Opinion
No. 4624.
April 7, 1932.
Appeal from the District Court of the United States for the Eastern Division of the Northern District of Illinois; Walter C. Lindley, Judge.
Action in equity by Alfonso L. Citro against the Queen Insurance Company of America and others. Decree for plaintiff, and defendants appeal.
Reversed, with instructions.
This is an action in equity to reform a written agreement for submission to appraisers, on account of an alleged mutual mistake in its execution, and for determination of the amount of damage alleged to be due appellee as a result of fire to the building described in three separate policies issued by appellants to appellee.
The first policy was issued by the Queen Insurance Company of America, on June 29, 1923, for $10,000; the second was issued by Fireman's Fund Insurance Company, on May 3, 1927, for $5,000; and the third is styled, "The Pittsburgh Underwriters Policy, Separate Insurance by Four Companies in One Policy," and it was issued by the Allemannia Fire Insurance Company, National Ben Franklin Fire Insurance Company, Republic Fire Insurance Company, and Superior Fire Insurance Company, on August 28, 1923, for $5,000. The last-named policy states that each company named therein had received one-fourth of the gross premium thereon, and that each of said companies agreed to pay a corresponding proportion of any loss or damage that might occur under that policy. There was no other insurance on the property.
Each of the three policies, in effect, contained the following provisions:
(a) That the loss or damage shall be ascertained according to the actual cash value of the property at the time of loss, and that the company shall be liable for no greater proportion of the loss or damage than the amount insured bears to the whole insurance, whether valid or not, or by solvent or insolvent insurers.
(b) That the amount of loss shall be ascertained by agreement between the insured and the company, or if they disagree then by appraisers, one to be selected by the insured and one by the company, and the two so chosen to first select an umpire to act with them in matters of difference only; and the award in writing of any two, stating separately sound value and damage, shall determine the amount of loss.
(c) That the company shall not be held to have waived any provision or condition of the policy by any requirement, act or proceeding on its part relating to the appraisal.
(d) That insured shall give immediate notice of any loss by fire, in writing; and within sixty days after the fire, shall render to the company sworn proof of loss stating sundry matters set forth in the policy.
(e) That the loss shall not become payable until sixty days after such proofs of loss, including appraisers' award when appraisal has been required, have been received by the company.
(f) That no suit or action, for the recovery of any claim, shall be sustainable, in any court of law or equity, until after full compliance with the foregoing requirements.
(g) That other insurance is permitted.
The property insured was damaged by fire on April 26, 1928, and the three policies named were then in effect. Insured thereupon immediately gave notice to each company of the loss and damage, but did not within sixty days after the happening of the fire render to said companies, or either of them, a proof of loss, signed and sworn to, as required by each policy. Proofs of loss were, however, made out and mailed by appellee to said companies on June 26, 1928, and the same were received by said companies on June 27, 1928, both of which dates were more than sixty days after the fire.
Immediately after the fire, appellee executed a power of attorney to his brother, John Citro, authorizing him, in appellee's name, place, and stead, to do each and every necessary thing in and about the adjustment of said insurance, and to bring legal action if necessary.
Appellee and appellants were unable to agree as to the extent and amount of the damage, and thereupon appellee demanded an appraisement of the loss under the terms of the respective policies. A written agreement of submission to appraisers was thereupon prepared by an agent of appellee and presented by said agent to appellants' agent for signature, and it contained the same provisions as are contained in each policy relative to submission to appraisal. It was signed by John Citro, and the companies also signed it, by their agent. It was not dated, but was executed on June 12, 1928. Appellants and appellee each named an appraiser, and these two, in turn, appointed an umpire, which umpire was never notified of his appointment, and his services were never used or needed. The bill of complaint sought to reform this written agreement, on account of mutual mistake, by inserting the date, June 12, 1928, and also by inserting before the name John Citro, "Alfonso L. Citro," and after the name of John Citro, the words "duly authorized agent, and attorney in fact of Alfonso L. Citro."
The appraisers signed the award on June 13, 1928, in which they stated that they had examined the premises and remains of the property covered by the policies, and that they appraised the sound value of said property at $25,000, and the loss occasioned by the fire at $4,500.
The only allegations in the bill upon which appellee based his right to appeal to equity for relief relate to the matter of reformation of the written agreement for submission to appraisers.
Appellants in their answers admitted the execution and existence of the policies. They, however, denied equitable jurisdiction, and that proofs of loss had been rendered to them within the time provided by the policies. They further alleged that the purported award by the appraisers was null and void by reason of misconduct of said appraisers, and they prayed that the bill of complaint be dismissed for want of equity, and that said pretended award be set aside.
