Buchanan v. Switzerland General Ins. Co.

• Decision Date: 29 May 1969
• Docket Number: No. 39674,39674
• Citation: 76 Wn.2d 100,455 P.2d 344
• Court: Washington Supreme Court
• Parties: L. L. BUCHANAN, Appellant, v. SWITZERLAND GENERAL INSURANCE COMPANY, Limited, a corporation, Respondent.

Page 100

76 Wn.2d 100

455 P.2d 344

L. L. BUCHANAN, Appellant, v. SWITZERLAND GENERAL INSURANCE COMPANY, Limited, a corporation, Respondent.

No. 39674.

Supreme Court of Washington, Department 2.

May 29, 1969.

Kenneth C. Hawkins, Yakima, for appellant.

Lane, Powell, Moss & Miller, Hartley Paul, Seattle, for respondent.

HAMILTON, Judge.

Appellant (plaintiff) initiated this action against respondent (defendant) seeking to recover upon fire insurance coverage issued by respondent with respect to a building owned by appellant which had partially burned. Trial was commenced before a jury and, at the conclusion of appellant's case in chief, the trial court dismissed the action upon respondent's motion challenging the sufficiency of the evidence.

During the course of appellant's case, it was admitted that appellant failed to timely submit a sworn proof-of-loss statement as required by the provisions of the applicable insurance coverage. The predominant question framed and posed upon appeal is, therefore, whether appellant's evidence was sufficient in quality and quantum to give rise to a jury question as to whether respondent, by virtue of statements and/or acts of its adjuster, waived or was estopped to assert the pertinent provisions requiring submission of a proof-of-loss statement.

We summarize the significant circumstances revealed by the evidence, bearing in mind that appellant, upon respondent's challenge to the sufficiency of his evidence, is entitled to have his evidence, and all reasonable inferences therefrom, interpreted in a light most favorable to him. Wetherbee v. Gary, 62 Wash.2d 123, 381 P.2d 237 (1963).

Appellant, a resident of Yakima County, Washington, is the owner of a two-story building and the property upon which it is situated in Seattle, King County, Washington. The bulk of the floor space in the building is leased by Draper Engine Works Co., a machine shop operation, with appellant reserving a limited portion of the ground floor as a terminal office for a freight line company owned and operated by him.

In May, 1962, appellant insured the building against fire with respondent. ¹ On February 3 or 4, 1964, a fire occurred in the building, resulting in substantial reconstruction costs to appellant. At the time of the fire appellant was in Canada and did not learn of the incident until his return to his home in Yakima 4 or 5 days later.

In the meantime, respondent, through its general agent in Seattle, was notified of the occurrence and engaged the services of an independent adjuster, ² who promptly visited the damaged premises. Because the work of the Draper Engine Works Co. was hampered by the fact that the front windows of the building had been broken and some of the electrical wiring impaired during the fire, a representative of the Draper Company and respondent's adjuster agreed that the windows should be replaced and the electrical wiring repaired immediately. This was then ordered at an expense of several hundred dollars to appellant, and the work substantially completed by the time appellant reached Seattle after his return from Canada and first met the adjuster. The representative of the Draper Company testified he would not have ordered this work done had not respondent's adjuster, authorized it.

Although appellant stated he would rather have foregone repairing the building in order to convert his property into a parking facility, he further stated that because of the partial restoration work undertaken in his absence he felt impelled to continue with reconstruction.

On appellant's second visit to the premises, he was met by and consulted with his tenant, respondent's adjuster, and a building contractor. At this time, the building contractor gave him a rough estimate of the cost of basic restoration, the adjuster indicated that he felt the insurance coverage would protect appellant, and the building contractor was then directed to proceed. This added reconstruction was ultimately accomplished for $26,409.32, plus some extra miscellaneous expense, all of which appellant paid. When asked about the necessity of proofs of loss, the adjuster, according to appellant, told him he, the adjuster, or a firm he would engage for that purpose, would take care of that aspect of the matter.

Following this second meeting, respondent's adjuster employed the services of an appraiser. Based upon the appraiser's figures and upon the repair estimates, the adjuster, on March 5, 1964, wrote to appellant as follows:

We now have an appraisal on your property which was compiled by Hugh A. Thompson, who is a senior member of the American Society of Appraisers. Mr. Thompson was with the General Appraisal co. of Seattle as a senior professional fee appraiser. He has been with them for 10 years and we are quite sure you will find him qualified.

