Summary
holding that, under a valued policy, “[a]n appraisal clause does not permit appraisers to determine whether a loss was in fact total, as an appraisal is to determine the amount of damage only”
Summary of this case from Auto–Owners Ins. Co. v. Second Chance Invs., LLCOpinion
Argued May 1, 1929
Decided July 11, 1929
Appeal from the Supreme Court, Appellate Division, First Department.
Frank Sowers and George Richards for appellant.
Ernest Angell and Irving I. Goldsmith for respondent.
The plaintiff insured his new automobile truck with the defendant insurance company for $5,720. The trial court has decided that the policy covering the truck is a valued policy, that there was a total loss of the truck by fire, and has awarded judgment to the plaintiff for the amount of the policy. Before this action was commenced, appraisers selected by the parties had fixed the sound value of the truck at the time of the fire at $3,700 and the loss and damage at $2,700.
A valued policy is one in which the words "valued at" appear and the amount at which the property insured is "valued at" definitely fixes the liability of the insurer and is conclusive on the parties. ( Michael v. Prussian Nat. Ins. Co., 171 N.Y. 25; Phoenix Ins. Co. v. McLoon, 100 Mass. 475.) The policy in question fixes the amount at which the property was insured or valued at as $5,720. It is, therefore, a technical valued policy.
In case of a total loss under a valued policy the amount to be recovered is the amount of the policy without regard to depreciation or other elements entering into the market value of the property at the time of the loss. The appraisal clause in a valued policy is inoperative when there is a total loss. ( Empire Development Co. v. Title G. T. Co., 225 N.Y. 53, 58; Penna. Fire Ins. Co. v. Drackett, 63 Ohio St. 41.)
Consent to an appraisal does not constitute a waiver of claim to a total loss. ( Penna. Fire Ins. Co. v. Drackett, supra; Seyk v. Millers Nat. Ins. Co., 74 Wis. 67.)
An appraisal clause does not permit appraisers to determine whether a loss was in fact total, as an appraisal is to determine the amount of damage only. ( Hartford Fire Ins. Co. v. Bourbon County Court, 115 Ky. 109.)
The question to be determined under the appraisal in this case was, what was the "loss or damage." The words "loss or damage" as used in the policy are explained and limited by the policy which reads: "In the event of loss or damage under this policy, this Company shall be liable only for the actual cost of repairing or, if necessary, replacing the parts damaged or destroyed." It also provides that in case of "loss or damage" the policy shall be reduced by the amount of such "loss or damage." Such provisions can only refer to a "loss or damage" less than a total loss. The provision of the policy for an appraisal reads: "In the event of disagreement as to the amount of loss or damage," an appraisal shall be had, etc.
It seems clear that the appraisal was to cover only "loss or damage" less than a total loss. If the insured under such a policy claims a total loss and the insurer a partial loss, and the latter insists on an appraisal, the granting of the appraisal by the insured cannot estop him from litigating the question of a total loss. If it be decided that the loss was not total, then the appraisal stands, but if it be decided that the loss was total, then under the valued policy the plaintiff would be entitled to receive the amount of the policy. Any other construction disregards the fact that the policy is a valued policy and treats it as an open policy.
The judgment should be affirmed, with costs.
Assume that the policy is a valued one and that, in the event of total loss, the full value as therein stated is recoverable. Assume also that when property insured under a valued policy is conceded to have been completely destroyed and to have passed out of existence, appraisal may not be enforced. ( Rosenwald v. Phoenix Ins. Co., 50 Hun, 172; Lang v. Eagle Fire Co., 12 App. Div. 39.) When, however, the parties to an insurance contract disagree respecting the fact whether damage is partial or loss is total that rule does not apply. In such circumstances an appraisal provision in a policy controls. ( Williamson v. Liverpool London Globe Ins. Co., 122 Fed. Rep. 59; Littrell v. Allemannia Fire Ins. Co., 222 App. Div. 302.) This policy provides for an appraisal "in the event of disagreement as to the amount of loss or damage." The parties disagreed, one asserting that the loss was total, the other that the damage was only partial. After such disagreement, they contracted by formal written instrument, pursuant to the terms of the policy, to submit to appraisers for determination concerning the amount of loss or damage. Such a determination necessarily includes ascertainment whether the loss is total or the damage partial. If a total loss is concluded by the appraisers, the amount payable is the sum at which the property is valued in the policy; if a partial damage is decided, then the amount is "the actual cost of repairing or, if necessary, replacing the parts damaged or destroyed." A loss is total only when the property has sustained such extensive damage that repairs would not be reasonably practicable. ( Corbett v. Spring Garden Ins. Co., 155 N.Y. 389, 394; Slocum v. Saratoga W. Fire Ins. Co., 149 App. Div. 867, 870.) Since no charge of fraud, corruption or obvious mistake is made, the appraiser's determination of a loss or damage less than total seems to me to be conclusive. In the prevailing opinion three cases in other States are cited with approval. ( Penna. Fire Ins. Co. v. Drackett, 63 Ohio St. 41; Seyk v. Millers Nat. Ins. Co., 74 Wis. 67, and Hartford Fire Ins. Co. v. Bourbon County Court, 115 Ky. 109.) All those decisions are based upon statutes the operation of which is of course limited to their respective States. Believing that the true rule in New York is announced in Littrell v. Allemannia Fire Ins. Co. ( supra), I vote for reversal.
POUND, CRANE and KELLOGG, JJ., concur with HUBBS, J.; O'BRIEN, J., dissents in opinion in which CARDOZO, Ch. J., and LEHMAN, J., concur.
Judgment affirmed.