The cause was referred to a master, who, after finding facts specially, recommended the reformation of the written agreement for submission to appraisers by inserting the date of June 12, 1928, and by affixing to said agreement, after the name John Citro, the words "duly authorized agent and attorney in fact of Alfonso L. Citro." He further recommended that appellee be decreed the sum of $4,500 as his damages against all appellants jointly.
The trial court adopted the findings of fact and conclusion of law of the master as its own and entered its decree reforming the written agreement for submission to appraisers by inserting therein the 12th day of June, 1928, as the date of its execution, and by affixing before the name of John Citro the name "Alfonso L. Citro," and after the name John Citro the words "duly authorized agent and attorney in fact of Alfonso L. Citro." It further decreed that appellee recover of appellants jointly the sum of $4,500 with interest.
C. Oscar Carlson, Robert J. Folonie, and Hendrik Folonie, all of Chicago, Ill., for appellants Queen Ins. Co. and Firemen's Fund Ins. Co.
Herbert W. Hirsh, Frederick D. Silber, and Samuel Levin, all of Chicago, Ill., for appellants Allemannia Fire Ins. Co. and others.
Irving Breakstone, of Chicago, Ill., for appellee.
Before ALSCHULER, EVANS, and SPARKS, Circuit Judges.
The following questions are presented by this appeal: (1) Is equity without jurisdiction? (2) In the absence of a waiver does the failure to make proofs of loss within the time required by the several policies constitute a bar to this action? (3) Was there a waiver of appellants as to such proofs of loss? (4) If there was such waiver proven, will that fact be of avail to appellee, in the absence of an allegation of such waiver in the bill? (5) Is the award of the appraisers void by reason of their misconduct? (6) Did the trial court comply with Equity Rule 70½ (28 USCA § 723) in adopting as its own the master's findings of fact and conclusion of law? (7) Did the trial court err in rendering a joint decree against appellants? Unless the first question be answered in the negative a consideration of the remaining questions will not be necessary.
A court of equity will reform an instrument only when necessary to enable a party to assert some right thereunder. Thompson v. Phoenix Insurance Company (C.C.) 25 F. 296.
The only allegations in the bill upon which appellee based his right to equitable relief relate to the reformation of the written agreement to submit to appraisal. He sought to reform that instrument: (1) By inserting the date of its execution. (2) By showing that the instrument was signed by John Citro, not in his individual capacity but as agent and attorney for appellee.
The date of an instrument which bears no date, or the true date of an instrument which bears a date, may be shown by parol evidence at law as well as in equity. Lambe v. Manning, 171 Ill. 612, 49 N.E. 509; Thompson v. Schuyler, 2 Gilman (7 Ill.) 271; United States v. Le Baron, 19 How. (60 U.S.) 73, 15 L. Ed. 525. The mere omission of the date of the execution of an instrument does not require reformation to make it enforceable or admissible in evidence, and is not sufficient to give equity jurisdiction, because the remedy at law in that respect is adequate and equally efficient. Loomis v. Freer, 4 Ill. App. 547.
A contract made by an agent in his own name may be shown by parol evidence to be that of the principal, where the transaction relates to the affairs of the principal and not to the personal affairs of the agent (Whitney v. Wyman, 101 U.S. 392, 25 L. Ed. 1050; Sun Printing and Publishing Association v. Moore, 183 U.S. 642, 22 S. Ct. 240, 46 L. Ed. 366; Lockwood v. Coley (C.C.) 22 F. 192); and such a contract may be enforced at law by or against the principal, if within the agent's authority, although the agency was undisclosed. Prichard v. Budd (C.C.A.) 76 F. 710; Pope v. Meadow Spring Distilling Company (C.C.) 20 F. 35. It is obvious, therefore, that it was not necessary to reform the instrument in the particulars mentioned in order to enable appellee to assert his rights. Bacon v. Ward, 10 Mass. 141, cited by appellee, was not an equitable proceeding, and it held that a written date is not essential to a contract, and that a false or impossible date may be explained and corrected by extraneous evidence whenever it is important to have the true date ascertained.
Appellee insists in his brief, however, that equity has jurisdiction in order to avoid a multiplicity of suits and to provide a more efficient and adequate remedy, but in his bill he makes no mention of those grounds as a basis for equitable relief, as required by Equity Rule 25 (28 USCA § 723). Equitable grounds of relief must be both averred in the bill and established by proof before purely legal rights may be determined by a court of equity. Brauer v. Laughlin, 235 Ill. 265, 85 N.E. 283; Toledo, St. Louis New Orleans R.R. Co. et al. v. St. Louis Ohio River Railroad Co. et al., 208 Ill. 623, 70 N.E. 715; Palmer v. Fleming, 1 App. D.C. 528. This objection would be met, however, if appellants by their acts waived their right to object to equitable jurisdiction, as he contends they did, but that contention will be discussed later.
