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Gibson Electric Co. v. Liverpool & London & Globe Insurance

10 A.D. 225 Court N.Y. App. Div. English

Delivered by O’Brien, J.:

Contents

Majority

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Gibson Electric Company, Appellant, v. The Liverpool and London and Globe Insurance Company, Respondent, Impleaded with Job R. Furman. Gibson Electric Company, Appellant, v. London and Lancashire Fire Insurance Company, Respondent, Impleaded with Job R. Furman. Gibson Electric Company, Appellant, v. Commercial Union Assurance Company (Limited) of London, Respondent, Impleaded with Job R. Furman.

Headnote

Insurance under standard policies—forfeiture by reason of a judgment of foreclosure before the loss—proceeding with an appraisal is not a waiver thereof.
In actions brought to recover a loss under certain New York standard fire insurance policies, it was conceded that the policies had been rendered void by the commencement of an action to foreclose a mortgage upon the insured premises, and the entry of a judgment therein, before the fire, but it was contended that the companies by proceeding with an appraisal of the loss involving trouble and expense to the insured had waived their right to insist upon the forfeitures.
The companies were notified of the foreclosure proceedings after they entered into the appraisal agreement, but notwithstanding that information proceeded with the appraisal and did not claim that the policies were void until after the proofs of loss had been presented, which was about six weeks after they had received notice of the foreclosure proceedings.
The policies contained the following: "This company shall not be held to have waived any provision or condition of this policy, or any forfeiture thereof by any requirement, act or proceeding on its part relating to the appraisal, or to any examination therein provided for."
Held, that the trouble and expense which the insured had incurred were all connected with the appraisal itself, and, in view of the provision of the policies above quoted, could not be considered upon the question of waiver;
That as it appeared that the insurance companies had availed themselves of the forfeitures within a reasonable time after knowledge thereof, and had done nothing to injuriously affect the rights of the insured, nor to induce it to change its position or lead it to believe that with full knowledge of the facts the companies had waived the forfeitures, it could not be held that there had been a waiver of the forfeiture.
(Titus v. The Glens Falls Ins. Go., 81 N. Y. 410 , distinguished.)
Appeal by the plaintiff, the Gibson Electric Company, from judgments of the Supreme Court in favor of the corporate defendant in each of the above-entitled actions, entered in the office of the clerk
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of the county of New York on the 28th day of February, 1896, upon the dismissal of the complaint upon the merits, directed hy the court after a trial before the court and a jury at a Trial Term of the Supreme Court held in and for the county of New York.
. The actions were brought by the Gibson Electric Company against the insurance companies upon three policies of fire insurance, known as standard policies, issued by them to the appellant upon . property located in the town of Chatham, Columbia county, Ñ. Y. At the time of the issuing of the policies the premises upon which the buildings insured stood were incumbered by a mortgage held by one Job R. Furman, who was made a defendant in these actions upon his refusal to join the plaintiff in bringing the action. The loss occurred on the 23d day of October, 1891. Prior to the fire Furman began an action for the foreclosure of his mortgage by the service of a summons and complaint upon the Gibson Electric Company, mortgagor, and the insured in these actions. The mortgagor having made default, the action of foreclosure was prosecuted to judgment and the same was entered October 20, 1891, and on October 31, 1891, the property was advertised for sale.
After the entry of said judgment and on the 11th day of November, 1891, an order was granted directing the plaintiff in that action to show cause why the default of the Gibson Electric Company should not be opened and the judgment and subsequent proceedings vacated, and subsequently the motion to open the default was granted, but upon the action being brought to trial, final judgment was entered dismissing the complaint of Furman.
On the 28th day of October, 1891, an agreement for submission to appraisers was executed by the plaintiff and the insurance comjDanies. On the 4th day of November, 1891, while the appraisal was pending and prior to the award, the insurance companies were notified of tffe interest of Furman, as mortgagee. As a result, the agent for some of these companies visited the office of the lawyers from whom the notification had been received, and there obtained information in reference to the claim of Furman and of the proceedings for the foreclosure of the Furman mortgage and the entry of judgment thereon. The companies, after such knowledge, did 'not 'interrupt the appraisement, and it appears that in that connection the insured incurred trouble and expense and submitted its
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books for examination, and prepared and filed proofs of loss np to the 4th day of December, 1891, when the award was made. On the 16th day of December, 1891, proofs of loss were served on the companies, and on the seventeenth they notified the insured that they did not recognize the loss or the validity of the policies, because, with the knowledge of the insured, an action to foreclose a mortgage on the property had been commenced prior to the fire.
A. B. Gardenier, for the appellant.
John Notman, for the respondent.

