Steen v. . Niagara Fire Insurance Company , 1882 N.Y. LEXIS 221 ( 1882 )

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[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] On the 25th of October, 1873, the defendant by its policy in writing undertook to insure James F. Atkins, for the period of three years thereafter, against loss or damage by fire, to the amount of $1,000 on his dwelling-house, described as "occupied by a tenant for farm dwelling," but, immediately following these words, there was, on the 7th of January, 1875, written into the policy by the agents, who had by countersigning given validity to it, these words: "The dwelling being unoccupied for a short time, but being in charge of a trusty person living near by, shall be no prejudice to this policy." Prior to the 16th of November, 1875, the premises were sold by the sheriff under an execution issued for the enforcement of a judgment theretofore, but after the date of the policy, recovered against the insured and then purchased by the plaintiff in this action. On that day with notice of the judgment, execution and sale, the defendant, by the agents above referred to, gave its consent in writing to an assignment of the policy to the purchaser, and it was assigned to him. On the 11th of January, 1876, the premises were injured or destroyed by fire to the full amount of the insurance. This action was commenced on the 3d of March, 1877, to recover the sum insured. The policy contains certain conditions hereinafter referred to, and the case made for the defense, and on which reliance is now placed, depends upon the alleged omission of the insured to comply therewith.

First. The contract limits the time for bringing an action under or by virtue of the policy, to a "term of twelve months next after the loss or damage shall occur," and declares that "in case any such suit or action shall be commenced, * * * 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 validity of such a stipulation is well settled (Wilkinson v. First National Fire Ins. Co.,72 N.Y. 499; 28 Am. Rep. 166; May on Insurance, § 478), and in this case the question is one of construction. What was the intention or understanding of the parties as to the time when the limitation should begin to run? The facts are undisputed, and the defendant's contention is that the words I have quoted are to be taken literally, and that they import a contract that no action shall be commenced after the expiration of twelve months from the happening of the fire by which the property insured was damaged or destroyed. On the other hand the plaintiff has so far succeeded upon the ground that they relate to the time when a claim or cause of action accrues, on which a suit may be maintained; that no claim accrues or arises in favor of the insured upon the mere happening of the loss, nor until sixty days after the proof required by the insurers, or provided for in the policy, should have been received by them at their office in New York, and the loss satisfactorily ascertained and proved.

These events are made conditions and are certainly precedent to the maintenance of an action, and we are of the opinion that they cannot be disregarded in getting at the true understanding of the parties of the meaning of the clause in question. Indeed they seem to be the governing words of the contract. They are the words of the underwriters, intended for their protection, and qualify the general obligation to make good any loss not exceeding the sum insured or the interest of the assured in the property, by requiring preliminary proof, and a lapse even then of a fixed period before any cause of action can accrue. Except for these provisions, a suit would have lain upon the instant of the happening of the fire, or within a reasonable time thereafter.

Now if we look at the clause relied upon, we find the insurers prescribing a time after which no claim shall be brought, and a declaration that it shall not be sustainable unless commenced within "the term of twelve months," and a greater lapse of time is made "conclusive evidence against the validity of the claim then attempted to be enforced." It is plain that a "term," or period, is indicated after which the insurers shall not be liable, and the implied meaning of the same words must be, that within that period they are or will be liable to an action. The law in case of breach of contract limits the time of bringing an action to six years. The contract substitutes twelve months. If we take the appellant's construction, the term of twelve months is at once narrowed to ten months, for sixty days at least must elapse after "a loss by fire," before any suit could be brought, and the term is subjected to such additional abatement as may be made necessary by alleged inadequacy of proof or controversies between the insurers and the policy-holder before such loss is "satisfactorily ascertained." The delay incident upon such provisions is illustrated by a variety of cases heretofore considered by the courts, and among others, Ames v. N.Y. Union Insurance Co. (14 N.Y. 253);Mayor v. Hamilton Fire Insurance Co. (39 id. 45); Hay v.Star F. Insurance Co. (77 id. 235; 33 Am. Rep. 607); these cases in substance hold that the time of limitation prescribed by such a contract does not commence running until the right to bring an action exists. Whether the delay is caused by extraneous circumstances, made effective by the insurer, as in the above cases, or by the provision of the policy, giving time to the insurer, before the lapse of which, payment cannot be enforced, is immaterial. The delay in either case is caused by the insurer, and until by the terms of the policy a cause of action accrues, the period of limitation against its enforcement should not, in the absence of plain and unequivocal words requiring such a construction, be deemed to commence.

