Putze v. Saginaw Valley Mutual Fire-Insurance

Hooker, J. The plaintiff, being owner of a building used for the purposes of a hotel and saloon by one Dwyer and his partner, tenants of the plaintiff, procured a policy of insurance against fire in the defendant company, dated January 12, 1897. In the following March, Dwyer and partner left the premises, and by consent of the plaintiff one Armstrong entered as tenant; and he ran the hotel and saloon, without a license authorizing him to sell liquors, until the premises were burned, on May 8, 1897. On May 22, 1897, an agreement was made for an appraisal of the property. This was made, and it is agreed that, if the plaintiff was entitled to recover in his action, the amount of recovery should be $1,140. Proofs of loss were furnished to defendant on July 11, 1897, and upon July 15th the defendant’s secretary wrote to the plaintiff as follows: — 672 — “Saginaw, E. S., Mich., 7 — 15—’97. “Gustave Putze, Esq., “Port Huron, Mich. “Dear Sir: I have papers purporting to be proofs of the Dutch Earm fire loss. As they do not contain a schedule of the dimensions and materials entering into the buildings and additions thereto, in detail, to make them complete, this will have to be done. “In view, however, of the fact Armstrong, your tenant, was arrested and convicted of carrying on a disorderly and illegal business, upon your complaint, it seems to me you voided your policy of insurance. Of this, however, I am not fully advised at this time. By reference to lines Nos. 14 and 15, 32 and 33, and 74, of your policy, you will see there are strong conditions in the contract, which you cannot plead ignorance of to evade responsibility in the matter. Respectfully yours, “P. R. Proctor, “Secretary.” On September 8th plaintiff’s counsel wrote and sent to defendant the following letter, inclosing the papers mentioned: “ Port Huron, Mich., Sept. 8, 1897. “Saginaw Valley Mutual Eire-Ins. Association, “Eddy Bldg., Saginaw, E. S., Mich. “ Gentlemen: Re your policy No. 010,775. “In this matter we inclose you herewith the original proofs of loss which you had returned to Mr. Putze, together with certified plans of the building burned. You will also find inclosed affidavits of the appraisers, A. J. Smith and J. Pennabaker, together with itemized bill for materials needed to rebuild the Dutch Earm hotel. Kindly let us know as soon as possible whether or not you will pay this loss. Truly yours, “Avery Bros. & WaEsh.” In answer the defendant’s secretary wrote a letter dated September 9, 1897, in which it was claimed that the company was misled and deceived as to the value of the property when the policy was obtained, and that some months before the fire its occupancy was changed, and an unlicensed saloon was afterwards conducted, increasing the hazard. A return of premium was offered to be — 673 — made upon demand. It was said that, under the policy, the defendant had 60 days after notice, ascertainment, estimate, and satisfactory proof of loss was received, in which to consider the question of payment. The letter invited correspondence with a view to settlement. On November 24, 1897, this action was commenced by summons. Declaration being filed, the defendant filed a plea of the general issue, accompanied by a notice containing the following allegations: “1. That the policy of insurance declared upon in this case is void and of no effect, in that it was obtained by plaintiff through fraud and misrepresentation: “ (a) Because the plaintiff, for the purpose of inducing defendant to issue said policy, fraudulently overestimated and stated to defendant the value of the property insured, and knowingly and willfully stated to defendant that the property was of much greater value than it really was. “ (6) Because the plaintiff, for the purpose of inducing said defendant to issue said policy, falsely and fraudulently represented, and stated to defendant that the property insured was used for a hotel and regularly licensed saloon, when, as á matter of fact, it was not, at the time of issuing said policy, regularly licensed, or licensed at all, as a saloon, but, on the contrary, was used for the purpose of conducting a saloon therein without license or authority. “2. That said policy is void and of no force and effect because, at the time that the property described in said policy was burned, the said property was being used for the purpose of illegally and wrongfully conducting a saloon therein without license or authority. “ 3. That the plaintiff cannot recover in this action on said policy because there was a change in the use, occupation, and exposure of said property at the time of said fire, different from the use, occupation, and exposure of said property at the time said policy was issufed, in that at the time said fire occurred said property was being used for the purpose of conducting a saloon business therein without license or authority. “4. That the plaintiff cannot recover in this action because the hazard was increased at the time of the fire by reason of the said property being used for conducting a saloon therein without license or authority, all of which was within the knowledge and control of the plaintiff. — 674 — “5. That the plaintiff cannot recover in this case because this suit was prematurely commenced, and at the time of the commencement of this suit the plaintiff had not complied with all the conditions of the law governing this policy, and had not waited as long as the law required after the claim became due before commencing this action, according to the provisions of law governing this case. “6. That at the time of the commencement of this action the plaintiff was not entitled to bring suit against this defendant upon the said policy under the terms and