Matthews v. American Cent. Insurance

This action is defended on three grounds: (1) That it was not begun within 12 months next after the fire; (2) that written notice of the loss was not immediately given; (3) that a verified statement of the loss was not xurnished within 60 days after the fire. The following are the provisions of the policy under which these defenses arise:

“It" Are occur the insured shall give immediate notice of any loss thereby, in writing, to this company; protect the property from further damage; forthwith separate the damaged and undamaged personal property; put it in the best possible order; make a complete inventory of the same, stating the quantity and cost of each article, and the amount claimed thereon; and within sixty days after the Are, unless such time is extended in writing by this company, shall render a statement to this company, signed and sworn to by said insured. * * * No suit or action on this policy for the recovery of any claim shall be sustainable in any court of law or equity until after full compliance oby the insured with all the foregoing requirements, nor unless commenced within twelve months next after the Are.”

It is settled in this state that parties to contracts may prescribe the time within which either party must, if ever, bring actions to enforce the contracts, and that such stipulations are not against public policy and are valid. This rule has often been applied in favor of insurers and against the insured. Wilkinson v. Insurance Co., 72 N. Y. 499 . And it has also been applied against the insurer and in favor of the insured. Wright v. Association, 43 Hun, 61 , affirmed 118 N. Y. 237 , 23 N. E. 186 . The plaintiff seeks to evade the effect of this stipulation by availing himself of the exceptions contained in chapter 4 of the Code of Civil Procedure (“Limitations”), but when the parties limit the time, by contract, within which an action must be brought thereon, their rights are to be determined by the contract, and the statute of limitations has no application. The statute so provides:

“Sec. 414. The provisions of this chapter apply, and constitute the only rules of limitation applicable, to a civil action or special proceeding, except in one of the following cases: (1) A case, where a different limitation is specially prescribed by law, or a shorter limitation is prescribed by the written contract of the parties.”

In Wilkinson v. Insurance Co., supra, the plaintiff sought to escape the effect of the stipulation by reason of a provision in the Revised Statutes saving the rights of parties from the effects of those statutes when they were stayed by an injunction from bringing an action. The court said:

“This provision does not aid the plaintiff. The exception, has no application where a limitation is prescribed by the contract of parties, but only applies to cases governed by the limitation in the general law.”

In Riddlesbarger v. Insurance Co., 7 Wall. 386 , the plaintiff attempted to escape the effect of such a stipulation by invoking an exception contained in the statute of limitations of the state of Missouri, where the contract was made and sought to be enforced. The court held that the statute had no application to the case, saying:

“In the second place, the rights of the parties flow from the contract. That relieves them from the general limitations of the statute, and as a consequence from its exceptions also.”

The section oí the Code above quoted, and the two cases cited, one in the court of appeals in this state, and the other in the supreme court of the United States, would seem to be sufficient authority on this proposition.

Again, the fire occurred April 20, 1892,—4 months and 18 days after the death of the insured (plaintiff’s testatrix), and no cause of action accrued to her; and this case does not fall within any of the exceptions of chapter 4 of the Code of Civil Procedure (“Limitations”), extending the time in which actions may be brought by the representatives of decedents on causes of action accruing before death. The delay in bringing this action was not induced by any act on the part of the defendant, but was due solely to the neglect of those who should have procured the appointment of a representative for the insured. No reason is given why a temporary administrator was not applied for and appointed pending the contest over the Adll. Had this been done, proof of loss might have been given, and an action brought within the period prescribed by the policy.

The defendant’s exceptions should be sustained, and, as a new trial would be unavailing, the complaint should be dismissed, with costs..

HARDIN, P. J., concurs.

