Niagara Fire Ins. Co. of New York v. Raleigh Hardware Co.

• Decision Date: 10 January 1933
• Docket Number: No. 3326-3335.,3326-3335.
• Citation: 62 F.2d 705
• Parties: NIAGARA FIRE INS. CO. OF NEW YORK, N. Y., v. RALEIGH HARDWARE CO., Inc., and nine other cases.
• Court: U.S. Court of Appeals — Fourth Circuit

62 F.2d 705 (1933)

NIAGARA FIRE INS. CO. OF NEW YORK, N. Y., v. RALEIGH HARDWARE CO., Inc., and nine other cases.

Nos. 3326-3335.

Circuit Court of Appeals, Fourth Circuit.

January 10, 1933.

Stanley C. Morris, of Charleston, W. Va. (Steptoe & Johnson, James M. Guiher, and J. Horner Davis, 2d, all of Clarksburg, W. Va., on the brief), for appellants.

James H. McGinnis and Ben H. Ashworth, both of Beckley, W. Va. (David D. Ashworth, of Beckley, W. Va., on the brief), for appellee.

Before PARKER, NORTHCOTT, and SOPER, Circuit Judges.

PARKER, Circuit Judge.

These are appeals in ten actions at law instituted to recover on fire insurance policies and heard together in the court below. The plaintiff was the Raleigh Hardware Company and the defendants were insurance companies that had issued policies on the store building of plaintiff, which was destroyed by fire on April 9, 1931. In each case there was verdict and judgment for the plaintiff, and the defendants have appealed. The appeals present four points: (1) Whether the court below erred in holding as a matter of law that plaintiff was not barred of recovery for failure to file proofs of loss within the time limited by the policies; (2) whether the court erred in instructing the jury that it might return a verdict for the full amount of the policies if it found that there was a total loss within the meaning of the valued policy statute of West Virginia; (3) whether there was prejudicial error in the admission and rejection of testimony; and (4) whether there was error in refusing to set aside the verdict and grant a new trial.

The policies, which are in the form prescribed by the statute of West Virginia (Acts of 1923, ch. 18, § 68), require that "the insured shall, within sixty days after the fire, unless such time is extended in writing by this Company, render to this Company a proof of loss, signed and sworn to by the insured, stating," etc. A subsequent clause provides that, "No suit or action on this policy, for the recovery of any claim, shall be sustainable in any court of law or equity unless all the requirements of this policy shall have been complied with, nor unless commenced within twelve months next after the fire." The fire occurred, as stated above, on April 9th. The proofs of loss were not filed until June 13th, more than sixty days thereafter. There is uncontradicted evidence, however, that the fire continued to burn in the basement of the building for a week or more after it began. And, following prompt notice by plaintiff that the fire had occurred, the companies sent adjusters, who as late as the latter part of May were negotiating with plaintiff in an attempt to arrive at an adjustment of the loss.

We agree with plaintiff that under no interpretation of the policy would the sixty-day period for furnishing proofs of loss begin to run until after the fire had sufficiently abated to allow a full inspection of the property for the purpose of determining the extent of the loss. National Wall Paper Co. v. Associated Manufacturers' Mutual Fire Ins. Co., 175 N. Y. 226, 67 N. E. 440; Slocum v. Saratoga & Washington Fire Ins. Co., 149 App. Div. 867, 869, 134 N. Y. S. 72. Such inspection was of particular importance in this case; for a close view of the basement, where the fire was burning, and of the foundations of the walls left standing was necessary to determine whether the loss was total within the meaning of the valued policy law of West Virginia. The evidence as to the length of time the fire was burning was sufficient to warrant the conclusion that the proofs of loss were furnished within the time limited by the policy; but this would be a question for the jury. The failure to submit it to the jury is immaterial, however, in the view that we take of the West Virginia law which we shall presently discuss.

And we agree, also, that the defendants would be held to have waived the condition requiring that proofs of loss be furnished within sixty days, if failure to comply with such condition resulted in a forfeiture under the laws of West Virginia. They entered into negotiations with plaintiff looking to an adjustment of the loss. In the course of the negotiations they were furnished by plaintiff with plans and specifications of the burned building and other information usually contained in proofs of loss. By their investigation of the fire and through their dealings with plaintiff, they secured all the information which the proofs were designed to furnish; and the negotiations for an adjustment were, in the absence of notice to the contrary, sufficient ground for plaintiff's assuming that no further or more formal proofs of loss were necessary. Plaintiff's delay in furnishing the proofs of loss was in a very real sense, therefore, the result of the conduct of the defendants, and it would be unconscionable to allow defendants to take advantage of the delay. If the provision of the policy requiring proofs of loss within sixty days were a condition of recovery, defendants would be held to have waived it by their conduct, or, what is the same thing, would be estopped to assert it. Concordia Ins. Co. v. School District, 282 U. S. 545, 550, 51 S. Ct. 275, 75 L. Ed. 528; Id. (C. C. A. 10th) 40 F.(2d) 379; Firemen's Ins. Co. v. Brooks (C. C. A. 6th) 32 F.(2d) 451, 65 A. L. R. 909; Continental Ins. Co. v. Fortner (C. C. A. 6th) 25 F.(2d) 398; Lusk v. American Cent. Ins. Co., 80 W. Va. 39, 91 S. E. 1078; American Ins. Co. v. Dannehower, 89 Ark. 111, 115 S. W. 950; Helvetia Swiss F. Ins. Co. v. Edward P. Allis Co., 11 Colo. App. 264, 53 P. 242; Teasdale v. City of New York Ins. Co., 163 Iowa, 596, 145 N. W. 284, Ann. Cas. 1916A, 591 and note; 26 C. J. 403; 14 R. C. L. 1348.

