Bell v. Quaker City Fire & Marine Ins. Co., Philadelphia

• Decision Date: 21 March 1962
• Parties: George BELL and Dawn Bell, Respondents, v. QUAKER CITY FIRE & MARINE INSURANCE COMPANY, PHILADELPHIA (also known as Quaker City Insurance Company), Appellant.
• Court: Oregon Supreme Court

Page 219

370 P.2d 219

230 Or. 615

George BELL and Dawn Bell, Respondents, v. QUAKER CITY FIRE & MARINE INSURANCE COMPANY, PHILADELPHIA (also known as Quaker City Insurance Company), Appellant.

Supreme Court of Oregon, Department 2.

Argued and Submitted Jan. 10, 1962.

Decided March 21, 1962.

Karl Clinkinbeard, Medford, argued the cause for appellant. On the brief were Haviland & Clinkinbeard, Medford.

Ben Day, Medford, argued the cause for respondents. On the brief were Day & Courtright, Medford.

Before McALLISTER, C. J., and SLOAN, O'CONNELL, GOODWIN and LUSK, JJ.

LUSK, Justice.

This is an action on a policy of fire insurance. In a jury trial plaintiffs had a verdict and the defendant insurance company has appealed from the ensuing judgment.

There are a number of assignments of error, but in the view we take of the case, the assignment directed to the court's denial of the defendant's motion for involuntary nonsuit on the ground that the action is barred by the statute of limitations, is the only one that calls for discussion. We think that the motion should have been allowed.

ORS 744.100 prescribes certain provisions which a standard fire insurance policy on property in this state must contain, among them the following:

'No suit or action on this policy for the recovery of any claim shall be sustainable in any court of law or equity unless all the requirements of this policy shall have been complied with, and unless commenced within 12 months next after inception of the loss.'

The policy sued on contained such a provision.

The question is whether this action was commenced 'within 12 months next after inception of the loss.' The fire occurred on October 11, 1957, and the complaint was filed on October 10, 1958, and summons delivered to the sheriff on October 20, 1958. Service of complaint and summons was not made on the defendant until December 16, 1958.

ORS 12.020 provides:

'For the purpose of determining whether an action has been commenced within the time limited, an action shall be deemed commenced as to each defendant, when the complaint is filed, and the summons served on him, or on a codefendant who is a joint contractor, or otherwise united in interest with him.'

ORS 12.030 provides:

'An attempt to commence an action shall be deemed equivalent to the commencement thereof, within the meaning of this chapter, when the complaint is filed, and the summons delivered, with the intent that it be actually served, to the sheriff or other officer of the county in which the defendants or one of them usually or last resided; or if a corporation be defendant, to the sheriff or other officer of the county in which such corporation was established by law, or where its general business was transacted, or where it kept an office for the transaction of business. But such an attempt shall be followed by the first publication of the summons, or the service thereof, within sixty days.'

If these sections govern the case and if the twelve-months' period began to run from the date of the fire the action is barred, for in that event it would not have been commenced until 12 months and 64 days after the fire.

The plaintiffs contend that the action was commenced on the day the complaint was filed (which was one day before the expiration of the statutory 12-months' period) and that the governing statute is ORS 15.020, which provides:

'Action shall be commenced by filing a complaint with the clerk of the court. Any time after the action is commenced the plaintiff or his attorney may issue as many original summonses as either may elect and deliver one of such summonses to the sheriff of each county in which service on any defendant is desired.'

Under this section the filing of the complaint is the commencement of an action for all purposes except determining the running of the statute of limitations. Matlock v. Matlock, 87 Or. 307, 170 P. 528, and cases there cited. But the plaintiffs argue that the present case falls within the rule of such decisions as Schulmerich v. First National Bank, 220 Or. 528, 349 P.2d 849; Nickerson v. Mecklem, 169 Or. 270, 272, 126 P.2d 1095; Shea v. Graves, 142 Or. 503, 509, 19 P.2d 406; and Burns v. White Swan Mining Co., 35 Or. 305, 310, 312, 57 P. 637. The holdings of these cases is thus summarized in Schulmerich v. First National Bank, supra (a will contest), 220 Or. at 531, 349 P.2d at 851:

'The general statutes of limitations, ch. 12 of ORS are intended only to apply to common law rights of action. They do not affect a special statutory proceeding which sets up its own limitation as has the probate code pertaining to will contests. * * *'

