Peerless Hosiery Co. v. Northern Ins. Co.

• Citation: 108 F. Supp. 52
• Decision Date: 09 May 1952
• Docket Number: Civ. A. No. 3392.
• Court: U.S. District Court — District of Connecticut
• Parties: PEERLESS HOSIERY CO. Inc. v. NORTHERN INS. CO. et al.

108 F. Supp. 52

PEERLESS HOSIERY CO. Inc. v. NORTHERN INS. CO. et al.

Civ. A. No. 3392.

United States District Court D. Connecticut.

May 9, 1952.

Klein & Klein, New Haven, Conn., for plaintiff.

John C. Flanagan, New Haven, Conn., for defendant.

HINCKS, District Judge.

The defendants have suggested four different grounds on which they contend they should be granted a judgment.

1. They contend that the plaintiff's failure to give written notice of loss or to file proofs of loss clearly is a bar to the action. This defense is overruled. It is true that the policies were intended to make the giving of such notice and the filing of proofs a condition precedent to recovery. Fields v. Metropolitan Life Ins. Co., 1946, 132 Conn. 588, 46 A.2d 127. However, such a requirement may be waived. The defendants' agent, Moakley, testified that he had no recollection of any conversation on December 8 in which he denied liability for the plaintiff's losses of December 7-8, but the plaintiff's president and its agent both gave positive testimony as to such conversations and I believe it more reasonable to find for the plaintiff as to this. A denial of liability of the sort testified to by these witnesses suffices as a waiver of the requirements of notice and proof of loss. Rathbone v. City Fire Insurance Co., 1862, 31 Conn. 193; cf. Haskell v. Eagle Indemnity Co., 1929, 108 Conn. 652, 144 A. 298; DiFrancesco v. Zurich General Accident & Liability Ins. Co., Ltd., 1926, 105 Conn. 162, 134 A. 789; Bernhard v. Rochester German Insurance Co., 1906, 79 Conn. 388, 65 A. 134. Hence the plaintiff's failure in this regard should not bar its recovery.

2. The defendants argue also that the plaintiff's claim is for damage which, since it occurred some twelve days after the hurricane, was outside the coverage of the policy. They contend that this lapse of time in and of itself sufficed to make the loss indirect. It is stated in the policies that the coverage includes "direct loss by windstorm." The limitation to "direct" losses is no more than an embodiment into the policy of the prevailing common law rule. Fogarty v. Fidelity & Casualty Co., 122 Conn. 245, 188 A. 481. However, in the law of insurance, as in the law of torts, the amount of time elapsing between cause and result is not necessarily conclusive as to the proximateness or directness of the result. Insurance Co. v. Boon, 1877, 95 U.S. 117, 24 L.Ed. 395; Mahoney v. Beatman, 1929, 110 Conn. 184, 147 A. 762, 66 A.L.R. 1121. The plaintiff offered uncontradicted testimony by two contractors tending to show that it was exceedingly difficult to obtain the services of roof repairmen in New Haven in the period immediately after November 25, 1950. The roof of the building occupied by the plaintiff apparently was repaired with all reasonable speed. Under the circumstances I hold that the mere lapse of time between November 25 and December 7-8 did not take plaintiff's claim outside the coverage of the policy.

3. But I must sustain the defense based upon the plaintiff's failure to comply with the requirement that it "protect the property from further damage." See Finding No. 6(a). This requirement is set out in the same paragraph of the policy as the requirement that the insured shall give written notice of loss and shall file proofs of loss. Clearly it too, like the requirement of filing proofs of loss, was intended to create a condition precedent to recovery. Taubman v. Allied Fire Ins. Co. of Utica, 4 Cir., 1947, 160 F.2d 157; New York Underwriters Fire Insurance Co. v. Malham & Co., 8 Cir., 1928, 25 F.2d 415; cf. Fields v. Metropolitan Life Insurance Co., supra.

