
    Grand Rapids Fire Insurance Co. v. Finn.
    
      Fire insurance policy — Provisions in event of disagreement as to amount of loss — Requirements governing demand for appraisal by insurer — Construction of written demand when ambiguous— Notice to insured as to protection of property — Law of contract.
    
    1. The pro visions of a policy of fire insurance, that in the event of disagreement as to the amount of the loss it shall be ascertained by appraisers, that the loss shall not become payable until sixty days after notice and satisfactory proof of the loss have been given, ‘ ‘ including an award by appraisers) when an appraisal has been required,” and, that no action on the policy shall be sustainable “ until a full compliance by the insured with all the foregoing requirements, ” do not make either an ascertainment of the loss by appraisers, or a demand by the insured therefor, a condition precedent to a right of action on the policy to recover the loss. Such provisions impose no obligation -on the insured to furnish an award of appraisers, except when an appraisal has been demanded by the insurer.
    2. The demand for the appraisal must be made in good faith, within a reasonable time after proof of loss has been furnished, and in such direct and explicit terms that a person of ordinary intelligence may fairly understand that a submission to appraisers for an ascertainment of the loss is requested ; and when it is claimed the demand was made in writing, the instrument, if ambiguous, will be construed most strongly against the insurer.
    3. Notice to the insured to protect the property from further damage and preserve all that remains of the property “until the loss thereon has been determined in the manner stipulated for in the policy,” and, that the insurer would not pay any amount claimed “ before sixty days after the amount of loss or damage has been determined in the manner stipulated in said policy,” does not constitute a demand for a submission to appraisers for an ascertainment of the amount of the loss..
    (Decided June 20, 1899.)
    Error to the Circuit Court of Mahoning county.
    The action below was brought by Mary Finn against the Grand Rapids Fire Insurance Company, on a policy of insurance issued by the defendant by which the plaintiff was insured in the sum of six hundred dollars against loss or damage by fire on her household furniture, etc., for three years from the fifth day of December, 1895. The petition alleges a total loss of the property by fire while the policy was in force, due proof of the loss as required by the policy, and refusal of the defendant to pay. The answer sets up several defenses, only one of which is important as the case is here presented. That defense, in substance is, that the parties had not agreed on the amount of the loss, nor had it been ascertained .or determined by appraisers; and, that the plaintiff had not demanded an appraisement, but had refused a demand therefor by the defendant. The provisions of the policy on which that defense is based are, that if the parties differ as to the amount of the loss, it is to be determined by appraisers, each party to select one appraiser, “and the two so chosen shall first select a competent and disinterested umpire; the appraisers together shall then estimate and appraise the loss, stating separately sound value and damage, and, failing to agree, shall submit the differences to the umpire; and the award in writing of any two shall determine the amount.of such loss. The loss shall not become payable until sixty days after the notice, ascertainment, estimate and satisfactory proof of the loss herein required have been received by this company, including an award by appraisers, when appraisal has been required. No suit or action on this policy, for the recovery of any claim, shall be sustainable in any court of law or equity, until after full compliance by the insured with all the foregoing requirements, nor unless commenced within twelve months next after the fire.”
    The reply to this defense admits that there was no agreement as to the amount of the loss, nor an appraisal thereof, and avers that “the reason therefor was and is, that the defendant, through its duly authorized agents, F. L. Parsons and May-berry & McCrackin, informed the plaintiff that the defendant would pay no part of said loss for the reason that plaintiff had burned her own property; that said defendant never in any manner proposed that an appraisal be had, or in any manner required an appraisal, and at all times refused to pay said loss, specifying as the only reason for such refusal that she had set fire to said property.” The reply further avers “that said defendant company never in any manner selected an appraiser, or informed plaintiff that it desired an appraisal; and waived all proofs of loss, conditions precedent and subsequent to be performed by plaintiff under said policy. And further replying the plaintiff denies each and every other allegation set forth in-said defense.”
    The only evidence offered on the trial, which it. is claimed tended to prove a demand by the defendant for an appraisement of the loss, is contained in the two following written ‘communications. The first one was served on the plaintiff on the day of its date, and the other mailed to her on the day it bears date.
    “Youngstown, O., Jan. 3, 1896.
    To Mrs. Mary Finn:
    The insured named in policy No. 60026, issued to you by The Grand Rapids Fire Insurance Co., of Grand Rapids, Michigan.
    Youngstown, Ohio.
    Madam:
    You are hereby required to protect the property described in said policy from further damage; and. to preserve and keep for exhibition to any person designated by said company all that Remains of any property described in said policy, until the loss thereon has been determined in the manner stipulated for in said policy; and to make a complete inventory of all property on which loss will be claimed, stating the quantity and cost of each article, and deliver immediately said inventory at the office of Mayberry & McCracken, Youngstown, Ohio, for the use of said company; all of which requirements constitute a part of the stipulations of said policy.
    Respectfully Yours,
    Grand Rapids Fire Insurance Co.,
    By F. L. Parsons, Adjuster.”
    “Cleveland, O., February 21, 1896.
    Mrs. Mary Finn:'
    The insured named in policy No. 60026 issued by the Grand Rapids Fire Insurance Company.
    Youngstown, Ohio.
    Madam:
    Papers purporting to be “proof of loss” alleged to have been sustained by you on property described in said policy, have been received; and without admitting nor denying liability, and without waiving or abating any of the stipulations, provisions, conditions or requirements of said policy, we hereby take exceptions to your statements made in said papers:
    
