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FORD v. GROCERS' MUT. INS. CO.

September 24, 1931

FORD
v.
GROCERS' MUT. INS. CO.



The opinion of the court was delivered by: MCVICAR

Plaintiff brought an action in the court of common pleas of Bedford county, Pa., on a fire insurance policy to recover the sum of $4,000, with interest. Defendant, by reason of the diverse citizenship of the parties, had the action removed to this court. Defendant filed an affidavit of defense herein where it set up as new matter, inter alia, that the policy in suit contained the following provisions:

"Appraisal.

 "In case the insured and this Company shall fail to agree as to the amount of loss or damage, each shall, on the written demand of either, select a competent and disinterested appraiser. The appraisers shall first select a competent and disinterested umpire; and failing for fifteen days to agree upon such umpire, then on request of the insured or this Company such umpire shall be selected by a judge of a court of record in the state in which the property insured is located. The 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. * * *

 "Suit.

 "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 ...


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