Gould v. Dwelling-House Ins.

Opinion,

Mr. Justice Mitchell:

In regard to the first assignment of error, to the overruling of the defendant’s objection to the proofs of loss, it would have been more regular and much better practice to have heard the evidence of a waiver first, and then passed upon the admissibility of the proofs of loss. But if the evidence of waiver was in fact, though subsequently given, sufficient to take that question to the jury, then it was a mere matter of the order of proof, which is within the discretion of the judge.

That a statement was furnished within the stipulated time is admitted, but that it was not such as the policy required we must assume, as the learned judge so charged the jury. There is, however, nothing to show that it was not in good faith intended by the plaintiff as a compliance with the requirement of the policy. Under such circumstances, it has often been declared by this court that it is the duty of the insurance company, if it means to rely upon failure to comply with this stipulation, to give immediate notice of its objection, pointing out the defects, etc.: Girard Life Ins. Co. v. Mutual Life Ins. Co., 97 Pa. 24, and cases there cited by the present Chief Justice; Ben. Franklin F. Ins. Co. v. Flynn, 98 Pa. 627; Susq. M. F. Ins. Co. v. Cusick, 109 Pa. 159; Universal F. Ins. Co. v. Block, 109 Pa. 535; Thierolf v. Insurance Co., 110 Pa. 37. And it is equally settled that the actions of the company, including the failure to return the proofs of loss, or to give notice of the objections, are evidence for the jury of a waiver: Snowden v. Insurance Co., 122 Pa. 502. The testimony as to what the company did was admitted by the learned judge in the present case as evidence of waiver, and in so doing he followed the line of decisions above cited, and therefore was clearly right.

In establishing this rule in regard to the conduct of insurance companies as to objections to proofs of loss, it is not intended to encroach at all on the doctrines of waiver, by estoppel, as laid down in the well-considered and authoritative cases of Trask v. Insurance Co., 29 Pa. 198; Beatty v. Insurance Co., 66 Pa. 9, and others of the same kind. In Trask v. Insurance Co. the policy required that the assured should notifj- the company of his loss “forthwith,” and it was held that a delay of eleven days, unexcused, was a breach of this requirement, and that the fact of the company’s receipt of the notice without objection was not sufficient evidence of waiver. This has been called a harsh case as to the time, but nevertheless was followed: Edwards v. Insurance Co., 75 Pa. 378. In Beatty v. Insurance Co., a notice was sent by the insurer, but it was so' defective that it was held to be “ no statement at all,..... a mere reiteration of the description in the policy;” and Sharswood, J., in delivering the opinion, said, “ to constitute a waiver, there should be shown some official act or declaration by the company, during the currency of the time, dispensing with it; something from which the assured might reasonably infer that the underwriters did not mean to insist upon it. . . After the thirty days had expired without any statement, nothing but the express agreement of the company could renew or revivify the contract.” But, notwithstanding the stringent terms in which the rule is thus laid down, the ground of the decision is the entire failure of the insured to send anything that could be considered the statement called for. This is clearly shown by what is immediately added: “Had a statement been furnished within the time, it might have been the duty of the insurers to notify the assured of any merely formal defect, so that it might be remedied.” This duty, as shown by the later cases already cited, is now clearly defined and settled, and that these cases are not at variance with the apparently stricter previous rulings is shown by the references made to the latter from time to time. Thus in Lycoming Co. M. Ins. Co. v. Schollenberger, 44 Pa. 261, Thompson, J., says: “ This court has never held that a waiver.....may not take place during the currency of the condition. The cases of Barclay v. Weaver, 19 Pa. 396, and Trask v. Insurance Co., 29 Pa. 200,.....only decide that it did not in those cases, as time for the performance of the condition had passed.” And in Imp. F. Ins. Co. v. Dunham, 117 Pa. 473, our Brother Clark, after citing Trask v. Insurance Co., says, “it is undoubtedly true that, where an insurance company is from any cause discharged from liability, responsibilit3r for the loss will not re-attach by waiver, without proof of authority,” etc.