In support of the proposition that this court has jurisdiction in order to avoid a multiplicity of suits and to provide a more efficient and adequate remedy, appellee cites Milwaukee Mechanics' Insurance Company v. Ciaccio et al. (C.C.A.) 38 F.2d 153, a case decided by this court. In that case appellees had originally instituted five separate actions at law on the policies in suit. They later brought an action in equity against the same five insurance companies to recover for their total loss under all the policies. In the actions at law the companies appeared and, with plaintiffs, stipulated in writing to waive a jury trial. On the trial the court consolidated the law actions and in one trial heard the evidence in the equity suit and, presumably, in the consolidated law actions. It refused to compel the insured to elect whether they would proceed with the law actions or with their suit in equity. A money decree was entered against the appellant company in the equity suit, rather than in the action at law. The court could have transferred the cause from equity to law and entered the same money judgment upon the same evidence. To avoid a multiplicity of suits was one of the grounds relied upon to invoke equitable jurisdiction. Also, one of the policies contained a misdescription of the property, and as against said company equitable relief was sought in the nature of reformation of that description. That mistake was such as to require reformation, and bears no analogy to the mistakes sought to be corrected in the instant case. There was also a controversy as to whether one of the policies was in force at the time of the fire. The total amount of insurance in force being controverted, and as each policy in force was bound to contribute its proportionate share of the total amount of insurance in force, it was quite necessary for the same court to ascertain that total amount, and to reform the misdescription, in order to afford appellee a complete, efficient and adequate remedy. This a court of law could not do on account of the necessity of a reformation of the description of the property in one of the policies.
In the instant case a similar state of facts does not exist. It has never been denied by the companies that all the policies in suit were in force at the time of the fire, and that the total amount of insurance then in force was $30,000, and the bill pleads no such denial, nor is there evidence to show it. The appellants admitted in their answers that the total amount of insurance in force at the time of the fire was $30,000, and the policies provide explicitly what portion of the total loss each company is to pay, in case there is a liability. That proportion as provided in the policies is based on the total amount of insurance in force at the time of the fire, and can be in no way affected by the inability of any company to pay, nor by any change of conditions since the fire. The liability of any company or companies may be defeated by proof of certain acts occurring since the fire, but such fact can in no manner change the proportions of the amount of total loss due from those who are held liable under the provisions of their respective policies. The liabilities of the several companies therefore are not interrelated or inter-dependent, and it cannot be said that equity will furnish a more efficient, adequate, and complete remedy for appellee's alleged rights than separate actions at law would furnish. In the Ciaccio case, supra, there were five actions at law involved, and the appeal to equity was largely relied upon in order to avoid a multiplicity of suits, but this court did not rely upon that ground alone to sustain equitable jurisdiction. The instant controversy would require three separate actions at law, and they would afford appellee a complete, efficient and adequate remedy on the respective policies. That number of actions, under the circumstances, could scarcely be referred to as a multiplicity of suits.
It is contended by appellee, however, that an objection to equity jurisdiction comes too late after reference and proceedings before the master; and he further contends that appellants waived their objection to equitable jurisdiction by demanding equitable relief in their answers, that is to say, they asked that the pretended award of the appraisers be set aside.
As to the first contention, it is sufficient to say that appellants' objection to equity jurisdiction was made at the first opportunity by way of answer, and before reference to the master.
With relation to the effect of appellants' cross-bill on the waiver of equitable jurisdiction, it may be said that a cross-bill filed by defendant will not confer jurisdiction upon a court of equity where no grounds of equitable jurisdiction appear from the bill, or are not established by the proofs, since the cross-bill must follow the fate of the original bill. Dows v. City of Chicago, 11 Wall. (78 U.S.) 108, 20 L. Ed. 65; Cross v. De Valle, 1 Wall. (68 U.S.) 5, 17 L. Ed. 515; Loomis v. Freer, 4 Ill. App.? 547. Nor can the fact that appellants participated in the agreement to submit to appraisal of the loss be considered in any manner as a waiver of objection to equitable jurisdiction, because the terms of the policies preclude such a holding.
We hold that no grounds for equitable jurisdiction were either alleged or proven, and that the trial court should have dismissed the bill without prejudice. Fleming v. Reheis, 275 Ill. 132, 113 N.E. 923; Mitchell v. Dowell, 105 U.S. 430, 26 L. Ed. 1142; Kramer v. Cohn, 119 U.S. 355, 7 S. Ct. 277, 30 L. Ed. 439.
The decree of the trial court is reversed, with instructions to dismiss the bill without prejudice.