of loss, although sworn to, as conclusive against the insured. If the insured is acting in good faith, and desires to show that the real value of the property destroyed exceeds the amount stated in the proofs, he may recover upon the higher valuation (see Lebanon Mutual Insurance Co. vs. Kepler, 106 Pa., 28).

Exhibition of Property and Records and Examination of the Property Owner. With reference to this feature the standard policy contains the following provision:

The insured, as often as may be reasonably required, shall exhibit to any person designated by this Company all that remains of any property herein described, and submit to examinations under oath by any person named by this Company, and subscribe the same; and, as often as may be reasonably required, shall produce for examination all books of account, bills, invoices, and other vouchers, or certified copies thereof, if originals be lost, at such reasonable time and place as may be designated by this Company or its representative, and shall permit extracts and copies thereof to be made.

In this connection it only remains to be said that the provision has been upheld by the courts, and that the examination must be made at the place of the fire, unless the parties by common agreement choose some other place. Here again impossibilities are not required by the law; instead the insured is obliged to make every reasonable effort to comply. To give better effect to this provision, clauses are often endorsed on the policy with a view to protecting books of account and other records. against loss.

Appraisal Clause of the Standard Fire Policy. In the settlement of losses it frequently occurs that the insurer and insured cannot agree as to the amount that should be paid. The insurance company naturally wishes to reduce its loss as much as possible and the insured, on the

other hand, is apt to claim an excessive sum. As middleman between these two parties, the adjuster of losses will strive to effect a fair and mutually satisfactory settlement. Yet, owing to differences of opinion as to the value of buildings or merchandise, or to the absence of inventories, invoices, and other records, cases extremely difficult for settlement often arise.

To make possible the speedy solution of such cases, and to avoid unnecessary litigation, it is desirable that every fire insurance policy should provide in advance against such contingencies by setting forth a definite line of procedure. Policies of every state contain some form of "appraisal clause," and in all cases provision is made for the choice of three appraisers, one by the insured, one by the insurer, and the third by these two or by some. court or state official. In the New York standard policy the following method of appraisal is provided:

In case the insured and this Company shall fail to agree as to the amount of loss or damage, each shall, on the written demand of either, select a competent and disinterested appraiser. 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 insured property is located. The appraisers shall then appraise the loss and damage stating separately sound value and loss or damage 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 sound value and loss or damage. Each appraiser shall be paid by the party selecting him and the expenses of appraisal and umpire shall be paid by the parties equally.

It will be observed that the appraisers provided for in the aforementioned clause shall be "competent and dis

interested." "By competent," according to Barbour,1 "is meant one who has sufficient knowledge concerning the kind of property involved to determine values and assume damages thereto." "By disinterested," according to the same authority, "is meant one who has no pecuniary interest in the loss, is not related to any interested party, and has no connection that would tend to influence his award." (For copy of form of appraisal agreement, see p. 155.)

It will also be observed that, while both parties agree to submit to appraisal on demand of either, the insurance company is not subjected to any penalty, in case of refusal, other than to be sued at law. The insured, on the contrary, in case of refusal, is confronted with the further policy provision: "No suit or action on this policy, for the recovery of any claim, shall be sustainable in any court of law or equity, unless all the requirements of this policy shall have been complied with, nor unless commenced within twelve months next after the fire." The insured, apparently, must thus submit to appraisal according to the policy although he may afterwards, if he so desires, sue in court. Almost invariably, however, the courts have sustained appraisals, unless it can be shown that the appraisers, or the umpire, in making the award, were unduly influenced or were biased or incompetent.

In interpreting the appraisal clause it should be borne in mind that the award of the appraisers is regarded as final and binding, unless it can be shown that their action involves fraud, misconduct or incompetency. This is true even though the board of appraisers have not found the actual cash value of the property. The presumption is that the arbitrators must act in good faith, and while doing so errors of judgment will not invalidate the award.

Robert P. Barbour: "Agency Key to Fire Insurance,'' p. 73.

FORM OF APPRAISAL AGREEMENT

IT IS HEREBY stipulated and agreed by and between....

each acting for itself and not as agent for the other, and each as party of the second part, that....

designated by the parties of the first part, and... designated by the parties of second part, shall ascertain, pursuant to the terms and conditions of the policies of insurance issued by said companies to the party of the first part, the sound actual cash value of the property of said party of the first part, on the 1st day of........June, 1922, which is more particularly described in the policies as

(Attach copy of Form)

as well as the actual direct loss or damage caused thereto by a fire which occurred on that day; that the said two appraisers shall first select a competent and disinterested person who shall act as umpire, and the said two 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 said umpire; and the award, in writing, of any two shall determine the amount of such loss. Such loss or damage shall be ascertained or estimated according to the actual cash value of said property at the time of the occurrence of said fire, with proper deduction for depreciation however caused, and shall in no event exceed what it would then cost the insured to repair or replace the same with material of like kind and quality, but such appraisement does not in any respect waive any of the provisions or conditions of said policies of insurance, or any forfeiture thereof, or the proof of such loss and damage required by the policies of insurance thereon.

It is true, however, that the appraisers should limit their inquiry to the subjects submitted to them, and the award will not be sustained in case matters are considered which were not referred to them. As long as they confine themselves to the subject-matter referred to them and act in good faith, they may decide questions of law as well as fact; indeed, they constitute a sort of court that has been created by the parties to the contract to settle their disagreement.

It should here be noted that this clause is given full force in all states except one. The supreme court of Pennsylvania has thus far considered the appraisal clause as revokable at will by either party. The general rule in this country is that either party to the contract may insist on arbitration. In Pennsylvania, however, this is not the case. As Justice Sharwood stated in his opinion, given in the case of Mentz vs. The Armenia Fire Insurance Co. (79 Pa., 478): "There can be no doubt that if this case stood upon a general arbitration clause in the policy alone, it would fall within the principle settled by this court, conformably to all the previous English authorities, that it is not in the power of the parties to a contract to oust the courts of their jurisdiction. The cases in which the certificate or approbation of any particular person-as the engineer of a railroad company-to the amount of a claim is made a condition precedent to an action, rest upon entirely different principles. He is not created a judge or arbitrator of law and facts, but simply an appraiser of work done. That is irrevocable. That which is before us, is a mere agreement to refer to arbitrators to be chosen at a future time."

"Such an agreement, like any other agreement of ref erence, is revocable, though the party may subject himself to an action of damages for the revocation. It is not in the power of the parties thus to oust the courts of their