Staats v. Pioneer Ins. Ass'n

• Decision Date: 29 September 1909
• Parties: STAATS v. PIONEER INS. ASS'N.
• Court: Washington Supreme Court

104 P. 185

55 Wash. 51

STAATS v. PIONEER INS. ASS'N.

Supreme Court of Washington

September 29, 1909

Department 1. Appeal from Superior Court, Yakima County; E. B. Preble Judge.

Action by Charles S. Staats against the Pioneer Insurance Association. Judgment for plaintiff, and defendant appeals. Affirmed.

Granger & Magill and H. T. Granger, for appellant.

Fred Parker, for respondent.

GOSE J.

The respondent, the plaintiff below, commenced this action to recover from the appellant the amount of loss sustained on account of the burning of his stock of goods, which had theretofore been insured by the latter against loss by fire. From a judgment entered upon a verdict in favor of the respondent, this appeal is taken.

The complaint avers that on the 5th day of September, 1906, the appellant, a corporation organized and doing a fire insurance business in the state of Washington, issued to respondent its policy, whereby it insured his stock of goods against loss by fire in the sum of $2,500 for the term of one year; that when the policy was issued the respondent had the goods insured against like loss in the sum of $4,000 in three policies, one for $2,000, and two for $1,000 each, which fact he then disclosed to the appellant; that on October 30, 1906, the goods were destroyed by fire, and that respondent's loss was about $9,000; that the respondent immediately notified the appellant of the loss, and that it sent its adjuster to investigate it; that the latter stated to the respondent that he had fully investigated the loss that he believed it was an honest one, but that the appellant desired to wait until the other companies having insurance upon the goods had acted, and that the appellant would do whatever the other companies did; that on December 8th following the respondent furnished the appellant the proof of loss, and demanded payment; that on June 29, 1907, the other companies settled with the respondent; that the respondent, relying upon the promise of the adjuster to do whatever the other companies did, refrained from commencing action until after the other companies had paid; that on July 1, 1907, the respondent advised the appellant that the other companies had paid, and demanded payment of the policy, which demand was refused on July 5th following. This action was commenced July 30, 1907, more than six months after the fire.

A general demurrer was interposed to the complaint, which being overruled, the appellant answered, joining issue upon the amount of the loss, notice at the time of the issuance of the policy of other insurance, and an extension of time in which to commence suit. The appellant pleaded three affirmative defenses: (1) That the policy sued upon provided, '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 six months next after the fire'; that the loss occurred October 30, 1906, and that the suit was not commenced until July 30, 1907; (2) that the policy provided, 'this entire policy, unless provided by agreement indorsed thereon or added thereto, shall be void if the party now has or shall hereafter make or procure any other contract of insurance, whether valid or not, on property covered in whole or in part by this policy'; that at the time the policy was issued, and continuously thereafter, and at the time of the fire, the respondent held three other policies of insurance on the property, aggregating $4,000; (3) that the policy stipulated that 'this entire policy, unless otherwise provided by agreement indorsed thereon or added hereto, shall be void if any increase of hazard of additional exposures within one hundred feet or otherwise'; that after the issuance of the policy, and prior to the fire, the hazard was increased by the erection of additional exposures to the property within 100 feet thereof, which fact was known to the respondent, and not known to the appellant until after the fire. The reply admitted the three several provisions, alleged that the first two were waived as pleaded in the complaint, and denied that there was any increase of hazard after the issuance of the policy. At the close of the case the appellant moved for a directed verdict. It is conceded that, at the time the policy was issued, a rider was attached, containing the words '$2,000 other concurrent insurance permitted,' and that at such time, and continuously thereafter, and at the time the fire occurred, the respondent held three other policies of insurance on the property, aggregating $4,000.

The appellant first makes the point that the court erred in overruling the demurrer. This argument is predicated upon the assumption that the force of the clauses set forth in the first and second affirmative defenses is not broken by the averments in the complaint. This position, briefly restated, is (1) that, the suit not having been commenced within six months after the fire, the action is barred; (2) that a recovery is precluded on account of the existence of other policies of insurance at the time of the fire in excess of $2,000. We will notice these questions in the order stated.

