Astrich v. German-American Ins. Co.

ARCHBALD, District Judge.

The undertaking of the defendants as insurers was one of conditional indemnity only, their liability in case of loss being limited to the actual damage sustained — not exceeding the amount of the policy — upon compliance on the part of the insured with the terms and conditions there named. To assist in . the correct ascertainment of it, certain duties were imposed upon the insured, prominent and primary among which was that he should give immediate notice of the fire; forthwith separate the damaged from the undamaged property, putting the same in the best order possible, and making a complete inventory of it; and within a specified time furnish itemized proofs of loss made up' and verified in a stated way. So far the plaintiff complied with the demands of his contract, but the difficulty lies with that which remains. Among the general provisions of the policy it was made the duty of the insured, as often' as required, to exhibit to any person designated by the company all that remained of- the property injured. It was also provided that,-in the event of a disagreement as to the amount of the loss, it should be ascertained by competent and disinterested appraisers to be chosen by the parties; and that it should be optional with the company to take all or any part of the articles insured at their ascertained or appraised value, and to replace those lost or damaged by others of like kind and quality, on giving notice of their intention so to do within 30 days after the receipt of proofs of loss. It is because the defendants, as they claim, have been deprived by the acts of the plaintiff of the rights so secured to> them by the policy, that defense is made.

The fire occurred December ió, 1903, and a large part of the stock insured was entirely destroyed. The total insurance carried was $22,000 ($4,500 of which was with the defendant company), and, according to the plaintiff, was exceeded by the loss incurred. On December 29th the agents and adjusters of the several companies involved appeared on the scene, and, after going over the books and papers of the plaintiff) and carefully inspecting the stock which remained, endeavored to arrive at an amicable settlement' with him of the lpss. An offer was made to collectively pay the full' amount of the insurance ($22,000), with the proviso that the companies should take the damaged goods; and, after shipping them to New York or Philadelphia, and having them put in order there, -should have them sold in the general market, the plaintiff to receive all that was realized up to $5,000, and the companies whatever there was above that. This was rejected, and they then offered as an alternative to pay $17,500, the plaintiff to keep his goods, and get out of them what he could on his own account. This also was refused, and the parties separated, the plaintiff being notified to read his policy and observe its terms. This occurred on December 30th, and the plaintiff immediately arranged for a fire sale of the damaged goods. It took place on January 8th, and continued for the next three days, the whole lot being disposed of at retail at prices to suit customers. The insurance companies, having learned that the sale was to take place, gave notice to the plaintiff by telegram *481 and registered letter, which were both received the day before it began, that he should not go on with it, as they desired to exercise the right given them of further examining the goods, calling attention also to the fact that they had the right, if they wished, to replace any part of the stock, and, in case of a disagreement as to the amount of the loss, to hate it determined by appraisement; and notifying him that it would avoid his policies if he proceeded; notwithstanding which he went on and sold. All this occurred in advance of the proofs of loss, which were not started on their way until the day after the sale began, nor received until the day following, January 10th, at which time the goods had been substantially disposed of.

The provisions of the policy to which reference has been made, looking as they do to the correct ascertainment of the loss sustained by the insured, cannot be disregarded by him. Oshkosh Match Works v. Manchester Fire Assur. Co., 92 Wis. 510 , 66 N. W. 525 ; Thornton v. Security Ins. Co. (C. C.) 117 Fed. 773 . Tike the giving of immediate notice of the fire, the furnishing of proofs of loss, or the submission to an examination under oatli, and the production of books and papers, with which they are closely associated and allied, they are conditions of the contract, inserted for the protection of the insurers, who are entitled to the full benefit of them. If, therefore, they are deprived of them by the act of the insured, he cannot expect to enforce the contract which he has thus broken, there being no way by which compensation can be made, or the rights that have been set aside restored. The right to an appraisal was absolute, if the insurers found that they desired it, and it was essential to this that the damaged stock should be retained. Looking into the evidence for the sake of argument, one of the most serious points of difference between the parties at the time the adjusters were there was the salvage value of the goods unburned. On the one side they were held to be worth $10,000 above the expense of putting them in order and selling them, and on the other but $3,000; while, as; sold by the plaintiff, they realized $4,200. On an appraisal the amount to be allowed for them could only be determined by inspection, for which, of course, the goods themselves would have to be on hand. An attempt to fix the loss without them, if not impossible, .would be seriously hampered; the opportunity to examine them being one of the merits of this course. But by a sale and dispersal of the goods, such as took place, that opportunity was entirely cut off, and an attempt to hold an appraisal after it would be practically useless. If the goods, as it is claimed, were deteriorating by being held, or had become rotten and unhealthy, the difficulty could easily have been met without abridging the right in question. No time is fixed in which an appraisal is to be asked for, and it must therefore be demanded within that which according to the circumstances is reasonable. Chainless Cycle Mfg. Co. v. Security Ins. Co., 169 N. Y. 304 , 62 N. E. 392 . A notice, therefore, to the insurers, of the condition of the goods and the necessity for promptly disposing of them, would have compelled them — -if this was found true — to exercise their rights, or else to forego them. It is no answer to say that the only object of an appraisal is to determine the value, and that this was sufficiently shown by the sale. That may be some evidence on the subject, but it is not the method provided by the *482 policy for determining it if the appraisal is desired, nor can the insurers be put off with any such substitute. It is to be remembered also that the sale was private, and at prices fixed by the plaintiff, and that the goods were mixed with others, to their possible disadvantage; the object being to dispose of both together. The prices obtained at a sale carried on in this way, to which buyers are drawn by the expectation of bargains, is very imperfect evidence on the question of value.

