Hawkeye-Sec. Ins. Co. v. Apodaca

• Decision Date: 09 July 1974
• Docket Number: No. 4307,HAWKEYE-SECURITY,4307
• Citation: 524 P.2d 874
• Parties: INSURANCE CO., a corporation, Appellant (Plaintiff below). v. Alfred APODACA and Byrlie Lee Apodaca, Appellees (Defendants below).
• Court: Wyoming Supreme Court

Page 874

524 P.2d 874

HAWKEYE-SECURITY INSURANCE CO., a corporation, Appellant (Plaintiff below). v. Alfred APODACA and Byrlie Lee Apodaca, Appellees (Defendants below).

No. 4307.

Supreme Court of Wyoming.

July 9, 1974.

F. M. Andrews, Jr., Riverton, for appellant.

Frank P. Hill, Riverton, for Alfred Apodaca, appellee.

H. S. Harnsberger, Jr., Riverton, for Byrlie Lee Apodaca, appellee.

Before PARKER, C. J., and Mc,EWAN, GUTHRIE, McINTYRE, and McCLINTOCK, JJ.

Mr. Justice McEWAN delivered the opinion of the court.

The defendants' home, insured by Hawkeye, burned, and the insurance company paid the insured defendants' note given to a mortgagee. The insurance company took an assignment of the note and mortgage, and brought an action on the note and for foreclosure of the mortgage. Defendants answered separately and each raised the issue of the insurance policy and counterclaimed for the loss in excess of that amount paid by the insurance company to the mortgagee. All parties moved for summary judgment, and ultimately the matter was submitted to the trial court for determination on the record. The trial court found against the insurance company on its claim against both defendants and for the defendant-Byrlie Lee Apodaca on her counterclaim, from which judgment the insurance company appealed. The two issues raised by the insurance company on appeal were that the defendants were barred from making any recovery because they failed to timely file proof of loss and they did not bring their action within one year after the loss, both as required under the terms of the policy.

The mortgagee, First Guaranty Savings & Loan Association, held a mortgage on defendants' home in the principal sum of $10,000.00. On January 1, 1969, the home was substantially destroyed by fire and it was agreed that the loss to the building was $15,815.68, and contents loss was $3,703.06. Coverage under the policy was $15,000.00 for the building and $6,000.00 for the contents. The insurance company was timely notified of the loss and it employed Leonard Yost, the local representative of General Adjustment Bureau, to investigate the loss. He accompanied a local building contractor during an examination of the house, who estimated the damage to the home to be $15,815.68. Mrs. Apodaca submitted to Mr. Yost a list of household goods claimed to have been lost in the fire, the value of which she asserted to be $5,215.06.

The cause of the fire became suspect and the State Fire Marshal was called by the sheriff's office and made an investigation. As part of the insurance company's investigation of the cause of the fire the insurance company requested that the Apodacas and their two children submit to polygraph examinations at the insurance company's expense. They did so and a memorandum of the results was contained in the record. By way of partial explanation of the insurance company's concern about the origin of the fire it appeared that at the time of the fire the Apodacas were separated and involved in a rather bitter divorce proceeding commenced October 25, 1968, which ultimately led to a divorce being granted in May of 1970. Apparently each of the Apodacas may have made some comment to third persons that he or she thought the other one had set the fire just to spite the other spouse.

Mrs. Apodaca and her attorney made inquiry about payment of the insurance proceeds in response to which they were advised that they must comply with the provisions of the policy. In any event, no payment was made under the terms of the policy by the insurance company until September 10, 1969, when, upon demand of First Guaranty, it paid to the mortgagee the amount due under the mortgage and as provided in the loss payable clause of the policy. Upon payment to First Guaranty, the insurance company took an assignment of the note and mortgage given by the Apodacas to the mortgagee. On May 18, 1970, the insurance company filed its complaint in which it demanded judgment against the Apodacas for the unpaid balance of the note assigned to it by First Guaranty and foreclosure of the mortgage. The insurance company alleged default on the monthly installment payments since December 23, 1968, and that the principal sum due was $9,645.79. The defendants answered separately and raised the question of the insurance policy, and counterclaimed for the difference between the face amount of the policy and the sum paid by the insurance company to First Guaranty together with the value of the contents. The insurance company answered and set up a defense to the counterclaim that defendant-insureds had failed to file a proof of loss as required by the terms of the policy which was a condition precedent to the right to receive payment, and, further, that the policy had a one-year statute of limitations clause for the bringing of any action.

