Buffalo Ins. Co. v. Star Photo Finishing Co., s. 44877

• Decision Date: 24 November 1969
• Docket Number: 44886,No. 1,Nos. 44877,s. 44877,1
• Citation: 172 S.E.2d 159,120 Ga.App. 697
• Parties: BUFFALO INSURANCE COMPANY v. STAR PHOTO FINISHING COMPANY. STAR PHOTO FINISHING COMPANY v. BUFFALO INSURANCE COMPANY
• Court: Georgia Court of Appeals

Page 159

172 S.E.2d 159

120 Ga.App. 697

BUFFALO INSURANCE COMPANY v. STAR PHOTO FINISHING COMPANY.

STAR PHOTO FINISHING COMPANY v. BUFFALO INSURANCE COMPANY.

Nos. 44877, 44886.

Court of Appeals of Georgia, Division No. 1.

Nov. 24, 1969.

Syllabus by the Court

1. (1) To be effective as a demand for payment of a loss under an insurance policy it must be made at a time when the insured was legally in position to demand immediate payment.

(b) Where proof of loss is not furnished within the time required by the policy provisions, a refusal to pay after expiration of that time will not operate as a waiver of proof of loss.

2. (a) Where demand is made upon an agent or adjuster upon whom the insured is entitled to make it and the agent or adjuster merely informs the insured that the demand must be referred to the company for consideration and action, this does not amount to a refusal to pay upon which a waiver or estoppel can be based.

(b) The policy requirement of written notice of loss to be given by the insured to the company is not met by a sending to the company of copies of investigation reports on the loss by an adjuster for another company having coverage.

(c) A company is not bound by notices or proofs of loss which its insured may deliver to an adjuster for another company having coverage on the same event, unless it appears that the insured delivered them to the adjuster in his capacity as agent and that it was done in reliance upon an apparent authority conferred upon him to receive them.

(d) The collection by the insurer of information concerning a loss on which it may have coverage, or an investigation of the circumstances does not work a waiver of policy requirements as to the giving of notice and the furnishing of proofs of loss.

(e) Although an insurer may have information indicating that the insured has suffered a loss under the policy, there is no duty on the insurer to notify the insured to give notice of the loss or to call upon him to furnish proofs of loss as required by the policy.

3. The insured is not excused from the giving of notice and the furnishing of proofs of loss as required by the policy provisions merely because he may have lost or misplaced his policy.

4. (a) Where the policy does not provide for a forfeiture upon failure to furnish proofs of loss within the sixty days required by its terms, yet unless the proofs are furnished at least sixty days before expiration of the twelve months during which a suit to recover for the loss may be filed, the insured is not in position to maintain the action.

(b) Absent a waiver, the furnishing of proofs of loss as required in the policy is a condition precedent to the accrual of liability for the loss and to the institution of an action to recover therefor.

(c) Where notice of the loss and proofs of loss are not given and furnished within the time required by policy provisions a refusal to pay subsequent to the expiration of the time-even an absolute refusal to pay-will not estop the company from setting up as a defense the failure of the insured to meet the policy requirements.

Star Photo Finishing Company had four locations where it carried a stock of merchandise insured agaisnt loss due to certain hazards under a Buffalo Insurance Company policy issued to Star through Lanier Haynie Insurance Agency for a term beginning September 28, 1962 and ending September 28, 1965 at high noon. It provided coverage up to 50 percent of the stated limits as a part of the 'total contributing insurance.' There was a similar policy issued by General Fire & Casualty Company for like amounts and upon identical terms providing coverage for the same period, issued through the same agency.

Each policy provided for an extension of coverage to newly acquired personal property, 'up to 10 percent of the limits of liability specified for Coverage B-Personal Property, but not exceeding $10,000, to cover business personal property acquired by the insured at any other location used by him for mercantile or warehouse purposes, within the territorial limits of this policy. This extension of coverage shall cease 30 days from the date of such acquisition, or on the date values of such acquisition are reported to the company, whichever first occurs. Additional premium for acquired locations shall be due and payable for values so reported computed from the date of such acquisition. This extension does not apply to property in transit.'

