When submission is a condition precedent.

SEC. 431. Whether submission to arbitration is a condition precedent or not, will depend upon the language employed. A clause, simply providing that "in case of difference of opinion as to the amount of loss or damage, such difference shall be submitted," etc., is not a condition precedent, because the parties, by the terms of their contract, have not made it so,' but, where the parties have stipulated that a submission shall precede the right to sue upon the policy, it is—if valid at alla condition precedent, performance of which, or an offer to perform, by the assured, or a waiver thereof by the insurer, must be shown. Thus in an English case,' the plaintiff and the defendant were members of an insurance association, and by one of the rules of that society it was provided (interalia) that the sum to be paid by the association to any suffering member for any loss or damage should, in the first instance, be ascertained and settled by the committee; and the suffering member, if he agreed to accept such sum in full satisfaction of his claim, should be entitled to demand and sue for the same as soon as the amount to be paid has been ascertained and settled, but not before, which could only be claimed according to the customary mode of payment in use by the society; and if a difference should arise between the committee and any suffering member relative to the settling of any loss or damage, or to a claim for average, or any other matter relating to the insurance, that arbitrators should be selected out of certain persons mamed in the rule, and that they should settle the claims and matters in dispute according to the rules and customs of the club. The rule also provided, that no member, who refused to accept the amount of any loss as settled by the committee in manner specified in full satisfaction of such loss, should be entitled to maintain any action at law or suit in equity on his policy, until the matters in dispute should have been referred to and decided by arbitrators appointed as therein specified, and then only for such sum as the arbitrators should award; and that the obtaining the decision of such arbitrators on the matters and claim in dispute was thereby declared to be a condition precedent to the right of any member to maintain any such action or suit. The plaintiff effected an insurance upon a ship in which he was interested with the association, and by the policy it was expressly stated that all rules and regulations of the association should be binding upon the assured and

1 Liv. Lon. & Globe Ins. Co. v. Creighton, 51 Ga. 95; 5 Ben. F. I. C. 573; Robinson v. Georgia Ins. Co., 17 Me. 131; Millandon v. Atlantic Ins. Co., 8 La. 558. Scott v. Avery, 8 Exq. 487; Affirmed 5 H. L. Cas. 811.

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assurers as effectively as if such rules were inserted in the policy. To an action by the plaintiff against the defendant, as one of the underwriters, to recover from him compensation for the loss of the vessel, which took place during the period covered by the policy, the defendant pleaded, setting out the above rule of the association, and alleging that before action brought, the committee ascertained and settled the sum to be paid to the plaintiff for the loss; that the plaintiff was dissatisfied with the settlement, and that the defendant and the committee had always been ready and willing to refer the matters in difference to arbitration, but that the plaintiff was not ready and willing so to do. It was held in Exchequer Chamber, reversing the judgement of the Court of Exchequer, that the condition, not divesting the courts of their jurisdiction, was valid, and a condition precedent to the plaintiff's right to sue, and this judgement was sustained and affirmed in the House of Lords.' But although this is the fixed doctrine of the English courts, there is no American case going to the same length, neither have I been able to find any where the question, under such a clause in the policy as referred to, ante, existed. But, upon principle, there would seem to be no question but that, if the condition to arbitrate is valid, the parties may, by express stipulation, make it a condition precedent, like any other condition of the policy. As has heretofore been stated, it may be waived by the insurers, and a refusal to pay the loss, without offering to submit the question as to the amount thereof to arbitration, is held to amount to a waiver.'

Where the policy does not, in express terms, make the submission a condition precedent to the right to sue, it is treated as a collateral agreement, which does not bind the assured to await a reference.' So where the dispute is one of law purely, the assured is not bound to submit to arbitration before bringing his action; and where the condition is in such terms as leaves it optional with the parties whether they will submit the questions; as, where the word "may" is employed instead of "shall"; as, "the parties may refer," etc., it is held that submission is optional, and the bringing of an action sufficiently indicates the purpose of the assured not to submit the questions."

To the same effect, see Tredwen v. Holman, 1 H. & C. 72; Elliott v. Royal Ins. Co., L. R. 2 Excq. 237; Wright v. Ward, 24 L. T. (U. S.) 439.

Millaudon v. Atlantic Ins. Co., 8 La. 558; Robinson v. Georgia Ins. Co., 17 Me. 131.

Effect of sumbission upon condition as to notice and proofs of loss.

SEC. 432. When the insurer or its agent, having authority to make a submission, enters into a submission with the assured, before notice or proofs of loss have been served, of the matters involved, there can be no question but that the submission operates as a waiver of both, but, where the agent has no such authority, and the insurers, in their auswer, deny that they ever waived the service of notice and proofs, it has been held that the submission does not of itself amount to a waiver. If the insurers rely upon the breach of this condition, they must set it up in their answer, or it is waived.'

When arbitrators exceed their jurisdiction.

SEC. 433. Of course, an award of arbitrators, in order to be valid, must only cover the matters submitted. If they travel beyond the limits of the submission, their award is void. This was well illustrated in an English case, where the question was as to what amount of damage had been sustained by the plaintiff under three several policies upon the same property. The submission was "to award what was the total sum of money which ought to be paid to the plaintiff under or by virtue of the said policies, or any of them, in respect of loss or damage occasioned by the said fire to or in the said chattels particularized as aforesaid," in three certain schedules referred to in the submission, and the proportion thereof that each insurer ought to pay. The arbitrators, by their award, found that £8,288 0s. 7d. was the total sum that ought to be paid by all the insurers, and fixed the proportions that each insurer should pay. They then found that the whole loss exceeded the insurance, and that the whole salvage belonged to the plaintiff absolutely. It appeared that the salvage arose upon the goods embraced in one schedule alone. The court held that, in awarding that the salvage belonged to the plaintiff alone, the arbitrators had exceeded their jurisdiction, and, consequently, that their award was void.

