Read v. State Insurance Co.
| Decision Date | 19 October 1897 |
| Citation | 72 N.W. 665,103 Iowa 307 |
| Parties | READ & TRAVERSY AND J. A. CAMPBELL, Trustee, v. THE STATE INSURANCE COMPANY, Appellant |
| Court | Iowa Supreme Court |
Appeal from Polk District Court.--HON. C. P. HOLMES, Judge.
ACTION on insurance policy for damages to stock of goods, occasioned by fire. Trial to jury, verdict and judgment for plaintiffs and defendant appeals.
Affirmed.
O. B Ayres, Earle & Prouty, and McVey & Cheshire for appellant.
Carroll Wright and Cummins, Hewitt & Wright for appellees.
The policy contains a clause concerning the property insured, in these words: "Or if, without written consent hereon, the title of the property is transferred or changed, in whole or in part (except by death of the insured); or if same, or any part thereof, is incumbered by mortgage, lien, contract or sale, or otherwise, or is assigned for the benefit of creditors; or any existing incumbrance at the time of making application is not set forth in the application; or if there is any other insurance, valid or invalid; or if there is any change in the occupant or occupancy of the premises insured * * * then, and in every such case, this policy shall be void." The goods insured were in a building leased February 15, 1893, for a term of three years, five and one-half months, at the rental of two hundred and eight dollars and thirty-three cents per month, payable in advance. The policy was issued March 14, 1893, for one year. The fire occurred August 18 following, and this suit was begun March 22, 1895. If, then, the lease constituted an incumbrance on the property, it existed at the time the policy issued, and does not come within the prohibition of this clause. There is no room for construction, as the policy, in unambiguous terms, provides that existing incumbrances must be disclosed in the application, and future incumbrances permitted by the company, else it will be void. Nor can any other intention be imputed to the defendant. The greater part of the merchandise of the country is kept in buildings leased for terms, and a lease is not commonly understood to be an incumbrance. In preparing its form of contract the defendant could not have had in view the invalidity of a large portion of its insurance for which adequate compensation had been received. Nor do the cases relied on sustain the contention now made. The instruments considered in Peet v. Insurance Co., 7 S.D. 410 (64 N.W. 206, and Insurance Co. v. Vanlue, 126 Ind. 410 (26 N.E. 119), are construed to be mortgages, and the rulings rest on that ground alone. It is well settled that such contracts must be strictly construed against the insurer, and a forfeiture avoided, if possible. If the lien for rent to accrue or for unpaid taxes,--created by statute,--is to invalidate a policy of insurance, it should so provide in unmistakable terms.
II. Was the action barred by the contract of limitation contained in the policy? It will be noticed the suit was begun within six months after the proofs of loss were furnished, but more than that time after the fire. The policy stipulates that "no suit or action against the company for the recovery of any claim under or by virtue of this policy shall be sustained in any court of law or equity unless commenced within the term of six months next after the fire shall have occurred." In Ellis v. Insurance Co., 64 Iowa 507, 20 N.W. 782, the policy provided that "action shall be commenced within six months next after the loss shall occur." The court held the period began to run when the cause of action had accrued; i. e. sixty days after the notice and proof of loss had been furnished. This ruling is expressly approved in Miller v. Insurance Co., 70 Iowa 704, 29 N.W. 411, and finds support in Steen v. Insurance Co., 89 N.Y. 315; Insurance Co. v. Fairbank, 32 Neb. 750 (49 N.W. 711); Barber v. Insurance Co., 16 W.Va. 658; Chandler v. Insurance Co., 21 Minn. 85. Authorities to the contrary may be mentioned. Travelers' Ins. Co. v. California Ins. Co., 1 N.D. 151 (45 N.W. 703); Johnson v. Insurance Co., 91 Ill. 92; Chambers v. Insurance Co., 51 Conn. 17; Insurance Co. v. Wells, 83 Va. 736 (3 S.E. 349); Riddlesbarger v. Insurance Co., 74 U.S. 386, 7 Wall. 386, 19 L.Ed. 257; Law v. Association, 94 Mich. 266 (53 N.W. 1104). The policy considered in McConnell v. Association, 79 Iowa 757, 43 N.W. 188, stipulated that no action should be maintained unless "commenced within six months after the happening of the death on account of which the action is brought." The court, through Beck, J., said: "It is a familiar and just rule, recognized by