
    Isaac Steinberg and Leo Falkenberg, Respondents, v. Boston Insurance Company, Appellant, Impleaded with Augusta E. Reese, Defendant.
    First Department,
    April 21, 1911.
    Insurance — pleading—complaint stating action on policy rather than on agreement — adjusting loss — evidence — when adjustment conclusive—fraud. j .
    Where a complaint in a suitj to recover on a policy of fire insurance sets •out the policy, alleges performance of conditions on the part of the plain- , tiff except as waived by thfe defendant and an adjustment of the loss pursuant to the terms of! the policy by adjusters appointed by the respective parties, the acticjn must be deemed to be one on the policy rather than on the adjustment.
    Where a fire insurance policy provides for an adjustment of loss by appraisers the policy remains in force, although the loss be adjusted in that manner.
    
      In an action on such policy the adjustment by appraisers is conclusive evidence of loss in the absence of proof of fraud.
    Where the plaintiff in an action on such policy pleads the adjustment and the defendant answers that it was procured by fraud, it is entitled to give evidence showing fraud, as it destroys the evidence upon which the plaintiff, relies to prove damage's.
    The insurer may defend upon the ground that the adjustment was procured by fraud without maintaining a suit in equity to set it aside.
    Appeal by the defendant, Boston Insurance Company, from a judgment of the Supreme Court in favor of the plaintiffs, entered in the' office of the clerk of the county of New York on the 22d day of November, 1910, upon the verdict of a jury rendered by direction of the court, and also from an order entered in said clerk’s office on the 25th day of November, 1910, denying the said defendant’s motion for a new trial made upon the minutes.
    
      Horace L. Cheyney, for the appellant.
    
      Max L. Schallek, for the respondents.
   Miller, J.:

This is an action upon a policy of fire insurance. The plaintiffs pleaded the policy, performance of conditions upon their part, except as waived by the defendant, and the adjustment of the loss pursuant to the terms of the policy by adjusters appointed by the respective parties. In its answer the appellant alleged as a separate defense that its adjuster was induced to agree upon the adjustment by the plaintiffs falsely representing that the lowest bid received by them for repairing the damage was in excess of the sum of $12,000. ■ Upon the trial the plaintiffs relied upon the adjustment for proof of the loss. . The appellant undertook to prove the alleged fraudulent representations by an examination of one of the plaintiffs, but the evidence was excluded on the ground that the action was upon the policy, not upon the agreement of adjustment, and that the answer had raised no issue as to the actual loss sustained. As a matter of fact, the plaintiffs had alleged that their loss was $12,000, and the answer denied it.

While counsel apparently think that the case turns on whether the action is deemed to be on the policy or the agreement of adjustment, we entertain no doubt that the action is on the pohcy. .Oases like Smith v. Glens Falls Insurance Company (62 N. Y. 85) and Brown v. Hartford Fire Insurance Company (117 Mass. 479), in which agreements in compromise' or settlement were made, have no- application. The policy in this cáse provided for an adjustment of loss by appraisers. ■ The loss was adjusted in that way, but- the policy-still remained in full forjse and effect. The plaintiffs recovered upon it by proving the adjustment without being put to proof of the actual loss, the adjustment in the absence of proof of fraud being conclusive evidence of the loss. It is possible that it was unnecessary for the plaintiffs to. plead the adjustment, If so, it Was unnecessary for the appellant to plead fraud in avoidance of it. In such case, upon proof of it being' made,.. the appellant could avoid it by proof that it was procured by* fraud. However, the plaintiffs did plead it, and the appellant ■ sufficiently, pleaded that lit was procured by fraud. We think that there can be no question but that, under such circumstances, the appellant w^is. entitled to give evidence in support of its claim of fraud. If such claim were established, it would destroy the ''evidence upon which the plaintiffs relied to prove damage. " ■ |

It was not necessary for the. appellant first to have the adjustment set aside. Where {one is induced by fraud,to enter into-an agreement, he may be entitled to the aid of equity to have it canceled, but when it is made the basis of an. attack against him, hé may without resorting to equity defend on the gfiound of fraud. (Bosley v. National Machine Co., 123 N.Y. 550; Mead v. Bunn, 32. id. 275.)

■ We think, therefore, tliat when the plaintiffs sought to establish their loss by proof ojf the adjustment, the appellant was entitled to overcome its, ¡effect by proving, if it could, that it' was procured by fraud.' It follows. that the judgment and order should be reversed and a new trial ordered, with costs' to the appellant to abide the event.

Ingraham, P. J., McLaughlin, Scott and Dowling, jj., concurred. ¡

• Judgment and' order reversed and .new trial ordered, with costs to appellant to abide event.  