But the determination of the question as to whether the proofs of loss were furnished in accordance with the terms of the policy does not depend upon the question of waiver or nice inquiries into the duration of the fire; for under the law of West Virginia failure to file proofs of loss within the sixty days limited by the policy merely delays and does not bar action. Raleigh Hardware Co. v. Williams, 106 W. Va. 85, 144 S. E. 879, 880; Smith Ins. Agency v. Hamilton Fire Ins. Co., 69 W. Va. 129, 71 S. E. 194; Rheims v. Standard Fire Ins. Co., 39 W. Va. 672, 20 S. E. 670. The provision of the statutory form relating to proofs of loss was construed in the recent case of Raleigh Hardware Co. v. Williams, supra; and in the light of what was said in that case there can be no question as to the rule applicable in West Virginia. The court, speaking through Judge Maxwell, said: "It is not provided in the policy that it shall be void, if proofs are not filed within the stipulated period; but there is a general provision that no suit shall be brought on the policy unless all the requirements of the policy have been complied with, and unless such suit be instituted within twelve months next after the fire. The only effect of noncompliance with the requirement for proof of loss is to postpone the right of action of the insured. `Although a policy of fire insurance requires that proof of loss shall be furnished within 60 days after the fire occurs, unless the time be extended by the company, but there is no provision therein forfeiting the policy for failure to comply with this requirement, the effect of such provision is to postpone right of action until such proof be furnished, but not to wholly destroy all right of recovery thereon.' Smith Insurance Agency v. Hamilton Fire Insurance Co., 69 W. Va. 129, 71 S. E. 194, pt. 6, syl. Proofs of loss merely fix the time when a loss becomes payable and when an action may be maintained to enforce a liability. Rheims v. Standard Fire Insurance Co., 39 W. Va. 672, 20 S. E. 670. See, also, Munson v. German Insurance Co., 55 W. Va. 423, 47 S. E. 160, and Adkins v. Globe Fire Insurance Co., 45 W. Va. 384, 32 S. E. 194. These cases go no further in this phase than to hold that the filing of proofs of loss is a condition precedent to action on the policy. This holding is in conformity with general authority."

It is true that in matters of general insurance law, we are not bound by state decisions. Fountain & Herrington v. Mutual Life Ins. Co. (C. C. A. 4th) 55 F.(2d) 120; Washburn & Moen Mfg. Co. v. Reliance Marine Ins. Co., 179 U. S. 1, 21 S. Ct. 1, 45 L. Ed. 49; Swift v. Tyson, 16 Pet. 1, 10 L. Ed. 865. But this is not a question of general insurance law. It is a question of the interpretation of language embodied in a statute of West Virginia; for the policies of insurance, by express provision of the statute, embody language which the statute prescribes. An interpretation of the language of the policies, therefore, is an interpretation of the language of the statute itself; and it is well settled that we are bound by the interpretation which the courts of a state place upon the language of its statutes. Elmendorf v. Taylor, 10 Wheat. 152, 6 L. Ed. 289; Burgess v. Seligman, 107 U. S. 20, 2 S. Ct. 10, 27 L. Ed. 359; Savings Bank of Richmond v. National Bank of Goldsboro (C. C. A. 4th) 3 F.(2d) 970, 39 A. L. R. 1374.

The duty of the federal courts to follow state decisions in the interpretation of state statutes is too well settled to admit of serious discussion. The rule has been followed, not only with respect to statutes dealing with local matters, but also with respect to those affecting general commercial law, such as the Negotiable Instrument Law, which was dealt with in the case of Savings Bank of Richmond v. National Bank of Goldsboro, supra. And the rule is followed as to state statutes dealing with insurance. Iowa Life Ins. Co. v. Lewis, 187 U. S. 335, 355, 23 S. Ct. 126, 47 L. Ed. 204; Concordia Ins. Co. v. School District, supra, 282 U. S. 545, 552, 51 S. Ct. 275, 75 L. Ed. 528; Union Indemnity Co. v. Dodd (C. C. A. 4th) 21 F.(2d) 709, 55 A. L. R. 735; Parr v. Ins. Co. (D. C.) 44 F.(2d) 567; and see Sun Ins. Office v. Scott, 284 U. S....