Webb v. Kentucky Farm Bureau Ins. Co.
| Citation | 577 S.W.2d 17 |
| Parties | Clifton WEBB, Appellant, v. KENTUCKY FARM BUREAU INSURANCE COMPANY, Appellee. |
| Decision Date | 15 September 1978 |
| Court | Court of Appeals of Kentucky |
H. Garland Wells, Hazard, for appellant.
Hoover Haynes, Hazard, for appellee.
Before WHITE, HOGGE and PARK, JJ.
This is an appeal from an order of the Perry Circuit Court dismissing the appellant's action to recover for fire loss under his homeowner's policy because the action was not brought within 12 months of the inception of the loss. The issue presented by this appeal is whether the provision in the policy containing the one-year limitation on the commencement of actions is in conflict with the general statute of limitations on actions on written contracts found in KRS 413.090(2).
The appellant's residence and all its contents were destroyed by fire on April 20, 1976. On April 27, 1977, appellant filed suit to recover for this loss under his homeowner's policy with the appellee. Thereafter, the appellee moved the circuit court to dismiss for failure to timely file the action, and the court, relying on the policy's one-year limitation, granted the motion on November 22, 1977.
The provisions of the policy which are relevant to the appeal provide that:
(1) No suit or action on this policy for the recovery of any claim shall be sustainable in any court of law or equity unless all the requirements of this policy shall have been complied with, and unless commenced within twelve months next after the inception of loss.
(2) Modification of Terms: The terms of this policy which are in conflict with the statutes wherein this policy is issued are hereby amended to conform with such statutes.
KRS 413.090(2), the statutory section that appellant alleges is in conflict with the one-year policy limitation, allows a fifteen-year period in which to bring an action on a written contract.
It is the appellant's contention that his suit was timely filed because the modification of terms provision requires that the policy be amended to adopt the longer statutory period of limitation.
We are of the opinion that the resolution of this appeal turns on what construction we give the phrase "in conflict" in the modification of terms provision. The appellant argues that a policy limitation must only call for a shorter period of time than the statute of limitations in order to be in conflict with it. The appellee contends that there must be a statute specifically proscribing the contractual shortening of the statutory limitation before there can be a conflict. As the following discussion will demonstrate, we believe the appellee is correct.
Our research discloses that during the last century a principle began to develop that where there is no statute prohibiting the contractual shortening of statutory periods of limitation, that contractual limitations are valid and not in conflict with statutes prescribing longer periods of limitation. The United States Supreme Court first stated this principle in Riddlesbarger v. Hartford Insurance Company, 7 Wall. 386, 74 U.S. 386, 19 L.Ed. 257 (1868). In upholding a one-year limitation imposed by a fire insurance policy, the Court held that as the purpose of statutes of limitation is to encourage the prompt assertion of legal claims, and since there is nothing in their language nor inherent in their purpose which prevents parties from agreeing to a shorter period of limitation, a contractual provision with such a limitation is valid. In Lee v. Union Central Life Insurance Co., 22 Ky.L.Rptr. 1712, 56 S.W. 724 (1900), the Court of Appeals followed this reasoning in upholding another one-year contractual limitation.
Although stated inversely, a more recent example of this principle is found in the decisions in Hiram Scott College v. Insurance Co. of North America, 187 Neb. 290, 188 N.W.2d 688 (1971) and Wulf v. Farm Bureau Ins. Co. of Nebraska, ...
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