We also have a very detailed estimate of repairs from C. M. Melburn Co. There are a few areas which we believe require some further discussion between the writer and yourself.

If you will kindly let me know when you anticipate being in Seattle, I will arrange my time accordingly and we can then sit down and go over your claim and try to reach a proper conclusion.

Thereafter, on March 12, 1964, appellant met with the adjuster in Seattle. On March 17, 1964, the adjuster informed respondent's general agent in Seattle by letter of the results of that meeting, as follows:

We wish to bring you up to date with regard to the above fire loss.

We discussed this matter with Mr. Buchanan, at his Seattle office, on March 12, 1964.

As you know we have an appraisal on the insured building which indicates that there was an insurable value, based upon replacement of $161,268.00. The Sound Value was estimated at $61,262.00. Mr. Buchanan was given an opportunity to review the appraisal. The Assured disagrees with us as to the replacement cost.

Mr. Buchanan requested that we give him the formula which we proposed using in settlement of his claim. This formula would be approximately 25 over 161 60,000.

The Assured stated that he had discussed this matter with his attorney and was advised that he had nothing to worry about. We offered to communicate with his attorney and furnish him with copies of the appraisal, forms, etc., but Mr. Buchanan did not wish to incur this additional expense.

The Assured now advises that he will ask for an appraisal as provided by the policy contract.

We will keep you advised of further developments.

On this same date, the adjuster testified he dicated and had mailed to appellant a letter enclosing a copy or copies of the appraisal and three blank proof-of-loss forms. Appellant denies receiving any blank forms, steadfastly maintaining that the adjuster assured him throughout that it was unnecessary for him to furnish such proofs since the adjuster, or a firm engaged by him, had or would fill out and submit the necessary proofs of loss. It does not appear that any further correspondence or communication occurred between appellant and the adjuster, although restoration work and quotations therefor continued for several months, and beyond the 60-day period specified by the policy provisions for submission of proof of loss. In the meantime, on April 29, 1964, some 24 days after the 60-day period, the adjuster wrote respondent's general agent that he was awaiting appellant's appraisal.

At the conclusion of the reconstruction work, appellant initiated this action, he then being dissatisfied with the $8,000 to $9,000 figure which he felt had been offered by the adjuster in settlement of his claim through the formula stated on March 12, 1964.

In support of his contention that the evidence gave rise to a jury question upon the issue of whether respondent, through the acts and/or statements of its adjuster, waived, or was estopped from asserting the pertinent policy provisions requiring a sworn proof of loss, appellant points to the evidence indicating that (a) the adjuster, without appellant's knowledge or acquiescence, authorized the initial window and electrical repairs; (b) the adjuster was present and, by his assurances to appellant that he was protected, tacitly if not directly approved appellant's direction that the contractor proceed with restoration work; (c) the adjuster advised appellant that it would be unnecessary for him to fill out any proof-of-loss statement; and (d) the adjuster was authorized by respondent to engage the services of an appraiser, submit proofs of loss on behalf of insureds, negotiate with insureds, and to compromise and settle claims.

Respondent, on the other hand, predicates its argument in support of the trial court's order of dismissal principally upon two premises. Respondent contends, first, that under our statutory and case law an independent adjuster is, absent proof to the contrary, without authority to effect a waiver by or an estoppel of his principal, the insurer; and, second, that appellant's evidence emanates solely from extrajudicial statements and/or acts of the adjuster; hence is incompetent under the rule that the scope of an agent's authority cannot be established by declarations or acts of the agent in the absence of the principal. Thus, respondent argues, appellant's evidence fails to show that the adjuster possessed any authority whatsoever to waive policy provisions relating to proofs of loss or to otherwise estop respondent from now asserting such provisions.

The trial court, in dismissing appellant's cause, adopted respondent's view. We are inclined to disagree.

The pertinent provisions of the insurance coverage here involved are standard in form, and read:

The insured shall give immediate written notice to this Company of any loss, protect the property from further damage, forthwith separate the damaged and undamaged personal property, put it in the best possible order, furnish a complete inventory of the destroyed, damaged and undamaged property, showing in detail quantities, costs,...