1 Reported in 204 N.W. 42, 210 N.W. 385. Note 2. The following opinion was vacated, after reargument, by that of October 15, 1926. See last paragraph of opinion on page 14, infra. [Reporter]. Respondent was a North Dakota corporation, engaged in operating a ladies' ready-to-wear store at Valley City, North Dakota. On October 12, 1922, its stock of goods had an inventory value of $56,580. Appellants, together with 13 other insurance companies, issued policies of fire insurance on the stock to the amount of *Page 4 $36,500, the two issued by appellants being for $2,000 each. All of the policies were in the North Dakota standard form.
On the day mentioned a fire occurred in a room adjoining the one where the stock was. The stock was considerably smoke-damaged. Eight days later the insurers, all joining, served a request for an appraisal and at the same time named an appraiser. Thereafter upon the same day respondent began a sale of the damaged goods, and sold and disposed of 74 per cent of the stock during the four days following, leaving goods on hand with an invoice value of $13,146.29. On November 14th respondent served a sworn statement of proof of loss upon the insurers, and thereafter two appraisers and an umpire were duly chosen.
The policies provide as follows:
"In the event of disagreement as to the amount of loss the same shall, as above provided, be ascertained by two competent and disinterested appraisers, the insured and this company each selecting one, and the two so chosen shall first select a competent and disinterested umpire; the appraisers together shall then estimate and appraise the loss, stating separately sound value and damage, and failing to agree, shall submit their differences to the umpire; and the award in writing of any two shall determine the amount of such loss."
The arbitrators met and qualified for the purpose of appraising the loss. Both the insured and the insurers were represented. At the outset a disagreement arose as to the manner in which the appraisement should proceed, the appraiser named by the insurers contending that only the goods on hand should be appraised, and the insurers coinciding. Upon the other hand, the appraiser named by the insured contended that the entire stock should be appraised, in which the insured concurred, the former contending that only the goods on hand should be examined and, if any disagreement arose, the umpire should decide the matter, while the appraiser named by the insured insisted that the entire stock be appraised, and that oral testimony be received without any examination of the goods. After considerable parleying, the appraiser named by the insured and the *Page 5 umpire proceeded to appraise the entire stock, receiving oral testimony as to its condition, the other appraiser refusing to participate therein. The one appraiser and the umpire made and signed an award, fixing the sound value of the entire stock at $54,882.56 and the damages thereto at $30,091.37, or 54 per cent of the whole. These actions are based upon the award so made. In the Phoenix case a verdict was directed in favor of the insured, and the defendant appealed from an order denying its motion for judgment or for a new trial. In the American case a verdict was directed in favor of the defendant, but upon motion judgment was ordered in favor of the plaintiff, from which defendant appealed.
When the appraisers met and qualified, they should have proceeded with an appraisal. It was the duty of both parties to choose an appraiser willing to act fairly and submit all disputes to the umpire, and, if either party failed in procuring such an appraiser, he should be replaced by another. Appraisers should act as a quasi court and decide the matters on the evidence offered by the respective parties. Christianson v. Norwich U.F. Ins. Soc. 84 Minn. 526, 88 N.W. 16, 87 Am. St. 379; American Cent. Ins. Co. v. District Court, 125 Minn. 374, 147 N.W. 242,52 L.R.A. (N.S.) 496. They are in no sense the agent or representative of either party. The appraisal may include goods wholly destroyed as well as those partially destroyed or damaged. There was no provision in the policy as to what the procedure should be, nor as to the character of the evidence. Under these conditions, the arbiters had a general discretion as to the mode of procedure and the kind of evidence to be received. 5 C.J. 172; Carlston v. St. P.F. M. Ins. Co. 37 Mont. 118, 94 P. 756,127 Am. St. 715.
It appears from the answers that, on January 9, 1922, the appraisers and umpire met for the performance of their duties; that the plaintiff and the appellants were represented at such meeting, and throughout said meeting the appellants objected to an appraisal of the loss or damage to the goods which had been sold, and demanded that the appraisal be confined to the goods on hand, and that the same be examined by the appraisers for the purpose of ascertaining *Page 6 the damage thereto; that such demands were concurred in by Mr. Glasrud, appraiser named by the appellants; that, notwithstanding such objection, the other appraiser and the umpire proceeded to appraise the damage to the entire stock of goods claimed to have been damaged by the fire; that for such purpose oral testimony was offered, but no examination of the goods on hand was made; and that Mr. Glasrud refused to make any estimate of the loss or damage to the goods that had been sold. There was testimony to the effect that Mr. Glasrud sat with the other arbiters while all of the testimony was being received; that he was asked to join in the estimates, but refused; that the other appraiser then consulted with the umpire, and finally arrived at a conclusion and the award was accordingly prepared, Mr. Glasrud refusing to sign the same.
In failing to replace the balky appraiser, as was their duty, and by coinciding with him in refusing to submit all of the matters in dispute to the umpire, as to the mode of procedure, as to what goods should be appraised, and in refusing to further participate in the adjustment, the appellants waived the conditions of the policies, and are precluded from complaining as to the manner of procedure and as to the character of the proofs received, as well as to what goods should be appraised. The purpose of an umpire was to settle such disputes, as well as the difference of opinion as to the value of the goods and amount of damage that might arise in arriving at the loss. The award should stand.
