Wilmington Amusement Company v. The Pacific Fire Insurance Company

• Decision Date: 20 June 1941
• Citation: 41 Del. 294,21 A.2d 194
• Court: Delaware Superior Court
• Parties: WILMINGTON AMUSEMENT COMPANY v. THE PACIFIC FIRE INSURANCE COMPANY

21 A.2d 194

41 Del. 294

WILMINGTON AMUSEMENT COMPANY v. THE PACIFIC FIRE INSURANCE COMPANY

Superior Court of Delaware, New Castle County

June 20, 1941

Superior Court for New Castle County, May Term, 1941.

Demurrer to declaration.

The demurrer is sustained.

Hugh M Morris and S. Samuel Arsht for plaintiff.

David F. Anderson (of Southerland, Berl, Potter and Leahy) for defendant.

LAYTON C. J., RICHARDS and TERRY, J. J., sitting.

OPINION

LAYTON, Chief Justice:

The demurrer challenges the sufficiency of the first count of the declaration. It was alleged that on June 8, 1938, the defendant issued its policy insuring against loss by fire the plaintiff's property in Wilmington, known as the Queen Theatre Building. On December 2, 1939, a fire occurred in a part of the building occupied by the plaintiff's lessee. The plaintiff had no knowledge of the fire and resulting damage until March 15, 1940, for the reason that its lessee did not notify it of the fire until that time. Upon receipt of the information, the plaintiff gave immediate notice of loss to the defendant's authorized agent who accepted the notice without objection or complaint and notified the defendant at its home office of the loss and damage on a written form provided by the defendant for such purpose. On June 19, 1940, the plaintiff submitted to the defendant written proofs of loss which contained all of the information required under the terms of the policy.

The policy in suit contained the following provisions:

"If fire occur the insured shall give immediate notice of any loss thereby in writing to this company * * *; and within sixty days after the fire, unless such time is extended in writing by this company, shall render a statement to this company, signed and sworn to by said insured, stating the knowledge and belief of the insured as to the time and origin of the fire; the interest of the insured and of all others in the property; the cash value of each item thereof and the amount of loss thereon; * * *."

"No suit or action on this policy for the recovery of any claim shall be sustainable in any court of law or equity until after full compliance by the insured with all the foregoing requirements, nor unless commenced within twelve months after the fire".

The defendant demurred on the grounds that the plaintiff failed to give immediate notice of loss, and failed also to furnish proofs of loss within the time required by the terms of the policy.

The purpose of a provision for notice and proof of loss is to afford the insurer an adequate opportunity for investigation, to prevent fraud and imposition upon it, and to enable it to form an intelligent estimate of its rights and liabilities before it is obliged to pay. O'Reilly v. Guardian Mutual Life Ins. Co., 60 N.Y. 169, 19 Am. Rep. 151. Such stipulations are, generally speaking, reasonable, valid and binding. Extrinsic circumstances and events may, however, operate to excuse delay in compliance with the requirements for giving immediate notice of loss; and the prevailing rule is said to be that where, because of circumstances and conditions surrounding the transaction, and through no fault or negligence on the part of the insured, the giving of notice within the stipulated time was impossible, the failure to give such notice will not bar a recovery on the policy, if notice is given within a reasonable time after the removal of the obstacle. 29 Am. Jur. 832.

The plaintiff is a Delaware corporation. The declaration does not disclose where its business organization was maintained, nor anything of the character and extent of the fire. Whether the plaintiff was at fault in not learning of the fact of the fire in its building for several months after its occurrence depends on a variety of factors; and as, for other reasons, the demurrer must be sustained it is unnecessary and unadvisable to determine the question.

It seems, from the plaintiff's brief of argument, that the notice of loss given to the defendant's agent on March 15, 1940, was verbal only; but as the defendant does not rely on the stipulation of the policy requiring written notice of loss the plaintiff's contention that written notice was unnecessary in view of the acceptance by the defendant's agent of verbal notice without objection need not be noticed further than to say that notice of loss and formal proofs of loss are matters entirely distinct. Both are required; and a mere notice of loss, verbal or written, cannot supply the place of, or dispense with, the more formal proof required by the policy. O'Reilly v. Guardian Mutual Life Ins. Co., supra.

Admittedly, proofs of loss were not furnished to the defendant until June 19, 1940, more than six months after the occurrence of the fire, and more than sixty days after the plaintiff had knowledge of it. The plaintiff contends that the provision of the policy that no action shall be sustainable thereon until after full compliance by the insured with the stipulation as to notice and proof of loss operates merely to suspend the right of the insured to sue on the policy until the expiration of sixty days after submission of such proof. Under this view, the giving of notice and the furnishing of proof of loss are regarded as conditions precedent to the institution of suit, not to liability. The theory is that if the policy of insurance provides that notice and proofs of loss are to be furnished within a certain time after the loss has occurred, but does not impose a forfeiture for failure to furnish them within the time limited, and does impose forfeiture for a failure to comply with other provisions of the policy, a condition precedent to liability is not indicated, but...