Whether the insured under a standard New York fire insurance policy may compel the insurer to comply with the provision for appraisal contained in such a policy, is the question for decision.
Delmar Box Company, doing business in a frame building situated on land leased from the New York Central Railroad in New Scotland, New York, carried insurance in the aggregate amount of about $23,000, issued by a number of insurance companies. On April 13, 1954, a fire occurred, the alleged loss amounting to some $33,000. In each of the policies was a provision for appraisal in the event of loss — in the form required by subdivision 6 of section 168 of the Insurance Law — which reads in this way:
After the insurance companies, respondents herein, had refused to consent to an appraisal, Delmar initiated this proceeding, pursuant to section 1450 of the Civil Practice Act, for an order compelling them to comply with the policies' appraisal provisions. At the same time, it commenced a separate action at law, upon the policies, to recover the amount of the fire loss. In opposition to the petition, respondents, by answer and affidavit, set forth their reasons for rejecting the appraisal demand. They claimed that petitioner had misrepresented and concealed material facts, had sworn falsely in relation to the subject matter of the loss and, in addition, had no insurable interest in the building since it was situated on land leased from the New York Central Railroad under a lease which had expired.
The Appellate Division, reversing the court at Special Term, dismissed the petition on the ground that the provisions for appraisal "do not constitute enforcible agreements to arbitrate controversies arising thereunder," and with that disposition we agree.
A number of basic distinctions have long prevailed between an appraisement under the standard fire policy and a statutory arbitration. An agreement for arbitration ordinarily encompasses the disposition of the entire controversy between the parties, upon which judgment may be entered after judicial confirmation of the arbitration award (Civ. Prac. Act, § 1464), while the agreement for appraisal extends merely to the resolution of the specific issues of actual cash value and the amount of loss, all other issues being reserved for determination in a plenary action. (See Matter of American Ins. Co., 208 App. Div. 168, 170-171.) Appraisal proceedings are, moreover, attended by a larger measure of informality (see Strome v. London Assur. Corp., 20 App. Div. 571, 573, affd. 162 N.Y. 627),
Furthermore, in an arbitration, all the arbitrators, if there be more than one, "must meet together and hear all the allegations and proofs of the parties" (Civ. Prac. Act, § 1456). The standard appraisal clause, in contrast, specifically recites that the umpire is not to participate in the appraisal in all cases, but is only to pass on such differences as there may be between the appraisers designated by the respective parties. In addition, the vacatur of an arbitration award invariably results in a new arbitration (Civ. Prac. Act, § 1462; see Matter of Fletcher, 237 N.Y. 440, 449), whereas after an appraisal award has been set aside without any fault on the part of the insured, he is not required to submit to any further appraisement but is free to litigate the issues in an action at law on the policy. (See Gervant v. New England Fire Ins. Co., 306 N.Y. 393, 400.)
And, at least until 1941, the decisions were uniformly to the effect that the standard provision in a fire insurance policy for appraisal did not constitute an agreement for arbitration and was not specifically enforcible under the statutory procedure applicable to contracts for arbitration. (See Matter of American Ins. Co., supra, 208 App. Div. 168;
In 1941, section 1448 of the Civil Practice Act, the opening section in the article governing arbitration proceedings, was amended by adding thereto the following (L. 1941, ch. 288): "Such submission or contract [for settlement by arbitration of a controversy between the parties] may include questions arising out of valuations, appraisals or other controversies which may be collateral, incidental, precedent or subsequent to any issue between the parties."
The Appellate Division for the third department — the same court which made the determination here — held in 1949 that the amendment effected an extension of the provisions governing arbitration to an agreement for appraisal under a fire insurance policy. (See Matter of Fitzgerald [Continental Ins. Co.], 275 App. Div. 453.) However, that decision was short-lived, for, in the very next year, this court expressed a contrary view in the case of Syracuse Sav. Bank v. Yorkshire Ins. Co. (supra, 301 N.Y. 403). "We see nothing in section 1448 of the Civil Practice Act as amended in 1941," Judge DYE there wrote (301 N. Y., at pp. 410-411), "requiring the appraisal authorized by section 168 of the Insurance Law to be treated as an arbitration proceeding. * * * There is nothing in the policy provision relating to appraisal which gives an appraiser the status of an arbitrator * * *. It is well established that the determination of a fire loss is not an arbitration proceeding". (See, also,
It is clear, therefore, that the 1941 amendment to section 1448, while authorizing the inclusion of questions arising out of valuations or appraisals in a contract "to settle by arbitration" a controversy between the parties, did not have the effect of converting the informal appraisal provided for by the standard fire policy into an arbitration proceeding.
It is urged, however, that the extension of the arbitration statute to fire insurance appraisals has been accomplished by a further amendment to section 1448, enacted in 1952, which inserted the words "or independent of" in the sentence added in 1941, so that the latter now reads as follows (L. 1952, ch. 757): "Such submission or contract may include questions arising out of valuations, appraisals or other controversies which may be collateral, incidental, precedent, subsequent to, or independent of any issue between the parties." But it is manifest that the new words "independent of" add nothing, as respects the problem here presented, to the words "collateral" or "incidental," and that, consequently, no greater effect can be given to the 1952 change than has been accorded to the 1941 modification. Neither amendment discloses any legislative design to alter the settled rule that "the determination of a fire loss [by appraisal] is not an arbitration proceeding". (See Syracuse Sav. Bank v. Yorkshire Ins. Co., supra, 301 N.Y. 403, 411.)
It is a cardinal principle of statutory interpretation that the intention to change a long-established rule or principle is not to be imputed to the legislature in the absence of a clear manifestation. (See Homnyack v. Prudential Ins. Co., 194 N.Y. 456, 460; Seligman v. Friedlander, 199 N.Y. 373, 376.) The consequence of applying the statute governing arbitration to fire insurance appraisals would entail, not only radical alteration of the settled practice in appraisal proceedings, but actual abrogation of the greater informality which has long prevailed therein. There is no doubt that the legislature may make such changes if it sees fit, but no such design may be ascribed to that body in the absence of a clearer showing than is to be found in this amendatory statute.
There is thus no indication whatever that the legislature intended to make applicable to fire insurance appraisals the
It may, perhaps, be desirable to provide a procedure whereby the insured may obtain specific enforcement, as against the insurance company, of the agreement for appraisal. If such be its aim, the legislature may accomplish it by a statute clearly and specifically drawn for that purpose. A court cannot, however, read that design into the statute here involved, particularly when the result would be, not merely to permit the enforcement of such appraisal provisions, but to effect the wholesale importation, into appraisement practice, of the entirely different procedure governing arbitration.
The order should be affirmed, with costs.