
    David H. Morgan and Charles R. Morgan, Appellants, v. The Merchants’ Co-operative Fire Insurance Association of Central New York, Respondent.
    
      Insurance policy — what arbitration clause requires that all the arbitrators unite in a report — when the report is tentative only.
    
    The by-laws of a co-operative fire insurance company provided as follows: “ Any member suffering a loss for which this Association is liable, shall immediately notify the secretary in writing; and, within ten days thereafter, a member designated for that purpose by the. President, and another member chosen by the party suffering such loss, together with the Manager of this Association, shall proceed to the place of the incurred loss and determine the amount of the same. The three adjusters shall, within five days thereafter, report their estimate as to the amount of such loss in writing to the Executive Committee, who shall proceed to liquidate the same in accordance with the pokers vested in them for that purpose.”
    
      Held, that the adjusters’ estimate of the amount of the loss was not conclusive;
    That their power was limited to the making of a tentative report for the guidance of the executive committee, which was finally to determine the sum to be paid;
    That, assuming that the adjusters’ report was final, all three must unite therein, and that a report signed only by the two adjusters controlled by the; association was insufficient.
    Appeal by the plaintiffs, David H. Morgan and another, from a judgment of the Supreme,Court in favor of the plaintiffs, entered in the office of the clerk of the county of Oneida on the 17th day of August, 1899, upon the verdict -of a jury for .$1,440.61 rendered by direction of the court, and-also from an order entered in said clerk’s office on the 16th day of August, 1899, denying the plaintiffs’ motion for a new trial made upon the minutes. . I.
    The defendant is a co-operative tire insurance company, and on the 12th' day of June, 1896, issued its policy to the plaintiffs whereby it insured a stock of goods owned by them in their store at Saquoit, N. Y., against “loss or damage by fire” in - a sum hot exceeding $2,880, and also $120 on store furniture and fixtures, for the term of one year and for the initial premium of $37.50. The policy was kept in force by renewal, and during its life, and on the 8th. day of August, 1897, said' merchandise, furniture andi fixtures were wholly destroyed by fire.
    Section 17 of the defendant’s by-laws, which are printed on the face of the policy, so far as it pertains to this ease, reads as follows: “ Any member suffering a loss for which this Association is liable, shall immediately. notify the secretary in writing; and, within ten days thereafter, a member designated for that purpose by the President, and another member chosen by the party suffering such loss, together'with the Manager of this Association, shall proceed to the place of the incurred loss' and determine the amount of the same. The three adjusters shall, within five.days- thereafter, report their estimate as to the amount of such loss in writing to the Executive Committee, who shall proceed to liquidate the ■ same in accordance with the powers vested in them fa,r that purpose.” '
    In pursuance of this provision the vice-president of the company selected one member, the plaintiffs another, and these, with the manager^ proceeded to the place of the fire and took'data for determining the amount of the loss. The mán selected bv the vice-president, and the manager, agreed upon their estimate, fixing the value of the destroyed property at the sum of $1,986.82, but the one chosen by the plaintiffs declined to join in this report.. There was concurrent insurance upon ' the property; consequently, the defendant was obliged to pay only its proportion of the entire loss, and this reduced the sum for the company to pay, according to the estimate, to $1,812.03. The court directed a verdict for the plaintiffs, limiting the recovery to the amount of the award. Other facts appear in the opinion.
    
      P. C. J. DeAngelis, for the appellants.
    
      Thomas Jones, for the respondent.
   Spring, J.:

The report made by the adjusters indicated that on March 1, 1894, the plaintiff’s inventory showed goods on hand of the value of $6,857.16. . The plaintiffs attempted to show that at the time of the fire their merchandise was worth over $6,000, but the proof was excluded, and the tidal court in explicit terms held that the determination of the two adjusters was conclusive, and the recovery was restricted to their adjustment. Section IT of the by-laws, quoted above, is stringent in its provisions. The manager of the defendant, another one of its members selected by the president, and still another member selected by the assured, are to determine the loss. All three, therefore, must belong to the association, and two of them are significantly within its dominion. A one-sided stipulation of this kind will be construed most liberally in favor of the insured and every ambiguity will be resolved in his aid. (Rickerson v. Hartford Fire Ins. Co., 149 N. Y. 307, 313; Gillet v. Bank of America, 160 id. 549, 554; Mead v American Fire Ins. Co., 13 App. Div. 476; Janneck v. Met. Life Ins. Co., 162 N. Y. 574; May Ins. § 175.) The three men selected are required to proceed to the place of the incurred loss and determine the amount of the same.” They are then, within five days, to “ report their estimate as to the amount of such loss in writing to the Executive Committee, ivho shall proceed to liquidate the same in accordance with the powers' vested in them for that purpose.” The full intendment of this language is that the persons chosen make a tentative report to the executive committee, and that body determines the sum to be paid ; that is, the absolute determination rests with the executive committee, and the report is for their' enlightenment, a detailed basis for their guidance. The three men selected, must go to the place of the fire, determine the amount of the loss, which must be founded .upon facts and data acquired on the ground, and they have five days in which to formulate the figures and make their report. The verbiage in defining the duties of tile executive committee is peculiar. After the estimate has been made they are to “proceed to liquidate the same.” That is, they are to. ascertain -— to pass upon the preliminary report.- Had the report of the men chosen been the final arbitrament, thp executive committee or some administrative officer would have been charged with the payment of the sum awarded. There is no intimation in this case that the executive committee took any action upon this report. That body was charged with an affirmative duty. The insured, under this drastic policy, was entitled to the consideration and to the judgment of the members of that committee. They might disagree with a report which recognized an inventory of the plaintiff’s stock in 1894 at the sum of nearly-$7,000, and then by a computation based somewhat upon speculation, reduce if to-.below $2,000 in 1897. If plaintiffs are to be within the control of the defendant they can insist upon their pound of flesh, and have every step taken provided for in the policy by which their rights are to be determined.