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'Pettengill v. Hanks, 9 Gray (Mass.) 169.
'Dyer v. Piscataqua Ins. Co., 54 Me. 457.
Skipper v. Grant, 10 C. B. (N. S.) 237.

Contracts limiting time, within which actions shall be brought, are valid.

SEC. 434. While the parties cannot contract so as to oust the jurisdiction of the courts, yet they may lawfully contract to limit the time within which an action shall be brought upon a contract. Therefore, a provision that no action shall lay upon a policy, unless brought within six months, one year, or any other stated period after the loss, is valid and binding upon the parties.'

The provisions of a policy in reference to proofs of loss, as well as for enforcing a claim therefor, must be complied with, unless the insurer has

'Peoria Ins. Co. v. Whitehill, 25 Ill. 466; Ames v. N. Y. Ins. Co., 14 N. Y. 253; Wilson v. Etna Ins. Co., 27 Vt. 99; Carter v. Humboldt Ins. Co., 12 Iowa, 287; Crary v. Hartford Ins. Co., 1 Blatch. (U. S. C. C.) 280; Broon v. Savannah Ins. Co., 24 Ga. 101; Brown v. Hartford Ins. Co., 5 R. I. 394; Brown v. Roger Williams Ins. Co., 5 R. I. 394; N. W. Ins. Co. v. Phonix Oil Co., 31 Penn. St. 449; Edwards v. Lycoming Ins. Co., 75 Penn. St. 378; Amesbury v. Bowditch Ins. Co., 6 Gray (Mass.) 603; Merchants' Ins. Co. v. La Croix, 35 Tex. 249; Goodwin v. Amoskeag Co., 20 N. H. 73; Ripley v. Etna Ins. Co., 29 Barb. (N. Y.) 552; Fullam v. N. Y. Ins. Co., 7 Gray (Mass.) 161; Woodbury Savings Bank v. Charter Oak Ins. Co., 31 Conn. 518; Ins. Co. v. La Croix, 35 Tex. 263; McFarland v. Peabody Ins. Co., 6 W. Va. 425; Riddlesberger v. Hartford Ins. Co., 7 Wall. (U. S.) 386; Williams v. Vt. Mut. Ins. Co., 20 Vt. 222; McFarland v. Peabody Ins. Co., 6 W. Va. 425; Carraway v. Merchants', etc. Ins. Co., 26 La. An. 268; Roach v. N. Y. and Erie Ins. Co., 30 N. Y. 546; Portage Co. Ins. Co. v. West, 6 Ohio St. 599; Portage Co. Ins. Co. v. Stukey, 18 Ohio, 455; Keim v. Home Mut. Ins. Co., 42 Mo. 38; Patrick v. Farmers' Ins. Co., 43 N. H. 621; Brown v. Savannah Ins. Co., 24 Ga. 97; Trask v. State F. Ins. Co., 29 Penn. St. 198; Beatty v. Lycoming Ins. Co., 66 id. 9; Franklin F. Ins. Co. v. Updegraff, 43 id. 350; Inland, etc., Ins. Co. v. Stauffer, 33 id. 397. Contra, see French v. La Fayette Ins. Co., 5 McLean (U. S.) 46; Eagle Ins. Co. v. La Fayette Ins. Co., 9 Ind. 443. But is proper to say that the doctrine of these two cases is generally repudiated.

done that which amounts to a waiver of compliance; and in order to amount to a waiver, the insurer must have done that which justified the assured in remaining inactive. The mere pendency of negotiations between the parties, or the fact that occasional interviews have been had between them, in regard to the adjustment of the loss, has been held not to amount to a waiver.' The conduct of the insurer must be such as to amount to an agreement, express or implied, to suspend the legal remedies, or as would operate as a fraud upon the insured. Thus, if an insurance company holds out hopes of an adjustment, and thereby induces delay, it is estopped from setting it up in bar of the action.3

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The condition being a mere matter of contract, may be waived, either expressly or by implication, and when the insurer, by any act of his, causes the delay, or prevents the bringing of the action within the time, strict compliance is not necessary. Thus, in the case last referred to, the defendant was a foreign corporation, and no agent upon whom process could be served could be found within the time limited, and this was held a sufficient excuse for not bringing the action within the period limited. The assured is not bound to pursue the company in its own domicile, but may wait until process can be served upon it in the state where he resides, and if delay is thus entailed, it is excused, as it is the duty of the insurer, if it means to insist upon the condition to render it possible for the insurer to comply with the condition, to have a known agent, upon whom process may be served, in the state where the insurance is made. So it seems that compliance as to time may be excused when the nature of the loss and the interest of the assured therein is such that its extent or value cannot be determined within the time limited. Thus it has been held that a condition that an action must be brought within a certain time after the loss, will not bar an action, brought after the time had elapsed, upon a policy in which the interest insured was a mechanic's lien, when it was impossible to fix the value of the lien within the prescribed time."

McFarland v. Peabody Ins. Co., 6 W. Va. 425; Gooden v. Amoskeag Ins. Co., 20 N. H. 73.

GILCHRIST, J., in Gooden v. Amoskeag Ins. Co., ante.

3 Grant v. Lexington, etc., Ins. Co., 5 Ind. 23.

4 Peoria Ins. Co. v. Hull, 12 Mich 202.

Longhurst v. Star Ins. Co., 19 Iowa, 364. But opposed to this doctrine, see Eastern R. R. Co. v. Relief Ins. Co., ante, where it was held that a railroad company insured against losses from the destruction of the property of people along its line by sparks, etc., from its engines, which, by the terms of the policy, was required to make proofs in sixty days, could not wait until such claims were adjusted and their amount ascertained.