Wilson v. Central Insurance

The plaintiff was a subject of Great Britain and the defendant corporation organized and existing under the laws of Great Britain. The plaintiff had been in the employ of the defendant as its agent. The defendant issued to the plaintiff a policy of insurance covering accidents happening in Europe which was extended by an indorsement on policy that covered risks .attendant on journeys by the assured to the United States of America and the South of Canada. This policy insured the plaintiff against accidents within 12 months beginning at noon on May 9, 1903. One of the conditions to which this policy was subject was that the right to recover

“If any difference or dispute shall arise respecting the liability of the company or the amount payable to the insured, the matter in difference shall be referred to the arbitration and decision of a neutral arbitrator, and the decision of the arbitrator shall be final and binding on. all parties and this condition shall be deemed and taken to be an agreement to refer as aforesaid within the meaning of the Arbitration Act, 1889, the Arbitration (Scotland) Act 1894, or any for the time being subsisting statutory modification thereof and it is hereby expressly stipulated and declared that the obtaining of an award by such arbitrator shall be a condition precedent to enforcing the liability of the company in respect to any claim under this policy regarding which any such difference may have arisen; and, further, that each party shall pay his or their own costs of the reference, and shall also pay one-half of the costs of the arbitrator, and of the award, and of any application to the court which may be necessary for the appointment of a single arbitrator, should such application be required.” • '

After this policy was issued, and in June, 1903, the plaintiff came to this country, and engaged in soliciting insurance, and traveled about the country for that purpose. He took a temporary appointment from the German Insurance Company as managing agent, which required him to be constantly traveling. On February 26, 1904, while underneath a railroad bridge in Allegany City, Pa., his right eye was injured. It became much inflamed and swollen, and subsequently plaintiff claims to have lost th.e sight of the eye. On February 29,' 1904, the plaintiff wrote a letter to the defendant, informing it of the acc’dent to his eye-on the 26th inst. This letter was answered March" IB, 1904, with the request that the plaintiff fill up and return a printed form which appears to have been inclosed in the letter, and this request the plaintiff complied with on the B2d day of April, 1904. There was considerable correspondence between the parties until the B7th of June, when the defendant wrote to the plaintiff that it had instructed its adjuster in Pittsburgh to deal with the matter. The plaintiff thereafter had interviews and correspondence with this adjuster, and finally, on the 19th day of December, 1904, the plaintiff wrote to the defendant, stating that he had endeavored to adjust his claim with the adjuster, but without success. Some time in February the adjuster told the plaintiff that the defendant would not entertain any claim for the loss of the sight of his eye, whereupon the plaintiff wrote tó the defendant, stating that he would not entertain any other proposition from them except for the loss of his eye. The plaintiff then offered to submit to a single neutral arbitrator in this country, but that offer was declined. Subsequently, and on the 9th day of March, 1905, the plaintiff proposed several persons as arbitrators and stated that if the defendant did not accept his offer he would instruct his at

By the English arbitration act of 1889, referred to in the policy, it is provided that the court or judge may on application by the party who gave the notice appoint an arbitrator, umpire, or third arbitrator, who shall have the like powers to act in the reference and make an award as if he had been appointed by consent of all parties. As both parties to this transaction are citizens of Great Britain and there domiciled, it is clear that the contract must be construed according to the laws of Great Britain. Both parties called witnesses to testify as to the law. An English barrister testified for the plaintiff, and was asked, a hypothetical question setting out the provisions of the policy, and in response to which the witness answered that “under the laws of Great Britain and on the facts stated'condition 8 above quoted as to arbitration is a good and valid condition precedent,” and that, on the facts stated, the plaintiff would be precluded from recovering from the insurance company, unless the insurance company by some overt act had expressly, notified the plaintiff that it would not proceed to arbitration at all, and excused the plaintiff from making an application to any court or judge to appoint an arbitrator.

