Clark Millinery Co., Inc. v. National Union Fire Ins. Co.

• Decision Date: 03 October 1912
• Citation: 75 S.E. 944,160 N.C. 130
• Parties: CLARK MILLINERY CO., Inc., v. NATIONAL UNION FIRE INS. CO.
• Court: North Carolina Supreme Court

75 S.E. 944

160 N.C. 130

CLARK MILLINERY CO., Inc., v. NATIONAL UNION FIRE INS. CO.

Supreme Court of North Carolina

October 3, 1912

Appeal from Superior Court, Wilson County; Justice, Judge.

Action by the Clark Millinery Company, Incorporated, against the National Union Fire Insurance Company. Judgment for plaintiff, and defendant appeals. Affirmed.

Where a fire insurance company through its adjuster denied all liability soon after the appraisers' award had been filed, it thereby waived a provision that suit should not be brought until a specified period had elapsed after the filing of satisfactory proofs of loss, or an award of appraisers when appraisal has been required.

This is an action brought in the superior court by the Millinery Company to recover on certain fire insurance policies issued to it by the defendants. The coplaintiff, F. S. Hassell, was appointed receiver of the Millinery Company, a corporation which had become insolvent, and made a party to the action at his own request. The property destroyed by fire was a stock of merchandise, consisting chiefly of millinery and notions and store furniture and fixtures. The parties agreed to submit to arbitration the ascertainment of "the sound value of said property and the loss and damage," and a certain method was prescribed for doing so. The agreement of reference to arbitrators contained what is called a "nonwaiver clause," by which it was stipulated that the submission and appraisement "shall not waive or invalidate any rights of either party to the agreement under the said policy or policies, or any provisions or conditions thereof." The arbitrators met and appointed an umpire as they were authorized to do by the terms of the submission and the three returned the following award:

"We, the undersigned, pursuant to the within appointment, do hereby certify that we have truly and conscientiously performed the duties assigned us in accordance with the foregoing stipulations, and have appraised and determined the actual cash value of said property on the -- day of --, 190--, and the actual loss and damages thereto by the fire which occurred on that day, to be as follows:

Sound Value. Loss and Damage.

On ............................ $6,039.53

On ............................ $4,872.62 $1,166.91

On furniture and fixtures ..... $ 460.80 $ 178.08

"Total amount of award, $4,872.62 and the damaged stock.

"Witness our hands this 10th day of March, 1910.

"Agree as to furniture and fixtures only.

"J. I. Thomason,

"Q. E. Rawls,

"Appraisers.

"J. T. Williams,

"Umpire."

The jury returned the following verdict:

"(1) Has there been an appraisal and award, as provided in the policies, as to the amount of damages to which plaintiff is entitled under the policies of insurance attached to the complaint? Answer: Yes (by consent).

"(2) Did the plaintiff bring this action within less than 60 days from the date of the making of the award by the appraisers? Answer: Yes (by consent).

"(3) Did Jordon S. Thomas, adjuster, subsequent to said award and while acting as representative of defendant companies, by words, acts, or conduct, deny all liability under said award? Answer: Yes.

"(4) Did more than one year elapse after the date of the award made by the appraisers and the date that the plaintiff F. S. Hassell, receiver of the Clark Millinery Company, was made a party to this action? Answer: Yes (by consent).

"(5) In what amount are the defendants indebted unto the plaintiffs by reason of the said fire and under the policies of insurance set forth in the complaint, and by virtue of the said award? Answer: Three thousand, four hundred and sixty-one dollars, and seventy-three cents, with interest from May 10, 1910, on stock, and (by consent) $178.08 damage to the furniture and fixtures, with interest from May 10, 1910.

"(6) What was the value of the insured property saved from the fire? Answer: $257."

The plaintiffs allege, in the seventh section of their complaint, that the fire occurred on the 1st day of January, 1910, and "practically destroyed the entire stock" of the Millinery Company, and this allegation is admitted in the answer. There was no dispute as to the insurance and award, so far as they related to the furniture and fixtures, and that matter is eliminated from the case.

The policies contained the following clauses:

"(1) The loss shall not be payable until sixty days after the notice, ascertainment, estimate and satisfactory proof of loss herein required have been received by this company, including an award by appraisers when appraisal has been required.

"(2) No suit or action on this policy for the recovery of any claim shall be sustainable in any court of law or equity until after full compliance by the insured of all the foregoing requirements, nor unless commenced within twelve (12) months next after the fire."