The trial court found that the insurance company should take nothing by its complaint against either defendant-insured, and that the defendant-Byrlie Lee Apodaca have judgment against the insurance company in the principal sum of $2,908.83. This was apparently one-half of the insured loss sustained by the parties. The divorce decree awarded each party one-half of the chose in action on the insurance claim, but the husband had waived his right to any recovery under the policy.

Proof of Loss

The insurance policy contained a provision that a proof of loss should be filed within 60 days of loss. The defendants did not file formal proofs of loss until after the action was commenced by the insurance company or about 16 months after the fire. The portion of the policy pertinent to our consideration and relating to the proof of loss provided that the insured should give immediate written notice to the insurance 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 loss claimed and within 60 days after the loss, unless such time be extended in writing by the company, the insured should render to the company a proof of loss, signed and sworn to by the insured, stating the knowledge and belief of the insured as to the time and origin of the loss, the actual cash value of each item and the amount of loss.

Our statute, § 26.1-330, W.S.1957, provides that the insurance company shall furnish proof of loss forms upon written request of any person claiming to have a loss under an insurance contract.

In ruling against the insurance company on the failure to timely file a proof of loss contention, the trial court held that because of the insurance company's own failures and shortcomings it could not be heard to complain of technical shortcomings of the defendants where the company failed to show any prejudice or hindrance of its ability to investigate the loss due to the late filing of the formal proof of loss. In January of 1969, Mrs. Apodaca furnished to the insurance company a complete written inventory of the personal items destroyed together with their valuations. She also asked in an accompanying letter if there was anything else she had to fill out or sign. On March 24, 1969, the insurance company's adjuster wrote her that a proof of loss would have to be filed. He again wrote Mrs. Apodaca on April 15, 1969, saying that per their previous conversation he was enclosing a copy of the policy and directing her attention to the proof of loss requirements, and indicating the insurance company still had not determined what action, if any, it would take. On September 9, 1969, Mrs. Apodaca's attorney made written inquiry to the insurance company on her claim. The adjuster wrote to him advising him that no claim had been filed and referred him to the conditions set forth in the policy. The insurance company did not furnish proof of loss forms to the defendants even though it could fairly be inferred that Mrs. Apodaca's written inquiry asking if there was anything else she needed to fill out or sign was such a request. In any event, it clearly appears by the adjuster's letter to Mrs. Apodaca's lawyer that as late as September 19, 1969, the insurance company made no contention that claims would not be honored because of the failure to file the proof of loss. At that time the 60-day period for filing the proof of loss had long since expired-the fire having occurred on January 1, 1969.

The insurance company had hired its own adjuster who made a thorough investigation of the cause of the fire and determined the extent of the loss to the real property. Mrs. Apodaca filed an inventory with valuations for the loss of personal items. A formal proof of loss would not have revealed any information not already known to the insurance company. The insurance company actually had considerably more information than that which would be required by the proof of loss, and it had all the information required under the proof of loss within the 60-day period. As we said in Howrey v. Star Ins. Co. of America, 46 Wyo. 409, 28 P.2d 477 at 481, where the insureds sent a written notice of loss to the insurance company and the insurance company had its agent investigate the loss, the insurance company will be deemed to have waived the formal notice required by the policy. The formal proofs of loss signed and sworn to were ultimately filed so that if the insurance company determined the defendants were making false claims it could have instituted appropriate action against the defendants which, under the facts of this case, would appear to this writer to be the only reason for the requirement that a proof of loss be signed and sworn to by the claimants. The insurance company made no contention that the failure of the defendants to timely file the formal...