The plaintiff testified to many interviews with the defendant’s adjuster in April or May, 1904; that in one of these conversations he says they conversed about the seventh 'clause of the policy, and that the defendant’s adjuster said that it would be absurd to apply that clause; that it would not apply in the plaintiff’s case because he believed that the plaintiff would get the sight of his eye again. He further testified that the adjuster told him that, if the defendant agreed to arbitrate, it must be done in England, and that subsequently this adjuster told him that the company would not arbitrate at all. It was after this conversation that the plaintiff’s solicitor proposed arbitration, and the plaintiff had an interview with the defendant’s representatives in this country in respect to the arbitration. On behalf of the defendant, this adjuster denied ever having stated to the plaintiff that the defendant would not arbitrate, or that the defendant waived any condition of the policy. There is not the slightest evidence to show that, this adjuster had any authority to waive any of the conditions of this policy, and the matter had only been referred to him to determine whether or not a settlement could be arrived at. The parts of the deposition of the English barrister who had been called on behalf ’ of the plaintiff which had not been read by the plaintiff were read by the defendant. He there testified that, upon the facts stated in the hypothetical question, the defendant was not liable to the plaintiff be-. cause,' the insurance company having rejected the plaintiff’s claim,

An English barrister was called by the defendant as a witness. He testified that the defendant was not liable to the plaintiff in any sum whatever upon the facts stated in the hypothetical question; that the right to recover the capital sum insured by the policy has been forfeited and extinguished, and the liability of the company has ceased and determined by the expiry of six months from the date of the accident without a settlement having been agreed on or referred to arbitration in terms of condition 8; that a difference has arisen respecting the liability of the company within the meaning of condition 8, and no award of such arbitrator as mentioned in that condition has been obtained, and the obtaining of such award is by that provision made a condition precedent to enforcing the liability of the company in respect of a claim made under the policy; that this is a valid condition precedent; and on the facts stated, it precludes the plaintiff from recovering from the company, unless waived by the company. I do not think that there is any dispute as to the laws of Great Britain applicable to this claim as between these parties. It seems to me clear by the law of England these provisions contained in sections 7 and 8 and made a part of the policy proved are conditions precedent to the maintaining of any action at law based upon the policy. That condition is that, within six months from the time'of "the accident, there shall be a settlement between the insured and the company as to all claims covered by the policy or a reference of the question to an arbitrator either by agreement of the parties or by obtaining the appointment of an arbitrator under the arbitration act of 1889. It is not such a short

I therefore think that the judgment should be reversed and a new trial ordered, with costs to the appellant to abide the event.

LAUGHEIN and SCOTT, JJ., concur.

(dissenting). The defendant is an English company, and on the 9th day of May, 1903, at London, it issued to the plaintiff, a British subject, an accident policy providing, amongst other things, that it would pay to the insured ¿500 in case he received within the life of the policy an accident to an eye which should cause total blindness within one calendar month, and in addition, would also pay his reasonable physician’s bills. By its terms the policy covered only accidents happening in Europe, but, upon the plaintiff informing the general manager of the defendant that he contemplated a journey to the United States, there was indorsed upon a policy a memorandum to the effect that it should be deemed to cover risks attendant on journeys by the assured to the United States of America and the South of Canada. On the 26th of February, 1904, within the life of the policy, unless it had been forfeited by acts of the assured, at Pittsburgh, Pa., the assured received an injury, through accident, to one of his eyes, which he claimed resulted' in. total blindness within one calendar month. On the 29th of February the plaintiff wrote to the defendant at London, informing it of the accident and claiming compensation, and asking advice as to what he should do. The defendant thereupon, after some delay, sent to the plaintiff blank forms of proof of loss to

The plaintiff was able to produce a letter of the defendant acknowledging payment in full of the premium, and the contention that notice of the accident was not received within the stipulated time was- very properly abandoned because the defendant requested proofs of loss long after such period had expired without questioning the regularity of the notice. Amongst the conditions contained in the policy are those numbered “7” and “8.” So far as material to the controversy involved, condition numbered 7 provided that the defendant should not be liable to pay any sum until the amount of compensation due or the defendant’s liability to pay had been ascertained and proved to the satisfaction of the directors; and, further:

“The right to recover payment of any capital sum insured under this policy shall be forfeited and extinguished on the expiry of six months from the date of the accident and the right to recover payment of the weekly compensation shall be forfeited and extinguished on the expiry of fifteen months from the date of the accident or sickness, on the completion .of which periods, respectively, the liability of the company in respect of such accident or sickness shall cease and determine, unless within these periods, respectively, a settlement with the insured or his representatives has been agreed upon or referred to arbitration in terms of condition 8.”

