Shields v. Vt. Mut. Fire Ins. Co.

• Decision Date: 01 October 1929
• Court: Vermont Supreme Court
• Parties: SHIELDS et al. v. VERMONT MUT. FIRE INS. CO.

147 A. 352

SHIELDS et al.

v. VERMONT MUT. FIRE INS. CO.

Supreme Court of Vermont. Caledonia.

Oct. 1, 1929.

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Exceptions from Caledonia County Court; John S. Buttles, Judge.

Action by Charles A. Shields and another against the Vermont Mutual Fire Insurance Company. Verdict for plaintiffs, and defendant brings exceptions. Affirmed.

Argued before WATSON, C. J., and POWERS, SLACK, MOULTON, and WILLCOX, JJ.

Charles A. Shields and David S. Conant, both of St. Johnsbury, in pro. per.

Fred L. Laird and George L. Hunt, both of Montpelier, for defendant.

MOULTON, J. This is an action of contract, upon the lightning clause in two policies of fire insurance, only one of which, covering a certain barn, is here in question. The answer is a general denial and special defenses. After trial by jury, the verdict was for the plaintiff. The case is here on the defendant's exceptions. The clause in question is as follows:

"Lightning Clause.—This policy also covers direct loss or damage to the property insured by lightning (meaning thereby the commonly accepted use of the term 'lightning' and in no case to include loss or damage by cyclone, tornado or windstorm) whether fire ensues or not."

The first question to be considered arises upon exceptions to the denial of the defendant's motions for a nonsuit, and for a directed verdict, and to the admission in evidence of a letter from the defendant to the plaintiffs (Plaintiffs' Exhibit 7), dated August 5, 1927, and saying, with reference to the policy in question: "After careful examination of this case, we have decided to deny liability, as the barn was blown down, and not struck by lightning."

The motion for a nonsuit was upon the ground that on the uncontradicted evidence no proof of the alleged loss or damage had been executed; that the alleged loss exceeded $100, and that no written permission to pay had been given the defendant by the insurance commissioner, wherefore the defendant was expressly prohibited from paying any such loss or damage, by force of No. 160, Acts 1921.

The grounds for the motion for a verdict here material are a practical reiteration of the ground stated in the motion for a nonsuit; that, since no proof of loss had been received, no such loss was yet due and payable by force of G. L. 5568; and the action was prematurely brought.

The plaintiffs admit that no proof of loss was executed by them, or sent to the defendant, but they rely upon the denial of liability contained in the letter above quoted, as a waiver of such proof by the defendant. To this the defendant replies, in effect, that although a stipulation in an insurance policy relating to proofs of loss may be waived, and is waived by a denial of liability, the statutes above mentioned contain limitations upon the right of action, which are not contractual in nature, and cannot be waived.

By G. L. 5568, it is provided that: "The amount of the loss under a fire insurance policy shall be due and payable in sixty days after receipt by the insurance company of satisfactory proofs, and the insured may commence an action after the expiration of that time to recover the same."

And by section 1, No. 160, Acts 1921: "In case of loss or damage to property insured by a fire insurance company transacting business in this state, such a fire insurance company shall not pay any loss or damage until after the expiration of forty-five days from the date when proof of loss is executed; provided that nothing contained in this section shall prevent the payment of a loss to any property owner when the aggregate loss under policies covering the risk does not exceed one hundred dollars: Provided, also, that upon application from an insurance company or its authorized representative, written permission to make earlier payment on any loss may be given said company or its authorized representative by the insurance commissioner, and immediately upon issuing such permit, the insurance commissioner shall notify and grant permits to any other companies known to be interested in the risk. For a violation of this section the insurance commissioner may suspend the authority of the company to transact business in this state for such length of time, not exceeding one year, as he may deem advisable."

We do not think that the action was prematurely brought under G. L. 5568. It has repeatedly been held that a clause in an insurance policy stipulating for the presentation of sworn proof of loss is for the benefit of the insurer, and may be waived by it, and is waived by an unconditional denial of liability for the loss, which is equivalent to saying to the plaintiff that the company would not pay, if such proof were furnished. Therefore a compliance with that provision of the policy would be an idle formality, which the law will not require. Mellen v. U. S., etc., Ins. Co., 83 Vt. 242, 247, 248, 75 A. 273; Clarke v. Travelers' Ins. Co., 94 Vt. 383, 391, 111 A. 449.¹ And so, too, where the policy contains a condition that no action can be maintained upon it, and no loss is payable under it, until a limited time has elapsed after satisfactory proof of loss has been received by the insurer, suit may be brought at once upon the denial of liability, although the time limited by the policy may not have expired. Frost v. North British, etc., Ins. Co., 77 Vt. 407, 415, 60 A. 803. A clause in a policy limiting the time within which suit may be brought thereon, being for the benefit of the company, may be waived. Bates v. German Comm. Acc. Ins. Co., 87 Vt. 128, 129, 130, 88 A. 532, Ann. Cas. 1916C, 447.

