Scott v Avery

[811] ALEXANDER SCOTT,-Plaintiff in Efrbr; GEORGE A VERY,-^jbefendantin Error [June 25, July 9, 1855 ; May 19, July 10, 1856]. '[Mews' Dig. i. 539, 540; iv. 136; xiii. 1324, 1362. S. C. 25 L.J. Ex. 308; 2 Jur.N.S. 815; 4 W.R. 746. Followed in Trainor v. Phoenix Fire Insurance Co.,1892, 65 L.T. 825; Scott v. Mercantile Accident and Guarantee Insurance Co.,Lim., 1892, 66 L.T. 811; and Caledonian Insurance Co. v. Gilmour C1893) A C85.] ' \ ) òòIt is a principle of law, that parties cannot by contract oust the courts of theirjurisdiction; but any person may covenant that no right of action shallaccrue till a third person has decided on any difference that may arisebetween himself and the other party to the covenant.H.L.x. 1121 36VH.L.C., 812 SCOTT V. AVERT [1855-56]A. effected in a mutual insurance company a policy of insurance on ship, one of the conditions of which was, that the sum to be paid to any insurer for loss should in the first instance be ascertained by the committee; but if a difference should arise between the insurer and the committee " relative to the settling of any loss, or to a claim for average, or any other matter relating to the insurance," the difference was to be referred to arbitration, in a way pointed out in the conditions: " provided always, that no insurer who refuses to accept the amount settled by the committee shall be entitled to maintain any action at law or suit in equity on his policy," until the matter has been decided by the arbitrators, and " then only for such sum as the arbitrators shall award," and the obtaining the decision of the arbitrators was declared a condition precedent to the maintaining of an action :Held, that these conditions were lawful, and that, (even should the difference relate to other matters than those of mere amount,) till award made no action was maintainable.Action on three policies of insurance effected on the ship Alexander, valued at £2400, in three assurance companies, of which both the Plaintiff and Defendant were members. It will be sufficient to refer to +he first only. The declaration, after stating in the usual form the making of the policy, alleged that it was mutually agreed that all rules and regulations of the association should be binding on the assurers and assured, as if they were inserted in the policy and formed part thereof, and that the said rules and regulations, so far as they relate to the Plaintiff's claim, are as follows:-" That any member, who shall prove to the committee of the said association that his ship is lost, [812] will be entitled (at the expiration of two months from the date of the first quarterly settlement) to part payment for the same, but in no case to exceed £80 per cent, on the sum insured, until a final account of the proceeds of the sale of the materials is furnished to the underwriters. That the sum to be paid by this association to any suffering member for any loss or damage shall, in the first instance, be ascertained and settled by the committee; and the suffering member, if he agrees to accept such sum in full satisfaction of his claim, shall be entitled to demand and sue for the same as soon as the amount to be paid has been so ascertained and settled, but not before, which can only be claimed according to the customary mode of payment in use by1 the society." The declaration then alleged that the Plaintiff " has performed all the conditions and things on his part by the said contract, policy, rules, and regulations to be performed; but that although he has always been ready and willing that such loss should be ascertained and settled by the said committee according to the rules of the said association, of which the defendant had notice; and although the Plaintiff has requested the Defendant and the said committee so to ascertain the said loss, and although a reasonable time for them so to do elapsed before the commencement of this suit, yet the said committee has refused and neglected so to do; and although two months have expired since the date of the first quarterly settlement of the said association, which occurred next after the said committee had notice of the said loss; and although a final account of the proceeds of the sale of the materials of the said ship was furnished to the underwriters of the said policy in accordance with the said rules, long before the commencement of this suit; and although a reasonable time for the Defendant and the said committee to pay the said loss elapsed before the commencement of [813] this suit, yet neither the Defendant nor the said committee has paid such loss, or any part thereof."The Defendant pleaded several pleas, but the only pleas material to the case of this policy are the fifth and sixth.The fifth plea stated that one