Star leased a fifth location and began placing merchandise (photo flash bulbs) in it. Lanier learned of this and telephoned Star asking for the values of merchandise in the new location, but Star did not report them, informing Lanier that it had decided to place the insurance with another agency and company. However, on the morning of September 28, 1963, at about 8 a.m., the roof of the new location fell in, due to faulty design and construction-a peril insured against.

Star filed proof of loss with General Fire & Casualty Company for the portion of the loss covered under its policy, but there was never any written notice from Star to Buffalo of the loss and no proof of loss was ever filed with it, although the policy provided that: 'The insured shall give immediate written notice to this company of any loss, * * * furnish a complete inventory of the destroyed, damaged and undamaged property, showing in detail quantities, costs, actual cash value and amount of the loss claimed; and within 60 days after the loss, unless such time is extended in writing by this company, the insured shall render to this company a proof of loss, signed and sworn to by the insured, stating the knowledge and belief of the insured as to the following: the time and origin of the loss, the interest of the insured and of all others in the property, the actual cash value on each item thereof and the loss thereto, all encumbrances thereon, and all other contracts of insurance, whether valid or not, covering any of said property, any changes in the title, use, occupation, location, possession or exposures of said property since the issuing of this policy * * tc.' (Emphasis supplied.)

There was further provision that: 'The amount of loss for which this company may be liable shall be payable sixty days after proof of loss, as herein provided, is received by the company and ascertainment of the loss is made either by agreement or between the insured and this company expressed in writing, or by the filing with this company of an award as herein provided.

'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 withis is months next after inception of the loss.' (Emphasis supplied.)

Plaintiff filed suit September 25, 1964, three days before expiration of the 12 months following the occasion of the loss, alleging that the policy had been lost and that it could not, therefore, attach a copy, but that demand for payment of the loss had been made on the company and that the company had refused to pay. By amendment it was alleged that Buffalo had intentionally concealed itself from the plaintiff and that the demand for payment of the loss was made about 11 months after it occurred and that the refusal was in bad faith. The testimony of plaintiff's attorney who made the demand was that it was made September 22, 1964-only three days before suit was filed, when he was informed by Buffalo's agent that his demand would have to be submitted to the company for its consideration.

Star asserts that Buffalo has been 'notified in writing' of the loss in that it received from an adjuster who was handling the claim of General Fire copies of letters and investigation reports made for General Fire, and that since Buffalo sent no forms for making of loss to it after getting the notice, there was a waiver of the requirement of proofs of loss.

Buffalo admitted that it learned of the loss some time between October 13, 1963, and December 16, 1963, when it received information from Mr. Charles Hurst, an adjuster who was handling the claim for General Fire, relative to a letter which Mr. Walter Calhoun, attorney for Star, had written to General Fire, and that it received from the adjuster a copy of an investigation report made to General Fire relative to the loss on November 13, 1963, but denied that it ever received proofs of loss or copies thereof which may have been made to General Fire by Star, and asserted that at the time it learned of the loss in this manner and received a copy of the adjuster's investigation report Buffalo had received no communication of any kind relative to the loss from Star and had received from it no notice of any claim which Star intended to make on account of the loss.

Motions for summary judgment were denied and the case was tried before a jury, which returned a verdict for the plaintiff.

Defendant, Buffalo, appeals from a denial of its motion for new trial and for judgment n.o.v., and plaintiff cross appeals from a pre-trial order limiting the liability under the policy to $5,000 and from the sustaining of a motion for directed verdict against the plaintiff on the issue of bad faith penalties and attorneys' fees.

Woodruff, Savell, Lane & Williams, Edward L. Savell, Atlanta, for Buffalo Ins. Co. Mitchell, Pate & Anderson, Taylor W. Jones, Clarence H. Calhoun, Atlanta, for Star Photo Finishing Co.

EBERHARDT, Judge.

1. All of the issues in both the appeal and the cross appeal can be disposed of by a ruling on the matter of whether the suit was maintainable, plaintiff not having given written notice of the loss ¹ and not having filed any proof of loss at any time prior thereto.

(a) Although plaintiff seeks to rely upon an oral demand ² made by its counsel upon a representative of the insurance company some three days prior to the filing of suit, and six days prior to the expiration of the...