conditions on which the said policy was issued. ” The act under which the defendant was organized contains the following provision: ‘ ‘ Suit at law may be prosecuted and maintained by any member against such corporations for claims which may have accrued, if payments are withheld more than sixty days after such claims shall have become due.” 2 Comp. Laws, § 7326. The policy contained the following provisions: “The sum for which this company is liable, pursuant to this policy, shall be payable sixty days after due notice,” etc. “The loss shall not become payable until sixty days after the notice,” etc. “If this policy be made by a mutual or other company having special regulations lawfully applicable to its organization, membership, policies, or contracts of insurance, such regulations shall apply to and form a part of this policy, as the same may be written or printed upon, attached or appended hereto.” Upon the trial it was contended by the defendant that, by the terms of the policy, the plaintiff’s claim was not due until the expiration of 60 days from September 9th, at which time (i. e., September 9th) the proofs of loss were returned to its officers, and that, under the statute cited, action could not lawfully be commenced for 60 days more {i. e., 120 days after September 9th). The circuit judge sustained this construction, but held that the defense was not admissible, under Cir. Ct. Rule 7, subdivision “c” of -which provides that: — 675 — “ Whenever it shall be claimed in defense that any-written instrument set forth in the plaintiff’s declaration is void or voidable, or cannot be recovered upon, by reason of any statute, or by reason of nondelivery, failure of consideration, fraud, payment, discharge, or release, the facts upon which such defense is based shall be plainly set forth in a notice added to the defendant’s plea.” See, also, 3 Comp. Laws, § 10074. He also refused to permit an amendment, inasmuch as another action might be barred under the following clause in the policy: “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 next after the fire.” Counsel for the defendant maintain that the defense was admissible under the general issue, and that in any event the notice was good, because it apprised the plaintiff of the nature of the defense, which is all that the-law requires of a notice. We’are of the opinion that the learned circuit judge placed the proper construction upon the statute, and that the action would not lie until the expiration of 120 days from the time that proofs of loss were filed, as the claim was not due, according to the terms of the policy, until 60 days expired after proofs of loss were furnished. We also think a notice necessary, and that this defense could not be made under the general issue; but we are of the opinion that this notice was sufficient, when tested by the rule that a notice is sufficiently specific when it apprises the plaintiff of the defense relied upon. Briesenmeister v. Knights of Pythias, 81 Mich. 532 (45 N. W. 977). This notice stated that the suit was prematurely commenced ; that he (plaintiff) had not complied with all of the conditions of the policy, and had not waited as long as the law required .after the claim became due before commencing this action, according to the law governing the — 676 — case. This w as a statement of facts, and indicated an intention to rely upon the law and the policy in relation to the time when suit might be commenced. It is contended -by counsel for the plaintiff that the case of First Baptist Church v. Insurance Co., 119 Mich. 203 (77 N. W. 702), sustains their contention as to the construction to be given the statute, viz., that it refers to the same 60 days mentioned in the policy, and it is said that such case is nearly on all fours with the present case. The policy explicitly fixes the period of 60 days after proof and appraisal as the time within which the loss shall not become due and payable, and the statute authorizes action only when payment has been withheld for more than 60 days after the loss becomes due. The case cited has not held to the contrary. In that case there was no notice of this defense, and, as we have already said, such notice was necessary. There was also a claim of waiver of that condition. The opinion does not state which ground the case turned upon. It is clear that it might have turned upon the want of notice of the defense. It already appears that proofs of loss were furnished and received by defendant on July 11th. If it can be said that these were “satisfactory proof of loss,” the 60 days began to run then. These proofs of loss seem to have complied with the requirements of the policy. An appraisal had previously been made by persons selected by the parties, and this had reached the defendant about May 22d. The defendant saw fit to claim that • these proofs were not complete, because they did not contain the dimensions and materials entering into the buildings and additions in detail, and asked that - these be supplied. ■ While these were not necessary in the first instance, the deféndant had a right to require them, under the terms of the policy. There was no undue delay in making such demand; the secretary having asked for this four days after he received the first proofs, i. e.,- on July 15th. We consider the information a necessary part of the proofs of loss, when demanded seasonably, and must hold, therefore, — 677 — as did the learned circuit judge, that the proofs of loss were not complete until September 9th, and it follows that the action was prematurely commenced. Northwestern Mut. Life-Ins. Co. v. Greiner, 115 Mich. 639 (74 N. W. 187). • We have no alternative but to reverse the judgment and order a new trial. It is so ordered. •The other Justices concurred.