Cullen v. Insurance Co. of North America

• Decision Date: 25 June 1907
• Citation: 126 Mo. App. 412,104 S.W. 117
• Parties: CULLEN v. INSURANCE CO. OF NORTH AMERICA.
• Court: Missouri Court of Appeals

104 S.W. 117

126 Mo. App. 412

CULLEN v. INSURANCE CO. OF NORTH AMERICA.

St. Louis Court of Appeals. Missouri.

June 25, 1907.

1. INSURANCE—FIRE INSURANCE—PROOF OF LOSS—WAIVER.

Where an adjuster of an insurer, within the time fixed for furnishing proofs of loss, stated that, unless the insured would accept a specified sum, no adjustment of the loss would be made, and the insured could sue on the policy, the right of the insurer to require proofs of loss was waived.

2. SAME—ADJUSTMENT OF LOSS BY ARBITRATORS.

A fire policy insuring a stock of merchandise stipulated for an arbitration in case of disagreement. The adjuster of the insurer stated that, unless insured would agree to accept a specified sum for the property totally destroyed, no adjustment would be made, and insured could sue on the policy. Held, that insurer was estopped from defeating an action on the policy by invoking the provision for arbitration.

3. EVIDENCE — ADMISSIONS — OFFER OF COMPROMISE.

In an action on a fire policy, evidence that, after the commencement of the action, an adjuster of the insurer offered to pay insured a specified sum in full on account of the policy, which offer was declined, was inadmissible because the offer was a proposition for a compromise, and its admissibility could not be sustained on the theory that it showed a waiver of a failure to furnish proofs of loss and to submit the controversy to arbitration.

4. APPEAL—HARMLESS ERROR—ADMISSION OF EVIDENCE.

Where, in an action on a fire policy, the amount of the loss was one of the principal issues in the case, the error in permitting insured to show that an adjuster of the insurer offered to pay a specified sum in settlement of the claim was prejudicial.

Appeal from Circuit Court, Audrain County; Jas. D. Barnett, Judge.

Action by P. H. Cullen against the Insurance Company of North America. From a judgment for plaintiff, defendant appeals. Reversed and remanded.

Chas. Obermeyer and George Robertson, for appellant. P. H. Cullen and Barclay, Shields & Fauntleroy, for respondent.

NORTONI, J.

The suit is on a policy of insurance against loss or damage by fire. S. J. Rosenthal is the insured in the policy sued upon. After loss, and prior to the institution of this suit, he assigned the policy to the plaintiff for value, and the suit is prosecuted by Mr. Cullen as the party in interest under this assignment. The view which the court entertains of the case will render it unnecessary to notice all of the many questions presented in the briefs. Two of those questions only will be discussed. The record is extended, and so much of the material facts as are relevant to those two questions only will be set out. The insured, Rosenthal, owned a retail store at 2137 Franklin avenue, in the city of St. Louis, in which was contained a stock of gents' furnishings, shoes, etc., said to be of the value, at the time of the fire, of from $13,000 to $14,000. On April 1, 1905, the defendant insurance company issued to the plaintiff the policy sued upon for $1,000, covering on stock for one year from that date, whereby it undertook to indemnify him for any loss or damage by fire during the period mentioned. There were 10 other policies of $1,000 each, covering on the same stock. On May 9, 1905, a loss occurred. Some of the goods were totally destroyed, and others greatly damaged by fire and water thrown thereon by the fire department. Rosenthal employed Mr. Mangson, an independent adjuster, to look after his interest in settling the loss with the several companies involved. No settlement was reached, however, inasmuch as the negotiations seem to have terminated unpleasantly. Rosenthal and his witnesses say that the defendant's adjuster became unreasonable and arbitrarily demanded he agree to accept $100 for his goods totally destroyed, and, if he would not agree to this, no further negotiations looking to an amicable settlement would be entertained by the defendant company; he could proceed to sue, etc.; that the adjuster abused him, etc., and because Mr. Mangson, his personal adjuster, failed to combat the company's adjuster in this onslaught, he thereupon discharged Mr. Mangson, took the policies out of his hands, and employed counsel to commence this suit. The policy sued upon contains the usual clause requiring the insured to render proof of loss to the company within 60 days after the fire, and also the usual stipulation with respect to arbitration in event the parties fail to agree upon the amount of loss sustained. Two of the principal defenses relied upon in the defendant's answer are the alleged failure of the insured to comply with either of these provisions of the policy. The proposition advanced and relied upon by the plaintiff to escape these stipulations in the policy and sustain the action is that the company, by the acts and conduct of its adjuster, Mr. Crandall, waived both of these provisions. Therefore this matter and the facts relied upon as tending to prove such waiver will be first considered.