The policies provide as follows: “ This entire policy, unless otherwise provided by agreement indorsed hereon or added hereto, shall be void if, * * with the knowledge of the insured, foreclosure proceedings be commenced or notice given of sale of any property covered by this policy by virtue of any mortgage or trust deed:” It was established, and we do not understand that it is disputed, that there was a violation of this condition by reason of the commencement of foreclosure proceedings after the issuance of the policies, with the knowledge of the insured, and that judgment of foreclosure and sale was entered before the happening of the fire.

In Quinlan v. Prov. Wash. Ins. Co. ( 133 N. Y. 356 ) this condition in the standard policy was under consideration, and it was held that its violation rendered the policy void. (See, also, Armstrong v. Agricultural Ins. Co., 130 N. Y. 560 ; Allen v. German American Ins. Co., 128 id. 6; Messelback v. Norman, 122 id. 583 ; O’Brien v. Prescott Ins. Co., 134 id. 28; Lett v. Guardian Fire Ins. Co., 125 id. 82.)

It is conceded that the foreclosure proceedings having been commenced and ripened into judgment before the fire, this rendered the policies void. But it is insisted that the acts of the insurance companies in proceeding with the adjustment of the loss after knowledge of the forfeiture waived it. Upon this question of what would constitute a waiver we are referred to the leading case of Titus v. The Glens Falls Ins. Co. ( 81 N. Y. 410 ), a case in many respects like this. The differences, however, between the policies and the law relating thereto are marked and distinct. Those here

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involved are standard policies, which went into effect in May, 1887 (Chap. 488, Laws of 1886), which form of policy, among other things, provides: “ This company shall not be held to have waived any provision or condition of this policy or any forfeiture thereof by any requirement, act or proceeding on its part relating to the appraisal or to any examination herein provided for.” Unlike, therefore, the policy involved in the Titus case, the one here under consideration has a legal sanction for a provision which in express terms declares that no waiver shall result from “ any requirement, act or proceeding *" * * relating to the appraisal or to any examination.” In addition, we have the form of the appraisal agreement on the separate appraisals as to the machinery and as to the building items of the policies, in evidence expressly providing as follows: “It being understood that this appointment and submission is without reference to any other questions or matters of difference within the terms and conditions of the insurance, and is of binding effect only so far as regards the actual cash value of, and the loss and damage to, said property.”

The facts relied upon to show a waiver, consisting of the trouble and expense connected with making the proofs of loss and presenting for examination, books and papers, and in paying an appraiser, were all connected with the appraisement itself, and are, -therefore, covered by the provision in the standard policy to which we have referred, and in that respect the present case differs from the cases which have arisen under the old forms of policy, of which the case relied upon, of Titus v. The Glens Falls Ins. Co. {supra), is the leading one. The last expression of the Court of Appeals bearing upon insurance policies is to be found in Kiernan v. Dutchess County Mut. Ins. Co. ( 150 N. Y. 190 ), which was an action to set aside an award, made by appraisers under a policy of fire insurance, as fraudulent and void, and to recover the amount of the policy. It does not appear in that case whether it was an old form policy or a standard, but we do not think that an examination thereof will aid the appellant in sustaining its contention that the acts relied upon constituted a waiver, for while, as therein held in conformity with a long line of decisions, an election by the company to insist upon the forfeiture of a fire insurance policy for breach of its conditions must be asserted within a reasonable time after acquiring knowledge of

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the breach — which ruling is not applicable to the present case — it is also held that when an appraisal of the loss under the fire insurance policy is proper in any event, the mere fact that one was had at the request of the company has no bearing upon the question of waiver or forfeiture. As therein said: “ The most of the acts of the company tending to show its intent to waive the forfeiture were independent of the appraisal, for some of them preceded while others followed it. They did not bear such a relation to it as to be excluded from consideration under the clause of the policy upon the subject of waiver. Without prolonging the discussion upon this point, we announce as our conclusion that the evidence, independent of all acts relating to the appraisal, sustains the finding of a waiver by the trial court.” Here all the acts relied upon to show a waiver were directly connected with the appraisement, and, as we have seen, as they were expressly provided against, they cannot now be relied upon, contrary to the provision in the policy, as effecting the very thing which that provision was aimed at preventing.

Upon the law, therefore, we think the learned trial judge was right in holding that there was no waiver, as he was equally right upon the facts, because it appeared that at the time the appraisal was commenced the companies had no knowledge of the foreclosure of the mortgage, and did not obtain it until some weeks afterwards; and there is no evidence that the companies did anything to induce the insured to do anything or to incur any expense which would prevent them, within a reasonable time, from insisting upon the forfeiture. It is true they permitted the appraisal to proceed to an award, but within a reasonable time thereafter they availed themselves of the forfeiture, and during that period, which was a short one, nothing was done by the companies to injuriously affect the insured, or induce it to change its position or lead it to believe that, with full knowledge of the forfeiture, they had waived it.

We think the judgment was right and should be affirmed, with costs.

Van Brunt, P. J., Barrett, Rumsey and Ingraham, JJ., concurred.

Judgment affirmed, with costs.

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