Barthelmas v. Fidelity-Phenix Fire Ins. Co.

• Decision Date: 10 April 1939
• Docket Number: No. 266.,266.
• Parties: BARTHELMAS v. FIDELITY-PHENIX FIRE INS. CO.
• Court: U.S. Court of Appeals — Second Circuit

103 F.2d 329 (1939)

BARTHELMAS v. FIDELITY-PHENIX FIRE INS. CO.

No. 266.

Circuit Court of Appeals, Second Circuit.

April 10, 1939.

Fenton, Wing & Morse, of Rutland, Vt., and Collins M. Graves, of Bennington, Vt., for appellant.

Joseph A. McNamara, of New York City, and Reuben Levin, of Manchester Depot, Vt., for appellee.

Before L. HAND, CHASE, and PATTERSON, Circuit Judges.

CHASE, Circuit Judge.

The defendant issued to the plaintiff a policy of insurance against loss by fire which covered certain personal property of the plaintiff in Bennington, Vermont, and was in force when that property was destroyed by fire on August 30, 1933. The loss as claimed not having been paid, the plaintiff brought suit on the policy against the defendant in the County Court for the County of Bennington, Vermont. The writ in that suit was dated August 29, 1934, and service of it upon the defendant was had on September 13, 1934. Issue was joined and the cause came on for trial at the December Term, 1934, of the above named court.

The policy contained a clause limiting the time within which any suit or action might be brought for the recovery of any claim under the policy to the period of twelve months next after the fire. Among the defenses pleaded by the defendant was one based upon this limitation clause in the policy. During the proceedings at the trial in the state court some question arose as to the right of the defendant so to plead specially after having entered a general appearance and a motion to strike it out was made. At the hearing upon the motion, the attorney for the defendant waived the special defense so pleaded and the motion was thereupon denied. The trial then continued until a motion was made by the defendant to dismiss the action for failure of the plaintiff to comply with a jurisdictional requirement of the Vermont statutes in respect to the filing of a return the character of which is of no present moment. The motion raised a point which was fatal to that action; was granted; and the suit was dismissed.

The present action was commenced by writ dated November 5, 1935, and served upon the defendant November 7, 1935. The plaintiff is a citizen of Vermont and the defendant is a New York corporation. Jurisdiction is based on diversity of citizenship and the requisite amount is involved. Among the defenses pleaded by the defendant is the above mentioned policy limitation upon the time within which suit might be brought. To this plea the plaintiff filed a replication alleging a waiver of the clause by reason of the previous waiver of a defense based upon the clause in the state suit. The court sustained the replication over the exception of the defendant and the cause went to trial by jury. A verdict for the plaintiff was returned upon which judgment was entered and this appeal followed in due course. The only errors now relied on by the appellant are those involved in, and traceable to, the sustaining of the plaintiff's replication to the special plea.

The policy limitation upon the time within which suit to enforce the defendant's obligations under it might be brought was reasonable and therefore valid. Schlitz v. Lowell Mutual Fire Ins. Co., 96 Vt. 334, 119 A. 516; Bates v. German Commercial Accident Co., 87 Vt. 128, 88 A. 532, Ann. Cas.1916C, 447. See, also, Riddlesbarger v. Hartford Fire Ins. Co., 7 Wall. 386, 19 L. Ed. 257. Unless the replication was properly sustained the delay in bringing suit on the policy is a complete defense to this suit. Wilson v. Aetna Ins. Co., 27 Vt. 99; Chichester v. New Hampshire Fire Ins. Co., 74 Conn. 510, 51 A. 545.

It is, however, only a contractual limitation and may be waived by the insurer. Bates v. German Commercial Accident Co., supra. And so the precise issue which controls on this appeal is whether or not the waiver of a defense based upon that clause in the state court action by the attorney for the defendant in charge of its defense therein is in legal effect a waiver by the defendant of the provisions of the clause itself; to the end that thereafter the policy should be construed as though there had been no such agreement of limitation at all. Perhaps it would be a bit more accurate to speak of what the defendant's attorney did in the state court action as the withdrawal of a special plea but it brings out the issue clearly to call it a waiver as it was there designated.

There is no doubt as to the authority of the defendant's attorney in the state court to take such action in respect to that suit as he determined to be proper and necessary in the defense of that action and in so doing he would bind his client. Barrows v. Wilson, 97 Vt. 26, 121 A. 440; Vail v. Conant, 15 Vt. 314. The client is bound thereby both during the trial, Raptis v. Alexander, 104 Vt. 203, 158 A. 73, and in a second trial of the...