Opinion
8 Div. 833.
June 30, 1939. Rehearing Denied October 3, 1939.
Appeal from Circuit Court, Lawrence County; W. W. Callahan, Judge.
Action on a policy of automobile insurance by George E. Chambers against the Home Insurance Company of New York. From a judgment of nonsuit, plaintiff appeals.
Reversed and remanded.
Certiorari denied by Supreme Court in Chambers v. Home Insurance Co. of New York, 238 Ala. 440, 191 So. 645.
The following is Count 3 of the complaint:
"Plaintiff claims of the defendant the sum of $500 damages, in this: Plaintiff avers that he was the owner of a Studebaker Automobile on towit: December 26, 1936, on which automobile the defendant issued its insurance policy, which became effective on said December 26, 1936, and remained in force and effect with the date of expiration was June 26, 1938. And plaintiff avers that said insurance policy covered damages to said car by collision, upset or wreck. And plaintiff avers that on towit: Dec. 25, 1937, while said policy of insurance was in force and effect, the said car, on which said insurance was issued to plaintiff, as insured, and which car was at the time the property of the plaintiff, was wrecked on the Joe Wheeler Highway, between the towns of Wheeler and Town Creek, in Lawrence County, Alabama. And plaintiff avers that said car was damaged in said wreck in the sum of $500 and the plaintiff was damaged thereby in said amount. And defendant denied all liability to this plaintiff under said policy and refused to pay his said damages.
"And plaintiff avers that the defendant has had notice of said wreck and plaintiff's damage as aforesaid, and has failed or refused to make payment or settle said damage with this plaintiff."
Defendant's plea 3 and the amendment thereto are as follows:
"In the policy of insurance sued on there is the following stipulation and provision:
" 'This Company's liability for loss or damage to the automobile described herein shall not exceed the actual cash value thereof at the time any loss or damage occurs, and the loss or damage shall be ascertained or estimated accordingly, with proper deduction for depreciation however caused, and without compensation for loss of use, and shall in no event exceed the limit of liability, if any, stated in Paragraph C, nor what it would then cost to repair or replace the automobile or parts thereof with other of like kind and quality; such ascertainment or estimate shall be made by the Assured and this Company, or if they differ, then by appraisal as hereinafter provided.'
"Thereafter in said policy it is further provided:
" 'In case the Assured and this Company shall fail to agree as to the amount of loss or damage, each shall, on the written demand of either, select a competent and disinterested appraiser. The appraisers shall first select a competent and disinterested umpire; and failing for fifteen (15) days to agree upon such umpire, then, on request of the Assured or this Company, such umpire shall be selected by a judge of a court of record in the County and State in which the appraisal is pending. The appraisers shall then appraise the loss and damage stating separately sound value and loss or damage: and failing to agree, shall submit their differences only, to the umpire. An award in writing of any two, when filed with this Company, shall determine the amount of sound value and loss or damage. Each appraiser shall be paid by the party selecting him and the expenses of appraisal and umpire shall be paid by the parties equally.'
"Thereafter in said policy it is further provided:
" 'No suit or action on this policy or for the recovery of any claim hereunder shall be sustainable in any court of law or equity unless the Assured shall have fully complied with all the foregoing requirements.'
"Defendant avers that after said loss it and the plaintiff differed as to the ascertainment or estimate of the damage sustained by said automobile and as to the amount of loss or damage, and that the same has not been ascertained by appraisal as provided in said policy. Wherefore, defendant said plaintiff ought not to recover.
"Now comes the defendant and amends its plea three heretofore filed as follows:
"By adding thereto the averments of paragraph 'C' included in said policy: —
" 'Actual cash value.
" 'Peril A — comprehensive — including deductive collision or upset — any loss or damage to the automobile and the equipment usually attached thereto, subject, however, to the exclusions stated on page 2, except that as respects loss caused by collision with any other object or by upset, the sum of $75 shall be deducted from the amount of each of such loss when determined.' "
Plaintiff's replications 2, 3 and 4 are as follows:
"2. That after said damage to said car, the defendant denied any and all liability under said policy to this plaintiff for the same and refused to pay for same and told plaintiff it would not pay anything. And plaintiff avers that the defendant thereby waived any and all right it had under said policy to have said damages ascertained by an appraisal.
