Hamilton v. Royal Insurance Co. of Liverpool, England , 156 N.Y. 327 ( 1898 )

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] The only question involved in this case is whether section 399 of the Code of Civil Procedure applies to the limitation contained in the policy in suit. The section in substance provides that an attempt to commence an action in a court of record is equivalent to the commencement of it, within each provision of chapter four of that act, which limits the time for commencing an action, when the summons is delivered to the sheriff of the proper county, with the intent that it shall be actually served. That the summons in this case was so delivered within twelve months after the fire is expressly admitted. The sole claim of the respondent is, that the provisions of section 399 have no application to the contractual limitation of the parties, and, hence, that the claim was barred when the summons was served.

To a better understanding of this question, it is perhaps well to consider to some extent the rules relating to the limitation of civil actions, how created, and upon what they are based. No rule limiting the time within which actions ex contractu might be brought existed at common law, but the limitation of actions is a creation of statute. (People v. Gilbert, 18 Johns. 227;Wilcox v. Fitch, 20 Johns. 472.) The English statute (21 James I) not only superseded the earlier statutes of that jurisdiction upon the subject, but formed the basis of similar statutes in many of the United States, and its leading provisions have been, to a greater or less extent, incorporated into the statutes of all. The present Statute of Limitations in this state, in most of its features, follows the English statute, not only as to the rules and periods of limitation, but in its general and special provisions relating to the subject.

When the present statute was adopted, the right of parties to make a contract which reasonably limited the time within which an action upon it should be commenced had been established by the decisions of this court. (Ames v. N.Y. Union Ins. Co.,14 N.Y. 253; Roach v. N.Y. Erie Ins. Co., 30 N.Y. 546.) Presumptively, with that fact in view, the legislature enacted chapter four of the Code of Civil Procedure. That statute was obviously intended to embrace the entire law upon the subject of the limitation of actions, including the manner of its application, the exceptions to its effect in special cases and the procedure for its enforcement.

That such was its purpose is evinced by the nature of its provisions, which fully and completely cover those subjects. It contains provisions which are made specially applicable where a party is an infant, insane or imprisoned, in case of death, or the absence of the defendant from the state, where either party is an alien, where a former judgment has been reversed, where the action has been stayed or the party enjoined, where it is for misconduct by an agent, where several disabilities exist, where a demand is necessary before suit, where an arbitration has been entered into and revoked, and where an action is discontinued after answer. It also defines what constitutes adverse possession, declares when a cause of action accrues on a current account, when disabilities must exist to be effective, what acknowledgment or new promise is necessary to relive from its operation, its effect upon a counterclaim, when an action shall be deemed commenced, the effect of an attempt to commence an action, and how the statute is to be made available.

These general provisions constitute essential and important elements of the statute. In their absence, its enforcement in many cases would be difficult or impossible, and in others would produce inequity and grave injustice. That they were intended to apply to all the limitations created by that statute, there can be no doubt, and no good reason is perceived why they should not apply to limitations created by special statute, or the written contract of the parties. If they are necessary to modify or effectuate one class, they are equally so as to others. It is said, however, that the statute does not in express terms make them applicable to limitations created by special statute or written contract. While that is true it is also true that the statute does not provide that they shall not apply.

To sustain the decision of the court below, great reliance is placed upon section 414 of the Code, which declares that the provisions of chapter four constitute the only rule of limitation applicable to a civil action, except in a case where a different limitation is specially prescribed by law, or a shorter limitation is prescribed by the written contract of the parties. It is to be observed that the provisions of that section refer only to rules of limitation contained in that chapter, and do not attempt to deal with any other subject. Obviously the phrase "rules of limitation" was not intended to include or affect the general provisions of that chapter to which we have adverted but refers only to periods of limitation. That section does not exempt limitations which are specially prescribed by law, or by the written contract of the parties, from the operation of any of the provisions of chapter four, except so far as they establish different periods of limitation. Indeed, this court has distinctly held that section 414 does not exempt limitations specially prescribed by law from any of the provisions of chapter four, except those which establish different periods of limitation. (Hayden v. Pierce, 144 N.Y. 512, 518; Titus v.Poole, 145 N.Y. 414.)

In the Hayden case this court decided that the words "rules of limitation" did not refer to the other provisions of chapter four, but only to those fixing periods of time within which the various classes of actions specified are to be brought. In theTitus case it again held that the words "rules of limitation" referred to the specific periods prescribed in titles one and two of chapter four for the bringing of actions, and did not restrict the application of the general provisions of the act to the limitations of the general statute. In each of the cases cited a question arose in regard to a limitation specially prescribed by law. In one case it was held that the general provisions of section 401 were applicable to such special limitations, as well as to the limitations established by chapter four, and in the other it was held that section 405 had a similar application.