Nickerson v. Mecklem was a suit to enforce a provision of the corrup practices act; Burns v. White Swan Mining Co., a suit to foreclose a miner's lien; and Shea v. Graves a suit to foreclose a mechanic's lien. Peters et al. v. McKay et al., 195 Or. 412, 238 P.2d 225, 246 P.2d 535, another case cited by the plaintiffs, was an action to recover escheated property. The action was brought against the state under a consent statute and it was held that '[n]one of the periods of limitation specified in Title 1, chapter 2 [O.C.L.A.], relating to limitation of actions, refer to the time within which an action may be brought against the state.' 195 Or. at 423, 238 P.2d at 230, Title 1, chapter 2, O.C.L.A. is now ORS, Title 2, chapter 12.

These decisions are not apposite because this is neither an action against the state nor one to vindicate a right created by statute, but a common law action to recover money under a contract. The right would have existed had there been no statute. The legislature, in the exercise of its power to regulate the business of insurance has, by the enactment of ORS 744.100, prescribed certain provisions which shall be included in every contract of fire insurance, among them the 12-months' limitation period for bringing an action on such a contract. It has limited an insurance company's right to contract, but it has not undertaken either to create a right or provide a remedy. If no special statute of limitations had been prescribed, the case would be governed by ORS 12.080, which fixes a six-year limitation for bringing an action on a contract. Nor is ORS, Title 2, chapter 12, any the less applicable to the present case because of the special limitation governing the time for suing on a contract of fire insurance, for ORS 12.010 provides:

'Actions at law shall only be commenced within the periods prescribed in this chapter, after the cause of action shall have accrued, except where a different limitation is prescribed by statute. * * *' (Italics added.)

In effect, the legislature has amended ORS 12.080 and the case is no different than if the limitation with respect to insurance contracts had been added to that section by way of exception or proviso.

We think, therefore, that the commencement of the action in this case is determined, not by ORS 15.020, but by ORS 12.020 and 12.030. Under the latter section an attempt to commence an action is deemed equivalent to the commencement thereof, but such an attempt, to be effective, must be followed by service of the summons within 60 days after filing the complaint. When, as here, more than 60 days have elapsed after the filing of the complaint before such service and in the meantime the period of limitation has run, the action is barred. Lang v. Hill, 226 Or. 371, 360 P.2d 316; Dutro v. Ladd, 50 Or. 120, 91 P. 459.

The plaintiffs insist, however, that, even though ORS 12.020 and 12.030 govern the case, still the action was commenced in time. They rely upon the language of ORS 744.100 that the action must be 'commenced within 12 months next after inception of the loss.' (Italics added.) That event is asserted to have occurred on February 13, 1958, when defendant mailed to the plaintiffs, after the latter had submitted proofs of loss, a letter rejecting their claim and declaring the policy to be void. Service of summons and complaint on the defendant was made within less than 12 months after February 13, 1958, and so, if plaintiffs' construction of the words 'after inception of the loss,' is correct, they were within time.

The argument for that construction proceeds in this wise: In Egan v. Oakland Insurance Co., 29 Or. 403, 42 P. 990, 54 Am.St.Rep. 798, the court construed a provision of a fire insurance policy reading:

'* * * No suit or action on this policy for the recovery of any claim shall be sustained * * * unless commenced within 6 months next after the fire shall have occurred. * * *' 29 Or. at 404, 42 P. at 991.

The court held that this provision should be given effect according to its plain and unambiguous meaning and declined to approve the decisions of some of the courts which assumed that there is no material difference between the phrase 'after the fire' and 'after the loss' or language similar thereto. The court pointed out that, while some courts had construed such phrases as 'after the loss' to mean 'that the limitation shall be computed from the time the amount of the loss is ascertained and payable, and the assured's right to bring an action accrues, and not from the time of the happening of the loss * * *', other courts of equal weight and respectability had construed those phrases to mean 'that the assured's right of action must be computed from the date of the happening of the loss, and not from the time the insurer is required to pay.' 29 Or. at 405, 406, 42 P. at 991. One of the cases referred to in which the court had assimilated 'after the fire' to 'after the loss' was Steel v. Phoenix Insurance Company, 51 F. 715, a decision of the Circuit Court of Appeals for the Ninth Circuit (aff. 154 U.S. 518, 14 S.Ct. 1153, 38 L.Ed. 1064). According to the argument on behalf of the plaintiffs, the change in the language of the statute from 'fire' to 'loss' (as the brief puts it) has brought the Oregon law under the rule of the Phoenix Insurance...