But beyond this, assuming that the report of the adjusters is,iinal, it does not come within the pale of the language used. Only two adjusters, those selected by the defendant, concurred in this report. Apparently there was no formal meeting after they were at the place of the fire. They talked over the amount of the loss on that day, and Hull, the adjuster chosen by the plaintiffs, did not ¡agree with his associates. A few days later Mr. Geer, the secretary and manager of the defendant, and ex officio one of its adjusters, prepared the report and presented it to Mr. Hull for his signature, but the latter declined to join in it. Afterward it was signed by Mr. Petrie, the man selected by the defendant. There was no meeting called to discuss the. details of the report. It was prepared in the defend-. ant’s office by its secretary and manager, and its deceptive profuseness of figures was never ventilated by any discussion by these adjusters.

The warrant of authority of these adjusters does not provide that a majority may make the adjustment. It does explicitly require that the “ three adjusters” shall make their report; this precludes a report by a less number. The basis of the intervention of the executive committee is the estimate of the three adjusters, not of a majority. Where an authority of this kind is intrusted to a definite number for a private purpose, all must unite in its execution unless the agreement provides otherwise. (Green v. Miller, 6 Johns. 39 ; Cope v. Gilbert, 4 Den. 347 ; Weaver v. Powel, 148 Penn. St. 372; Hubbard v. Great Falls Mfg. Co., 80 Maine, 39, 42.)

The principle is stated in Morse on Arbitration and Award, at page 162, as follows: “ Unless the statute, or the submission under which the arbitrators act and derive their authority, provide to a contrary effect, or unless a contrary intention of the parties can be clearly and unmistakably gathered from the submission and attendant facts] the rule is general and. imperative that all the arbitrators must unite in the award in order to render it valid.”

And in 2 American and English Encyclopaedia of Law (2d ed. 643) is the following : “ All must join in private matters, unless there is an express provision to the contrary in the statute or submission under which the arbitrators act, or unless it can be inferred from the submission itself, and the surrounding circumstances, that the parties intend the contrary. Arbitration being usually a private matter, all the arbitrators must join in the award or it is invalid.”

In Hubbard v. Great Falls Mfg. Co. (supra) the doctrine is thus announced at page 42 : “ For it is a well settled principle that where a submission is made by private parties to a given number of persons, without any express - authority given or to be inferred from the manner or circumstances of the submission, that a smaller number may decide, an award or decision will be void unless made by all, though a different rule prevails where authority is conferred to several persons in matters of public concern.”

There is a clear distinction between an- arbitration of private import and one of public concern. In the latter a majority of the arbitrators chosen may act where all have met, but that rule does not obtain where the controversy is between individuals. (People ex rel. Washington v. Nichols, 52 N. Y. 478, 48L) This was not technically an arbitration. It is an agreement to select adjusters. They became the agents of those appointing them, and the principals were, entitled to the performance of the agency by each of the persons selected. (Tallcot v. Arnold, 61 N. Y. 616.)

It was not an arbitration pursuant to the Code of Civil Procedure, and the provision that an award by a majority is valid (§ 2371) has no application. The rights of the parties in this casé are .fixed by their contract, and the powers of the adjusters are derivable solely from that instrument.

It has been urged that this construction vests the authority in the' man chosen by the plaintiffs, and his refusal to concur with his co-adjusters prevents a determination. By the very force of the pj’ovision the power is committed to three interested persons, two of whom are apt to be peculiarly favorable to the defendant, and the courts cannot be expected to strain to vindicate the position of the defendant. Uiiless the plaintiffs have the benefit of the concurrence of their representative they are at the mercy of those interested in a low adjustment. The blocking of this scheme to determine the amount of the loss does not deprive the association of its rights. It can still interpose any. defense available to it, and it has the benefit of the investigation and estimate of two men favorable to its contention.

' We think that the determination of the two adjusters ¡was not of conclusive - force and that plaintiffs should have been permitted to give evidence of the value of the property burned. ¡

The. judgment and order are reversed and a new trial granted, with costs to the appellants to abide the event.

All concurred, except Williams, J., not sitting.

Judgment and order reversed and a new trial ordered, with costs to thé appellant to abide the event.  