The evidence established that during a windstorm occurring on or about November 25, 1950 more than half the roof was blown off the building in which the plaintiff did business. The storm was accompanied by rain, some of which entered the building through the hole in the roof and penetrated to the plaintiff's store on the first floor, and at that time some of the plaintiff's goods suffered water damage. Prior to December 7, 1950 the plaintiff and the defendants agreed that the damaged goods had a value of $12,114.24 and they were then removed from the premises by the defendants. Others of the plaintiff's goods had not been damaged in the storm of November 25 and these were left in the store. Meanwhile, the owner of the building was experiencing difficulty in obtaining repairs to his roof and as of December 7-8 the hole was covered only by loose boards and tarpaulins. The plaintiff's president knew of this condition and knew, or should have known, that such a covering would not protect the interior in case of a heavy storm. On December 7-8 such a storm occurred and once again, in the same manner, some of the plaintiff's remaining goods, valued at $3,128.33, suffered water damage.

In this state of the facts, the defendants contend, the plaintiff should not be allowed to recover for its loss of December 7-8 because it failed properly to protect its goods after the initial loss of November 25. The policy provision relied on by the defendants has never been construed by the Connecticut courts so far as I can discover. The cases in the federal courts in which insurance companies have attempted to rely on such a provision have, in contrast to the present case, involved disputes as to whether the insurer was liable for any part of the initial loss where the insured failed to comply with this requirement. New York Underwriters Fire Insurance Co. v. Malham & Co., supra; Thornton v. Security Ins. Co., C.C.M.D.Pa.1902, 117 F. 773. And here, as I have already held, the loss in December, notwithstanding the time which intervened, was the proximate result of the windstorm in November. It follows that if nothing but a lapse of time had intervened, the December damage would have been recoverable.

But the fact is that under the express provisions of the contract, after the hurricane there intervened as a condition of recovery a duty on the part of the plaintiff "to protect the property from further damage." Doubtless this was not an absolute duty. But I construe the language of the contract to impose upon the insured as a condition of recovery at least a duty to use reasonable care to protect the property. Without this minimum content, the provision would be meaningless. Thus we are brought to the question whether the plaintiff used such care.

It is the defendants' position that in the existing situation the plaintiff should have had these goods removed from the store until after the roof was repaired, or at least have had them covered with tarpaulins. The plaintiff concedes that it did neither of these things. However, the undamaged goods were moved to a part of the store in which there had been no water damage on November 25, and it is the plaintiff's position that this was a sufficient compliance with the requirement of the policy. As to the suggestion that its goods should have been removed from the building until it was repaired, it states that in order to carry on its business it had to have its goods available for display to customers. It argues from this that it could not reasonably have been required to move its goods since this, it asserts, would have forced it to suspend business. As to the suggestion that it should cover its goods with tarpaulins, it states that its goods were of such a nature that they could not be so covered. But the plaintiff's argument is specious: the policy did not purport to insure against all suspensions of business.

The record contains very little evidence as to the point, but on the basis of the available facts it is my conclusion that immediately prior to December 7 the plaintiff should have realized that a mere removal of its undamaged goods to another part of the store would not adequately protect them against further damage. The store was on the first floor of a four-story building which had had more than half its roof blown away. Unless the building was constructed in such a way as to impose a waterproof floor or wall between the roof and part of the plaintiff's store there was no reasonable basis for confidence that any part of the store would be immune from water damage. Since the burden is on the insured to prove compliance with a condition precedent in the policy, Benanti v. Delaware Insurance Co., 1912, 86 Conn. 15, 84 A. 109, I cannot, without evidence, find that such a waterproof structural condition existed. And evidence of such a condition is wholly lacking.

Thus I come to the conclusion that the plaintiff failed to take measures reasonably required to protect its goods after the loss of November 25. Since such action on its part constituted a condition precedent to its right to recover, its failure in this regard compels a decision for the defendants.

My decision on this point in effect disposes of the case. However, the record discloses another defense which is equally dispositive.

4. The plaintiff's present claim is also barred by a valid accord and satisfaction. The defendants tendered, and the plaintiff accepted, payment in the amount of $6,057.12 as compensation for losses suffered by the plaintiff as a result of the windstorm of November 25. In total the amounts paid to the plaintiff were equal to the value of the plaintiff's goods which were destroyed in November. The payment was made in February, 1951, subsequent to the plaintiff's additional loss in December.

There can be a valid accord and satisfaction only when there is a dispute as to the amount due. The plaintiff argues that because the goods which were damaged on November 25 had been inventoried at $12,114.24 prior to December 7 and because the parties were in full agreement that this was the amount to which it was entitled for such damage, the defendants' liability for that damage had thereby become fully liquidated prior to December 7, and hence there was no possibility of an accord and satisfaction. However,...