The insured died December 2, 1891. The fire occurred April 20, 1892. The will was contested and was admitted to probate in May, 1894, and letters testamentary were thereupon issued to the plaintiff. Proofs of loss were sent to the company before the expiration of 60 days from issuing of letters, but were not returned, and no attention was paid to the matter. (Not stated that even any notice of loss was ever sent.) Action was brought October 29, 1894. The policy provides that no action shall be sustainable “until full compliance by the insured with all the foregoing requirements, nor unless commenced within twelve months next after the fire.” The “foregoing requirements” are the usual conditions in fire insurance policies, providing for giving notice of the fire, making inventory, and within 60 days aftef the fire furnishing proofs of loss, etc. And then “the loss shall not become payable until 60 days after the notice, ascertainment, estimate, and satisfactory proof of the loss herein required have been received by this company,” etc. This action was commenced within 60 days after furnishing proofs of loss. More than two years had elapsed since the fire before proofs of loss were furnished. Plaintiff’s excuse is that letters testamentary were not issued, and could not have been issued, to him, as the executor designated in the will, until the contest was determined and the will admitted to probate; and his demand is that the court shall ingraft in the policy a provision that in case of the death of the insured proofs of loss may be furnished within 6Ó days after the issuing of letters testamentary. The contract speaks for itself, and it is not within the power of the court to change, enlarge, modify, or

Again, it would seem that the devisee of the land, being the real party in interest,—and if there is no deficiency of personal assets for satisfaction of creditors, the sole party in interest,—would have the right to furnish proofs of loss, and the company would be bound to accept them. If the personal assets are ample for payment of debts, the heir or devisee is entitled to the proceeds of the insurance policy. If insufficient, then he would be entitled to the surplus, if any, remaining after payment of the debts. It was held in Wyman y. Wyman, 26 N. Y. 253 , modifying 36 Barb. 368 , that the insurance moneys belong to the heir or devisee, subject to the claims of creditors upon a deficiency of assets, and also to dower; that it is real assets, and not personal; that the executor, etc., may sue upon the policy, by virtue of its terms, where it is payable to executor, administrator, and assigns; he may sue as the “trustee of an express trust,” although he may not be entitled to hold the money as against the heir or devisee; if it is required to pay creditors, and there is a surplus, the heir is entitled to it. Not decided whether heir or devisee, as the real party, and perhaps the only party, in interest, could sue upon the policy. It seems not. Approved in Herkimer v. Rice, 27

Contention is made by plaintiff’s counsel that he is entitled to the benefit of any provisions or exceptions contained in the statute of

Defendant’s exceptions sustained and complaint dismissed, with costs.

The policy of insurance upon which this action is founded, and which is known as a “standard policy,” contains, in addition to the usual requirement that proofs of loss shall be furnished within 60 days after the fire, the following provision:

“No suit or action on this policy for the recovery of any claim shall be maintainable in any court of law or equity until after the full compliance by the insured with all the foregoing requirements, nor unless commenced within twelve months after the fire.”

It is not claimed- that there has been a literal compliance with these requirements, and consequently, at first blush, it would seem

“The defendant has made its own special and hard provision on that subject. * * * We have no doubt that the disability to sue imposed on the plaintiff by the war relieves him from the consequences of failing to bring suit within twelve months after the loss, because it rendered a compliance with that condition impossible. * * * That part of the contract therefore presents no bar to the plaintiff’s right to recover.”

The case of Longhurst v. Insurance Co., 19 Iowa, 367 , was one where the policy in question was intended to protect a mechanic’s lien, and it contained a provision which limited the time within which any action thereon must be brought. The action was not brought within such limitation, but the court held that this fact was no bar, because the limitation was inconsistent with the nature ,of the interest insured, and therefore ineffectual to prevent a recovery if diligence was employed to establish the loss in the way prescribed by law. In Bumstead v. Insurance Co., 12 N. Y. 81 , the policy in suit contained a condition that the insured, in case of loss or damage, should, as a condition precedent to a recovery, within 30 days deliver to the insurer a particular account of the loss or damage, verified by his oath, and, if required, by his books and vouchers, together with an inventory of the property destroyed or damaged, giving the amount of damage to each item, verified by his oath. The insured was unable to comply with this requirement, by reason of the fact that the papers and other data from which a statement of the nature required could have been made were consumed in the fire. And the court held that the action might be maintained, and that such conditions were construed as requiring only as full and accurate an inventory and statement as the party, without fraud or fault on his part, was able to furnish. This case is also an authority for the proposition that where an insurance company receives proofs of loss which do not comply with the requirements of the policy, without objecting to their form or time of service, and declines to pay the loss, without placing the refusal upon such noncompliance, its action amounts to a waiver of any objection which may have existed by reason of such noncompliance. In O’Neill v. Association, 63 Hun, 292 , 18 N. Y. Supp. 22 , which was an action brought to recover upon a policy of life insurance which contained a condition requiring the plaintiff to furnish a certificate of the death of the insured, by his attending physician, and no such certificate was furnished, for the reason that the attending physician declined to make the certificate until his bill for services to the deceased was paid, it was held that this was a sufficient reason for not requiring a full compliance with the condition of the policy as a prerequisite to maintaining the action. But, without citing additional authorities in support of this particular aspect of the case, it is sufficient to say that, in the view which I take of this question, the fair and reasonable construction which ought to be given to the provisions of