"3. That after said damage to said car, the defendant denied any and all liability to this plaintiff for the same under the terms of said policy and said it would not pay anything. And plaintiff avers the defendant thereby estopped itself to have the damages to said car ascertained by an appraisal.
"4. The defendant denied all liability under the policy sued on for damages to said car in said collision, upset or wreck and stated it would not pay plaintiff any damages due the plaintiff thereunder. And plaintiff avers that the defendant thereby waived the terms of the policy pleaded in said plea No. 3, and estopped itself from setting the same up in defense of this suit. And plaintiff avers that thereafter he filed this suit. And plaintiff avers the defendant, after it had waived said terms in said policy and had estopped itself to plead the same in this suit as a defense thereto, and after this suit had been filed, defendant undertook to have said damages appraised, but did not call on this plaintiff for an appraisal until after this suit was filed."
Defendant's demurrer to plaintiff's replications was upon the following grounds:
"1. Said replication is no answer to said plea. 2. Said replication neither confesses nor avoids the matters and things set up in said plea. 3. Said replication confesses but does not avoid the matters and things set up in said plea. 4. Said replication traverses said plea. 5. The matters and things set up in said replication furnish no excuse for the failure of the plaintiff to appraise said loss as provided in said policy. 6. Said replication is a departure from the complaint. 7. For aught appearing in said replication defendant denied liability upon the grounds set forth in said plea. 8. From aught appearing in said replication, defendant denied liability under said policy because the damage to said automobile was not sufficient to render it liable to the plaintiff in any sum. 9. It is not shown and from aught that is shown it appears that defendant did not deny liability to plaintiff because of any breach or forfeiture of said policy, but because the amount of the damage to said car rendered nothing payable to the plaintiff. 10. From aught that appears in said replication defendant's denial of liability was on account of a difference between it and plaintiff as to the amount of the damage."
W. L. Chenault, of Russellville, for appellant.
The denial of any liability by the defendant on the policy was a waiver of all conditions of the policy, including an appraisal of the property destroyed. 26 C.J. 431, § 574; West. Assur. Co. v. Hall Bros., 120 Ala. 547, 24 So. 936, 74 Am. St. Rep. 48; Mississippi Fire Ins. Co. v. Dixon, 133 Miss. 570, 98 So. 101; Ray v. Fidelity-Phoenix F. I. Co., 187 Ala. 91, 65 So. 536. The defendant having prevented the appraisal by denying liability could not assert the proposition that an award was prerequisite to a suit on this contract. Headley v. Ætna Ins. Co., 202 Ala. 384, 80 So. 466; Maryland Casualty Co. v. Mayfield, 225 Ala. 449, 143 So. 465.
Coleman, Spain, Stewart Davies, of Birmingham, for appellee.
If the dispute is simply about the amount of the loss, a denial does not constitute a waiver of the appraisal provisions of the policy. Ex parte Birmingham Fire Ins. Co., 233 Ala. 370, 172 So. 99; 26 C.J. 431; Pollina v. State Mut., c. Ins. Co., 249 Mich. 121, 227 N.W. 765. None of the replications allege that defendant denied liability on account of forfeiture of the policy.
George E. Chambers brought his suit in the Circuit Court of Lawrence County against the Home Insurance Company of New York to recover damages in the sum of $500 which said plaintiff alleged was due him by said defendant under an insurance policy issued by said defendant to said plaintiff. The plaintiff's suit against the defendant is set out in count 3 of plaintiff's complaint, in so far as this appeal is concerned.
The Reporter will copy all of said Count 3 into his report of this case.
Home Insurance Company of New York, defendant, answered the plaintiff's complaint, in so far as this appeal must determine the questions presented, by filing its plea No. 3 and amendment thereto. Defendant's plea number 3 as amended sets up certain provisions of the policy of insurance on account of which the defendant says plaintiff ought not to recover damages under said policy.
The Reporter will copy all of defendant's plea No. 3, and the amendment to said plea, into his report of this case, inasmuch as it is admitted by defendant that this plea and amendment correctly present the provisions of said policy of insurance which defendant contends bar the plaintiff's action.
