Sager Glove Corporation v. Aetna Insurance Company, 13993.

• Citation: 317 F.2d 439
• Decision Date: 05 June 1963
• Docket Number: No. 13993.,13993.
• Parties: SAGER GLOVE CORPORATION, Plaintiff-Appellant, v. AETNA INSURANCE COMPANY et al., Defendants-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)

317 F.2d 439 (1963)

SAGER GLOVE CORPORATION, Plaintiff-Appellant, v. AETNA INSURANCE COMPANY et al., Defendants-Appellees.

No. 13993.

United States Court of Appeals Seventh Circuit.

May 10, 1963.

Rehearing Denied June 5, 1963.

Robert J. Nolan, Chicago, Ill., John C. Ambrose, Chicago, Ill., of counsel, for plaintiff-appellant.

John P. Gorman, Donald N. Clausen, Clausen, Hirsh, Miller & Gorman, Chicago, Ill., for defendants-appellees.

Before HASTINGS, Chief Judge, and KNOCH and SWYGERT, Circuit Judges.

HASTINGS, Chief Judge.

Plaintiff Sager Glove Corporation brought this action against Aetna Insurance Company and 21 other insurance companies on January 12, 1956. Recovery was sought for losses allegedly covered by vandalism and malicious mischief endorsements contained in 67 separate fire insurance policies which losses defendants had refused to pay. The district court entered judgment on the pleadings with respect to 28 of these policies and summary judgment with respect to the remainder. Plaintiff's appeal followed.

After its original complaint was stricken, plaintiff filed an amended complaint containing 67 counts, 1 count for each policy sued on. Plaintiff alleged in its amended complaint that acts of vandalism and malicious mischief occurred between February 1, 1953 and January 14, 1955. The specific dates of such occurrences varied from count to count. Plaintiff further alleged that the various acts of vandalism and malicious mischief were not discovered by it until January 14, 1955 and that upon discovery defendants were immediately notified.

By its reply to defendants' answer, plaintiff admitted that each policy sued on contained the following limitation: "No suit or action on this policy for the recovery of any claim shall be sustainable in any court of law or equity unless commenced within twelve months next after inception of the loss."

With respect to 24 of the policies sued on (group 1 policies), no acts of vandalism and malicious mischief are alleged to have occurred later than December 20, 1953. Thus, it appears from the pleadings alone, with respect to group 1 policies, that the last date for commencing suit within the twelve month limitation period was December 20, 1954. Plaintiff did not discover its loss or notify defendants, much less bring suit, until January 14, 1955.

The district court entered judgment on the pleadings as to all group 1 policies, and plaintiff claims it erred in so doing. It is plaintiff's theory that the twelve month time limitation did not begin to run until the loss was discovered.

We have found no Illinois cases where the phrase involved here — "twelve months next after inception of the loss" — has been discussed as to losses from vandalism or malicious mischief. It is our conclusion that the meaning of the phrase is quite clear. It has nothing to do with the state of mind of the insured. It deals with an objective fact which in the context of this case is a specific act of vandalism or malicious mischief. The loss occurs and has its "inception" whether or not the insured knows of it.

Our view of this phrase finds support in two New York cases where this precise phrase was considered. Margulies v. Quaker City Fire & Marine Ins. Co., 276 App.Div. 695, 97 N.Y.S.2d 100 (1950); Thames Realty Corp. v. Massachusetts F. & M. Ins. Co., Sup.Ct., 170 Misc.2d 747, 184 N.Y.S.2d 170 (1959). In Thames Realty, insured sued on policies for losses from an explosion which damaged its building. The suit was commenced more than twelve months after the explosion, but insured claimed it discovered the damage only a few months before the action was filed. The court stated that the fact of recent discovery was immaterial and held that the twelve month period began to run from the "occurrence of the event insured against." Thames Realty Corp. v. Massachusetts F. & M. Ins. Co., supra at 171.

The district court did not err in entering judgment on the pleadings with respect to the group 1 policies. Time of discovery of the loss by the insured is immaterial, and it appears from the pleadings that suit was not brought within twelve months of any acts of vandalism or malicious mischief alleged with respect to these 24 policies. There is no claim that defendants did anything to prevent discovery of the loss by plaintiff.

As to the remaining 43 policies sued on (group 2 policies), the district court entered summary judgment under Rule 56, Federal Rules of Civil Procedure, 28 U.S.C.A.¹ Losses under 40 of the group 2 policies were alleged to have occurred up to and including January 14, 1955, under 1 policy up to and including March 7, 1954 and under 2 policies up to and including January 15, 1954. The instant suit was filed January 12, 1956. Thus, only those acts of vandalism and malicious mischief alleged to have occurred on January 12, 13 and 14, 1955 were within the twelve month time for suit limitation contained in the group 2 policies.

In addition to contending that the twelve month time for suit limitation ran from the time of discovery of the losses, which contention we have rejected, plaintiff urges that defendants waived the time for suit limitation by "exhausting its investigative prerogatives for a full year after notice of the claimed loss." The earliest possible date of waiver, under such contention, was January 14, 1955 when defendants were first notified of plaintiff's losses. All counts of the complaint with respect to group 2 policies allege acts of vandalism and malicious mischief occurring within the twelve month period preceding January 14, 1955.

There is no genuine issue as to any material fact relevant to the question of waiver. The following facts appear from the amended complaint and the affidavits in support of and in opposition to defendants' motion for summary judgment.

Immediately upon discovery of the losses, plaintiff gave written notice thereof to defendants. Defendants then sent adjusters to discuss such claims with plaintiff's president who was urged by them to prepare an audit for inspection. Shortly after receiving the written notice, defendants denied liability under the insurance policies. On March 8, 1955, plaintiff filed a formal statement of loss with defendants listing the machinery claimed to have been damaged.

Pursuant to provisions in the...