabus.): “An award fixing the amount of loss under a fire insurance policy, by appraisers provided for in the policy, and also acting under a written submission executed by the parties after the fire, which constituted them arbitrators, cannot be impeached in an action at law on the ground that the appraisers refused to consider, or to include in the award, the loss on so much of the property as was totally destroyed, when such loss was clearly within the submission and was covered by the terms of the award.” The Alabama court again, in Rutter & Hendrix■ v. Hanover Fire Insurance Go., 35 So. 37, in construing an agreement of submission similar to the one at bar, uses this language: “We think it quite clear that the terms of the agreement called for an appraisal of the property totally destroyed as well as for that partially injured. It was the duty of the arbitrators under this agreement to appraise the property totally destroyed, as well as that which was partially destroyed, unless there had been a modification of the agreement ' of appraisal by the parties that dispensed with such duty on the part of the arbitrators.” See also Early v. Ins. Co., 140 Am. St. Eep. 750, Century Digest, paragraphs 1430-2-4-; Decennial Digest, paragraph 574; Hanover Insurance Co. v. Lewis, (Fla.), 10 So. 297, Tarto v. Purser, 74 So. 425. So, on the main proposition that the submission to and the award of the arbitrators is binding on all the parties to this litigation, there would seem to be no doubt, and the lower court was clearly in error in sustaining the demurrer to the special plea. It follows that appellee has no right to maintain this suit, since it is not a suit to enforce the award, and it ought to ■be reversed and dismissed. It-is. the contention of appellee that any pretended agreement entered into by appellee and appellant as to the property totally destroyed by fire is an absolute nullity and cannot be enforced against appellee, since, the statute Laws of 1912, chapter 224, amending section 2592 of the Mississippi Code of 1906, referring to the hind of property insured by appellant in this case, absolutely fixes the amount of recovery of property totally destroyed by fire and shuts out any agreement tending to fix any other value than that fixed by the policy of .insurance. Appellants, in their brief, state that there was an agreement to submit the entire loss both of the property partly destroyed and the property totally destroyed to arbitration and that the award complies with this submission. We cannot understand how there could be an appraisement of the value of the property which was totally destroyed. There would be nothing from which or to which the appraisers could work. The Missouri supreme court in the case of O’Keefe v. Liverpool é London Insurance Co., 140 Mo. 558, 39 L. E. A. 819, makes this apt observation about an appraisement of the value of the property totally destroyed by fire, saying, “Such an appraisement would be an anomaly.” The court further says the “whole case depends upon the claim of plaintiff that the less was total. If he was right there was nothing to appraise, nothing to arbitrate.” So we take the position that it never was the intention of the parties to have the value of the property totally destroyed appraised since under the law, an appraisement was prohibited and because an attempt to appraise property totally destroyed would be fraught with too many conjectures and uncertanties. We call the court’s attention further to the opinion in the .case above referred to where it is stated that: “An agreement to arbitrate in case of a total loss is repugnen! to our statute and void.” This decision was under a statute of Missouri similar to. the statute of Mississippi referred to above. The case of Insurance Company v. Coioan, 71 So. 746, cited by counsel for appellant in their brief on pages 748 and 749 of the opinion states: “In our opinion the question of whether or not the loss under consideration was a total loss should have been submitted to the jury under proper instructions, and if the jury found that the loss was a total loss, the company should have been required to pay the full amount of the twenty-five hundred dollar item of the policy, and if the jury found that the loss was only •partial, the suit should have been abated pending a submission of the matter to an appraisement according to the terms of the policy. It will be seen in this case there was an appraisement fixing the value at two thousand and twenty-nine dollars and thirty-three' cents when the property was insured for twenty-five hundred dollars. The case then, certainly holds that the pretended ■appraisement is not binding if there was a total loss and the question of arbitration did not enter into the •case, if the property was a total loss. If an insurance •company could bind the insured by a provision in its policy to submit the matter of the value of the property destroyed to an appraisement, it could, by indirect methods, make of no effect the statute above referred to. Our court in the case of Darden v. Liverpool <& London Insurance Co., 68 So. .483, holds that an insurance company cannot avoid this statute by an agréement with the insured that real property is to be considered personal property. What was attempted to be •ne in the case above referred to was only an attempt on the part of the insurance company to avoid this provision of our statute. The supreme court of Missouri, in the case of Havens v. Germania Fire Insurance Company, 26 L. E. A. 107, page 111, of the opinion indorses a statement made by the supreme court of Ohio in the case of Insurance Company v. Lesley, 47 Ohio State, 479, 9 L. E. A. 45, which is as follows: “The statute cannot be treated as conferring upon the assured a mere personal privilege which may be waived or qualified by agreement. It . has a broader scope. It molds the obligation of the contract into conformity with its provisions;- and establishes the rule and measure of the insurer’s, liability.- The terms and conditions embraced .in the policy, inconsistent with the provisions of the statute, are subordinate to it, and must give way.” 'Justice Sievens, in the case of Daren v. Liverpool di London Insurance Company, supra, quotes the following' language from a case of the Insurance Company v. Barren, 91 Miss. 722, 45 So. 875: “Section 2502, Code 1906, is as much a part of this policy as if written in the face of it. Any provision in the insurance contract which conflicts with it in any way is a nullity.” We do not see how there can be any dispute of the fact that an agreement to arbitrate as to the value of the property totally destroyed, when the value has already been agreed upon by the parties to the contract of insurance and the premium already paid by the insured, could he anything else than an attempt to avoid the provision of the statute, and since it is an attempt to avoid this law of our’ state, it is absolutely null and void. Hence the value fixed by the appraisers and the pretended award made is not binding upon appellee and does not preclude him from bringing suit for the value of the property as stated in the face of his policy.