Gill v. Manhattan Life Ins. Co.

• Decision Date: 27 March 1907
• Docket Number: Civil 1001
• Parties: LILLIE G. GILL, Plaintiff and Appellant, v. MANHATTAN LIFE INSURANCE COMPANY, Defendant and Appellee
• Court: Arizona Supreme Court

95 P. 89

11 Ariz. 232

LILLIE G. GILL, Plaintiff and Appellant, v. MANHATTAN LIFE INSURANCE COMPANY, Defendant and Appellee

Civil No. 1001

Supreme Court of Arizona

March 27, 1907

APPEAL from a judgment of the District Court of the Fourth Judicial District, in and for the County of Coconino. Richard E Sloan, Judge. Affirmed.

The necessary facts are stated in the opinion.

Thomas Armstrong, Jr., E. E. Ellinwood, and John M. Ross, for Appellant.

The application is prepared by the company. It is printed by it and placed before the applicant for signature. It is neither read to nor by him, and he is given no opportunity to read or hear it read, or to learn its contents further than as he replies to the questions of the medical examiner of the company relative to his health and family history. Under these circumstances, and where there is doubt as to the meaning of the provisions of the contract, the rule is to construe the policy most strictly against the insurer who made the contract. The company's own words in its policy should be construed most strictly against itself, and the court should lean against that construction which imposes upon the insured the obligation of a warranty. First National Bank v. Hartford Ins. Co., 95 U.S. 673, 24 L.Ed. 563; McMaster v. New York Life Ins. Co., 183 U.S. 26, 22 S.Ct. 10, 46 L.Ed. 64; Northwestern Mutual Life Ins. Co. v. Woods, 54 Kan. 663, 39 P. 189.

In all cases of doubt as to whether conditions or limitations are part of the policy, the rule of construction against the insurer obtains, for the company frames its own contracts uses its own language, and surrounds its liability with such defense as it chooses to adopt. 1 Joyce on Insurance, p. 293 sec. 222. Courts have frequently separated such an application into parts in order to arrive at the exact meaning of the contract, and held to the rule that unless expressly made the basis of the issuance of the policy, mere statements or agreements not specified to be representations or warranties do not become a part of the contract. Northwestern Life Assur. Co. v. Tietze, 16 Colo.App 205, 64 P. 774. The most that can be said of this limitation clause, limiting the time in which suit shall be brought, is that it is a mere agreement or promissory stipulation; if it had been the intention of the company to secure the limitation as a covenant or condition upon which the policy issued, it would not have stopped as it did before the insertion of this clause, and the court cannot by construction place a warranty or covenant where the parties have not done so by the plain provisions of the contract. Aetna Ins. Co. v. Norman, 12 Ind.App. 652, 40 N.E. 1116; Alabama Gold Life Ins. Co. v. Johnson, Admr., 80 Ala. 467, 60 Am. Rep. 112, 2 So. 125.

While it is true that the supreme court of the United States has held that a clause may be lawfully inserted in an insurance policy reducing the time within which suit may be brought upon it to less than the period provided by statute (Riddelsbarger v. Hartford Ins. Co., 7 Wall. 389, 19 L.Ed. 257, and the authorities to the same effect are numerous), yet in all these cases the limitation is sustained only because it is reasonable and for the protection of the parties, and is inserted in the policy itself, so that the insured and his beneficiary shall have full notice of it and be advised of it. So far as we have been able to find, the only cases upholding it are those wherein the penalty of forfeiture or avoidance of the policy specifically is expressed in the policy itself as the penalty for failure to bring the action within the time limited. There is no penalty attached for failure to comply with the provision that "no suit shall be brought on this policy after two years," and it is analogous to the usual one in policies which require proofs to be made or notices given within a certain time after loss, and failure to furnish such proofs within the exact time is often excused by the circumstances of the case, and unless there is an express provision in the policy avoiding it or forfeiting it for failure to furnish proofs within the time, the courts refuse to declare a forfeiture. Steele v. German Ins. Co., 93 Mich. 81, 53 N.W. 514, 18 L.R.A. 85. To the same effect, and also holding that where there are circumstances and conditions, obstacles or causes preventing or rendering impossible the performance of the act within the time stipulated, the act may be performed thereafter, and the beneficiary will be excused for the failure if done within a reasonable time thereafter, or within the time stipulated after the cause preventing prior compliance ceases -- each case is to be determined according to its nature and circumstances. Woodmen Acc. Assn. v. Pratt, 62 Neb. 673, 89 Am. St. Rep. 777, 87 N.W. 546, 55 L.R.A. 291; Munz v. Standard L. & Acc. Ins. Co., 26 Utah 69, 99 Am. St. Rep. 830, 72 P. 182, 62 L.R.A. 485. In this case of ours, the suit was commenced and in course of prosecution before the limitation was known to the beneficiary; she had no knowledge of any other than the four or five year limitations then provided by statute, and was proceeding with all due diligence to prosecute the suit. To forfeit the policy under such circumstances where the defense is purely technical would be shocking to our sense of justice, inexcusable, and unreasonable. Woodmen Acc. Assn. v. Pratt, 62 Neb. 673, 89 Am. St. Rep. 777, 87 N.W. 546, 55 L.R.A. 293. Some states hold such limitation fixing a shorter period than that prescribed by statute of the state to be against public policy and void. Union Cent. Life Ins. Co. v. Spinks, 119 Ky. 261, 83 S.W. 615, 84 S.W. 1160; Barnes v. McMurtry, 29 Neb. 184, 45 N.W. 285; Georgia Masonic Ins. Co. v. Davis, 63 Ga. 471.