The distinction between the two lines of cases is the time at which the acts alleged to prove waiver are done. Proofs of loss are acts to be done by the assured for the information of the insurer, and the stipulation for them, as said by Strong, J., in Inland Ins. and Dep. Co. v. Stauffer, 33 Pa. 404, is, “ at most, a condition precedent, not to the undertaking of the insurer, but to the right of action of the insured; ” and the cases agree that substantial compliance is all that is required. The result of the decisions may therefore be formulated in the following rule: If the insured, in good faith, and within the stipulated time, does what he plainly intends as a compliance with the requirements of his policy, good faith equally requires that the company shall promptly notify him of their objections, so as to give him the opportunity to obviate them; and mere silence may so mislead him to his disadvantage, to suppose the company satisfied, as to be of itself sufficient evidence of waiver by estoppel. But if without valid .reason he fails to comply with the requirements of his policy at all, or to do so within the stipulated time, then the liability of the company is discharged ; and mere silence, or investigation, or even negotiation, will not, in the words of Sharswood, J., in Beatty v. Insurance Co., “revivify the contract.” Nothing will do that short of an express agreement, or a change of position by the insured reasonably induced by the acts of the company, and to his disadvantage. Mere disappointment in the expectation of a settlement, even though such expectation be founded on the acts of the company, as in National Ins. Co. v. Brown, 128 Pa. 386, will not be enough.

All of the reported cases may not be easy to bring into entire conformity with this rule. They are very numerous, and sometimes are decided on their own very exceptional facts. But none of them depart far, if at all, in principle, from the rule; and such as may not be absolutely consistent in its application must be considered as accidental departures from the established general line.

The present case falls within the first branch of the rule. The proofs of loss were furnished within the prescribed time, and it was the duty of the company to give prompt notice of its objections, so that they might be obviated. It is argued that, as the proofs were received only three days prior to the end of the period limited, the plaintiff could not have remedied the defects in time, and therefore notice would have been useless. W e will not undertake to say, now, how far the strict limitation as to time may control the right to correct defects in proofs duly furnished. That case will be decided when it arises. Here the proofs were in time, and we need not speculate what the plaintiff might by diligence have done in the three days left to him. It is sufficient for this case that the company gave him no chance. The first and seventh assignments of error are not sustained.

The second and fourth errors complained of seem, at first sight, to come dangerously near transgressing the settled rule that offers of compromise are not admissible. But examination shows that the offer of settlement in this case was not admitted as evidence of plaintiff’s claim. Indeed, the fact of loss was not in dispute, nor its amount; and the evidence was admitted on the question of waiver, and was carefully limited to that in the charge. So regarded, it was free from error.

The other assignments raise three questions as to encumbrances not indorsed on the policy; first, was parol notice of the existing encumbrances, given before the issue of the policy, sufficient; secondly, was the condition against encumbrances broken by the entry of the subsequent judgment; and, thirdly, was the interest of the insured changed, or the hazard of the insurance increased, by the subsequent judgments? Bearing in mind that the jury have found that plaintiff, when applying for the insurance, informed the agent of the amount of encumbrances then existing, and that the company issued the policy with such knowledge, and further that, though the items of encumbranee were somewhat changed, the amount stated was never exceeded, this case bears so close a likeness to Kister v. Insurance Co., 128 Pa. 553, that it is not necessary to do more than refer to the opinion in that case to dispose of these questions.

There remains only the question of the agreement that the loss, if any, should be payable to Robinson & Son. The condition of the policy is, that, if it be assigned before a loss without the agreement of the company, it shall be void. But as such agreement is indorsed on the policy, the fact that the qualified assignment, such as it is, was made before the indorsement, even if proved, would be entirely immaterial. The indorsement by the company was a ratification, which is equivalent to prior consent.

Judgment affirmed.