Notice of the loss having been duly received by the defendant, Mr. Crandall, its adjusting agent, and two other adjusters, Whittimore and Mattison, for other companies interested, as well as Mr. Mangson, the adjuster for Rosenthal, met at the store on the morning of May 19th to examine and negotiate with respect to a settlement. As said before, some of the goods were totally destroyed; others were damaged. The adjusters looked over the store, and Mr. Crandall, for defendant, inquired of Rosenthal what he estimated his loss to be on such goods as were totally destroyed; that is, such goods referred to in the evidence as being "entirely out of sight." Rosenthal answered he could not say, but from what he saw, and his clerks said, he thought the amount of the goods totally destroyed amounted to something between $2,000 and $4,000. Whereupon Mr. Crandall answered, in substance, that such a statement was absurd; that there was not over $5 worth of goods totally destroyed. Whereupon, according to the evidence of Mr. Rosenthal and his several clerks who were present, Mr. Crandall said Rosenthal was a fraud, a scoundrel, and a liar, to which Rosenthal answered: "You do not know me. You have no right to call me that. I have been in St. Louis all my life, and my reputation stands good, and you have no right to call me those names." Crandall insisted that he would not give but $5 for the entire loss on goods totally destroyed, and that, before he would take up the loss at all on the goods damaged, they must first reach an agreement with respect to those totally destroyed and "out of sight." Rosenthal said: "I told him it is unreasonable. Gentlemen, you can see from the pile of burned stuff what I say is reasonable. Why, just a couple of shirts would be worth $5." Whereupon he said Crandall told him that, unless he fixed on the amount he was willing to accept for the totally destroyed goods first, and fix that amount "damned low, too," they would decline to proceed in the adjustment. "And they wouldn't take up my loss unless I agreed the totally destroyed goods was $5. Afterwards I got excited. They went back to the corner of the store and had a consultation among themselves. They came back and told me: `Rosenthal, we have decided to give you $100 for the total lost goods, and if you refuse to accept that, we won't give you anything. You can go ahead and do whatever you please.'" Rosenthal and his adjuster Mr. Mangson, suggested that they, together with Crandall and the others, go over the matter and make up a list of such goods as were totally destroyed. Mr. Crandall and the other adjusters declined to participate in this, and said: "We don't settle losses of that kind. We don't settle without going to litigation losses of that kind unless we have to, and in this case, if you don't want to do it, go ahead and do whatever you please. Go ahead and do what you want. We will see you don't get your money in four or five years." Mr Crandall said: "Go ahead, you can't bluff us. It will take you years before you can get a dollar out of it." And further, that unless Rosenthal agreed first to accept $100 for the goods totally destroyed and "out of sight," they would quit the matter right there, and he could proceed to sue on the policies, or do as he pleased. They would see he did not get the money for several years. The defendant's adjuster having thus arbitrarily asserted that, unless Rosenthal would agree first to accept $100 for his goods totally destroyed, no adjustment would be made, and he could sue on the policy, and the company would see he did not get his money for several years, Mr. Rosenthal very properly placed the matter in the hands of his attorney.

This having occurred within the time for furnishing proofs, we entertain no doubt upon the proposition that such conduct on the part of the adjuster, if true, and the jury found it to be so on conflicting evidence, amounted in law to a waiver of the provision of the policy requiring the insured to furnish proofs of loss within 60 days after the fire. It is well settled that a denial of liability on the policy, or any act or conduct on the part of the insurer making it apparent that the furnishing of proofs would be an unnecessary and nugatory formality, amounts to a waiver thereof. The principle of law involved is said to be that need not be done which it appears from the position assumed by the insurer will be unnecessary. Phoenix Ins. Co. v. Center, 31 S. W. 446, 10 Tex. Civ. App. 535; Siegle & Son v. Phœnix Ins. Co., 107 Mo. App. 456, 81 S. W. 637; Vining v. Franklin Ins. Co., 89 Mo. App. 311; Seigle & Son v. Badger Lumber Co., 106 Mo. App. 110, 80 S. W. 4; 13 Amer. & Eng. Ency. Law (2d Ed.) 345; 2 May on Ins. (4th Ed.) § 469; Ostrander on Ins. (2d Ed.) §§ 223-352. While what was said by the adjuster here may not have been a denial of liability in express terms, and may not have been precisely tantamount to that in law, it...