      First — We deny that “the property described in said policy belonged at the time of the fire” to you; and we deny that “no other person or persons have any interest therein;” and we deny that your interest in said property is that of unconditional and sole ownership; and we demand and require you to state your interest and that of all others in the property, and all encumbrances thereof; and any changes in the title, use, occupation, location, possession, or exposures of said property since the issuing- of said policy.
    
      Second — We deny that “the cause of said fire is unknown” .to you, and we require you to state your knowledge and belief as to the time and origin of the fire.
    
      Third — -We most emphatically and unconditionally differ and disag-ree with your statement as to “the actual cash value of each specific subject” set forth in the “schedule” of said papers; and your statements of “the actual loss and damage by said fire to the same as shown by” said “schedule;”'' and we state that we will not pay any “amount-claimed” thereon before 60 days after the amount of loss or damage has been determined in the-manner stipulated in said policy.
    
      Fourth — We deny each and every one of your following statements, viz : That “the said fire did not originate by any act, design or procurement on the part of assured, or this affiant, or in consequence of any fraud or evil practice done or suffered by said assured, or this affiant; nothing has been done by or with the privity or consent of the assured or this affiant to violate the conditions of the policy, or render it void; no articles are meo tioned herein, but such as were in the building damaged or destroyed, and belonging to, and in possession of the said assured at the time of said fire. No property has been in any manner concealed, and no attempt to deceive the said company, as to the extent of said loss has in any manner been made.”
    
      
      Fifth--We are credibly informed that the certificate attached to said papers is not signed by the magistrate or notary public living nearest the place of fire, and that said certificate is signed by one interested as a creditor; and we deny the statement made in said certificate-; therefore we demand and require a strict compliance with the stipulations set forth in lines “seventy-seven” to ■“eighty,” inclusive, of said policy.
    We reserve the right to take such further exceptions to said papers and the statements therein made, as we may deem necessary to the protection -of our rights under said policy; and you are .hereby notified that said papers are not a compli-■ance by you with the stipulations, provisions, conditions and requirements of said policy, and that -said alleged proof of loss is not satisfactory to us, .and that said papers are held only as subject to your order for disposition.
    Respectfully yours,
    Grand Rapids Fire Insurance Co.,
    By F. L. Parsons, Adjuster.”
    The record shows that neither party selected an ■appraiser, nor took any other step in regard to an .appraisal. The court charged the jury as follows:
    “The policy further provides'that the ascertainment and estimate of the loss shall be made by the insured and this company, or, if they differ, then by appraisers as therein provided. The court says -to you as a matter of law that these provisions are •conditions precedent, and that before the plaintiff •would be entitled to recover in this case, she must produce a preponderance of the evidence that she ■has complied with these provisions, or that the .same have been waived; and I therefore say to you as a matter of law that if you find that the insured and this company differed or disagreed as to the amount of loss, then it became the duty of the plaintiff to demand an appraisal in the manner specified in the contract, to determine the amount of the loss, and to select a competent and disinterested appraiser, and her failure to make such demand would defeat a recovery in this action, unless, as I have said, you find that such provision of the policy was waived by the defendant.”
    A verdict was returned for the defendant, on which judgment was rendered. That judgment was reversed by the circuit court for error in the foregoing charge; and to the judgment of reversal error is prosecuted here.
    
