Steadman v. Pearl Assur. Co.

• Decision Date: 06 November 1961
• Docket Number: No. 45601,45601
• Citation: 134 So.2d 884,242 La. 84
• Parties: Henry STEADMAN, Jr. v. PEARL ASSURANCE COMPANY, Limited.
• Court: Louisiana Supreme Court

Page 884

134 So.2d 884

242 La. 84

Henry STEADMAN, Jr. v. PEARL ASSURANCE COMPANY, Limited.

No. 45601.

Supreme Court of Louisiana.

Nov. 6, 1961.

Rehearing Denied Dec. 11, 1961.

Roccaforte & Rousselle, Leo W. Rousselle, Frank W. Roccaforte, New Orleans, for plaintiff-appellant.

Lemle & Kelleher, Allen R. Fontenot, New Orleans, For defendant-respondent.

HAMLIN, Justice.

We granted Certiorari in this matter to review a judgment of the Court of Appeal, Fourth Circuit (127 So.2d 366), which affirmed a judgment of the trial court maintaining an exception of no right or cause of action filed by the defendant, Pearl Assurance Company, Limited. Article VII Section 11, Louisiana Constitution of 1921, LSA.

On June 24, 1959, defendant issued to plaintiff, Henry Steadman, Jr., a three year theft insurance policy covering 'One man's 14K yellow gold ring set with a diamond weighing approx. 2.85 carats, silver cape in color, American cut and containing a very slight feather near the girdle.' The policy recited that the ring had a value of $2,950 and stated (Condition 5):

'All adjusted claims shall be paid or made good the Assured within sixty (60) days after presentation and acceptance of satisfactory proof of interest and loss at the office of this Company. No loss shall be paid hereunder if the Assured has collected the same from others.'

On September 6, 1959, while the above mentioned policy was in full force and effect, plaintiff's ring was stolen from his automobile, and a short time thereafter the loss was reported to defendant's representative. On October 1, 1959, plaintiff mailed a written proof of loss to Miazza Adjustment Company, defendant's agent. Plaintiff was not paid his loss, and he filed the present action on December 2, 1959, alleging in part:

'11. That on October 1, 1959 petitioner furnished said Miazza Adjustment Company, defendant's agent, with a satisfactory proof of loss; that since that time petitioner has not been contacted by defendant or by anyone representing the defendant with regard to his claim and loss nor has he received any amounts in settlement of his said claim.

'12. That to date petitioner has not been paid, compensated or satisfied for his said loss and the defendant, Pearl Assurance Company Limited's failure to pay, compensate or satisfy said loss was arbitrary, capricious, and without probable cause; that as a result of defendant's arbitrary failure and refusal to pay and compensate petitioner, he has been forced to employ an attorney to protect his rights, prosecute, and collect the amounts due him; that the defendant herein, Pearl Assurance Company Limited, should be assessed 25% Penalties and damages, and attorneys fees in the amount of $1200.00, all in accordance with LSA R.S. 22 :658 and other laws of the State of Louisiana.

'13. That petitioner avers amicable demand without avail.'

In answer to plaintiff's petition, filed on January 7, 1960, defendant denied that it had acted arbitrarily, capriciously or without probable cause, or that plaintiff had made amicable demand. It averred:

'* * * upon the loss in question being reported to it by plaintiff, defendant undertook at once to process the said claim and to fulfill its obligations under the policy in question; that defendant acknowledged its said obligations under the said policy to the plaintiff herein shortly after the plaintiff reported the loss; that, shortly after the said loss was reported to it, defendant contacted plaintiff in an effort to replace the lost property of plaintiff; that defendant invited the plaintiff to examine the stock of reputable jewelers in the City of New Orleans for the purpose of selecting a replacement to be purchased and paid for by defendant so as to discharge its obligations under the said policy; that, when such efforts on the part of defendant to replace the said property failed in that plaintiff did not find a ring or a stone acceptable to him in replacement of his lost property, defendant authorized the payment to plaintiff of the full sum of Two Thousand Nine Hundred Fifty and No/100 ($2,950.00) Dollars, which was the full face value of the policy; that, on December 2, 1959, the plaintiff was advised that a draft was being issued to him in such sum is full discharge of the defendant's obligations under its policy; that plaintiff, at that time, replied that suit had been filed by him earlier on that same date and declined to accept the said full face value of the policy; * * *'.

On February 3, 1960, defendant filed a motion to deposit the draft in the Registry of the Civil District Court of the Parish of Orleans; an order was duly signed, and the draft was deposited on said date.