The first objection does not go to the question of the original liability, but is a plea of the limitation of the time in which the suit is sustainable under the contract. We have held that the clause is a valid one. State Insurance Company v. Meesman, 2 Wash. St. 459, 27 P. 77, 26 Am. St. Rep. 870; Hill v. Phoenix Insurance Company, 14 Wash. 164, 44 P. 146. The respondent urges that the complaint alleges a waiver of this provision of the policy. Upon the demurrer we must accept it as true that the appellant's adjuster, a few days after the fire, stated to the respondent that he had investigated the loss, that he believed it was an honest one, but that the appellant desired that he should wait until the other companies having insurance upon the goods had acted, and that it would do whatever they did. It has been held that to adjust an unliquidated claim is 'to determine what is due; to settle; to ascertain.' 1 Am. & Eng. Enc. Law (2d Ed.) 641. Or, as defined by Webster, it is: 'To settle or bring to a satisfactory state, so that parties are agreed in the result.' In Ruthven v. American Fire Ins. Co., 102 Iowa, 550, 71 N.W. 574, it was held that the direction to a party to adjust a loss included the power to waive formal proofs. In Hall v. Union Central Life Ins. Co., 23 Wash. 610, 63 P. 505, 51 L. R. A. 288, 83 Am. St. Rep. 844, the action had not been commenced within the time fixed by the policy. An agent had told the beneficiary that the money would be paid if it was found that the premiums had been paid, and that it was best to wait until the party returned, to whom it was claimed the premiums had been paid, and to whom as the court found the payments were made. This was held to constitute a waiver.

In Sidebotham v. Merchants' Fire Association, 41 Wash. 436, 83 P. 1028, the insured, the holder of an insurance policy, had not made sworn proofs of loss. The court held that, the insured having complied with the directions of the officers of the company in furnishing invoices and submitting his books for examination, and having been misled by them into the belief that he had done all that the company required of him in the way of furnishing proofs, and it appearing that he had been deceived in that respect, the presentation of sworn proofs of loss was waived. Hill v. Phoenix Insurance Co., 14 Wash. 169, 44 P. 146, relied upon by the appellant, was by a divided court, and the rule announced by it as to the authority of an adjuster was not followed either in the Hall Case or in the Sidebotham Case. In Insurance Company v. Eggleston, 96 U.S. 572, 24 L.Ed. 841, the court considered the question of forfeiture arising from a failure to pay the premiums on a life policy. Discussing the question of a waiver of a forfeiture clause in the policy, at page 577, it is said: 'Any agreement, declaration, or course of action on the part of an insurance company which leads a party insured honestly to believe that by conforming thereto a forfeiture of his policy will not be incurred, followed by due conformity on his part, will, and ought to, estop, the company from insisting upon the forfeiture, though it might be claimed under the express letter of the contract.' In the instant case the delay in the commencement of the action was caused solely by the representations of the appellant's adjuster, and it has suffered no prejudice or injury therefrom. A corporation can act only through its agents, and they must be held to have such power as inheres in the duties they are assigned to perform. The appellant having clothed its adjuster with apparent authority to speak for it, and he having induced the respondent to delay the commencement of the action until the time limit fixed in the contract had expired, it will not now be heard to urge that he exceeded his authority, and invoke the bar. It is further urged in this behalf that suit was not commenced within a reasonable time after payment was refused. The jury under proper instructions resolved this question in favor of the respondent, and we cannot say as a matter of law that the time--25 days--was not reasonable. The formal presentation of proof of loss after the request of the adjuster to delay the commencement of the action does not militate against the view announced in these cases.

It is next urged that the excess insurance alleged in the complaint renders it subject to demurrer. The respondent asserts that the appellant, knowing of the breach of the condition of the policy existing when it was issued and delivered, will be held to have waived the provision against other insurance. The appellant answers,...