      King, Mg Vey db Robinson, for plaintiff in error.
    The claim of the plaintiff in error is: That in the event of disagreement between the insurer and the insured as to the amount of loss, the policy imperatively requires that the amount of loss be fixed by “two competent and disinterested appraisers” and a “disinterested umpire” chosen by them. We submit that no suit or action can be maintained thereon until after the amount of loss has been ascertained, either by agreement or by appraisal.
    Upon the question as to whether or not such conditions in a policy of insurance, constitute a condition precedent to the right of the insured to institute and maintain an action in case of loss, we cite the court to the following authorities: Kane v. Stone Co., 39 Ohio St., 1; Hamilton's Ex'rs v. Fireman's Ins. Co. of Dayton, 29 W. L. B., 209; 11 Dec. Re., 761; Gasser v. Sun Fire Office, (Minn.), vol. 19, Ins. Law Jour., 243; Pioneer Mfg. Co. v. Phoenix Ins. Co., (N. C.), vol. 19, Ins. Law Jour., 408; Chippewa Lumber Co. v. Phoenix Ins. Co., vol. 19, (Mich.), Ins. Law Jour., 535; Hamilton v. Liverpool & London Globe Ins. Co., vol. 19, Ins. Law Jour., 865; Taylor et al. v. L. & L. Ins. Co., vol. 11, Ins. Law Jour., 361; Niagara Fire Ins. Co. v. Bishop, North Eastern Reporter, vol. 39, No. 14, page 1102; vol. 45, No. 1, page 57, N. W. Rep.; vol. 21, Ins. Law Jour., 515; 11 Federal Reporter, 63; 57 Federal Reporter, 562; 5 Pacific Reporter, 332; 11 Pacific Reporter, 271; 13 Pacific Reporter, 363.
    
      R. B. Hurray and Charles Koonce, Jr., for defendant in error.
    Do the provisions of the policy of insurance in the case at bar make an award an absolute condition precedent, or one conditioned upon a demand for it?
    It is the claim of the defendant in error that the conditions or stipulations of the policy providing for a submission to arbitration under certain contingencies, is a condition precedent only after “the appraisal has been required,” by a request therefor by either or both parties.
    Must be clearly made condition precedent. Burmingham Fire Ins. Co. v. Pulver, 126 Ill., 331; Sergent v. Ins. Co., 155 N. Y., 349; McNally v. Ins. Co., 137 N. Y., 389.
    Ambiguous provisions in policy must receive interpretation most favorable to insured. National Bank v. Ins. Co., 95 U. S., 673; Thompson v. Ins. Co., 136 U. S., 287; Wharton on Contracts, vol. 2, 670; Bishop on Contracts, section 400; Kahnweiler v. Ins. Co., 14 U. S. C. C. A., 489.
    To give the construction contended for by the plaintiff in error, it would be necessary to import provisionsJ into a the policy which® the policy does not contain.
    