The plaintiff demurred to defendant's plea No. 3, as amended. The trial court overruled plaintiff's demurrer thereto and the plaintiff then filed his replications, numbers 2, 3 and 4 to said plea number 3, as amended.
The Reporter will set out said replications 2, 3 and 4 in his report of this case.
The defendant demurred to plaintiff's replications 2, 3 and 4, each respectively. The trial court sustained defendant's demurrer to said replications and on account of the adverse ruling of the trial court in sustaining defendant's demurrer to plaintiff's replications 2, 3 and 4 to defendant's plea number 3, as amended, the plaintiff took a nonsuit, with bill of exceptions, and brings his appeal to this court under the provisions of section 6431 of the Code, 1923.
In order that the pleadings may be understood it is necessary for the Reporter to set out, also, defendant's said demurrer to said replications 2, 3 and 4 in his report of this case.
The law applicable to the averments of count 3 of the complaint and applicable also to defendant's plea No. 3 and to plaintiff's replications 2, 3 and 4 thereto, as well as to defendant's demurrer to said replications, is that a denial of liability by an insurer on a policy of insurance, issued by the insurer, amounts to a waiver of an arbitration, or appraisal, clause incorporated in said policy; the reason for the rule being that in the event of such denial the dispute is not about the amount of the loss. Western Assurance Co. v. Hall Brother, 120 Ala. 547, 24 So. 936, 74 Am.St.Rep. 48; Ray v. Fidelity-Phoenix Fire Ins. Co., 187 Ala. 91, 65 So. 536; Mississippi Fire Ins. Co. v. Dixon, 133 Miss. 570, 98 So. 101; 26 Corpus Juris, 431, Sec. 574; Couch's Cyclopedia of Insurance Law, Vol. 7, p. 5648, Sec. 1613.
It is also the law of this State that a denial of liability by an insurer on a policy of insurance issued by it estops the insurer from pleading an arbitration, or appraisal clause of the policy, as a defense to an action brought by the insured on said policy, after such denial of liability was made and before the same was retracted, or modified. Couch's Cyclopedia of Insurance Law, Vol. 7, p. 5645, Sec. 1613; Scharfenberg v. Town of New Decatur, 155 Ala. 651, 47 So. 95; Headley v. Ætna Ins. Co., 202 Ala. 384, 80 So. 466; Emerson-Brantingham Implement Co. v. Arrington, 216 Ala. 21, 112 So. 428; Colvin v. Payne et al. 218 Ala. 341, 118 So. 578; Maryland Casualty Co. v. Mayfield, 225 Ala. 449, 143 So. 465.
Count 3 of plaintiff's complaint does not aver the defendant failed to admit liability, nor that the defendant failed to demand the observance of the arbitration, or appraisal clause contained in said policy of insurance, or either of them but it does, plainly and unequivocally, aver that the defendant "denied all liability to this plaintiff under said policy and refused to pay his said damages."
The defendant, answering said complaint, did plead the arbitration, or appraisal, clause of said policy in bar of plaintiff's action. The plaintiff demurred to defendant's plea and the same being overruled by the trial court the plaintiff filed his replications setting up the waiver and the estoppel averring that the defendant, after the suit was brought, undertook to have said damages appraised, and then called upon plaintiff for an appraisal of said damages under the terms of said policy. This court is of the opinion that under the law of this State the defendant was estopped to plead the appraisal, or arbitration, clause of the policy of insurance sued upon in answer to plaintiff's complaint as averred in count 3 thereof and that the trial court erred in sustaining the defendant's demurrer to plaintiff's replication setting up the waiver and estoppel. Citations, supra.
If the defendant qualified its denial of liability to plaintiff under the provisions of the appraisal, or arbitration, clause of the policy of insurance, sued upon, then the defendant did not deny all liability under said policy as is averred in count 3 of plaintiff's complaint.
For the error committed by the trial court in sustaining defendant's demurrer to plaintiff's replications 2, 3 and 4 the judgment of the court below sustaining said demurrer is hereby reversed and this cause is remanded to said court.
Reversed and remanded.