Boyd v. Bankers & Shippers Insurance Company

96 S.E.2d 703 (1957) 245 N.C. 503

Arthur E. BOYD and wife, Mary M. Boyd,
v.
BANKERS & SHIPPERS INSURANCE COMPANY.

No. 666.

Supreme Court of North Carolina.

February 27, 1957.

Frank Freeman, Dobson, for plaintiffs appellants.

Wilson Barber, Mt. Airy, for defendant appellee.

WINBORNE, Chief Justice.

Is there error in the ruling of the trial court in granting defendant's motion for judgment as of nonsuit? Consideration of the pertinent acts of the General Assembly, and decided cases in respect thereto, leads to a negative answer.

The policy of insurance here involved is in form the "Standard Fire Insurance Policy of the State of North Carolina" prescribed by the General Assembly, Section 14 of Chapter 378, 1945 Session Laws, by which G.S. § 58-176 and G.S. § 58-177, as they then appeared, were repealed and new sections of the same numbers were inserted. In the new G.S. § 58-176 the General Assembly has declared in pertinent part "(1) The printed form of a policy of fire insurance, as set forth in subsection three shall be known and designated as the `Standard Fire Insurance Policy of the State of North Carolina.'

"(2) No policy or contract of fire insurance shall be made, issued or delivered by any insurer or by any agent or representative thereof, on any property in this State, unless it shall conform as to all provisions, stipulations, agreements and conditions, with such form of policy. * * *

"(3) The form of the standard fire insurance policy of the State of North Carolina * * * shall be as follows: * * * This policy is made and accepted subject to the foregoing provisions and stipulations and those hereinafter stated, which are hereby made a part of this policy, together with such other provisions, stipulations and agreements as may be added hereto, as provided in this policy."

And among the stipulations set forth in such standard form of policy it is provided that when loss occurs, the insured shall file with insurer proof of loss, as therein prescribed and that "No suit or action on this policy for the recovery of any claim shall be sustainable in any court of law or equity unless all the requirements of this policy shall have been complied with, and unless commenced within twelve months next after inception of the loss."

In this connection the word "inception" as defined by Webster means "act or process of beginning; commencement; initiation." Hence as used above "inception" necessarily means that the beginning, the commencement, the initiation of the loss was that caused by the fire.

Moreover, the General Assembly declared in the 1945 Act, Chapter 378, that "All laws and clauses of laws in conflict with this Act are hereby repealed", and the Act became effective July 1, 1945.

And this Court in Mcekins v. Aetna Ins. Co., 231 N.C. 452, 57 S.E.2d 777, 15 A.L.R. 2d 949, decided in 1951, in opinion by Denny, J., held in effect that the provision of the Standard Fire Insurance Policy of the State of North Carolina that an action to recover thereon must be commenced within twelve months next after the inception of the loss, unless a longer time for instituting suit has been agreed upon between the parties, and such agreement appears upon the face of the policy, is valid as a contractual limitation, and is binding upon and enforceable between the parties.

To like effect, in principle, are these decided cases: Holly v. London Assurance Co., 1915, 170 N.C. 4, 86 S.E. 694; Tatham & Co. v. Liverpool, London & Globe Ins. Co., 1921, 181 N.C. 434, 107 S.E. 450; Welch v. Phoenix Ins. Co., 1926, 192 N.C. 809, 136 S.E. 117; Midkiff v. North Carolina Home Ins. Co., 1929, 197 N.C. 139, 147 S.E. 812; Johnson v. Aetna Ins. Co., 1931, 201 N.C. 362, 160 S.E. 454; Rouse v. Old Colony Ins. Co., 1932, 203 N.C. 345, 166 S.E. 177; Zibelin v. Pawtucket Mut. Fire Ins. Co., 1948, 229 N.C. 567, 50 S.E. 2d 290.

In the Welch case, supra [192 N.C. 809, 136 S.E. 118], this Court in Per Curiam opinion referring to grounds upon which judgment of nonsuit may be sustained, stated that "Failure of plaintiff, however, to commence the action within twelve months next after the fire, without allegation and proof of waiver or estoppel, precluding this defense, is sufficient," adding "decisions of this court are all to this effect," citing Beard v. Sovereign Lodge, 1922, 184 N.C. 154, 113 S.E. 661, and other cases there enumerated.