      Construction contended for by defendant in error in harmony with the construction given by the courts to policies containing the same or similar phraseology.
    The construction contended for herein is in harmony with all the adjudged cases, the stipulations with reference to arbitration whereof, have the same or similar phraseology as that of the policy under consideration. Nurney v. Ins. Co., 63 Mich., 633; Ins. Co. v. Badger, 53 Wis., 283; Wright v. Ins. Co., Penn., (20 Atlantic, 716); Wynkoop v. Niagara Fire Ins. Co., 91 N. Y., 478; Hamilton v. Ins. Co., 137 U. S., 370; Wood on Fire Insurance, vol. 2, section 457; Mentz v. Armenia Fire Ins. Co., 79 Pa. St., 478 (21 Am. Reports, 80); Moyer v. Sun Ins. Co., 176 Pa. St., 579; Boyle v. Ins. Co., 169 Pa. St., 349; Urig v. Ins. Co., 101 N. Y., 362; Bishop v. Ins. Co., 130 N. Y., 488; Gere v. Ins. Co., 67 Iowa, 273; Davis v. Ins. Co., (Iowa), 64 N. Western, 687; Sun Ins. Co. v. Crist (Ky.), 39 S. W., 837; Snodgrass v. Gavit, 28 Pa. St., 221.
    The following are eases in which the conditions of the policy are verbatim et literatim, the same as the policy in the case under consideration: Milwaukee Mechanics' Ins. Co. v. Stewart (Indiana), vol. 42, N. E. Reporter, 290; Davis v. Atlas Ins. Co., 47 Pacific Reporter, 436; Lesure Lumber Company v. Mutual Fire Ins. Co. of New York, 101 Iowa, 514; s. c. 70 N. W. Rep., 761; Home Building and Loan Association v. Dwelling House Ins. Co., 106 Mich., 236, is the latest utterance of a Supreme Court, on this proposition. Moody v. Ins. Co., 52 Ohio St., 12; Mosness v. Ins. Co., 50 Minn., 341.
    An examination of the two papers addressed by the company’s adjuster, to the insured, reveals the fact that they are written in an ambiguous manner, with an evident intent on the part of the writer to as carefully conceal bhe alleged demand as possible. In fact, no one except the author thereof, and those previously informed of the buried meaning, would ever think of giving that portion of the communications the interpretation contended for by plaintiff m error.
    But when it makes the alleged demand for an appraisal- — that portion of the communication on which it intended to rest its defense — it surrounds that demand on all sides with denials of the representations made by insured in her proof of loss, with an expertness and a degree of care that is worthy of a better cause; and is absolutely silent as to a reference of any provision of the policy which might give the unsuspecting reader a clew to the translation. If they were really intended to contain a demand for an appraisal, it would have been just as easy —and very much fairer — to ask for it in so many words, instead of enshrouding it in mystery. Gould v. Ins. Co., 134 Pa. St., 588; Aetna Fire Ins. Co. v. Tyler, 16 Wend., 385; Ins. Co. v. Ins. Co., 97 Pa. St., 24; Sergent v. Ins. Co., 155 N. Y., 349; McNally v. Ins. Co., 137 N. Y., 389; Boyle v. Ins. Co., 169 Pa. St., 346; Moyer v. Sun Ins. Co., 176 Pa. St., 579.
   Williams, J.

The effect of the charge for which the .judgment of the trial court was reversed, obviously was to preclude a recovery by the plaintiff, if the jury should find that she had failed to make demand for an ascertainment of the loss by an award of appraisers, and select a competent person to act as an appraiser, unless the defendant waived that mode of ascertainment, in some other way than by its failure to request an appraisement. And that purport of the charge is defended by counsel for the plaintiff in error, on the ground that the policy sued on makes such demand by the plaintiff a condition precedent to the right to bring and maintain the suit.' The stipulations of the .policy to which that operation is ascribed, are those contained in the statement of the case, and especially those which provide that “the loss shall not become payable until sixty days after notice, .ascertainment, estimate and satisfactory proof of loss herein required have been received by this company, including an award by appraisers when appraisal has been required;” and that no suit on the policy for any claim shall be sustainable “until after full compliance by the insured with all of the foregoing requirements.” While the policy undoubtedly confers on either party the right to call for an ascertainment of the loss by appraisers, when the parties are unable to agree upon the amount, it does not itself constitute an arbitration bond, binding them unconditionally to a submission of the loss to the judgment of. appraisers. Whether that method of determining the loss shall be resorted to, is optional with the parties, either of whom may, by demand on the other, require that it be pursued; ancl when so required, no suit can be maintained until the award of the appraisers has been furnished. But the provisions of the policy in this respect do not execute themselves. The party who elects to invoke that mode of proceeding must notify the other, and request the selection of appraisers. Then, the agreement of submission follows. If neither party chooses to request the appraisement, the right of the other to pursue the ordinary legal remedies is unaffected. “A eondition in a policy of insurance providing for an arbitration in case the parties cannot agree as to the amount of loss, cannot operate to deprive the assured of his right of action, unless clearly made a condition precedent to the existence of such right. ” Insurance Co. v. Pulver, 126 Ill., 331; Sergent v. Insurance Co., 155 N. Y., 349-355; McNally v. Insurance Co., 137 N. Y., 389.