Condition 8 reads as follows:

■ “If any difference or dispute shall arise respecting the liability of the company or the amount payable to the insured, the matter in difference shall be referred to the arbitration and decision of a neutral person as single arbitrator, and the decision of the arbitrator shall be final and binding on all parties and this condition shall be deemed and taken to be an agreement to refer as aforesaid within the meaning of the Arbitration Act, 1889, the Arbitration (Scotland) Act, 1894, or any for the time being subsisting statutory modification thereof and it is hereby expressly stipulated and declared that the obtaining of an award by such arbitrator shall be a condition precedent to enforcing the liability of the company in respect of any claim under this policy regarding which any such difference may have arisen.”

The arbitration act referred to was introduced in evidence, and, amongst other things, it provides that, where a submission to a single arbitrator by agreement has been made, any party may serve the other with a written notice to appoint an arbitrator, and, if he shall fail to do so. within seven days, a court or judge, may on application of the party giving the notice, appoint an arbitrator who shall have the same powers as one designated upon consent of the parties, and that a submission to arbitration, unless a contrary intention is expressed therein, shall be irrevocable except by leave of the court, and shall

By his complaint the plaintiff alleged that he had duly complied with all the terms and conditions of the policy on his part, and that he had at all times been ready and willing to refer whatever difference or dispute there may have been under the policy to an arbitrator or arbitrators, but that the defendant had neglected and refused to refer such difference or dispute to such arbitration. The defendant, amongst other defenses, alleged specially that the plaintiff had not complied with

The defendant contended at the trial, and now contends, that the plaintiff’s complaint was not sufficient to entitle him to prove waiver of the condition of the policy respecting the bringing of the action within six months after the happening of the accident, or as to the arbitration ; and, in effect, that the provision with respect to arbitration required the plaintiff before he could bring any action at all, whether the defendant refused to arbitrate or not, to obtain the award of an arbitrator. The learned trial court held that the allegation of the complaint that the defendant had neglected and refused to arbitrate was sufficient to entitle the plaintiff to prove waiver of arbitration, and that the provision of the policy respecting the bringing of the action within six months was not a condition precedent, but was in the nature of a forfeiture or limitation which it was not necessary for the plaintiff to plead, and which he had a right to rebut in contradiction of the defendant’s plea and proof; and that, if the plaintiff established waiver of the arbitration or refusal to arbitrate, the six-months clause became operative only on- such refusal because the plaintiff had six months after such waiver or refusal within which to bring his action. I think the ruling was right, and that the judgment should be affirmed.

The seventh condition of the policy, to the effect that the right of recovery should be forfeited and extinguished on the expiration of six months from the date of the accident unless a settlement with the insured should have been agreed upon or the matter referred to arbitration within that period, is clearly to my mind a clause of limitation, and not a condition precedent. It is a short statute of limitations which the parties themselves have agreed upon. The defendant had the right immediately upon receiving notice of the accident to the plaintiff to say that it would neither pay plaintiff his claim nor arbitrate it, and thereby set running this six-months statute of limitations. Had the defendant done that, the plaintiff would have been compelled to bring his action within the six months or lose his right. The provision as to six months, unless so interpreted, can have no meaning at alL The English arbitration act provides that the award of an arbitrator shall be final unless set aside by the court, which may be done for certain reasons, and may be enforced by leave of the court or judge in the same manner as a judgment. The provision of the policy cannot mean that the assured shall have six months after an award shall be made to bring an action thereon because no action is necessary upon an award or contemplated by the arbitration act. Nor can it mean that, if any action is ever brought under any circumstances, it must have been brought within six months after the happening of the accident.

The contract was made in England, and concededly is to be governed bv the English law, and testimony of English lawyers was introduced

According to the testimony of both plaintiff and defendant, negotiations respecting plaintiff’s claim and his policy were continued long after the expiration of six months from the happening of the accident; the defendant making no claim that it was relieved from liability under the provisions of the six-months clause. By numerous letters the defendant recognized the plaintiff’s claim as subsisting, except for the fact that total blindness did not occur within one calendar month, and that plaintiff had become a resident of Pittsburgh, instead-

In Trippe v. P. E. Society, supra, the court says:

“It is well settled that such defenses [limitation] are waived when the company with knowledge of all the facts requires the assured by virtue of the contract to do some act or incur some expense or trouble inconsistent with the-claim that the contract had become inoperative in consequence of the breach of some of the conditions.”