It is urged that plaintiff breached the terms of the policies by a sale of a portion of the damaged goods, thereby depriving the insurers of the option to take all or any part of the damaged stock at its appraised value. The policies provide that
"It shall be optional, however, with this company to take all, or any part, of the articles at such ascertained or appraised value."
After the sale of 74 per cent of the stock of goods, the insurers joined with the insured in the selection of proper appraisers. The appraisers selected an umpire. They all met and qualified. Both the appellants and the respondent were represented. A disagreement *Page 7 arose between the appraisers. The umpire determined in favor of the attitude assumed by the appraiser named by the insured. Thereupon the other appraiser refused to further participate in the matter. The one appraiser and the umpire proceeded to receive proofs and determine the loss, and made an award in which the sound value of the entire stock was fixed, as well as the damage thereto. We are of the opinion and hold that by their conduct in the premises and by repudiating the award the insurers waived the conditions of the policies to take the property at the appraised value, and are now estopped to complain of the award because of any irregularity in the procedure. Kent P.P. Co. v. Aetna Ins. Co. 165 Mo. App. 30, 146 S.W. 78; Model Drygoods Co. v. North British Merc. Ins. Co. 79 Mo. App. 550; Eagle Fire Co. v. Globe L. T. Co. 44 Neb. 380, 62 N.W. 895; Illinois Live Stock Ins. Co. v. Baker, 153 Ill. 240, 38 N.E. 627; Home Fire Ins. Co. v. Kuhlman, 58 Neb. 488, 78 N.W. 936, 76 Am. St. 111; Beauchamp v. Retail M. Assn. M.F. Ins. Co. 38 N.D. 483, 165 N.W. 545.
Appellants were fully apprized of the sale of a portion of the damaged goods through the proofs of loss served upon them wherein it was clearly stated that the sales of damaged goods after the fire amounted to $19,408.31; less expenses of sale, $1,189.95; net proceeds of sale, $18,218.36; inventory of goods on hand after sale, $13,146.14. Some six days after receiving the above information appellants, without asserting any claim of forfeiture or nonliability, took an active part in procuring a board of appraisers under the provisions of the policies. In other words, appellants remained persistent in obtaining an appraisal of the loss long after the sale of a portion of the stock. They now rely upon a provision in the policies which is as follows:
"This company shall not be held to have waived any provision or condition of this policy or any forfeiture thereof by any requirement, act or proceeding on its part relating to the appraisal or to any examination herein provided for."
Clearly the foregoing provision was inserted in the policies for the benefit of the insurers and may be waived by them. It may be assumed that the insurers intended to carry out the purposes of the *Page 8 policies, and, if they saw fit to waive any of the provisions inserted therein for their benefit, they may do so. This view is well supported by authority. 19 Cyc. 657; Parsons, Rich Co. v. Lane, 97 Minn. 98, 106 N.W. 485, 4 L.R.A. (N.S.) 231,7 Ann. Cas. 1144; Mee v. Bankers Life Assn. 69 Minn. 210, 72 N.W. 74; Beauchamp v. Retail M. Assn. M.F. Ins. Co. 38 N.D. 483,165 N.W. 545; Home Fire Ins. Co. v. Kennedy, 47 Neb. 138, 66 N.W. 278,53 Am. St. 521; Hollis v. State Ins. Co. 65 Iowa, 454, 21 N.W. 774; Titus v. Glens Falls Ins. Co. 81 N.Y. 410; Kiernan v. Dutchess County Mut. Ins. Co. 150 N.Y. 190, 44 N.E. 698; Bishop v. Agricultural Ins. Co. 130 N.Y. 488, 29 N.E. 844. Many other cases might be cited, all bearing upon the same proposition.
It is set forth in the answers, after alleging the sale of a portion of the damaged goods, that, by reason of the facts set forth, plaintiff forfeited all right to an appraisal of damages to the property sold, as well as all right to recover damages therefor. It is further alleged that the actual amount of such damage was less than $10,000 and further that the award as made was grossly excessive. The answer to this contention is that the policies covered the entire stock of merchandise as one item and is in no manner divisible. The premium was paid for the whole risk as a single item. There is but a single provision for submission to arbitration, and that is for an appraisal of the loss to the entire stock insured. We know of no authority giving a right of appraisal to a portion of the property damaged. By assuming such attitude, appellants concede liability for a part of the loss. It must follow that the asserting of an unwarranted claim of forfeiture for damages to a part of an indivisible claim for loss must be taken as an admission of liability by appellants for the entire loss to the extent covered by the policies, in effect amounting to a waiver of their right to assert a forfeiture of the entire claim. Parsons, Rich Co. v. Lane,97 Minn. 98, 106 N.W. 485, 4 L.R.A. (N.S.) 231, 7 Ann. Cas. 1144; Plath v. Minn. F. Mut. F. Ins. Assn. 23 Minn. 479,23 Am. Rep. 697; 26 C.J. 101. It follows that the order appealed from in each case should stand.
Affirmed.
STONE, J. concurs in result. *Page 9
AFTER REARGUMENT.
Note 3. The following opinion was filed on October 15, 1926, and vacated the preceding opinion. [Reporter].