Western Assurance Co. v. Hall & Brother , 112 Ala. 318 ( 1895 )

COLEMAN, J.

The action is upon a policy contract of fire insurance, and the complaint is framed after the statutory form. The court sustained the plaintiff’s demurrer to the pleas of the defendant, and the defendant declining to plead further, judgment was rendered for the plaintiffs. The appeal is from the ruling of the court, sustaining the demurrer to the pleas. The question raised by the pleas is the 'legal effect of the “arbitration clause” contained in the policy. According to the averments of one or more of the pleas, the policy provided that in the event of disagreement as to the amount of loss, the amount should be settled by arbitration, and that it was provided and stipulated in the policy, in substance, and made a condition thereof, that no suit or action on said policy should be maintained without a compliance with the conditions, &c. How the ai’bitrators were to be selected, and the loss ascertained are sufficiently stated in the plea. It would have been better pleading to have set out that part of the arbitration stipulation which provided that no suit should be maintained without a compliance with the condition, than to have made the averment the conclusion of the pleader.

The demurrer to the pleas raise the one question, whether the plaintiff’s refusal to submit the question of the amount of the loss to arbitration upon the demand of the defendant, the parties having disagreed, bars the plaintiff’s action. Does the arbitration provision oust courts of jurisdiction, and will such an agreement be upheld ?

There are some decisions of this court which in principle go far to sustain the ruling of the primary court, and upon these authorities our first conclusion was that the court ruled rightly, in sustaining the demurrer to the plea. Upon further consideration of the question and examination of the authorities, we are convinced that the weight of authority and the better argument are adverse to our first conclusion, and that the demurrer to the plea should have been overruled. The Alabama cases principally relied upon are Bozeman v. Gilbert, 1 Ala. 90, Meaher v. Cox, 37 Ala. 201, and Wright v. Evans, 53 Ala. 108. The principle declared in these cases is, that when the agreement to arbitrate includes the whole subject matter of difference, so that the right of the party to resort to the courts of his country for the determination of his suit or claim is absolutely and effectually waived, such an agreement is against public policy and void. We adhere tó that conclusion. The courts clearly distinguish between an agreement which refers to arbitration the extent or amount of damages to be recovered, but leaves the parties free to have the right to recover or liability .of the other party determined by the courts, and those agreements which refer to arbitration the authority to determine the right of the one to recover, or the liability of the other. The former are upheld and enforced, while the latter are declared to be against public policy and not binding. The policy of the legislature of this State is to encourage the settlement of legal controversies by arbitration as far as can be done ■without contravening some principle of public policy. Tankersley v. Richardson, 2 Stew. 130; Tuscaloosa Co. v. Jemison, 33 Ala. 476; Code of 1886, §§ 3221, 3222. The arbitration clause under consideration, came before the court in the case of Hamilton v. Liverpool Ins. Co., 136 U. S. 242, and. it was there upheld in the following language : ‘ ‘Such a stipulation, not ousting the jurisdiction of the courts, but leaving the general question of liability to be judicially determined, and simply providing a reasonable method of estimating and ascertaining the amount of the loss, is unquestionably valid, according to the uniform current of authority in England and in this country. — Scott v. Avery, 5 H. L. Cas. 811; Viney v. Bignold, 20 Q, B. D. 172; Delaware & Hudson Canal v. Pennsylvania Coal Co., 50 N. Y. 250; Reed v. Washington Ins. Co., 138 Mass. 572, 576; Wolff v. Liverpool & London & Globe Ins. Co., 50 N. J. L.453 ; Ilallv. Norwalh Ins. Co., 57 Conn. 105, 114. The case comes within the general rule long ago laid down by this court: ‘Where the parties, in their contract, fix on a certain mode by which the amount to be paid shall be ascertained, as in the present case, the party that seeks an enforcement of the agreement must show that he has done everything on his part which could be done to carry it into effect. He can not compel the payment of the amount claimed, unless he shall procure the kind of evidence required by the contract, or show that by time or accident he is unable to do soP — United States v. Robeson, 9 Pet. 319, 327. See also Martinsburg & Potomac Railroad v. March, 114 U. S. 549.”

As sustaining the principle, we cite the following authorities: Carrol v. Fire Ins. Co., 72 Cal. 297; Hallv. Ins. Co., 57 Conn. 105; Campbell v. Amer. Ins. Co., 29 Am. Rep. 591; Ins. Co. v. Creighton, 51 Ga. 95; Wolff v. Ins. Co., 50 N. J. L. 453; Pioneer Co. v. Ins. Co., 106. N. C. 28; Hanover Ins. Co. v. Lewis, 28 Fla. 209; May on Ins., § 495; Chippewa Co. v. Ins. Co., 80 Mich. 116.

Former opinion withdrawn,rehearing granted, reversed and remanded.