It cannot be charged that the right to an appraisal is not asserted in good faith, advantage being taken of the situation to defeat by a technicality an honest loss. Whatever might have been the case had the insurers suffered the sale to go on without challenge, as in Davis v. American Central Ins. Co., 7 App. Div. 488 , 40 N. Y. Supp. 248 , nothing of that kind can be predicated of what we have here. Acting on the information which they had of the sale — not obtained from the plaintiff, who'took no pains to let them know — they gave immediate notice in the most positive terms of their intention to stand on their rights, and of the result to the plaintiff if he went on in disregard of them. It was his duty, on the receipt of this, to stop; and, if any bad faith was exercised at this juncture, it certainly cannot be charged upon the insurers. When the plaintiff went on and sold, as he did, in the face of it, he took the risk of what should follow, and has only himself to blame.

It is said, however, that at the time when the adjusters were’there it was declared^'- Mr. Berkey, speaking for the rest, that without a statement from the plaintiff as to the amount of the goods burned out of sight an appraisement would be useless. This is not found in the point reserved, and is not, therefore, a part of the record. But, even if jt were, it could have no effect. At the most it was a mere expression of opinion, based on the alleged recalcitrancy of the plaintiff in refusing to give an estimate of the value of the goods destroyed— . a casual observation, which cannot be wrested into a waiver, without which the provision of the policy of course remains.

Important, also, to the insurers — as we must assume — were the other rights involved. It is true that the agents and adjusters who were present on December 29th and 30th inspected with some thoroughness the damaged goods, and on the strength of their examination made the offers of settlement mentioned. But this was in the preliminary stage of the controversy, when an effort was being made to reach an amicable adjustment. When it failed, and the parties fell apart, they were remitted to their several rights, which each side was bound to respect and observe. Recognizing this, the plaintiff drew up and forwarded his proofs of loss, on the receipt of which the insurers were entitled, if they found it-necessary, to require a new exhibition of the damaged goods, just as they had the right to call for his books and papers, or' to demand that he should submit to an examination under oath. Undoubtedly, this provision of the policy is to receive a reasonable construction; but with the proofs of loss only just made out, and not yet on their way, it certainly cannot be held to have been unreasonable to require of the insured that he should retain the goods to await the possible exercise of the right of further inspection, if desired.

•The same is true with regard to the right to take and replace any *483 part or all of the goods lost or damaged. This, be it noted, is not simply the right to replace, and so confined to the property actually destroyed, but is to take and replace, and so extends also to that which is only damaged. Unquestionably, therefore, it was materially abridged by the plaintiff’s sale. Notice of the intention to exercise this right did not have to be given until 30 days after the receipt of proofs of loss, and the insurers were entitled to this full period in which to make up their mind. They did not have to decide 011 the spot, and could not be made to do so. It is no objection, therefore, that in notifjdng the plaintiff not to sell they did not say positively that the}'- proposed to exercise the right, but only that they might want to. They were not bound to do more. The notice was precautionary merely, so that they could not be charged with having kept silent in the face of it, and that is all that could be asked of them at that time. I do not lose sight of the fact that there were several insurers who were only ratably liable, and might have di,argent views. But that did not prevent a several election (Morrell v. Irving Fire Ins. Co., 33 N. Y. 429, 454 , 88 Am. Dec. 396 ; Good v. Buckeye Mut. F. Ins. Co.. 43 Ohio St. 394 , 2 N. E. 420 ; Hartford Fire Ins. Co. v. Peeples’ Hotel Co., 54 U. S. App. 215, 82 Fed. 546 , 27 C. C. A. 223 ), or they might have concluded to join; with neither of which the plaintiff had any right to interfere (Beals v. Home Ins. Co., 36 N. Y. 522 ).

Ret judgment be entered in favor of the defendants non obstante veredicto on the reserved point, with costs.