Here, we think, the intention of the defendant was to give the insured a full period of twelve months, within any part of which he might commence his action, and having by postponement of the time of payment, secured itself from suit, it did not intend to embrace that period within the term after the expiration of which it could not be sued. In other words, the parties cannot be presumed to have suspended the remedy and provided for the running of the period of limitation during the same time. Indeed the actual case is stronger; not only was the remedy postponed, but the liability even did not exist at the time of the fire, nor until it was fixed and ascertained according to the provision of the policy. Having thus 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 condition to bring an action. Under any other construction, the two conditions are inconsistent with each other.

The cases cited by the learned counsel for the parties before us show that the courts have differed as to the proper construction of the clause in question. In Illinois (Johnson v.Humboldt Insurance Co., 91 Ill. 92; 33 Am. Rep. 47), in Massachusetts (Fullam v. N.Y. Union Insurance Co., 7 Gray, 61), it is held to take effect from the time of the destruction of the property by the cause insured against. In Minnesota (Chandler v. St. Paul F. and M. Insurance Co., 21 Minn. 85; 18 Am. Rep. 385, following, The Mayor v. Hamilton InsuranceCo., supra), it is applied to the time the cause of action accrues. In Wisconsin (Killips v. Putnam F. Insurance Co.,28 Wis. 472; 9 Am. Rep. 506), the court inclines to the doctrine enunciated by us in the cases before referred to. (Ames v.N.Y. Union Insurance Co.; Mayor v. Hamilton F. Insurance Co.) We perceive no reason for departing from it, and adhere to the opinion that the limitation provided for by the clause in question should be construed as running from the time when the loss becomes due and payable, and not from the time when it in fact occurs. Construing these provisions of the policy together, this intention seems plain, but if there is ambiguity, the words must be construed most strongly against the appellant, who uses them, and in favor of the insured, as he might fairly have understood them (Anderson v. Fitzgerald, 4 House of Lords Cases, 484; Hoffman v. Etna F. Insurance Co., 32 N.Y. 405;Reynolds v. Commerce F. Insurance Co., 47 id. 597), and so as to sustain rather than defeat the contract of indemnity. No doubt the appellant could have stipulated that the time of the fire should be looked to as the event, from the happening of which the limitation should run, but it would require distinct language to show that such was the intention of the parties. It is not used here. It is found in Schroeder v. Keystone Insurance Co. (2 Phil. 286), one of the cases cited by the appellant. Nor is the defendant's contention aided by the use of the words "loss occur" instead of "loss accrue." In DeGrove v. Metropolitan Ins. Co. (61 N.Y. 594; 19 Am. Rep. 305) the limitation clause was the same, and the court construed the word as synonymous with accrue, saying, "the plaintiff had twelve months from the time the cause of action accrued," and in Hay v. Star F. Insurance Co., the same word "occur" was used, but the court said, "the limitation should be construed to commence when the loss was due and payable, and not from the time of the physical burning of the property." There is undoubtedly a difference in the derivation and etymological meaning of the words, but as used by insurers and interpreted by the courts, they have in contracts of this kind the same signification. They represent the happening of an event from which a claim arises. Moreover, this construction accords with the general rule which regards the statute of limitations as beginning to run upon a contract of indemnity, from the time at which the plaintiff is actually damaged, and not from the happening of the event from which the loss arises.

Second. The policy provided that, "if the premises are, at the time of insuring of during the life of the policy, vacant, unoccupied, or not in use, whether by removal of the owner or occupant, or for any cause, without the company's consent is indorsed thereon, the insurance shall be void and of no effect." The court found that the house in question was occupied by a tenant up to about the 7th day of January, 1875, at which time it became unoccupied, and that fact being communicated by the party insured to the defendant's agents, the latter inserted the clause above referred to in the body of the policy, so as to make it a part of the contract, and also found that "the dwelling-house remained unoccupied until the latter part of January, 1875, when it was again occupied. During the non-occupancy, it was in charge of a trusty person living near by, who inspected and attended to it daily." It also appears that more than one vacancy occurred after this time, and the house was vacant and unoccupied at the time of the fire, but it continued in charge of a trusty man living near by, taking care of it and being there every day.

