Spare v. Home Mut. Ins. Co.

• Decision Date: 13 August 1883
• Citation: 17 F. 568
• Parties: SPARE v. HOME MUT. INS. CO.
• Court: U.S. District Court — District of Oregon

17 F. 568

SPARE v. HOME MUT. INS. CO.

United States Circuit Court, D. Oregon.

August 13, 1883

George H. Williams and W. Scott Beebe, for plaintiff.

Cyrus A. Dolph, for defendant.

DEADY J.

This suit is brought by a citizen of Oregon against a corporation formed under the laws of California, to reform a policy of insurance, and recover an alleged loss thereunder as reformed.

It appears from the bill that on July 26, 1881, Aaron and Ben Lurch were doing business as Lurch Bros., at Cottage Grove Oregon, and were the owners of a warehouse there of not less than $1,000 in value, and that at and before said date they were indebted to the plaintiff in a sum exceeding $1,000, and to secure him in the payment of the same it was agreed that they should insure the warehouse against loss by fire for the sum of $900 in their own names, for his benefit, and that, in pursuance of said agreement, it was agreed between Lurch Bros. and the defendant that the latter would insure said property accordingly; that on July 26, 1881, the defendant delivered to said Lurch Bros. its policy of insurance on said warehouse against loss by fire for the period of one year, in the sum of $900,-- describing it as 'his one-story frame warehouse occupied by the assured for the storage of grain only,'-- but that in the execution of the policy the plaintiff's name was by mistake inserted therein as the assured, instead of that of Lurch Bros., and the provision that the loss, if any, should be payable to the plaintiff was omitted therefrom; that on February 14, 1882, said warehouse was totally destroyed by fire, and on March 24th, thereafter Lurch Bros. furnished the defendant with the proof of loss and the same was duly adjusted by it at $900; and that the plaintiff was not aware of the mistake in the policy until after the loss, and Lurch Bros. have since assigned the same together with all their rights thereunder, to the plaintiff.

The defendant demurs to the bill, and for cause thereof alleges (1) that the suit is not brought within the 12 months limited therefor by the policy; (2) that the policy was void from its inception; (3) that the policy became void by the assignment thereof to the plaintiff contrary to its terms; (4) that the plaintiff is not the real party in interest; and (5) that the plaintiff is not entitled to any relief against the defendant.

The policy is annexed to the bill, and to understand the particular grounds of the demurrer some of its voluminous clauses must be stated; as, for instance: The assured shall give immediate notice and proof of any loss. Such loss is to be paid in 60 days after due notice and proof of the same. If the policy is assigned before or after a fire the same shall be void. 'That no suit for the recovery of any claim by virtue of this policy shall be sustained unless commenced within 12 months next after the loss shall have occurred; and should any such suit be commenced after the aforesaid 12 months, the lapse of time shall be taken as conclusive evidence against the validity of such claim.'

The bill in this case was filed on April 28, and the subpoena thereon was issued and served on May 1, 1883. By rule 6 of this court a party filing a bill must cause proper process to issue thereon, and endeavor to have the same served within 90 days from such filing, or it may be dismissed for want of prosecution on the motion of any defendant who has not voluntarily appeared thereto. Under this rule this suit was commenced when the bill was filed; and, for aught that has been shown, such was the effect of filing the bill without the rule. However, the bill was not filed until 14 months and 14 days after the fire occurred.

On the authority of adjudged cases (Davidson v. Phoenix Ins. Co. 4 Sawy. 594; Riddlesbarger v. Hartford Ins. Co. 7 Wall. 389; May, Ins. § 478) it is admitted by counsel for the plaintiff that this clause in the policy, limiting the time within which a suit may be commenced thereon against the defendant, is valid; but they contend that it must be read in connection with that other clause which provides that a loss does not become payable until 60 days after the proof of that fact is made; and that, taken together, the reasonable construction of them is that the right to sue on the policy being postponed until the loss is payable,-- namely, 60 days after proof thereof,-- the 12 months' limitation upon such right does not commence to run until that time. This construction is supported by the decided weight of authority, and in my judgment is correct on principle. Mayor, etc., v. Hamilton Fire Ins. Co. 39 N.Y. 45; Hay v. Star Fire Ins. Co. 77 N.Y. 241; Barber v. Fire & Marine Ins. Co., etc., 16 W.Va. 658, (S.C. 37 Amer.Rep. 800;) Chandler v. St. Paul F. & M. Ins. Co. 21 Minn. 85; Steen v. Niagara Fire Ins. Co. 89 N.Y. 315, (S.C. 42 Amer.Rep. 297;) May, Ins. Sec. 479.

The language of this policy is that of the defendant, and any ambiguity in its terms must be resolved against it. Taken literally, the clause limiting the time within which the defendant may be sued does provide that a suit on the policy must be commenced within 12 months after the loss has occurred; but the policy also provides that the loss is not payable until 60...