
    New York Mutual Savings and Loan Association, Respondent, v. The Manchester Fire Assurance Company, Appellant, Impleaded with George W. Morrison.
    
      Award under an insurance policy — where the umpire has acted with one appraiser without consultation with the other the award will he set aside.
    
    
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    Whenever one assumes to act in a judicial capacity, whether as judge, referee, arbitrator or umpire, he must be free from the suggestion of bias against either party to the controversy.
    While it is the policy of the courts to give full effect to the appraisal clause contained in the standard form of fire insurance policies, they are strenuous in condemning any practice under such an appraisal clause which, in effect, savors of unfairness, even though no actual bad faith is shown.
    Where the appraiser appointed by the insurance company, in the absence of the appraiser appointed by the insured and without notice to him, submits his estimate of the loss to the umpire agreed upon by both the appraisers, and the umpire accepts such estimate without consultation with the other appraiser,
    ■ the insured "is entitled, in the event of the award being only $1,033, while the value of the property destroyed was $1,300, to maintain an action to- set aside the award and to recover the value of the property burned.
    . Appeal by the defendant, The Manchester Fire Assurance Company, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of Erie on the 1st day of June, 1903, upon the report of a referee.
    The defendant issued a policy of insurance dated April 10, 1896, insuring the dwelling house on Hazeltine avenue in the city of Buffalo in the sum of $1,600 to the owner and payable to the plaintiff as mortgagee, whose mortgage éxceeded the amount of the policy. On the 5th day of December, 1898, and during the life of the policy, the insured property was totally destroyed by fire. The policy was of the standard form and contained the following clause : “ In the event of disagreement as to the amount of loss the same shall, as above provided, be ascertained by two competent and disinterested appraisers, the insured and this company each selecting one, 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 their differences to the umpire; and tfie aw'ayd jn -yriting of any tym sli^Jl determine the amovpit of such loss; the parties thereto, shall pay the appraiser respectively selected by them and shall bear equally the expenses of the appraisal and umpire.”
    The parties disagreed as to the amount of the loss, and in- compliance with this provision two appraisers were duly appointed and they selected an umpire. The umpire and Mr. Yanderwerf, the appraiser chosen by the appellant, agreed upon and signed an award for $1,032 in which Mr. Howell, the other appraiser, declined to join. This action is commenced to set aside said appraisal and to recover the value of the property burned.
    
      Seward A. Simons, for the appellant.
    
      Thomas B. Boyd, for the respondent.
   Spring, J.:

Mr. Howell was familiar with the house destroyed and at the suggestion of the other appraiser prepared a plan of it and submitted it to him. Mr. Howell claimed that the building was worth' the amount of the policy and was totally destroyed, and on that account the only fact to be ascertained by the others was whether the destruction was complete. He and Mr. Vanderwerf had three meetings each for a few moments only, and no comparisons of estimates was had by them and no figures were submitted to Howell by Vanderwerf at any time. Vanderwerf took the plans and made his estimate and gave it to the umpire, Metz. The latter brought it to Howell, saying they were the figures of Vanderwerf, and Howell refused to agree to them.

The scheme of appraisal contemplates that the two appraisers shall estimate the amount of the loss, and in case of their disagreement “ their differences ” shall be submitted to the umpire. It is not within the purpose of the provision that one appraiser shall present no estimate to his associate appraiser, but confer with the umpire in the absence of and without any notice whatever to the other appraiser. In this appraisal, so far as we can gather from the testimony, Metz accepted without modification the estimate prepared by the appraiser representing the defendant. This was not fair to the plaintiff or to the owner. It is somewhat significant that neither Metz nor Vanderwerf was sworn and there is pothing to exculpate them from the suggestion that they did not act openly and in a judicial manner. While the policy of the courts is to give full effect to this wholesome provision for the ascertainment of damages accruing upon, an insurance policy they have been strenuous in condemning any practice which in appearance savors of unfairness even though no actual bad faith is shown. In Schmitt Brothers v. Boston Insurance Company (82 App. Div. 234) the appraiser chosen by the defendant and the umpire made the award together in the absence'of the Other appraiser and without any notice to him or to the insured. The award was set aside by the Special Term and its judgment was affirmed. The court say (at p. 238): “ In an ordinary appraisement, «where the parties charged' with that duty act in a proper maimer, no notice to the insured is necessary, because he is at all times "represented by the appraiser whom he has selected, and who is there for the purpose of protecting his interest. It is- quite a different thing where an umpire and appraiser for the defendant assume to enter upon a consideration of the questions necessarily involved in making the award, in the absence of the appraiser for the insured, and without notice either to him or to the insured. Under such circumstances, the insured stands without that représentation’^to which he is entitled, and an appraisement and award made under such circumstances will not be permitted to stand, even though there be no basis upon which to predicate a charge of bad faith. It is not such an appraisement as the law contemplates, or for which the contract of insurance provided, but is a one-sided proceeding, in which only one party is represented; and if there1 were no¡ other reasons to be assigned in support of the judgment of the court, this fact would be quite sufficient to sustain his conclusion that the award was improperly made.” (See, also, Strome v. London Assurance Corporation, 20 App. Div. 571, 573; affd., 162 N. Y. 627; Kaiser v. Hamburg-Bremen Fire Ins. Co., 59 App. Div. 525, 530.) The principle underlying these decisions is that, whenever one assumes to act in a judicial capacity, whether as judge, referee, arbitrator or umpire, he must be free from the suggestion of bias against either party to the controversy. The award in the present case apparently was made by Vanderwerf alone without the knowledge of Howell, and was submitted to and acquiesced in by the umpire also without any consultation with the other appraiser, and there has been no endeavor to explain this situation.

The referee has found the value of the property destroyed to be $1,300, and the proof abundantly sustains this finding. The difference between this sum and the award is not grossly inadequate, but proportionately the diminution from the actual value comes within the rule of condemnation administered in Kaiser v. Hamburg-Bremen Fire Ins. Co. (supra). There the award was of $3,031, and the loss, as found by the referee, $3,830.28, the percentage of difference being substantially the same as here. There was a substantial loss to the plaintiff, and that is the test in determining whether the award was in fact insufficient. An action may be maintained to set aside the award, and, in the event of accomplishing that result, to recover for the actual loss sustained. (Bradshaw v. Agricultural Ins. Co., 137 N. Y. 137; Maher v. Home Ins. Co., 75 App. Div. 226, and cases above cited.)

The judgment should be affirmed, with costs.

All concurred.

Judgment affirmed, with costs.  