The learned counsel for the defendant makes some point upon what he is pleased to term the “laches” of the plaintiff in bringing his action, or in obtaining leave to bring the same, and insists that by reason of such laches he ought to be deprived of the right to invoke the aid of the principle which the authorities, in my view of the case, seem to establish. But there are at least two perfect answers to this contention upon his part: In the first place, no such defense is set up in the answer, and the evidence of laches upon the part of the plaintiff is, at the most, exceedingly nebulous in its character; and, in the second place, if it were much stronger than it is, it would simply have presented a question of fact for the jury, .and the learned counsel expressly stated upon the trial that there was no question of fact in the case which he desired to have submitted to the jury. The courts of this state have been inclined to construe the provisions contained in policies of insurance favorably to the insured. In Norton v. Insurance Co., 7 Cow. 649 , Savage, C. J., ¡says:

“The clause requiring proof of marine losses has been construed with considerable liberality. The courts have looked to the circumstances, and required no more information of the party than what appeared to be within his control.”

The same liberal construction was in that case extended to a fire policy. And the language just quoted has met with approval in our court of last resort. Bumstead v. Insurance Co., supra. If, however, it is contended that this tendency to liberal construction is obviated by the legislative enactment requiring all insurance companies to adopt a standard and uniform policy, the answer is that policies thus formulated do contain provisions which are somewhat harsh and severe in their requirements of the insured, and when such provisions involve a forfeiture they ought still to receive a strict construction, even though they may conform to a fixed “standard.” Griffey v. Insurance Co., 100 N. Y. 417 , 3 N. E. 309 ; McNally v. Insurance Co., 137 N. Y. 398 , 33 N. E. 475 ; Davis v. Insurance Co., 7 App. Div. 488 , 40 N. Y. Supp. 248 . And especially is this true of conditions relating to matters after the loss which are dessigned to define the manner in which accrued loss is to be established, adjusted, and recovered. See opinion of O’Brien, J., in McNally’s Case, 137 N. Y. 398 , 33 N. E. 476 .

The conclusion of the matter, therefore, in my view of the case, is that the performance of the condition contained in the policy was rendered practically impossible by reason of the death of the insured, that its nonperformance was without any fault or laches upon the part of the plaintiff, and that, consequently, his failure to comply with such condition does not work a forfeiture of the policy, nor does it operate as a bar to this action. And this view of the case constrains me to dissent from that entertained by a majority of my brethren.

This is an action to recover upon a standard policy of insurance issued to Caroline Silvernail, a resident of Steuben county, N. Y., by the defendant, an insurance company in St. Louis, Mo., insuring some farm buildings “against all direct loss or damage by fire,” in an amount specified, for the period of three years. The policy was issued August 1, 1889. The assured died December 2, 1891. A fire occurred April 20, 1892, destroying a barn, shed, and produce insured, which it was stipulated on the trial was worth the sum of $612, for which the same was insured. The insured left a will in which she appointed the plaintiff as her executor. The plaintiff proceeded in the surrogate’s court to obtain probate of the will, which was contested by certain parties to the proceedings, and the will was not admitted to probate, in consequence thereof, until May, 1894, during which month letters testamentary were issued to the plaintiff. After the letters were issued, and on May 21, 1894, an attorney for the plaintiff communicated by letter with the defendant the claim of the plaintiff in this action, stating that before the loss Mrs. Silvernail had died; that there had been a contest over the will, which had just been admitted to probate,—and requested that the matter be paid at the earliest prac

The chief contention of the defendant herein is that, the short limitation prescribed in the policy having long since expired, the plaintiff cannot recover. The clause in the policy upon that subject is as follows:

“No suit or action on this policy for the recovery of any claim shall be sustainable in any court of law or equity until full compliance by the insured with all the foregoing requirements, nor unless commenced within twelve months next after the fire.”