The principle upon which the decisions in those cases rest has an important, if not a controlling, bearing upon the question under consideration. If, as this court there held, limitations specially prescribed by law fall within, and are governed by, the general provisions of chapter four, it is difficult to perceive any good reason why they do not equally apply to limitations prescribed by the written contract of the parties. The language of that section clearly shows an intent to place limitations specially prescribed by law and those prescribed by the contract of the parties in the same category, and to make them subject to the same rules. The view that these provisions apply to limitations prescribed by contract, as well as to a limitation specially prescribed by law, was clearly expressed in the opinion of this court in Hayden v. Pierce. In that case Judge O'BRIEN, after referring to many of the general provisions of the statute to which we have adverted, and after declaring that they were not embraced in the term, "rules of limitation," said: "The very subdivision of that section (Sub. 1, § 414) now under consideration 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 four 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. * * * It is difficult to conceive 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." The views expressed in that case were expressly approved in Titus v. Poole, where ANDREWS, Ch. J., said: "We had occasion recently to decide a very similar question in the case of Hayden v. Pierce, and the reasoning in the careful opinion in that case is applicable to this case." Although it must be admitted that the precise question under consideration did not arise in either of the cases cited, still they involved the principle under discussion, and also plainly show that the opinion of this court was that the general provisions of chapter four apply as well to limitations prescribed by the written contract of the parties, as to those where a different limitation is specially prescribed by law. The reasoning which shows the necessity for their application in one class of cases, is equally applicable to the other, and the same rule should be applied in each.

It is obvious that, by section 414, the legislature intended to and did recognize the right of parties, by their written contract, to prescribe a shorter limitation for its enforcement than that contained in the general limitations of the Code. It is equally clear that it intended to make the limitations prescribed by special statute, or by the contract of the parties, a part of the general law controlling the limitation of actions, and to make all the rules of limitation recognized by that act subject to the general provisions of chapter four. Any other rule would result in unsettling the law, and in many cases would work the greatest injustice. If those general provisions are not applicable to such a case, then we have a plain and definite system of law which governs one class of limitations, but no law or procedure whatsoever applicable to the other classes.

The language of section 399 is sufficiently broad to include the limitation in this case, as it declares that its provisions are applicable to each provision of the act which limits the time for commencing an action. When that section provides that a summons delivered to the sheriff of the proper county to be served is equivalent to the commencement of an action within the provisions of the act, it must have been intended to include limitations by contract, as that is one of its provisions limiting the time within which an action may be begun. Who, reading that statute, which plainly recognizes a limitation by contract, would for a moment suppose that the delivery of a summons to the sheriff of the proper county with the intent that it should be actually served, was not a commencement of the action in such a case? If it was not the purpose of this statute that it should apply to such a case, then its effect is to create a snare to the unwary party and practitioner.

If the contention of the respondent is correct, it is apparent that infancy, insanity, imprisonment, alienage, death or absence of a defendant from the state does not suspend or affect the limitation in such a case. Nor does the fact that a former judgment has been reversed or that the plaintiff has been enjoined, or the action stayed, or any other disability extend the time within which the action must be commenced. If the general provisions of this statute are not applicable, we are led to inquire how is the limitation to be made available? Must it be pleaded or is it a defense without? What is the mode of computing the periods of limitation? When shall the action be deemed commenced? What acknowledgment or new promise is necessary to relieve from the limitation? If these provisions do not apply to a limitation by contract, then it necessarily follows that there is no law applicable to such a limitation or to regulate the procedure for its enforcement.

When the parties entered into this agreement they must have considered it in the light of the general provisions of the existing law relating to the subject. It must be presumed that the parties knew the law and intended to make their contract in pursuance of it, and that those general provisions were understood and considered by them when the policy was issued. Indeed, it would be unreasonable to suppose that when they provided for a shorter limitation it was not intended to be controlled and governed by the general provisions of law relating to the subject, which were not in conflict with their agreement, especially when they are necessary to an orderly and uniform enforcement of the law.

