Fidelity Phenix Ins. Co. of New York v. Vincent

• Decision Date: 29 May 1928
• Citation: 224 Ky. 769,7 S.W.2d 203
• Parties: FIDELITY PHENIX INS. CO. OF NEW YORK v. VINCENT.
• Court: Kentucky Court of Appeals

7 S.W.2d 203

224 Ky. 769

FIDELITY PHENIX INS. CO. OF NEW YORK v. VINCENT.

Court of Appeals of Kentucky

May 29, 1928

Appeal from Circuit Court, Edmonson County.

Action by G. R. Vincent against the Fidelity Phenix Insurance Company of New York. Judgment for the plaintiff, and the defendant appeals. Reversed and remanded, with directions.

Gordon & Laurent and T. M. Galphin, Jr., all of Louisville, and Logan & Vincent, of Brownsville, for appellant.

Milton Clark and Logan & McCombs, all of Brownsville, for appellee.

SANDIDGE C.

Appellant issued and delivered to appellee a fire insurance policy insuring a frame store building, fixtures, and stock of goods against loss by fire to a total amount of $2,600. The property insured was destroyed. This action was instituted to recover the full amount of the policy. There was a judgment for insured, and insurer appeals.

The proof of loss and other relative clauses of this insurance policy are so worded that failure to furnish proof of loss does not work a forfeiture of insurer's liability; but the furnishing of proof of loss is a condition precedent to the right to institute an action on the policy. Kenton Insurance Co. v. Downs, 90 Ky. 236, 13 S.W. 882, 12 Ky Law Rep. 115, is perhaps the outstanding opinion from this court on this question. See, also, Germania Insurance Co v. Ashby, 23 Ky. Law Rep. 1564, 65 S.W. 611, where the doctrine was succinctly written:

"Proof of loss is but a condition precedent to the action; it is not a condition upon which liability exists."

See, also, Kenton Insurance Co. v. Adkins, 12 Ky. Law Rep. 291; Ph nix Insurance Co. v. Creason, 14 Ky. Law Rep. 573; Am. Insurance Co. v. Heaverin, 16 Ky. Law Rep. 95; Orient Ins. Co. v. Clark, 22 Ky. Law Rep. 1066, 59 S.W. 863, 22 Ky. Law Rep. 1066; Continental Casualty Co. v. Waters, 30 Ky. Law Rep. 245, 97 S.W. 1103, 30 Ky. Law Rep. 243.

The distinction between the proof of loss clause of this policy and those of policies so worded that furnishing proof of loss must be held to be a condition precedent to liability was clearly defined in Standiford v. American Insurance Co., 208 Ky. 731, 271 S.W. 1042, which is perhaps the latest utterance of this court on the question. Hence the trial court properly sustained a general demurrer to the petition which failed to plead that insured had furnished proof of loss in conformity with the provisions of the policy. The amended petition cured the defect by pleading that, before the action was instituted, insured denied all liability, and thereby waived the proof of loss provision of the policy. Issue on this question was made by traverse of the allegations of the amended petition. This is the only issue made by the pleadings. It was admitted by appellee that he did not furnish proof of loss before instituting the action, and it was admitted by appellant that the property insured had been destroyed by fire, though it was denied that it was worth more than $500. Appellant sought to plead a defense under the iron safe and inventory clause of the policy, but this paragraph of the answer was wholly insufficient to constitute a defense, because it did nothing further than plead that the policy contained such a clause, which was quoted. It failed to plead any facts constituting a breach thereof. In this state of case the pleadings were not sufficient to constitute a waiver of the proof of loss provisions of the policy, within the rule written in Lancashire Insurance Co. v. Monroe, etc., 101 Ky. 12, 39 S.W. 434, 19 Ky. Law Rep. 204.

The question presented by the appeal then is: Was the evidence sufficient to establish that, before the action was instituted, appellant denied all liability, and hence waived the proof of loss provision of the policy? This court's careful consideration of the evidence has led to the conclusion that such is not the case. It cannot be said that, when an insurer declines to settle for a loss upon the ground that proof of loss had not been furnished, he thereby waives the provision of the contract that proof of loss must be furnished. The evidence of appellee himself, considered as a whole, establishes that appellant did nothing more than decline to settle this loss because appellee would not furnish proof of loss. On this question appellee testified that five days after the fire an adjuster for appellant visited the scene of the fire, and for what occurred his testimony is quoted:

"After he made himself acquainted with me, he demanded the invoice, and I said, 'I am sorry to say it is gone, too,' and he said, 'Do you mean to say it was burned?' and I said, 'Yes,' and he said, 'Where is your account file?' and I said, 'It was burned, too,' and he says, 'I am sorry to tell you, Mr. Vincent, but I can't pay it,' and I says, 'That is too bad, for I am going to lose about $1,800 besides the policy,' and I said, 'Is there no way that I can get this fixed?' and he said, 'I don't know; I will have to take it up with the company,' and I said, 'Can I write to the wholesale people and get the bills of goods that I have bought?' and he said, 'You could do that, but that would not show your sales.'

Q. And he refused to pay you and left? A. Yes, sir; and didn't pay me."

The statement, "I am sorry to tell you, Mr. Vincent, I can't pay it," which appellee says appellant's adjuster made to him on this occasion, standing alone, unexplained, would doubtless be sufficient to constitute a waiver of the proof of loss clause of the contract. What appellant said further upon his direct examination, as quoted, seems clearly to establish, however, that this was not a denial of liability upon the part of the company, but merely the adjuster's refusal to settle without being furnished some evidence by way of proof of loss as to the value of the property burned. That such is the case is established beyond question by the cross-examination of appellee as to the full conversation between him and appellant's adjuster on this occasion. It reads:

"Q. There was Mr. Crump came to see you, and you told him you didn't have any inventory? A. I told him I had lost it.

Q. You suggested to him that you might send to the wholesale houses and get the invoices, and he suggested that it would not show your sales, and that was true, wasn't it? A. Of course it was.

Q. Then you gave Mr. Crump no information about what you had in the store, but your word for it? A. At that moment I didn't.

Q. You told him you had a certain amount of goods but as to proving it by the invoice and a sales...