“The foregoing requirements” are the usual conditions in tire insurance policies, providing for giving notice of the fire, separating the damaged and undamaged property, putting it in good order, making an inventory, and within 60 days after the fire furnishing proofs of loss; and also the insured to submit to examination under oath, produce books of account, vouchers, etc.; and in the event of disagreement the loss to be ascertained by appraisers; and then “the loss shall not become payable until sixty days after the notice, ascertainment, estimate, and satisfactory proof of the loss, herein required, have been received by this company, including an award by appraisers, when appraisal has been required.” The result of this position is that notwithstanding the fact of the death of the assured, and that she had no legal representative to bring this action or furnish proofs of loss until within six months before this action was commenced, and although the claim is just in every respect, the plaintiff cannot recover. A proposition so startling and unjust may well challenge the most careful examination, to ascertain whether the law is so lame and impotent as to sanction this conclusion. The short limitation prescribed in the policy never began to run until the executor of Mrs. Silvemail was duly appointed. This is not a case where the statute began to run, and then its operation was suspended. The law on this subject is thus laid down by Judge Allen in Sanford v. Sanford, 62 N. Y. 555 :

“It is directly adjudged that the statute does not commence to run against the representatives of a deceased creditor upon an obligation incurred or debt becoming due after his decease until administration is granted upon his estate, there being no cause of action until there is a party capable of suing. Murray v. East India Co., 5 Barn. & Aid. 204; Bucklin v. Ford, 5 Barb. 393 ; Cary v. Stephenson, 2 Salk. 421. In order to put the statute in motion, there must not only be a person in esse to sue, but a person to be sued. Davis v. Carr, 6 N. Y. 124 ; Levering v. Rittenhouse, 4 Whart. 130 , per Nelson, J.; Wehman v. Insurance Co., 13 Wend. 267 ; Jolliffe v. Pitt, 2 Vern. 694; Douglas v. Forrest, 4 Bing. 686; Benjamin v. De Groot, 1 Denio, 155 .”

—To which may be added Richards v. Insurance Co., 8 Cranch, 84 ; Dunning v. Bank, 6 Lans. 296 ; Pendleton v. Pendleton, 6 Bush, 469 ; Word v. West, 38 Ark. 243 ; Hall v. Brennan, 64 Hun, 396 , 19

“Sec. 414. The provisions of this chapter apply, and constitute the only rules of limitation applicable to a civil action or special proceeding, except in one of the following cases: (1) Where a different limitation is specially prescribed by law or a shorter limitation is prescribed by the written contract of the parties.”

And it is argued that this excludes the cases just mentioned entirely. from the operation of the chapter of the Code on the subject of limitation of actions. Chapter 4. We think the legislature never intended by the clauses cited to exclude every other limitation, whether created by statute or contract, from the operation of the general provisions of this chapter, so far as they might be applicable; The purpose of the sections quoted is answered in the construction tha,t it was intended only to preserve the short limitations, that might conflict in point of time with the limitations specially prescribed in that chapter. This view has been sanctioned by the court of appeals in Hayden v. Pierce, 144 N. Y. 517 , 39 N. E. 638 , where the question was whether section 401 of that chapter, declaring that, when a cause of action accrued against a person who was without the state, the action may be commenced against him within the time limited therefor after his return to the state, applied to an action upon a disputed and rejected claim against the estate of a deceased person, and the short limitation of six months. It was held that it did, notwithstanding the claxise we have cited, which excludes short limitation from the operation of chapter 4; and O’Brien, J., argues with great clearness against the contention of the defendant here, and holds that the general provisions of chapter 4 are applicable to all limitations, and he says at page 518, 144 N. Y., and page 640, 39 N. E.:

