Latham v. U.S. Fidelity & Guaranty Co.
| Decision Date | 23 October 1972 |
| Docket Number | No. 46795,46795 |
| Citation | 267 So.2d 895 |
| Parties | P. U. 'Jack' LATHAM, d/b/a Latham Oil Company v. UNITED STATES FIDELITY & GUARANTY COMPANY. |
| Court | Mississippi Supreme Court |
W. T. Denman, III, Eupora, for appellant.
Brooks, Guyton & Shaw, Kosciusko, for appellee.
The principal question to be decided in this case is whether the parties to a fidelity bond, or a fidelity insurance contract, can legally contract so as to provide for a shorter period of limitation than prescribed by the applicable statute of limitations. We hold that Mississippi Code 1942 Annotated, Section 724 (1956), prohibits the parties from so contracting and any attempt to do so is null and void.
The record reflects that on March 4, 1970, appellant, P. U. 'Jack' Latham, doing business as Latham Oil Company, brought suit in the Circuit Court of Webster County against appellee United States Fidelity & Guaranty Company seeking to recover on a fidelity bond for the loss of money due to the fraudulent and dishonest acts of certain named employees. The declaration charged that the losses were discovered on February 10, 1966, and occurred while the bond was in full force and effect and that although all the terms and provisions of the bond had been complied with, appellee refused to comply with its obligations to pay such losses.
Appellee filed a motion to dismiss the suit and as grounds for such motion alleged:
1. The contract requires that said action be brought within one year after discovery of the loss, and therefore, suit is not timely filed as shown by the face of the declaration.
2. The statute of limitations being Section 376, Mississippi Code 1942 Annotated (1956), requires action on bonds to be brought within one year from the completion and final determination of the contract, and that this action was not filed until over three years after the discovery of the loss.
The provisions of the fidelity bond relied upon by appellee read as follows:
No action shall lie against the Underwriter unless, as a condition precedent thereto, there shall have been full compliance with all the terms of this bond, not until nonety days after the required proofs of loss have been filed with the Underwriter, nor at all unless commenced within one year from the date when the Insured discovers the loss. If any limitation of time for notice of loss or any legal proceeding herein contained is shorter than that permitted to be fixed by agreement under any statute controlling the construction of this bond, the shortest permissible statutory limitation of time shall govern and shall supersede the time limitation herein stated. (Emphasis added).
The trial court found that the suit was not filed within the time required by the terms of the policy and entered an order dismissing the cause with prejudice. Hence, this appeal.
Appellant admits that the action on the fidelity bond was not commenced until over three years after the loss was discovered, but contends that the foregoing provision in the contract is in contravention of Section 724, Mississippi Code 1942 Annotated (1956), and is null and void and that the six year statute of limitations controls. Section 724 reads as follows:
The limitations prescribed in this chapter shall not be changed in any way whatsoever by contract between parties, and any change in such limitations made by any contract stipulation whatsoever shall be absolutely null and void; the object of this statute being to make the period of limitations for the various causes of action the same for all litigants.
In Standard Accident Insurance Co. v. Broom, 111 Miss. 409, 71 So.2d 653 (1916), this Court pointed out that prior to 1912 Section 2575 of the Code of 1906 made it possible for an insurance company to contract that its policies of insurance would not be subject to the general statute of limitations, but the terms of its...
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...would allow insurance companies to contract around the statutory scheme imposed by our legislature. In Latham v. United States Fidelity & Guaranty Co., 267 So.2d 895 (Miss.1972), this Court recognized that insurance contracts are subject to the general six year statute of limitations (in ef......
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