On March 7, 1960, defendant filed an exception of no right or cause of action, averring that plaintiff's petition did not allege that Subsequent to the expiration of the alleged lapse of sixty days following receipt of proof of loss by defendant, and prior to the filing of the instant suit, Plaintiff made demand for payment as required by law. Defendant prayed for dismissal of plaintiff's suit, contending that the demand, supra, was an indispensable predicate for the proper filing of a suit such as the instant one.

The trial court rendered judgment in favor of the plaintiff in the amount of $2,950 with interest and costs; it maintained the exception of no right or cause of action, thereby dismissing plaintiff's demand for penalties and attorney's fees.

Plaintiff appealed from that part of the judgment dismissing his demand for penalties and attorney's fees. Defendant answered the appeal, praying that the portion of the judgment awarding interest and costs to plaintiff be set aside.

Relying on the case of Sbisa v. American Equitable Assurance Co. of New York, 202 La. 196, 11 So.2d 527, 145 A.L.R. 332, the Court of Appeal affirmed the judgment of the trial court. It held that it is no longer an open question that LSA-R.S. 22:658 contemplates a demand being made after expiration of the sixty-day period where the insurer is merely guilty of a passive denial of liability of a claim presented to it.

In this Court, plaintiff relator assigns the following errors by the Court of Appeal in its opinion and decree:

'1. The Fourth Circuit Court of Appeal erred in holding that under the provisions of L.S.A.-R.S. 22:658 that there must be an allegation of demand subsequent to 60 days from submission of proof of loss.

'2. The Fourth Circuit Court of Appeal erred in affirming the District Court's failure to assess the mandatory penalties and attorney's fees after rendering judgment against defendant on the main demand.

'3. The Fourth Circuit Court of Appeal erred in holding that an allegation of demand was necessary, since same may be waived.'

Defendant contends that plaintiff has not brought himself within the penalty statute and cannot do so because he admits that he failed to make the demand as required by the statute. It summarizes as follows:

'1. No debt is demandable until the suspensive conditions upon which its maturity depends are fulfilled. The obligation to pay plaintiff's claim did not mature until sixty days after the proof of loss had been received, hence the demand under the statute could not be made until such sixty days had elapsed. Plaintiff admits his failure to do so.

'2. The first sentence of R.S. 22:658 permits an insured to sue for the amount due under the policy without making a demand; hence, when the second sentence requires a demand in addition to the proof of loss as a prerequisite to the Additional remedy of penalties and attorneys fees, it necessarily assumes that the sixty days have elapsed and that payment has not been made. The demand must follow such passage of time. Plaintiff admits he made no such demand.

'3. The purpose of the required demand is to place the insurer In mora.

No one can be placed In mora before the obligation is due and exigible--in this case, sixty days after proof of loss was received.

'4. Since the filing of a proof of loss (or, for that matter, the mere reporting of a claim) constitutes an informal demand for payment, the additional demand required by the statute must be made after the passage of sixty days from the filing of the proof of loss and before suit if it is to make any sense whatsoever.

'5. Statutes must be construed so as to give meaning to the words therein; the word 'demand' can only have meaning in this statute if it is construed to mean demand after sixty days have elapsed from filing of proofs of loss with passive failure to pay the claim and prior to filing of suit.

'6. Penalties are not favored in the law and those who claim them must come Stricti juris within the statute; plaintiff's contention can be upheld only by construing the statute liberally in favor of the penalty.'

LSA-R.S. 22:658 provides:

'All insurers issuing any type of contract other than those specified in R.S. 22:656 and 22:657 (above) shall pay the amount of any claim due any insured * * * within sixty days after receipt of satisfactory proofs of loss from the insured, * * * or any party in interest. Failure to make such payment within sixty days after receipt of such proofs and demand therefor, when such failure is found to be arbitrary, capricious, or without probable cause, shall subject the insurer to a penalty, in addition to the amount of the loss, of 12% Damages on the total amount of the loss, payable to the insured, * * * together with all reasonable attorney's fees for the prosecution and collection of such loss, or in the event a partial payment or tender has been made, 12% Of the difference between the amount paid or tendered and the amount found to be due and all reasonable attorney's fees for the prosecution and collection of such amount. Provided, that all losses on policies covering automobiles, trucks, motor propelled vehicles and other property against fire and theft, the amount of the penalty in each of the above cases shall be 25% And all...