“The very subdivision of that section now under consideration [section 414] would seem to except from the operation of the chapter a case where a shorter limitation is prescribed by the written contract of the parties. This permits the parties themselves to agree upon a shorter statute, but in such a case what reason is there for supposing that the general provisions of chapter 4 to which I have referred would not apply? Indeed, it is scarcely possible to suppose that any other rule could have been contemplated-by the framers of the statute, since to exclude these general provisions from the operation and application of a short limitation fixed by the contract of the parties would in many cases work the grossest injustice. There is a large class of

actions and proceedings, mostly founded upon some statute, and not specified in chapter 4, to which special limitations apply. * * * In many of them the limitation, if applied, without reference to the general provisions referred to, would work such hardship and injustice that it is reasonably certain that such a result was never within the contemplation of the legislature. It is difficult to perceive how any special limitation applicable to any class of actions can be administered • without producing great injustice, unless the courts are at liberty to apply to such cases, when necessary, at least some of the general provisions mentioned, and which are necessary to a just application of all such statutes.”

While the question in that case did not relate to limitations by contract, it did relate to a short limitation of another kind, and the case is conclusive upon the proposition that general provisions of chapter 4 are not limited as the words of section 414 might seem to imply. Judge O’Brien clearly shows in the case last cited that, while the contention of the defendant may be within the letter of the Code, it is not within its spirit; and we are guided by the spirit, and not by the letter. Richards v. Insurance Co., supra.

The defendant seems to rely greatly upon Wilkinson v. Insurance Co., 72 N. Y. 499 . In that case the policy contained the provision that no suit should be maintained upon it unless commenced within 12 months after the loss, any statute of limitation to the contrary notwithstanding. The insured assigned his policy to the plaintiff. Two years and nine months after the loss, action was commenced upon the policy. The defense of the short statute being set up, the plaintiff proved that in an action brought against the plaintiff and defendant, the parties to this action, by a third party, the court had enjoined the company in that action from paying the plaintiff, and the plaintiff from receiving the loss. The company did not procure the injunction issued, nor was it served upon them, nor had they notice that it was issued. The court properly held that this constituted no defense; the injunction only restrained the plaintiff from receiving the loss. The plaintiff was in no manner restrained from bringing his action upon the policy, and the case went off on this-point. Some general remarks are made by Judge Andrews to the effect that:

“The provision fixing the time within which an action must be brought is distinct, definite, and unqualified. The contract contains no saving of the right of action after the expiration of the year from the time of the loss, for any cause whatever; and unless bringing of the action within the time limited by the contract is waived by the defendant, or was excused and made impossible by the act of God or of the law, the remedy of the plaintiff has been lost.”

In Hall v. Brennan, affirmed in 140 N. Y. 409 , 35 N. E. 663 , where B. on September 17,1880, had made his promissory note on 12 months to S., B. died August 12, 1887, leaving a will, which, after a contest, was admitted to probate on March 23, 1889, upon which letters testamentary were issued to his executors. On March 21, 1890, action was commenced against the executors of B. Held that, from the time of the death of B. to the issue of letters testamentary,1 there was no person in being against whom the plaintiff could have brought their action; that this amounted to a statutory prohibition as to the plaintiff’s right to sue, and the period between the death and

“It is no answer to this view to say that the plaintiffs might have applied for a temporary administrator under section 2668 of the Code of Civil Procedure. They could not procure such appointment as a matter of right. It is expressly made dependent on the discretion of the surrogate. The law did not require them to make the application under the penalty of losing their debt.”

The learned counsel for the defendant contends that, the short limitation in the policy being a matter of strict contract between the parties, the death of the insured, though an act of God, did not excuse the failure to bring the action within the year, as that was a contingency that should have been stipulated in the contract, if it were to be relied upon; and he cites a number of cases where parties have stipulated to do a work, or furnish materials, or perform a contract, as to matters of property, which could be done by persons other than the party contracting to do it. In Dexter v. Norton, 47 N. Y. 64 , the cases where death excuses are considered, and the distinction is drawn between acts of a personal character, that must be performed by the contracting party, such as promise to marry, paint a picture, deliver a particular horse, hold a concert, and adds:

“The principle seems to us to be that, in contracts in which the performance depends on the continued existence of a certain person or thing, a condition is implied that the impossibility of performance arising from the perishing of the person or thing shall excuse the performance; - and the reason given for the rule is, because from the nature of the contract it is apparent that the parties contracted on the basis of the continued existence of the particular person or thing.”

And on page 64 the court says that there is—

“A variety of cases where the courts have implied a condition in .the contract itself, the effect of which was to relieve the party when the performance had, without his fault, become impossible.”