In the Midkiff case, supra, this Court held that the terms and conditions of the standard form of a fire insurance policy, C.S. §§ 6436, 6437, and the stipulations as to a valid waiver thereof are valid and binding on the parties. Connor, J., opened the opinion of the Court by saying [197 N.C. 139, 147 S.E. 813]: "When a policy of insurance, in the form prescribed by statute (C.S. § 6437), and known and designated as the Standard Fire Insurance Policy of North Carolina (C.S. § 6436), has been issued by an insurance company and accepted by the insured, and has thereby become effective for all purposes as their contract, the rights and liabilities of both the insurer and the insured, under the policy, must be ascertained and determined in accordance with its terms and provisions. These terms and provisions have been prescribed by statute, and are valid in all respects; they are just both the insurer and to the insured. Each is presumed to know all the terms, provisions, and conditions which are included in the policy. Both are ordinarily bound by them * * *." See also Johnson v. Aetna Ins. Co., 1931, 201 N.C. 362, 160 S.E. 454.

Moreover in Rouse v. Old Colony Ins. Co., supra, the judgment of the Court sustained the demurrer upon the ground that it appeared "to the Court that the plaintiff did not institute his action on the policy sought to be recovered on within the twelve months next after the fire, and under the terms of said Standard Fire Insurance Policy of the State of North Carolina, the type of the policy sued on, it is required, as a condition precedent to the maintenance of any action for recovery thereon that such action shall be commenced within said period." And this Court, in Per Curiam opinion, affirming judgment below, declared: "The decisions of this court are to the effect that the contractual limitation of twelve months in which to bring suit, inserted in a fire insurance policy by virtue of C.S. § 6437, is valid and binding," citing Holly v. London Assurance Co., supra, and Tatham v. Liverpool, London & Globe Ins. Co., supra.

To like effect is Zibelin v. Pawtucket Mut. Fire Ins. Co., 1948, supra [229 N.C. 567, 50 S.E.2d 291], involving a standard fire insurance policy. There Devin, J., later C. J., summarizes: "Unfortunately for the plaintiff, he failed to observe the terms of his policy and to comply with its plainly written provisions. The contract between the plaintiff and the Insurance Company embodied, in the standard form of fire insurance policy is one prescribed by statute G.S. § 58-177, and its provisions have been held by this Court to be valid and just to insured and insurer. Greene v. Aetna Ins. Co., 196 N.C. 335, 145 S.E. 616. The rights and liabilities of both under the policy must be ascertained and determined in accord with its terms," citing Lumber Mut. Cas. Ins. Co. v. Wells, 226 N.C. 574, 39 S.E.2d 741; Midkiff v. Dixie Fire Ins. Co., supra; Muse v. London Assurance Company, 108 N.C. 240, 13 S.E. 94.

And it is worthy of note that the Federal District Court of Florida, Jacksonville Division, in case of Holderness v. Hamilton Fire Ins. Co. of New York, D.C.1944, 54 F.Supp. 145, interpreting the North Carolina statute, held that "A provision in fire insurance policy, issued to North Carolina citizens on building in such state, that no action thereon shall be sustainable, unless commenced within 12 months after fire, is valid and enforceable in North Carolina, and hence bars action on policy in Florida after such time in absence of countervailing circumstances." See also Annotation 112 A.L.R. at page 1288; also 121 A.L.R. at pages 759 and 772. Annotation Contractual Limitation of Time for Suit.

Now in the light of contentions made by and for appellant on this appeal a brief history of the legislation in respect to the "Standard Fire Insurance Policy of the State of North Carolina" may be appropriate and informative in reference to the many decisions of this Court pertaining to the subject.

The General Assembly of 1893, in Chapter 299, amended the insurance law then in effect in North Carolina so as to adopt, by reference, and provide for the exclusive use in this State the Standard Fire Insurance Policy prescribed under certain insurance law of the State of New York. But the act did not spell out the form of the policy.