The foregoing authorities, it is true, have to do with the waiver of contractual stipulations, contained in the policy. But in many jurisdictions, where the form and contents of a policy are prescribed by statute, it has been held that a stipulation therein providing for the filing of proof of loss may be waived by the insurer. Hicks v. British Am. Assur. Co., 162 N. T. 284, 56 N. E. 743, 745, 746, 48 L. R. A. 424; Simons v. Ins. Co., 277 Pa. 200, 120 A. 822, 823; Hamblin v. Newark Fire Ins. Co. (1927) 48 R. I. 473, 139 A. 212, 213, 214; De Noya v. Fidelity, etc., Ins. Co., 110 Okl. 235, 236, 237 P. 125; Nicholas v. Ins. Co., 125 Iowa, 262, 268,101 N. W. 115; Llebing v. Mut. Life Ins. Co., 269 Mo. 509, 520, 191 S. W. 250, 253.

Indeed, it has been held that such a requirement, being for the benefit of the insurer, may be waived by it, whether imposed by contract or by statute. Jewett v. Quiney Mut. Fire Ins. Co., 125 Me. 234, 132 A. 523, 524 (a case much like the instant one, in that the action was brought under the lightning clause of the policy, and the claim of the defense was that the building was demolished by wind); Levi v. Palatine Ins. Co., 75 N. H. 551, 78 A. 617, 618; Flynn v. Orient Ins. Co., 77 N. H. 431, 92 A. 737, 738; Oakes v. Ins. Co., 112 Me. 52, 90 A. 707, 708 (a statutory arbitration clause held susceptible of waiver by the company in a manner other than the one provided therein). In Williams v. Vermont Mutual Fire Ins. Co., 20 Vt. 222, 231, a provision as to the place and time of bringing suit under a policy contained in the charter of the company was held to be a limitation upon the legal liability of the insurer, and, no suit having been brought in accordance therewith, there was no indebtedness which might be reanimated by an acknowledgment or new promise; thus, in effect, holding that this provision of the charter could not be waived by the company. To the same effect in Dutton v. Vermont Mutual Fire Ins. Co. of Vermont, 17 Vt. 369, 374. But, in commenting upon the former of these cases, it is said in Bates v. German Comm. Acc. Co., supra, 87 Vt. at page 131, 88 A. 534, Ann. Cas. 1916C, 447, that it "is predicated upon a theory of insurance contracts which has long been abandoned."

The defendant attempts an analogy between this case and such decisions as Petraska v. National Acme Co., 95 Vt. 76, 80, 113 A. 536, and Parker v. Pittsfield, 88 Vt. 155, 158, 92 A. 24, 26, in support of the contention that there can be no waiver of a statutory requirement that no suit shall be brought until a certain notice has been given. But these authorities are not in point. In the Petraska Case, the failure to make claim for compensation by an injured employee was held to be a jurisdictional defect in a proceeding before the commissioner of industries, and being a statutory limitation upon his authority, it could not be enlarged, diminished, or destroyed by express consent, or waived by acts of estoppel. Parker v. Pittsfield, supra, was an action against a town to recover for injuries alleged to have been caused by the insufficiency of a culvert. It was held that the statute (P. S. 4031) providing that no action should be maintained against a town in such a case, unless a writ- ten notice of prescribed contents should first be given by the injured party, "pertains to the remedy, and it is essential to the right to maintain an action to prove that the person injured or damaged gave notice to the town in compliance therewith," and that a failure to object to the notice when offered in evidence was not a waiver of material defects therein.

It is not necessary to decide whether, in such a case, the giving of the statutory notice can be waived by the town. In Pratt v. Sherburne, 53 Vt. 370, 374, it is said that the purpose of the notice is "to give the town such notice of the injury that they in the exercise of reasonable diligence could ascertain its character and extent." In Wheclock v. Hardwick, 48 Vt. 19, and again in Gregg v. Weathersfield, 55 Vt. 385, the question was as to the authority of the selectmen to bind the town by their statements or vote. But the liability of towns for defects in highways or bridges is purely statutory in its nature. Kent v. Lincoln, 32 Vt. 591, 595, 596; Hyde v. Jamaica, 27 Vt. 443, 457; Gay v. Cambridge, 128 Mass. 387, 388. And...