Selden v. Metropolitan Life Insurance

In my opinion the averments of the plaintiff's statement of claim, which must necessarily be taken as true in the procedural situation in which the judgment appealed from was entered, disclose a condition which was sufficient in law to excuse the beneficiary from her failure to file a proof of loss under the policy within the period prescribed therein, viz., ninety days from the date of the insured's death. Although the ninety-day period had expired, the beneficiary had areasonable time after her discovery of the existence of the policy (theretofore unknown to her, admittedly through no fault of her own) within which to file such proof. See Couch, Cyclopedia of Insurance Law, Vol. 7, § 1538k, pp. 5478 et seq. Consequently, when the reasonable time for the filing of a proof of loss, in the exculpatory circumstances here present, had expired, the beneficiary by the terms of the policy had two years within which to institute a suit upon the policy.

The question, therefore, presented by this case is not whether the beneficiary's suit (not having been filed within two years and ninety days of the insured's death) was filed out of time but whether it was not filed timely, having been filed "within two years from the expiration of the time within which proof of loss is required by the policy", i. e., within two years of the discovery of the policy and a reasonable time thereafter because of the situation here shown.¹

The limitation which remains constant and applies in all cases alike under policies of the form here involved is thetwo-year period for the bringing of suit thereon. That period never varies. And, it begins to run ". . . from the expiration of the time within which proof of loss is required by the policy". That time, in cases such as the facts here reveal, is when the existence of the policy first becomes, or should have become, known to the one entitled to assert a claim under it. If that is after the ninety-day period prescribed by the policy, the beneficiary has yet a reasonable time after the discovery of the policy within which to file the required proof. Thus, the thing that may vary, for cause shown, is "the expiration of the time within which proof of loss is required by the policy".

Any other construction would produce harsh and unjust results and a lack of uniformity in operation. For example, suppose a case where, through no fault whatsoever of a beneficiary or the deceased insured's legal representative, a policy was not discovered until two years and four months after the insured's death. Under the ruling of the majority, a recovery would be absolutely barred in such instance notwithstanding that under the policy the beneficiary had "two years" from the expiration of the time for filing proof and, in the circumstances supposed, proof could be filed within a reasonable time following the discovery of the policy: see Couch, loc. cit. supra. Or, suppose a case where the existence of the policy, under like circumstances, was unknown to the beneficiary or the deceased insured's legal representative until two years and two months after the insured's death. Even then recovery would not be possible although the two years and ninety days (stressed by the majority opinion as crucial) had not expired. That would necessarily follow, for under further terms of the policy, suit may not in any event be instituted until sixty days after thefiling of proof. So that, in the instance last supposed, although the policy had been found a month before two years and ninety days had elapsed, suit could not be instituted for another sixty days, thus making in all two years and four months after the insured's death, and, hence, out of time under the holding of the majority opinion.

The illustrations just supposed are all the more startling where, as in the present instance, the company actually knew within no more than seven weeks of the insured's death that the policy was then an extant matured liability of its own. On February 18, 1942, the defendant had received and accepted from the deceased insured's personal representative due proof of loss (for the insured's accidental death) under an exactly similar policy issued by the defendant in favor of the insured's estate. In my opinion, the failure of the defendant to inform the deceased insured's personal representative or the beneficiary of the existence of the like policy, now in suit, amounted to nothing less than fraudulent concealment sufficient to debar the defendant from pleading technical defenses and to require that the claim under the policy be heard on its merits.

Technical defenses, which arise out of a convention of parties, require good faith at all times of the one attempting to plead them as does also the assertion of all contract rights and liabilities: see Paul v. Paul, 266 Pa. 241, 245,109 A. 674; cf. also Ad-Lee Company v. Meyer, 294 Pa. 498, 502,144 A. 540; Walcofski v. Lehigh Valley Coal Co., 278 Pa. 84, 88,122 A. 238. A right cannot arise out of the fraudulent performance of a condition of the contract upon which the right of action depends: Fisher v. Saylor, 78 Pa. 84, 87. No one is permitted to take advantage of his own wrong. What, then, was the wrong perpetrated by the defendant? Simply this: when the insurance company accepted due and timely proof of the insured's accidental death and paid the policy in favor of the insured's estate, it then well knew (nor will it be denied that it knew) that it had issued another like policy on the insured's life at approximately the same time in favor of the insured's mother as the beneficiary. Yet, judging from the purely technical defense which it has interposed in this case, the insurance company stood by mute, apparently hoping that that policy would never be known to the beneficiary or the insured's personal representative.

A sufficient proof of loss for the insured's accidental death having been filed on the known policy, a further proof on the other like policy with the same company was not actually necessary: Girard Life Insurance, etc., v. Mutual LifeInsurance Company of New York, 97 Pa. 15; Telesky v. FidelityGuaranty Fire Corporation, 140 Pa. Super. 457,13 A.2d 899. But, to use that legal circumstance, as did the court below to start the running of the two-year limitation on theunknown policy does violence to the plaintiff's rights. The proof first filed was not filed in behalf of the beneficiary's then unknown right under the undiscovered policy. The proof so filed could not have become a substituted proof under the unknown policy at least until it had been discovered and its existence thus made known to the beneficiary. The law does not bind one fictitiously with action which there was neither duty nor occasion to take in the circumstances.

The one important question in this litigation is the question of fact as to whether the beneficiary's failure to discover the policy in her favor until February 22, 1943, was excusable. That question, the defendant has never yet put in issue. I should, accordingly, reverse and send the case back for a trial on its merits if the defendant sees fit to put in an affidavit of defense on the merits.

Mr. Justice PATTERSON joins in this dissent.

¹ The policy was found on February 22, 1943. The ninety-day period for the filing of proof of loss in ordinary course had then expired. The insured had died from accidental cause on December 31, 1941. But, within a day of the finding of the policy, viz., on February 23, 1943, the beneficiary requested the defendant to furnish her with proof of loss forms which, by letter of March 8, 1943, the defendant refused to do. None the less, on March 19, 1943, the plaintiff furnished the defendant with written proof covering the occurrence, character and extent of the loss for which she made claim under the policy. The defendant having refused to pay the policy, the instant suit on the policy was entered on September 8, 1944.