Thereafter, in 1899, the General Assembly passed a comprehensive act, Chapter 54, entitled "An act to regulate fire insurance and other companies." This act, under the sub-heading "Fire Insurance", and in Section 43 declared that "No fire insurance company shall issue fire insurance policies on property in this State other than those of standard form filed in the office of the insurance commissioners of the state, known and designated as the standard fire insurance policy of the state of North Carolina, except" (Exception not here pertinent); and in subsection f of Section 43 the form of such policy is prescribed and set out in detail.

And in Section 117 certain laws relating to insurance, among them Chapter 29 of The Code of 1883, and Chapter 299 Laws 1893, were repealed.

Moreover this act of 1899, as amended, was codified and incorporated as Chapter 100 entitled "Insurance" in the Revisal of 1905 of North Carolina. And Sec. 43 of this act, P.L. 1899 Chapter 54, became, in the main, Sections 4759, adopting standard fire insurance policy, and 4760, prescribing the form and conditions, stipulations and agreements of such standard form.

Next the General Assembly, by Sec. 9, Chapter 109, P.L.1915, amended the form and the provisions of standard form of policy described in Revisal 4760, incorporating in the body thereof the condition that "This policy is made and accepted subject to the foregoing stipulations and conditions, and to the stipulations and conditions printed on the back hereof, which are hereby made a part of this policy, together with such other provisions, stipulations and conditions as may be endorsed hereon or added hereto as herein provided."

And it is noted that there is set out in the Act of 1899, and in the codification thereof in the Revisal of 1905, and in the Act of 1915, respectively, above described, a contractual limitation substantially as follows: No suit or action on this policy, for the recovery of any claim, shall be sustainable in any court of law or equity unless the insured shall have complied with all the requirements of this policy, nor unless commenced within twelve months next after the fire.

And it is declared in Sec. 13 of the 1915 Act that "All laws and parts of laws in conflict with or inconsistent with this act are hereby repealed."

Thereafter the provisions of the 1915 Act pertaining to the adoption, and to the form of standard policy, in substantial accord, became Sections 6436 and 6437 of the Consolidated Statutes of North Carolina of 1919.

And thereafter upon the adoption of the General Statutes of North Carolina, effective December 31, 1943, Sections 6436 and 6437 of Consolidated Statutes, in substantial accord, including the contractual limitation as to time within which a suit may be commenced, as above recited, became G.S. § 58-176 and G.S. § 58-177.

Thereafter the General Assembly, 1945 Session Laws, Chapter 378, amended Chapter 58 of the General Statutes of North Carolina relating to fire insurance by repealing Sections G.S. § 58-176 and G.S. § 58-177, and inserting new sections of same numbers, as hereinabove related.

Among the stipulations made a part of the policy are these:

"Waiver provisions: No permission affecting this insurance shall exist, or waiver of any provision be valid, unless granted herein or expressed in writing added hereto. No provision, stipulation or forfeiture shall be held to be waived by any requirement or proceeding on the part of this Company relating to appraisal or to any examination provided for herein. * * *

"Requirements in case loss occurs: The insured shall give immediate written notice to this Company of any loss, * * * and within sixty days after the loss, unless such time is extended in writing by this Company, the insured shall render to this Company a proof of loss, signed and sworn to by the insured, stating the knowledge and belief of the insured as to the following; the time and origin of the loss, the interest of the insured and of all others in the property, the actual cash value of each item thereof and the amount of loss thereto, all encumbrances thereon, all other contracts of insurance, whether valid or not, covering any of said property * * *.

"Suit: No suit or action on this policy for the recovery of any claim shall be sustainable in any court of law or equity unless all the requirements of this policy shall have been complied with, and unless commenced within twelve months next after inception of the loss."

In summary it may be noted that (1) in the act of 1899, (2) in the codification in Revisal of 1905, (3) in the act of 1915, (4) in the codification of Consolidated Statutes of 1919, and (5) in the General Statutes, as hereinabove set forth, the limitation agreement as to suit each reads as follows: "Nor unless commenced within twelve months next after the fire," whereas the new section of the 1945 act reads, "and unless commenced within twelve months next after the inception of the loss."