The defendant company, by its conduct as detailed in the complaint, has estopped itself to plead this short limitation by way of demurrer. Limitations as to the time of bringing suits on contracts of insurance are not to be applied with the same rigidity as statutes of limitation. Jackson v. Fid. & Cas. Co., 75 F. 359, 21 C.C.A. 394. The supreme court of the United States, while not receding from the rule laid down in the Riddelsbarger case, has in later cases distinctly held that such limitations contained in policies of insurance may be waived by the company; such waiver need not be in writing, and it may arise from such a course of conduct on the part of the company as will equitably estop it from pleading the prescribed limitation in bar of a suit by the insured. Thompson v. Phoenix Ins. Co., 136 U.S. 299, 10 S.Ct. 1019, 34 L.Ed. 408 (413). It is held by the better line of authorities that any conduct on the part of the insurer tending to mislead the insured and to cause him to delay suing until after the limitation has expired constitutes a waiver of the limitation. De Farconnet v. Western Ins. Co., 110 F. 405 (reading p. 410). While many of the cases hold that some active steps like holding out hope of adjustment are required to constitute a waiver of the limitation by the company, yet they also hold that concealment from the insured of the knowledge of a by-law or provision in the application requiring suit to be brought within a certain time is also a waiver. Metropolitan Acc. Assn. v. Froiland, 161 Ill. 30, 52 Am. St. Rep. 359, 43 N.E. 766; and where the company withholds the policy and conceals and withholds information as to its terms, the limitations expressed by the policy do not apply. Taylor v. Glens Falls Ins. Co., 44 Fla. 273, 32 So. 887 (889). Under such circumstances it amounts to a waiver of the limitation. Union Cent. Life Ins. Co. v. Phillips, 102 F. 19 (p. 26), 41 C.C.A. 263; American Cent. Ins. Co. v. Simpson, 43 Ill.App. 98 (103).

Walter Bennett, for Appellee.

Limitations by the terms of the contract of the time within which action may be brought is a valid provision, and controls the statutory limitation. Riddelsbarger v. Hartford Ins. Co., 7 Wall. 389, 19 L.Ed. 257; Express Co. v. Caldwell, 21 Wall. 269, 22 L.Ed. 556; Lee v. Union Cent. Ins. Co., 22 Ky. Law Rep. 1712, 56 S.W. 724; Smith v. Herd, 110 Ky. 56, 60 S.W. 841, 1121; Owen v. Insurance Co., 87 Ky. 571, 10 S.W. 119. Infancy of the beneficiary is no defense to the limitation of time in the policy within which action may be brought. O'Laughlin v. Union Cent. Ins. Co., 11 F. 280, 3 McCrary, 543; Suggs v. Travelers' Ins. Co., 71 Tex. 579, 9 S.W. 676, 1 L.R.A. 847; Mead v. Phoenix Ins. Co., 68 Kan. 432, 104 Am. St. Rep. 412, 75 P. 475, 64 L.R.A. 79; May on Insurance, sec. 478. The contract of insurance is voluntary, and the terms of the policy must be strictly complied with to warrant recovery. Riddelsbarger v. Hartford Ins. Co., 7 Wall. 390, 19 L.Ed. 257; Glass v. Walker etc., 66 Mo. 32. The limitation in the contract goes to the right and not simply to the remedy. Craig v. Hartford Fire Ins. Co., Fed. Cas. No. 3375, 1 Blackf. 280. One who accepts a policy of insurance, which refers to another document and makes it a part of such policy, is bound by the terms of such document, though he never saw it and had no knowledge of its provisions. Connor v. Manchester A. Co., 130 F. 743, 65 C.C.A. 127, 70 L.R.A. 106. The insurance company owed no duty to assured to notify her of the fact of the limitation. Paul v. Fidelity etc. Co., 186 Mass. 413, 104 Am. Rep. 594, 71 N.E. 801. The fact that the company had possession of the document containing the limitation does not prevent pleading such limitation. Lewis v. Metropolitan Life Ins. Co., 180 Mass. 317, 62 N.E. 369. Where fraud is alleged to defeat a contract, the facts constituting the fraud and deceit must be alleged with directness and certainty. History Co. v. Dougherty, 3 Ariz. 387, 29 P. 649; Goodwin v. Goodwin, 59 Cal. 560.

OPINION

NAVE, J.

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