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ICE CITY v. INSURANCE COMPANY NORTH AMERICA (01/24/74)

decided: January 24, 1974.

ICE CITY, INC. ET AL., APPELLANTS,
v.
INSURANCE COMPANY OF NORTH AMERICA



Appeal from decree of Court of Common Pleas of Lehigh County, June T., 1972, No. 22, in case of Ice City, Inc., a corporation and Ice City Christmas, Inc., a corporation v. Insurance Company of North America, a corporation.

COUNSEL

Harold Caplan, with him C. Tracy Taylor, and Stamberg, Caplan, Calnan & Behrle, for appellants.

Richard W. Hopkins, with him White and Williams, for appellee.

Andrew F. Giffin and Barton Isenberg, Assistant Attorneys General, for Pennsylvania Insurance Department, amicus curiae.

Jones, C. J., Eagen, O'Brien, Roberts, Pomeroy, Nix and Manderino, JJ. Opinion by Mr. Justice Roberts.

Author: Roberts

[ 456 Pa. Page 211]

On November 13, 1971, the business premises of appellants, Ice City, Inc., and Ice City Christmas, Inc., were damaged by fire. Fire insurance coverage was provided by appellee, the Insurance Company of North America (INA). The parties, while able to agree on the amount of losses to real and personal property, were unable after protracted negotiations, to agree on the amount of lost income. Appellee admits liability for this loss, but disputes the amount of loss.

On July 10, 1972, appellants, pursuant to the terms of the insurance policy, demanded in writing the appointment of independent appraisers qualified to determine the extent and amount of lost income. INA, however, refused to comply with the procedures set forth in its policy, and declined to nominate an appraiser. The policy, as statutorily mandated,*fn1 provides: "Appraisal.

[ 456 Pa. Page 212]

In case the Insured and this Company shall fail to agree as to the actual cash value or the amount of loss, then, on the written demand of either, each shall select a competent and disinterested appraiser and notify the other of the appraiser selected within twenty days of such demand. 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 covered is located. The appraisers shall then appraise the loss, stating separately actual cash value and loss to each item; and, failing to agree, shall submit their differences, only, to the umpire. An award in writing, so itemized, of any two when filed with this Company shall determine the amount of actual cash value and loss. Each appraiser shall be paid by the party selecting him and the expenses of appraisal and umpire shall be paid by the parties equally."

Appellants instituted this action in equity seeking a decree of specific performance requiring appellee to appoint "a competent and disinterested appraiser." INA filed preliminary objections in the nature of a demurrer, which were sustained. This appeal ensued.*fn2 We reverse.*fn3

The single question for our determination is whether the appraisal provision is enforceable. In support of the chancellor's conclusion that the clause is unenforceable, appellee relies on our decision in Mentz v. Armenia ...


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