In other words the provisions of the limitation in the 1945 Act are used conjunctively, that is, there must be compliance with all the requirements of the policy, and the suit or action must be commenced within twelve months next after inception of the loss.

Moreover, since it is contended that the contractual limitation as to suit should be construed in pari materia with the provisions of Revisal 4809, now G.S. § 58-31, as was done in Modlin v. Atlantic Fire Ins. Co., 151 N.C. 35, 65 S.E. 605, a case decided in the year 1909, before the enactment of the Act of 1915, repealing all laws and parts of laws in conflict or inconsistent therewith, it is appropriate to interpose here the history of the statute G.S. § 58-31, formerly L.1899, Chap. 54, Sections 23 and 106; L.1901, Chap. 391, Section 8; Revisal 4809; C.S. § 6290, relied upon by appellants in instant case.

This statute originated in this manner: The General Assembly of the year 1899, as above related, passed a comprehensive act, Chapter 54, entitled "An act to regulate fire insurance and other companies". In Section 1 thereof it is declared that "the word `domestic' designates those companies incorporated or formed in this state and with home offices therein." And under sub-division entitled "North Carolina or `Domestic Companies,' Organizations, etc.", Section 23 read as follows: "No such company shall make any condition or stipulation in its insurance contracts concerning the court or jurisdiction wherein any suit thereon may be brought, nor shall they limit the time within which such suit may be commenced to less than one year after the cause of action accrues, and any such condition or stipulation shall be void." And under heading "Insurance in Unauthorized Companies", Section 106 read as follows: "No person licensed to do insurance business under this act shall limit the term within which any suit shall be brought against such person to a period less than one year from the time when the loss insured against shall accrue." And this Section 106 was amended, Public Laws 1901, Chapter 391, Section 8, by adding at the end thereof this clause: "Or to less than six months from any time at which a plaintiff shall take a nonsuit to an action begun within the legal time."

Thereafter Sections 23 and 106, as so amended, were codified in the Revisal of 1905 as Section 4809, to read as follows: "Stipulations as to jurisdiction and limitation of actions. No company or order, domestic or foreign, authorized to do business in this state under this chapter, shall make any condition or stipulation in its insurance contracts concerning the court or jurisdiction wherein any suit or action thereon may be brought, nor shall it limit the time within which such suit or action may be commenced to less than one year after the cause of action accrues or to less than six months from any time at which a plaintiff shall take a nonsuit to an action begun within the legal time. All conditions and stipulations forbidden by this section shall be void."

And the provisions of Rev. 4809 were later codified into Consolidated Statutes of 1919, as Section 6290, and lastly codified into General Statutes as G.S. § 58-31, in substantially the same language as in Revisal 4809.

And though the statute pertaining to form of Standard Fire Insurance Policy of the State of North Carolina as originally written in the year 1899, was re-written in the years 1915 and 1945, the verbiage of Revisal 4809 remained substantially the same.

It will be noted, in this connection, that the Modlin case, supra, was decided in the interim between the 1905 codification of the 1899 act, and the enactment of the 1915 act. And it is significant that the 1915 act made no reference to Revisal 4809, but reenacted the standard form of fire insurance policy, and declared "that all laws and parts of laws in conflict with or inconsistent with this act are hereby repealed." Thus this repealing clause had the effect of repealing Revisal 4809 in so far as it was in conflict or inconsistent with the contractual limitation in the standard policy as formulated and adopted in said act is concerned. Johnson v. Roberson, 171 N.C. 194, 88 S.E. 231; Board of Road Com'rs v. County Com'rs, 186 N.C. 202, 119 S.E. 206; Spaugh v. Charlotte, 239 N.C. 149, 79 S.E.2d 748. It too had the effect of overruling decisions of this Court made in the interim giving effect to conflicting and inconsistent provisions of Revisal 4809. And the tenor of subsequent decisions all along the line clearly indicate that this Court was so impressed,—that is, that the provisions of the contractual limitations are valid, and binding upon the parties, and are enforceable as the obligations of the parties.