the courts, that a bar created by a statute or by the contract to an action for a breach of its conditions by reason of the lapse of time will not commence to run until the right of action accrues; that is, the plaintiff must have the full time given by the statute or contract after his right of action accrues, in which to commence his suit." The action was begun more than six months after death, but within that time after the right of action accrued, and held to be in time. This ruling is approved in Matt v. Association, 81 Iowa 135, 46 N.W. 857. These cases are decisive. The period must be held to have commenced to run sixty days after the notice and proof of loss were furnished the defendant,--the time of payment fixed by the policy. Parties may waive the limitation fixed by statute, and adopt one for themselves, if reasonable; but, in cases like this, the time agreed upon will be construed to begin to run when the right of action accrues. That the rule is a wholesome one is illustrated by an examination of many of the cases cited. In some of them a strict construction of the language employed would cut off all recovery, and in others leave the time limited with which an action might be brought, unreasonably short. In this state the insured has sixty days within which to furnish the company notice and proof of loss, and may not maintain an action within ninety days thereafter. Quinn v. Insurance Co., 71 Iowa 615, 33 N.W. 130. This would leave one month only within which suit might be brought. The property involved in this controversy was covered by policies issued by twenty-four different companies, and the length of time required to begin so many actions need only be suggested. Were the question before this court for the first time, we might deem it more appropriate for the legislature to establish such a rule; but as it is not inimical to justice, and may well be presumed to have been followed in making contracts throughout the state for many years, we are content to adhere to it. It finds support in Hong Sling v. Insurance Co., 8 Utah 135 (30 P. 307); Insurance Co. v. Davis, 40 Neb. 700 (59 N.W. 698); Friezen v. Insurance Co., 30 F. 352. To the contrary, see Meesman v. Insurance Co., (Wash.) 2 Wash. 459, 27 P. 77 McElroy v. Insurance Co., 48 Kan. 200 (29 P. 478); Hart v. Insurance Co., 86 Wis. 77 (56 N.W. 332).
III. Was arbitration a condition precedent to the bringing of this action? The policy contains this provision: "If differences of opinion shall arise between the parties hereto as to the amount of loss or damage, the subject shall be referred to two disinterested and competent men, each party to select one (and, in case of disagreement, they to select a third), who shall, under oath, ascertain, estimate, and appraise such loss or damage separately; and their award in writing shall be binding on the parties hereto as to the amount of loss or damage, but shall not decide the liability of the company under this policy." There is nothing in the policy making submission to arbitration a condition precedent to the payment of the loss or to the maintenance of an action, nor can such a condition be inferred from its terms. The authorities recognize the rule as stated by Sir George Jessel, M. R., in Dawson v. Fitzgerald, 1 Exch. Div. 257: etc. This court has recognized the right of parties to bind themselves to make payment of a sum to be fixed or estimated by an arbitrator or third person. Flynn v. Railway Co., 63 Iowa 490; Ross v. McArthur, 85 Iowa 203, 52 N.W. 125; McNamara v. Harrison, 81 Iowa 486, 46 N.W. 976. Also the right to make arbitration a condition precedent to the maintenance of an action. Zalesky v. Insurance Co., 102 Iowa 613, 71 N.W. 566. A mere provision in the policy, however, that, in event of a disagreement, the amount of damage shall be ascertained by arbitrators, will not prevent the assured from maintaining an action, unless arbitration is made, by the terms of the policy or necessary inference therefrom, a condition precedent. In such a case the agreement to arbitrate is collateral to the main purposes of the policy,--an independent agreement,--a breach of which, while it will support a separate action, cannot be pleaded in bar to a suit on the principal contract. Hamilton v. Insurance Co., 137 U.S. 370 (11 S.Ct. 133, 34 L.Ed. 708); Insurance Co. v. Pulver, 126 Ill. 329 (18 N.E. 804); Reed v. Insurance Co., 138 Mass. 572; Canfield v. Insurance Co., 55 Wis. 419 (13 N.W. 252); Seward v. City of Rochester, 109 N.Y. 164 (16 N.E. 348); Insurance Co. v. Alvord, 9 C.C.A. 623 (61 F. 752); Lumber Co. v....
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