The learned counsel for the appellant contends that the permission written into the policy was applicable only to the then existing vacancy. This is not its necessary limitation. On the contrary it may be deemed to modify the original contract. It is a general rule that a writing contains all that may be fairly inferred from it, and taking the condition and the permit together, they import a qualification of the prohibition of the policy against vacancy to such an extent that, although the premises are temporarily and at different times vacant, the policy shall be unaffected, provided the terms of the permit are complied with. The oversight of a trusty neighbor is made to take the place of occupancy during occasional brief vacancies, and we might as well say that the condition was not violated unless the premises were vacant "during all the life of the policy," as to say that the permit applied to, and was exhausted by, a single occasion. The object was to get rid of the restriction, and if the words are ambiguous, the observations already made upon the method of interpretation apply here. The words are not limited to a single period, and embodied as they are in the contract, the insured is entitled to a construction favorable to himself so long as it is not unreasonable.

Moreover, the court find that the general agent, when informed by the insured that the house was again empty, declared "that this clause upon the policy," evidently referring to the permit, "would hold good if it (the house) was unoccupied." This evidence was admissible, and the construction given by him binds the defendant. It is true the agent testifies to the contrary, but the conflict of evidence was for the trial court, and the question was decided as one of fact and not of law. It is therefore sustained by Underwood v. Farmers' Joint-Stock Ins.Co. (57 N.Y. 500); Pechner v. Phœnix Ins. Co. (65 id. 195);Marcus v. St. Louis Mutual Life Ins. Co. (68 id. 625). It is found as a fact that the agent making the statement was a general agent, and it was clearly within the power intrusted to him as such. It is true there is a provision that "the use of general terms, or any thing less than a distinct specific agreement clearly expressed and indorsed on the policy, shall not be construed as a waiver of any printed condition or restriction therein," but the company itself could dispense with the condition by oral consent, as well as by writing, and the general agent, unless specially restricted, could do the same. This was held in Walsh v. Hartford Fire Ins. Co. (73 N.Y. 5). That case and others cited by the appellant, in Van Allen v. Farmers'Joint-Stock Ins. Co. (64 N.Y. 469), and Marvin v. UniversalL. Ins. Co. (85 id. 278), were in favor of the defendant on the ground that by the terms of the policies in question, the power of the agent was limited, and the authority he assumed had been reserved by the company to its "officer" (Van Allen v. F.J.Stock Ins. Co., supra); or was to be exercised only "at the head office," and authenticated by one of its officers. (Marvin v.Universal, supra.) Such reservation is not to be found in the policy before us, and the condition referred to cannot be deemed to affect one dealing with a general agent, who has original powers, co-extensive, as to the business in which he was engaged, with those of his principal.

Another defense rests upon an alleged violation of a provision of the policy declaring that "in case * * * of the creation of any lien, or the levy of an execution" upon "the subject insured, without the consent of this company indorsed hereon," the insurance secured thereby should cease. Liens by judgment and execution against the insured were obtained, but not by the consent or act of the insured. It is not necessary to consider whether or not they are within the prohibition. (Baley v.Homestead Fire Ins. Co., 80 N.Y. 21; 36 Am. Rep. 570); for after notice of the judgment, and its enforcement by execution, the company, by its general agents, consented to the assignment of the policy to the plaintiff, who was the purchaser at sheriff's sale. It thus became in effect a new contract between the company and the assignee, unaffected by the forfeiture, if in any event it could have been insisted upon. (Shearman v.Niagara Fire Ins. Co., 46 N.Y. 526; Hooper v. Hudson RiverFire Ins. Co., 17 id. 424.)

We have examined the other minor objections stated in the printed points of the appellant, and are of opinion that the defendant has not shown sufficient ground to sustain this appeal.

The judgment should, therefore, be affirmed.

All concur, except MILLER and TRACY, JJ., absent.

Judgment affirmed.