appraisers shall then appraise the loss and damage, stating separately sound value and loss or damage to each item; and failing to agree, shall submit their difference only, to the umpire. An award in writing, so itemized, of any two when filed with this Company shall determine the amount of sound value and loss or damage. Each appraiser shall be paid by the party selecting him and the expenses of appraisal and umpire shall be paid by the parties equally. * * *
"When Loss Payable.
"The amount of loss or damage for which this Company may be liable shall be payable sixty days after proof of loss, as herein provided, is received by this Company and ascertainment of the loss or damage is made either by agreement between the insured and this Company expressed in writing or by the filing with this Company of an award as herein provided. * * *
"No suit or action on this policy, for the recovery of any claim, shall be sustainable in any court of law or equity unless all the requirements of this policy shall have been complied with, nor unless commenced within twelve months next after the fire."
Defendant averred that the plaintiff, the insured, and the company, the defendant, had failed to agree as to the amount of loss or damage; that it had appointed an appraiser and had made a written demand of plaintiff to select a competent and disinterested appraiser as provided for in the provision of the policy aforesaid; that plaintiff had refused, and still refuses, to comply with said demands of the defendant, and has refused and still refuses, to appoint an appraiser.
The plaintiff, in her reply to the above provisions of the affidavit of defense, admitted them to be true. Defendant moved for judgment for want of a sufficient reply, and contends in support thereof that under the admitted facts aforesaid plaintiff did not have a right to bring this action.
Under the law of Pennsylvania, an appraisal covenant, such as the covenant contained in the policy in suit, is revocable, and the insured may bring an action on the policy without complying with the terms thereof. Rubenstein v. Dixie Fire Insurance Company, 51 Pa. Super. Ct. 447 (1912); Gratz v. Insurance Company of North America, 282 Pa. 224, 127 A. 620 (1925); and Dudzinski v. Great American Insurance Company of New York, 90 Pa. Super. Ct. 540.
Where an action is brought in the federal courts to recover on a policy containing such covenant, the plaintiff must show that he has complied therewith before bringing his action. Hamilton v. Liverpool & London & Globe Insurance Company, 136 U.S. 242, 10 S. Ct. 945, 34 L. Ed. 419, and Commercial Union Assurance Co. v. Dalzell, and London & Lancashire Fire Ins. Co. v. Dalzell, 210 F. 605 (C.C.A. 3, 1914).
What law applies where an action on a policy containing such covenants is brought in a state court and by reason of diversity of citizenship is removed to a federal court? The state law applies. Montgomery's Manual of Federal Jurisdiction and Procedure (3d Ed.) § 277; Whittemore et al. v. AEtna Insurance Co., 296 F. 238, 239 (D.C., S.D. Fla., 1924); Collins Manufacturing Co. v. Wickwire Spencer Steel Co., 14 F.2d 871, 873 (D.C., D. Mass., 1926); and Great Southern Life Ins. Co. v. Burwell, 12 F.2d 244, 245 (C.C.A. 5, 1926).
In Montgomery's Manual of Federal Jurisdiction and Procedure, § 277, it is stated: "If the plaintiff has asserted rights which are recognized by the state courts, the defendant cannot escape an enforcement thereof by removing the suit to the federal court."
In Whittemore et al. v. AEtna Insurance Co., supra, it is stated: "This action was begun in the circuit court of Pinellas county, Fla., and was transferred to this court on the ground of diversity of citizenship. The rights of the parties are to be adjudicated as they would be in the state tribunal, according to the laws of the state."
In Collins Manufacturing Co. v. Wickwire Spencer Steel Co., supra, which was a suit in equity brought in a state court in Massachusetts, and which was removed to the District Court of the United States therein by reason of diversity of citizenship, the court in its opinion said: "But I look upon the asserted rights as substantive equitable rights, and if they are recognized by the courts of Massachusetts as adequate grounds for the interposition of equity, or, in other words, if they are held by the courts of that state to be rights of an equitable character when tested by general principles of equity, this defendant cannot avoid the enforcement of these equitable rights by removing the suit from the state to the federal court."
In Great Southern Life Ins. Co. v. Burwell, supra, Circuit Judge Foster said: "It must be remembered that this suit was instituted originally in the state court. Citation of authority is hardly required to show that a litigant cannot be deprived of any substantial rights by removal to the federal court."
Our attention has not been called to any case or authority holding to the contrary.
The motion for judgment for want of a sufficient reply by the plaintiff is refused.
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