There was a judgment upon the verdict, and the defendant appealed, after reserving certain exceptions, to be hereafter noted.

Connor & Connor, of Wilson, for appellant.

Woodard & Hassell, of Wilson, for appellee.

WALKER J.

The defendants resist recovery upon three grounds.

First. That the action was prematurely brought. It was found by the jury that the company soon after the award was filed denied its liability thereunder, through its adjuster, and the finding is fully supported by the evidence. The adjuster, after examining the award, refused to allow the arbitrators to rearrange the figures and place them in their proper columns, and in reply to a request that he permit this change to be made, so that it might appear clearly what was intended, he said: "It is no good. I demand another appraisal. We are not liable for one cent under that award. You cannot hold us for one cent." This language was a strong and unequivocal denial of all liability, and made inapplicable the stipulation for the six weeks' extension of time for payment. That clause evidently refers to a proof of loss or an award, the validity of which and the correctness of the amount due thereunder are admitted. The agreement is that the company shall be allowed six weeks to pay, and not six weeks if it has refused to pay and denied liability. Why require plaintiff to wait six weeks to sue for a debt which is disputed, or, to put it in other words, to wait six weeks for payment, when the defendant has emphatically said that it will not pay at the end of the time? It was intended to be merely an extension of credit upon an admitted debt. And so are the authorities. It will be observed that the provision for an allowance of six weeks indulgence is the same as to proof of loss and the award, and we have held in Higson v. Insurance Co., 152 N.C. 206, 67 S.E. 509, that a denial of liability will dispense with proofs of loss, and to the same effect are the following cases: Gerringer v. Insurance Co., 133 N.C. 407, 45 S.E. 773; Jordan v. Insurance Co., 151 N.C. 341, 66 S.E. 206; Parker v. Insurance Co., 143 N.C. 339, 55 S.E. 717; Insurance Co. v. Edmundson, 104 Va. 486, 52 S.E. 350; 19 Cyc. 857, § 2, and other authorities cited in Higson v. Insurance Co., supra. In State Insurance Co. v. Maackens, 38 N. J. Law, at page 571, the same doctrine is stated, and supported by the citation of many cases: "A denial of all liability on the policy and peremptory refusal to pay under any circumstances is also a waiver of the right of the company to have the stipulated time before any suit is commenced. Upon such denial of liability, and refusal to pay, an action may be commenced at once. Norwich & N.Y. Trans. Co. v. Western Mass. Ins. Co. [Fed. Cas. No. 10,363] 6 Blatchf. C. C. R. 241; s. c., 34 Conn. 561 [Fed. Cas. No. 10,363]; Allgre v. Maryland Ins. Co., 6 Har. & J. [Md.] 408 ; Phillips v. Protection Ins. Co., 14 Mo. 220; Baltimore Fire Ins. Co. v. Loney, 20 Md. 20; Ætna Ins. Co. v. Maguire, 51 Ill. 342; Cobb v. Ins. Co., 11 Kan. 93." The court in Insurance Co. v. Gracey, 15 Colo. 70, 24 P. 577, 22 Am. St. Rep. 376, said that the clause was inserted to give the company an opportunity for making arrangements to pay the debt, and when liability is denied, since payment is in no event to be made, preparation therefor becomes a matter of no importance whatever. It therefore held that the condition was waived by the denial. The simple way to put it is that the clause has failed of its purpose. Time was allowed upon the assumption that the company would act in good faith and pay the claim, and not attempt to use the indulgence for the mere purpose of delay. What is said in Insurance Co. v. Cary, 83 Ill. 453, is still more to the point: "What reason can be assigned for extending to the company the benefit of the limitation clause in the policy as to the bringing of an action for a loss which its officers have decided upon full examination not to pay at any time nor under any circumstances? The time given in which to make payment of the loss was of no value to the company, for it did not intend to pay at all, and the assured was at liberty to bring her action at once." The same court said, in Insurance Co. v. Maguire, 51 Ill. 342: "The fair understanding of this condition of the policy seems to us to be that when the company agrees to pay the loss, or are undecided what they will do, no suit can be brought until after the expiration of sixty days from the time proof of loss is furnished, but it cannot apply, nor would it be just that it should, to a case where a company peremptorily refused to pay, as was this case."

The cases uniformly state that the object of this clause inserted for the sole benefit of the insurer, is to allow time for investigation in the case of the requirement as to proof of loss and of preparation in the case of an adjustment. Proofs would...