Young v. Aetna Insurance , 101 Me. 294 ( 1906 )

Emery, J.

This is an action upon a fire insurance policy of the standard form, upon a factory building and machinery which were destroyed by fire within the terms of the policy. Referees to determine the amount of the loss had been chosen as provided in the policy and by statute R. S., c. 49, secs. 4-5, and these referees had made their award. The plaintiff, however, contends that the evidence shows such bias and want of impartiality on the part of one or more of the referees as to require the court to set aside the award and render judgment for the amount shown by the evidence before the court to be the actual loss.

The contract and the statute called for “ three disinterested men ” to appraise the amount of the loss. None of the three referees, or appraisers, in this case had any pecuniary interest in the defendant company, or in the plaintiff’s property loss, or in the result of the appraisal; nor was either of them related to the plaintiff. In fine, none of them had any such interest as would disqualify him from acting in an official capacity between the parties under the sanction of an official oath and responsibility, however manifest might be the impropriety of his so doing. McGilvery v. Staples, 81 Maine, 101, and cases there cited.

We think, however, that something more than absence of pecuniary interest and relationship is required to constitute disinterestedness in this class of cases. The men who act as referees in these cases are not officials acting in behalf of the state under the sanction of official oath and responsibility. They are mere private persons holding no permanent commission from public authority and not required to take any oath to safeguard their action. Again, they are not freely chosen by the parties like ordinary referees where each party has an absolute veto which he may exercise until all three men are satisfactory to him in all respects. The mode of choosing them that the parties were obliged by the policy and the statute to follow in this case was as follows: Each party nominated three men from whom the other party chose one. These two were to choose the third man if they could agree upon one. As they did not agree the Insurance Commissioner appointed the third man. It is evident that each party’s freedom of choice was thus materially abridged. True, the parties stipulated in the contract of insurance that the referees should be chosen in that way, but nevertheless it cannot be held that in fact there was perfect freedom of choice. The plaintiff was obliged to make the stipulation or go without insurance protection of his property. He coidd not obtain fire insurance except from an incorporated insurance company, It. S., c. 49, sec. 1, (assuming but not deciding that restriction to be constitutional.) No incorporated company could issue a fire insurance policy without that stipulation, H. S., c. 49, sec. 4.

Assuming, as we should, that the stipulation as to referees was required by the legislature as in furtherance of justice, we think the legislative purpose must have been to secure an adjustment of the amount of the loss more speedily, cheaply and accurately than could be done by a court and jury. The spirit of the statute requires that the three referees shall be as free from pecuniary interest and relationship as judges and jurors are required to be, and also be as free from bias, prejudice, sympathy and partizanship as judges and jurors are presumed to be. If there is no other restriction as to the men to be nominated for the other party to choose from, or as to the third man however appointed, than that they shall not be relatives and have no pecuniary interest, then either party may have forced upon him as referee, at least one violent partizan of the other party, or at least men incompetent, opinionated or biased. The purpose of the statute might thus be wholly defeated and made to work an injustice.

From the foregoing considerations and others we are satisfied that the insurance statute and the insurance contract require that the referees shall be “ disinterested ” not only in the narrow sense of being without relationship and pecuniary interest, but also in the broad, full sense of being competent, impartial, fair and open minded, substantially indifferent in thought aud feeling between the parties, and without bias or partizansliip either way. Brock v. Insurance Company, 102 Mich. 583; Bradshaw v. Insurance Co., 137 N. Y., 137 ; Hall v. Assurance Co., 133 Ala. 637, (32 So. Rep. 257); Hickerson v. Insurance Co., 96 Tenn. 193, (33 So. W. Rep. 1041).

Turning now to the evidence in this case we find the following facts among others: The property insured was situated in Calais, a city on the extreme eastern frontier of the state. The referee chosen by the defendant from the three men nominated by the plaintiff, was Mr. Sawyer of Calais. The referee chosen by the plaintiff from the three men nominated by the defendant, was Mr. Allen of Portland, nearly three hundred miles distant from Calais. .Practically, Mr. Sawyer was the choice of the plaintiff, and Mr. Allen the choice of the defendant. When these two undertook to agree upon a man as third referee, Mr. Allen declined to agree upon any man in Calais, though freely admitting there were as good men in Calais as anywhere else in the state. He gave as a reason for his refusal that the defendant company objected to any local man.

This refusal, apart from the excuse given for it, was unreasonable. Assuming, as Mr. Allen admitted, that there were as good men in Calais as anywhere else in the state, it is not a reasonable inference from the fact of their residence in Calais and consequent probable better knowledge of local conditions affecting values there, that none of them were proper persons to act as appraising referees. His refusal to consider any of them shows that Mr. Allen was not an impartial, indifferent arbitrator, and, coupled with the excuse given, it shows that he regarded himself as the representative of the defendant company. From this circumstance alone, without considering others appearing in the evidence, we think it clear that Mr. Allen was not the disinterested referee required by the statute and the policy, and hence that the award must be adjudged not binding on the plaintiff, and must be set aside. Brock v. Insurance Co., 102 Mich., 583; McCullough v. Insurance Co., 113 Mo., 606; Insurance Co. v. Bishop, 154 Ill. 9; Hickerson v. Insurance Co., 96 Tenn. 193 (33 So. W. 1041.)

The defendant company refused to comply with the plaintiff’s request for another arbitration of the amount of the loss, and it was stipulated in the report of the case, that if the court adjudged the award invalid^ judgment should be awarded for the plaintiff for the full amount of the insurance $1,700, less $1,353.06 already paid.

Judgment for the plaintiff for $3f6.9 ^ and interest from the date of the writ.