In this connection it may be noted incidentally that the General Assembly of 1883, at a time when no standard form of fire insurance policy had been adopted in this State, passed an act, Chapter 57, which was codified as Chapter 29 of The Code of 1883, entitled "Insurance". This Act declared that: "It shall be unlawful for any person, whether natural or corporate, either as principal or as agent, to do or contract or solicit for any insurance business with any resident of this state, unless such insurance business shall have been licensed, as provided in this act, and no contract for any such insurance business entered into otherwise than as this act permits, shall be enforceable in any of the courts of this state." The Code 3061. L.1883, Chapter 57, Section 1.

And in Section 16 of the Act of 1883 it is declared that: "No person licensed to do insurance business under this act shall limit the term within which any suit shall be brought against such person to a period less than one year from the time when the loss insured against shall accrue." This Section 16 was codified as Section 3076 of The Code.

While this Section was in effect, before the adoption of standard form of fire insurance policy in North Carolina, this Court rendered opinions in the cases of Muse v. London Assurance Co., 1891, supra; Dibbrell v. Georgia Home Ins. Co., 1892, 110 N.C. 193, 14 S.E. 783, and Lowe v. United States Accident Ass'n, 1894, 115 N.C. 18, 20 S.E. 169. The principles there applied are applicable to factual situation of case in hand.

In the Muse case, supra, this headnote epitomizes the opinion: "A stipulation in a policy of insurance that the insured shall bring his action for any loss `within twelve months next after the loss shall occur' is not in contravention of the general policy of the statutes of limitations, nor with the special statute of this State (The Code,§3076), which limits the powers of insurance companies to make such stipulations or conditions to a `period less than one year from the time' of the loss."

Avery, J., writing for the Court in this Muse case had this to say: "It seems to be established that a provision in a policy that the insured may bring suit within 12 months after the loss, and not later, being in the nature of a condition precedent, is not in contravention of the policy of statutes of limitation, and will be upheld by the courts." And the Court continued: "The condition that the suit shall be instituted, if at all, within a year after the loss has been sustained is reasonable and valid * * *."

To like effect are Dibbrell v. Georgia Home Ins. Co., 1892, supra, and Lowe v. United States Accident Ass'n, 1894, supra.

The Dibbrell case is premised upon the principle that "a stipulation in an insurance policy that a failure to bring suit within a time therein prescribed after loss should constitute a forfeiture, is a contract, and not a statute of limitations * * *."

And in the Lowe case, supra [115 N.C. 18, 20 S.E. 170], while this Court dismissed the appeal as premature, Edwards v. Raleigh, 240 N.C. 137, 81 S.E.2d 273, the opinion concluded with this declaration: "In the absence of any proof tending to show a waiver of the benefit of this stipulation on the part of the defendant company, we must hold that it is binding upon the plaintiffs, and operates to defeat the action, not as a statute of limitations, but as a reasonable agreement insisted on by the defendant in order to avoid the danger incident to making defense after the lapse of a long time intervening between the loss or injury and the institution of suit."

Moreover, under the terms of the standard fire insurance policy of the State of North Carolina, plaintiffs agreed and were required to file proof of loss within sixty days after the fire occurred, and unless the requirements of the policy shall have been complied with, that is, unless proof of loss shall be filed as required, within the prescribed period, no action may be maintained on the policy. See Gardner v. Carolina Ins. Co., 230 N.C. 750, 55 S.E.2d 694, and cases cited. Indeed it is said in the Gardner case that ordinarily compliance with these provisions of the policy must be alleged in the complaint and proved upon the trial. Here there is no evidence that proof of loss was filed. [3] The record discloses that the fire occurred on November 26, 1953. And this action was commenced by summons dated November 27, 1954—more than twelve months from the inception of the loss. Hence in any event it is manifest that the trial judge properly allowed the motion for judgment as of nonsuit on the ground of failure of plaintiffs to commence the action within twelve months next after inception of the loss.

Cases cited and relied upon by appellant are distinguishable in factual situation, and not controlling here.

All other assignments of error brought up have been duly considered and in them error is not made to appear. Thus the judgment from which appeal is taken will be

Affirmed.

PARKER, J., dissents.