
    Charles De Kay Townsend, et al., Plaintiffs, v. The Greenwich Insurance Company and Louise C. Blythe, Defendants.
    (Supreme Court, Nassau Trial Term,
    October, 1902.)
    Fire insurance — Written agreement of all parties to appraise a loss not assailable by the owners in a common law action on the policies — Oral evidence to vary a written instrument — Fraud or mistake must be pleaded — Rescission and restoration.
    A written agreement to appraise a loss on mortgaged premises, payable to the mortgagee, executed by the owners, the mortgagee and the insurers, and followed by an award thereunder and payment thereof, cannot be varied by oral evidence that to induce the insured to enter into the same the agent of the insurers orally promised or agreed that, notwithstanding its terms, the arbitrators should not follow the same but should award at least $6,000, and only consider whether they should award more.
    
      Where a written agreement is complete in itself proof of an oral agreement made at the same time is inadmissible to vary it.
    Fraud cannot be predicated on a mere promissory statement inducing the making of an agreement where its terms are understood.
    A common law action to recover on a policy of insurance cannot be maintained where an award has been made and paid unless the plaintiffs first rescind and restore; and although the award was paid to the mortgagee the insured owners must still restore it where it was paid for their benefit and under the terms of the policies.
    Actiobt on a policy of insurance on a building by the owners. The complaint is in the usual form on the policy, alleging a total loss, compliance with all the terms of the policy &c., and prays for judgment for $2,500, the amount of the policy. It also alleges that the policy was by its terms payable to the defendant Blythe, who holds a mortgage for $20,000 on the premises, and that she is made a defendant because she refused to join with the plaintiffs in bringing the action.
    The answer pleads as a defence that after the loss the plaintiffs and the said mortgagee and the defendant company entered into an appraisal agreement in writing to fix the amount of the loss, as provided for by the terms of the policy, and that the appraisers fixed the amount, viz., $4,156.58, by their award in writing, and it was paid to and received by the said mortgagee.
    There were two other similar actions tried at the same time, viz., one against Continental Insurance Company and one against Hanover Eire Insurance Company (the said Blythe being also made a defendant in each in the same way), on similar policies for $2,000 and $2,500 respectively on the same building, and payable to the said mortgagee Blythe.
    The same testimony applied to all of the cases, and the three companies were parties to the said appraisal.
    William D. Gaillard and Mortimer S. Brown for. plaintiffs.
    Michael H. Cardozo for defendants
   Gaynor, J.:

When the defendants had put in evidence the written appraisal agreement and the award thereunder, and proved payment of such award, viz., $4,156.58, to the mortgagee, i. e., the defendant Blythe, as required by the policies, the plaintiffs gave evidence that prior to and at the time of the execution of such appraisal .agreement the agent of the defendant companies stated to them and orally agreed in substance that notwithstanding the said written appraisal agreement was in general terms for the ascertaining of the amount of the loss, $6,000 would be allowed without dispute, and the appraisal would be confined to determining whether more than $6,000 should be the amount of the loss, the plaintiffs claiming $7,000, which was the total insurance by the three companies; and that they were induced thereby to execute such written agreement. Strangely enough, neither side to the arbitration communicated such oral arrangement to the appraisers, but left them to act under the terms of the written agreement, which required them to ascertain and appraise the actual loss as they should find it, and they found it to be less than $6,000, viz., $4,156.58. The jury found by special verdict that such oral agreement was made, and the cash value of the building at the time of the destruction to have been $9,000. All questions of law were reserved, and both sides move for judgment, the defendants having also moved for a direction of a verdict in their favor at the close of the evidence, which was reserved until after verdict.

1. The oral evidence, received under objection and exception by the- defendants, varied the written appraisal agreement, which was that the appraisers should appraise and ascertain the actual loss. Such agreement was complete on its face and covered the whole subject. If the understanding was that the award had to be at least $6,000 it needed to be in the written agreement. It was in no sense collateral; it was essentially of the subject matter of the appraisal. The oral evidence was therefore incompetent and must be disregarded (Wilson v. Deen, 74 N. Y. 531).

2. The oral evidence was not sufficient to show fraud or mutual mistake by the defendant companies. There was no mistake at all about the written agreement; the plaintiffs concededly knew its contents thoroughly. Fraud cannot be predicated upon the promissory statement of the agent of the companies that the appraisal would be confined to whether the loss was more than $6,000 (Ex parte Fisher, 18 Wend. 608).

3. There was no issue of fraud or mistake on the pleadings. The complaint did not seek to have the arbitration agreement annulled ; it was simply a complaint in a common law action to recover the amount of the policy. A defendant cannot he made to meet an issue of fraud or mistake in the making of a contract unless it he tendered to him by the complaint. In Sullivan v. Traders’ Insurance Co. (169 N. Y. 213), a reply alleging fraud by appraisers in the making of an award, which was pleaded as a defence, was allowed to eke out the complaint which contained no such allegation but was like the present one. There is no reply here; and besides that case is generally understood to be a border one, and not to serve as a precedent except in an exactly similar case.

4. Finally, in order to maintain this action, which is one at law, the plaintiffs had first to rescind and restore the amount they had received; and to maintain a suit in ' equity to set aside the written appraisal agreement and the award thereunder they would have to offer in their complaint to restore the amount received, and also tender it to the defendant companies in court at the opening of the trial. That the amount of the award was not paid directly to the plaintiffs, but to their mortgagee in reduction of the mortgage, does not make a difference. It was paid for their account and benefit. They cannot retain it and take the chance of getting more. They' must first restore it, and take the chance of getting less (Gould v. Cayuga Co. Natl. Bank, 86 N. Y. 75; 99 N. Y. 333; Remington Paper Co. v. London Assurance Corporation, 12 App. Div. 218).

Judgment for the defendants.  