In Barnum v. Merchants’ Fire Ins. Co., 97 N. Y. 188 , the court says:

“The defendant may by objecting to the proofs of loss impose upon the assured the duty of making them complete and removing, if possible, the dissatisfaction of the insurer, and, if he chooses to do so, the delay is mutual, and.: the time of limitation necessarily extended.”

Negotiations were continued and hope held out to the plaintiff that the defendant would arbitrate to within a few weeks of the bringing: of the action. In my opinion the six-months clause was one of limitation, and the defendant by its acts was estopped from pleading it as» a defense to the plaintiff’s action.

I fully appreciate the holdings of the learned courts in Allen v. Dutchess County Mutual Ins. Co., 95 App. Div. 86 , 88 N. Y. Supp. 530 , and in Williams v. Fire Association of Philadelphia, 119 App. Div. 573 , 104 N. Y. Supp. 100 , to the effect that the provision in a policy of insurance that actions shall be brought thereon within 12 months after the occurrence of the loss is a condition precedent, and that, if the insured relies upon a waiver of the limitation, he must plead it as a waiver in his complaint. The fundamental error in these decisions lies in confusing the limitation clause of the policy with the various conditions precedent contained therein, like furnishing proofs of loss for example. A condition precedent is something that a party-must do before he begins his action. An agreement that an action; shall be brought within a certain time relates to the bringing of the action, and not to the doing of something before it is brought.

An objection that the action was not commenced within the time limited can only be taken by answer (Code Civ. Proc. § 413), and,,

The plaintiff’s complaint was sufficient to permit him to show that-the defendant had waived, arbitration through refusal to arbitrate. In Glazer v. Home Ins. Co., 113 App. Div. 235 , 98 N. Y. Supp. 979 , the plaintiff pleaded performance, and that he had served proofs of loss upon the defendant which they had retained without objection, and without requiring any further proof on the subject. The Appellate Division held such plea insufficient to show waiver, and because the proofs were not such as were required under the conditions of the policy reversed the judgment. On appeal the Court of Appeals ( 190 N. Y. 6 , 82 N. E. 727 ), held such erroneous, and that, while the word “waiver” was not used in the complaint, the facts were sufficiently stated to make a good pleading. In Young v. Phoenix Ins. Co., 61 N. Y. 650 , the complaint alleged that proofs of loss were not given within the specified time and set forth certain facts which tended to show a waiver without however stating their effect, and the complaint was held good. By the plaintiff’s complaint the defendant was apprised that the plaintiff claimed that he had offered to arbitrate, and that the defendant had refused so to do, and thus no legal effect, constituted a waiver of arbitration on defendant’s part.

In my opinion condition No. 8 did not require the plaintiff to obtain the award of an arbitrator at all hazards, whether the defendant wanted an arbitration or not. Even if the defendant had an absolute, right to arbitration, it could waive that right. When the plaintiff accepted the defendant’s policy containing the arbitration clause, he may be assumed to have agreed irrevocably on his part that he would arbitrate, and that arbitration should be a condition precedent to recovery; yet the defendant could relieve him from that condition and could waive its right to an arbitration. The absolute refusal to have anything to do with an arbitration either in England or in the United States was a waiver by the defendant of the arbitration agreement, and the defendant cannot now be heard to say that arbitration should have been had.

If the pleading was sufficient to admit to proof, as I think it was, the plaintiff stands uncontradicted in stating that the defendant’s manager told him that, if plaintiff would write him a letter after his return to England, he would submit the matter finally to the defendant’s directors, and that, if he did not hear from him by a certain time, he might consider that the defendant refused both to pay and to arbitrate, and that he should go ahead and sue. Plaintiff’s story in this

The other questions involved were properly disposed of by the court and jury, and I think the judgment should be affirmed, with costs.

CRARKE, J., concurs.