There is another ground that requires a reversal if the decisions of the court in the Hayden and Titus cases are followed. The policy in this case was a standard fire insurance policy of the state of New York, and was issued under and in pursuance of a statute, which declares: "No fire insurance company, corporation or association, their officers or agents, shall make, issue, use or deliver for use, any fire insurance policy, or a renewal of any fire policy, on property in this state other than such as shall conform in all particulars as to blanks, size of type, context, provisions, agreements and conditions with the printed form of contract or policy filed in the office of the secretary of state, as provided for in the first section of this act, and no other or different provision, agreement, condition or clause shall in any manner be made a part of said contract or policy, or be indorsed thereon or delivered therewith." (L. 1886, ch. 488, § 2; L. 1892, ch. 690, § 121.) The only policy the defendant had a right to issue was that authorized by that statute, and the policy in suit contained only such provisions, agreements and conditions as were specially authorized and required by it. The provision limiting the time within which an action thereon should be commenced to the period of one year, was inserted in obedience to the statute. If it had not been contained in the form filed in the office of the secretary of state, its insertion in the policy would have been illegal. (L. 1886, ch. 488, § 3; Penal Code, § 577d.) Therefore, it is manifest that the statute specially prescribes the limitation of time within which an action upon a fire insurance policy upon property in this state shall be commenced. The claim that the limitation in this case was by contract, can hardly be sustained. It is true it was inserted in the policy, and was in the form of a contract. It was not, however, made a part of the policy by virtue of any agreement of the parties, but by the command of the statute. The parties had no volition in the matter. They could have provided no different period of limitation. The law establishes the period of limitation, and forbids the parties from disregarding it. The law as effectually established the period of limitation as if it had declared in express terms that the limitation of time for the commencement of an action upon a fire insurance policy should be the period of one year. Practically, then, the limitation in this case was specially prescribed by law, and, hence, falls directly within the principle of the decisions of this court in the Hayden andTitus cases. Therefore, the conclusion that section 399 is applicable to and governs this case, and that the summons was served in time and the action properly commenced, should be sustained both upon principle and authority.

But it is claimed that the case of Wilkinson v. First Nat.F. Ins. Co. (72 N.Y. 499) is adverse to this conclusion. It is true that in that case it was said that the provisions of the old Code, saving the rights of parties under the Statute of Limitations when they were stayed by injunction, applied only to cases governed by the general Statute of Limitations, and had no application to a limitation prescribed by contract. When, however, that case is examined, it will be found that, although the question was considerably discussed, its determination was unnecessary to the decision, as it was there expressly held that the injunction did not restrain the bringing of an action upon the policy. Of course, if there was no injunction restraining an action upon the policy, then the provision of the Code that, where the commencement of an action had been stayed by injunction, the time of the continuance of the stay was not a part of the time limited for the commencement of the action, had no application whatever. In other words, the case did not fall within the provisions of the statute, and there was no occasion to determine whether that section applied to all limitations, or only to those created by the general statute. While that case was well decided, it is not a controlling authority upon the question involved in the case at bar. Moreover, the question in that case arose before the adoption of the present Code. By the latter, as we have already shown, the limitation by contract was made a part of the general plan or scheme of the law relating to the limitation of actions, and thus brought within the general provisions of that statute. That such is the view of this court is evinced by the decisions to which we have already referred, and as the learned chief judge, who wrote the opinion in the Wilkinson case, expressly approved of the opinion in the Hayden case, when writing in Titus v. Poole, it is evident that he, too, was of the opinion that the views expressed in the Wilkinson case did not apply in view of the provisions of the Code of Civil Procedure.

Nor do we regard the decision in Hill v. Supervisors (119 N.Y. 344) as adverse to or in conflict with the conclusion we have reached. In that case the right sought to be enforced was a special right for which a special remedy was given and a special limitation provided, and, under the well-settled principle that where a new right is given, or a new power conferred by statute, and the means of executing it are granted, it can be executed in no other way than as provided by the statute, it was held that the limitation was so incorporated with the remedy as to become a part of it, and constituted a condition precedent to the maintenance of the action It is doubtless true that where time is the essence of the right created, and a limitation as to the time of its enforcement is a part of the statute under which the right arises, so that there is no right of action independent of the limitation, the limitation extinguishes the right rather than affects the remedy, and such contracts are not subject to the exemptions contained in the Statute of Limitations. It was upon that principle that the Hill case was decided, and it has no application to the case at bar.

Cases which have arisen in other jurisdictions have been cited by the parties as sustaining their respective claims, but, as they are not controlling in this case, we have deemed it unnecessary to examine or review them. We are of the opinion that section 399 is applicable to the limitation contained in the policy in suit; that the courts below were in error in holding otherwise, and that for that error the judgments in both courts should be reversed.

The judgments of the General and Special Terms should be reversed and a new trial granted, with costs to abide the event.