Farmers' Fire Insurance v. Mispelhorn

Alvey, J., delivered the opinion of the Court. The principal questions in this case are, whether the requirements of the eighth clause or condition of the policy of insurance sued on have been waived, or whether they have been complied with by the insured. The policy provides that the insured should, forthwith after loss sustained, give notice thereof in writing to the secretary of the company, and, as soon thereafter as possible, deliver a particular account of the loss or damage sustained, under oath, declaring such account to he true and just, &c. This is required by the sixth clause or condition of the policy. In addition to this requirement, the policy contains, as its eighth clause or condition, the following stipulation:— “And whenever required, the insured or person claiming shall produce and exhibit the hooks of account, hills of purchase, or duplicates thereof, and other vouchers, to the insurers or their specially authorized agent, in support of the claim, and permit extracts and copies thereof to he made; and also exhibit to any person or persons named by this company, and permit to he examined by them, any property damaged on which any loss-is claimed; and shall also, if required, submit to an examination or examinations, under oath, by the agent or attorney of this company, and answer all questions touching his, her or their knowledge of anything relating to such loss or damage, and subscribe and make oath to such examination, the same being reduced to writing. And until such proofs, examinations, declarations, certificates and exhibits are produced, and permitted by the claimant, when required as above, the loss shall not he payable.” The fire causing the loss occurred about the 20th of October, 1876, and the notice and preliminary proofs of [190] loss, as required by tbe sixth condition of the policy, appear to have been furnished. This preliminary proof, however, not being satisfactory to the company, a special agent was sent to Baltimore to make scrutiny into the matter, and to examine the insured. The examination of the insured on written interrogatories took place the 6th or 7th of December, 1876. The ground of objection urged by the company to the claim of the insured was that it was excessive, and all investigation had reference to that point of contest. At the time this investigation was going on, the agent of the company demanded of the insured that he should produce his bills of purchase; and upon being informed by the insured that they had been burnt, the agent then required him to produce duplicates of such bills, which the insured failed to do. The insured, in giving his testimony at the trial, on cross-examination, stated that such demand was made upon him; and he also stated that he told the agent that he could not get the duplicates required, and that he did not furnish them; and he further stated that he did not apply to any one from whom he had purchased goods, to furnish him with duplicates of his bills of purchase. After the investigation by the agent, the company still refusing to pay the amount claimed by the insured, the latter, by his attorney, notified the company of his intention to institute suit for the recovery of the claim. To this notification, the agent of the company replied by letter, dated the 29th of January, 1877, thus: “Dear Sir: — In reply to your favor of the 26th, giving notice of intended suit, I am instructed to say, that the Farmers’ Fire Insurance Company will contest the payment of A. Mispelhorn’s claim, (in its present exaggerated form,) under the terms and conditions of his policy, though we should have preferred an amicable compromise. The company is more impelled to this course, as we cannot learn that the City Co., on the same risk, have, or intend paying the claim as made. When they [191] pay, this Co. will probably not delay longer. If, however, you prefer litigation with this Co., we shall contest the claim as above.” This letter was offered in evidence by the insured to show waiver; and the Court instructed the jury, that if they found such letter to have been written and sent to the plaintiff by the agent of the company, then there was a waiver on the part of the company of any further preliminary proof of loss than had before that time been presented to the company. In thus instructing the jury we think there was error. It must be borne in mind that the whole dispute or controversy between the parties was, and had been from the commencement, in regard to the amount of the claim made by the insured. The company, according to the insured’s own testimony, had offered to pay a less sum than that claimed by him, but which he refused. In view of these facts, what meaning was conveyed by the letter of the agent, which informed the attorney of the insured that the company would contest the payment of the claim, in its then exaggerated form, under the terms and conditions of the policy? Clearly, none other than that the company still adhered to and would persist in its refusal to pay the claim because it was excessive in amount, and that the terms and conditions of the policy would be relied on as a protection against what was regarded as an exaggerated demand. If the letter had put the refusal to pay upon other and distinct grounds, or if it had been silent as to the grounds of refusal, but simply denied liability for the loss, without intimating that there was a defect, and in what particular, in the preliminary proofs furnished, then it might well have been insisted, according to the authorities, that there had been a waiver of all further preliminary proof; for otherwise the insured would have been liable to be taken by surprise. But here the letter in evidence pointedly directs attention to the ground of refusal, [192] and the specific objection taken to the claim is one of those that might have been removed by compliance with the provisions of the eighth clause or condition of the policy. Upon what principle of construction then can we say that the proof required, under this eighth condition, has been waived ? The letter must receive a rational construction, and one that will not unjustifiably deprive the insurer of the benefit of the terms and conditions of its contract. The very object of this eighth condition is to put means in the power of the insurer to scrutinize the claims of the insured, and to protect itself against fraud. The provision is such as the parties were competent to make, and having made it a part of their contract, the Courts have no dispensing power over it. Unless therefore it he shown to have been waived by the party entitled to the benefit of it, it must he enforced as any other provision of the contract; and, as we have already said, the letter of the 29th of January, lSll, cannot fairly he regarded as a waiver in that respect. The construction of this eighth clause or condition, and the duty of the insured thereunder, on the requirement of the company, are correctly stated in the first prayer of the company, which was rejected by the Court below. The insured was not only hound to produce and exhibit to the company or its agent, upon being required so to do, the bills of purchase, if within his power or control, but, if they were destroyed, as he himself proved, he was hound to produce duplicates thereof, if it was possible for him so to do. And it was no excuse for his failure to produce such duplicates that they were not in his possession or at his command at the time of the demand made; if they could have been had by application to those who could have furnished them, he was bound to procure and exhibit them as required. Compliance with this condition, if required by the company, was indispensable to the insured’s right of action, and there is no answer to [193] the objection that he had failed to comply, unless he could show, either that compliance had been waived, or that performance of the condition had become impossible without fault of his own. This construction is not only reasonable, but it would seem to be the only one of which the condition is susceptible. A condition substantially in the same terms as the present has received a similar construction to that here adopted, by the Court of Appeals of New York, in the recent case of O'Brien vs. Commercial Fire Ins. Co., 63 N. Y., 108. In that case, in speaking of the condition and what it required, the Court said: “The intent and meaning of the clause is neither ambiguous nor obscure,. and, upon the most favorable interpretation for the insured, exacts from him, upon the requisition of the insurers, duplicates of his invoices of purchase, certified by the merchants from whom the purchases were made. The condition is reasonable and not difficult of performance, and the defendant has a right to insist upon a compliance.” (Decided 19th December, 1878.) But while we are of opinion that the defendant’s first prayer embodies the correct interpretation of the eighth condition of the policy, the last clause of that prayer, which asserts that there was no evidence before the jury legally sufficient to show compliance by the plaintiff with the terms of the condition, or to excuse his non-compliance therewith, and therefore he was not entitled to recover, justified the Court in refusing the prayer as offered. We think there were some circumstances, before the jury reflecting upon the question of the inability of the plaintiff to gratify the demand for duplicates of his bills of purchase; and that being the case, the prayer should not have sought to withdraw that question from the jury. The judgment will be reversed and a new trial ordered. Judgment reversed, and new trial awarded.