It seems to be conceded that the defendant might waive this short limitation. Why? There is no such condition in the contract, but there is an implied condition attached to every contract that the party seeking the benefit of it may waive it, and he may put himself in a condition where he will be estopped from insisting upon the performance of the contract. So, in reason, there was an implied condition attached to this contract, that there should be at the time of the fire some party that could bring the action, and that until, in the course of legal procedure, the representatives of the insured, who had been removed by the act of God, could bring the action, this short and arbitrary limitation should not commence running. It is difficult to see how the insured was guilty of laches. There is no laches in the grave. The delay in appointing the representatives of the insured is explained, and in our opinion the laches on their part, if any, was not sufficient to bar their right to recover.

“The act [chapter 488 of the Laws of 1886] providing for a uniform policy, known as the ‘Standard Policy,’ and which makes its use compulsory upon insurance companies, marks a most important and useful advance in legislation relating to contracts of insurance. The practice which prevailed before this enactment, whereby each company prescribed the form of its contract, led to great diversity in the provisions and conditions of insurance policies, and frequently to great abuse. Parties taking insurance were often misled by unusual clauses and obscure phrases concealed in a mass of verbiage, and often so printed as almost to elude discovery. Unconscionable defenses based upon such conditions were not infrequent, and courts seemed sometimes to have been embarrassed in the attempt to reconcile the claims of justice with the law of contracts. Under the law of 1886, parties are not permitted to insert conditions in policies at their will. The policies they now issue must be uniform in their provisions, arrangement, and type. Persons seeking insurance will come to understand to a greater extent than heretofore the contract into which they enter.”

An important change was created by the statute referred to, which was in force at the time this insurance policy was issued, and at the death of the insured. Many of the decisions, therefore, in regard to construing policies, that have been cited in this case, are inapplicable, and we must construe this policy in the light of these changed conditions and the purpose of the legislature. One of the conditions imposed is that the action shall be brought within 12 months next after the fire, but that condition must be construed in the light of other provisions of the policy. If by those other provisions the defendant postponed, in taking advantage of them, the right of the insured to sue, the time so taken by the defendant should not be taken out of the 12 months. The short limitation should only commence when the action could be brought under the

“No suit or action of any kind against this company [the defendant there] for the recovery of any claim upon, under, or by virtue of this policy shall be sustained in any court of law or chancery unless such suit or action shall be commenced within the term of twelve months next after such loss or damage shall occur; and, in case any such suit or action shall be commenced against this company after the expiration of twelve months next after such loss or damage shall have occurred, the lapse of time shall be taken and deemed conclusive evidence against the validity of the claim thereby so attempted to be enforced, any statute of limitation to the contrary notwithstanding.”

The policy in this case contained similar provisions to the one in the case at bar as to ascertaining the loss, and the procedure that the defendant might resort to in the premises before the claim should be due; and the court held that the 12-months limitation did not commence until the claim was due and the action could have been brought, and cited Ames v. Insurance Co., 14 N. Y. 253 ; Mayor, etc., of New York v. Hamilton Fire Ins. Co., 39 N. Y. 45 ; Hay v. Insurance Co., 77 N. Y. 235 ,—containing a similar clause in the policy, which had held in the same direction; and Judge Danforth pithily says that:

“The defendant having made the doing of certain things, and a fixed lapse of time thereafter, conditions precedent to the bringing of an action, the parties must be deemed to have contracted in reference to a time when the insured, except for that contract, might be in a condition to bring an action. Under any other construction, the two conditions are inconsistent with each other.”

The defendant cites King v. Insurance Co., 47 Hun, 1 , as an authority for the position that under all conditions the 12 months must commence from the time of the fire. The. policy in that case was issued in 1882, and contained a provision very similar to the one in the case of Steen v. Insurance Co., supra, the only difference being that in the latter case the 12 months commenced next after such loss or damage shall have occurred, while in the former case it was to commence next after the fire shall have occurred; and the court in the former case attempts to draw a distinction at general term between

In both aspects of the case, as we have considered, the trial court v/as right in directing the verdict for the plaintiff; and the motion for a new trial should be denied, with costs, and judgment should be entered upon the verdict as directed by the court.