of the rules and regulations of the Newcastle A 1 Insurance Association is as follows:-"25. That the sum to be paid by this association to any suffering member, for any loss or damage, shall in the firsl instance be ascertained and settled by the committee, and the suffering member, if he agrees to accept such sum in full satisfaction of his claim, shall be entitled to demand and sue for the same as soon as the amount to' be paid has been so ascertained and settled, but not before, which can only be claimed according to the customary mode of payment in use by the society. And if a difference shall1122SCOTT V. A VERY [1855-56] V H.L.C., 814arise between the committee and any suffering member, relative to the settling any loss or damage, or to a claim for average, or any other matter relating to the insurance, in such case the member dissatisfied shall select one arbitrator on his or her behalf, and the committee shall select another. And if the committee refuse for 14 days to make such selection, the suffering member shall select two, and in either case the two selected shall forthwith select a third, which three arbitrators, or any two of them, shall decide upon the claims and matters in dispute, according to the rules and customs of the club, to be proved on oath by the secretary."- " And in all cases where arbitration is resorted to, the settlement of the committee to be wholly rescinded, and the statement begun de novo. Provided always (and it is hereby expressly declared to be a part of the contract of insurance between the members of this association), that no member who refuses to accept the amount of any loss as settled by the committee, hereinbefore specified, in full satisfaction of such loss, shall be entitled to maintain any [814] action at law, or suit in equity, on his policy, until the matters in dispute shall have been referred to, and decided by, arbitrators, appointed as hereinbefore specified; and then only for such sum as the said arbitrators shall award. And the obtaining the decision of such arbitrators on the matters and claims in dispute, is hereby declared to be a condition precedent to the right of any member to maintain any such action or suit."The plea then stated, that " the said committee, in pursuance of the said rule, proceeded to ascertain and settle the said loss, but before they had ascertained or settled it a difference and dispute arose, which has ever since existed between the said committee and the said Plaintiff, relating to the said insurance, to wit, as to the extent of the said loss, and as to the repairs done to the said ship, and as to the sum to be paid by the said association to the Plaintiff in respect of such loss; by reason and means and in consequence of which difference and dispute the said loss never has been ascertained or settled by the said committee." Averment of readiness and willingness by the committee to refer, and the refusal of the Plaintiff so to do: " and the matters of the said difference and dispute have not nor has any of them been referred to arbitrators or decided, nor has the said loss been ascertained or settled by arbitrators, as by the said rule is in such case required."The sixth plea stated, " that the said committee did not refuse or neglect to ascertain the said loss as alleged, but, n the contrary, the Defendant says that the committee did within a reasonable time in that behalf, and before the commencement of this action, ascertain and settle the sum to be paid by the said association to the Plaintiff for the said loss, as the Plaintiff well knew; but the Plaintiff was dissatisfied with the settlement so made by the said committee, and declined to accept the sum at which they so ascertained and settled the said loss; and thereupon a [815] difference and dispute arose, which has ever since existed between the said committee and the said Plaintiff, relating to the said insurance, to wit, as to the extent of the said loss, and as to the sum to be paid by the said association to the Plaintiff in respect of such loss." The plea then alleged that the rule set out in the fifth plea was binding on the Plaintiff and Defendant, and stated as before, that the Defendant and the committee were willing to refer, but this the Plaintiff refused, etc.Demurrer and Joinder. Upon the argument of the demurrers at the sittings after Hilary Term 1853, the Court of Exchequer gave judgment for the Plaintiff in Error (8 Exch. 487-497).On error brought the Court of Exchequer Chamber reversed that judgment, and gave judgment for the Defendant in Error (8 Exch. 487-497). This writ of error was thereupon brought.The Judges were summoned, and Mr, Baron Parke, Mr. Baron Alderson, Mr. Justice Coleridge, Mr. Justice Maule, Mr. Justice Cresswell, Mr...