It will be observed that this policy imposes no obligation on the assured to furnish an award of appraisers, except “when appraisal has been required.” That requirement certainly should be made within a reasonable time'after proof of loss; and if not so made before suit, is no obstacle to the maintenance of the action. In other words, a demand by the insurer for an appraisal within a reasonable time after proof of the loss has been furnished, is, under such a policy, a condition precedent to the right to require the insured to furnish an award of appraisers. This appears to be the construction placed upon such policies in numerous cases, and sustained by the great weight of authority. In Lesure Lumber Co. v. Insurance Co., 101 Iowa, 514, it was held that “provisions in a policy that an appraisal by arbitrators shall be made, if tliere is a disagreement as to the loss; that the loss shall not be payable until sixty days after notice and satisfactory proofs of loss have been given, including’ an award by appraisers when the appraisal shall be required; and that no action on the policy can be maintained without ‘a full compliance by the insured with all the foregoing requirements’ — do not make an appraisal a condition precedent to the right to sue, where the company makes no demand therefor.” The same construction was placed upon like polieies in the following, and other cases: Insurance Co. v. Stewart, (Indiana), 42 N. E. Rep., 286); Home etc. v. Insurance Co., 106 Mich., 236; Davis v. Assurance Co., 47 Pac. R., 436. In Sun Insurance Co. v. Crist, (Ky.), 39 S. W. Rep., 837, the court held that: “The insured need not plead or prove performance of the provision for arbitration in a fire policy, it being the duty of the company to propose arbitration in case of disagreement.”

The charge of the trial court was in conflict with the established construction of policies like that involved in this case, and was, we think, erroneous.

It is contended, however, that the error in the charge was not prejudicial to the plaintiff, because the notice of January 3, 1896," and letter of February 21,1896, set out in the statement of the ease, contain a demand by the defendant for an appraisal of the plaintiff’s loss, substantially in accordance with the policy. It is not claimed that either of those documents contains such a demand in terms, but only that one may be inferred therefrom. To be of any avail the demand must be made in good faith, within a reasonable time after proof of the loss has been furnished, and in such direct and explicit terms that a person of ordinary intelligence would fairly understand and be informed that the insurer requests a submission to appraisers for the ascertainment of the loss; and, when it is claimed the demand was made in writing, the instrument, if ambiguous, will be construed most strongly against the insurer, for the reason that the companjT- has the opportunity of making its meaning clear and unequivocal. The onty language in either of the documents referred to which counsel claim to be equivalent to a demand for an appraisal, is that contained in the first one, by which the insured is directed to. protect the property from further damage, and preserve all that remains, “until the loss thereon has been determined in the manner stipulated for in said policy;” and that of the other, in which she was informed that the company would not pay any amount claimed until “sixty days after the amount of the loss or damage has been determined in the manner stipulated in said policy, ” It seems evident that neither of these statéments amounts, by any proper construction, to a present demand for an appraisal of the plaintiff’s loss; nor can such demand be fairly extracted from either or both .of the instruments as a whole. By the first one the adjuster simply gave directions to the insured for the care of the property, and for an inventory required preliminary to an adjustment; and the other is wholly made up of objections to the proof of loss furnished, coupled with the information that the loss would not be paid “before the expiration of sixty days after it should be determined;” but there is no request to have the loss determined by appraisers. We therefore concur in the holding of the circuit court that neither of the documents mentioned constituted a demand for an appraisal, and the error in the charge was prejudicial.

Judgment affirmed.  