Hamilton v. Phoenix Ins. Co. of Hartford

61 F. 379, 8 Ohio F. Dec. 137, 1894 U.S. App. LEXIS 2188

Opinion

TAFT, Circuit Judge,

after stating the facts as above, delivered the opinion of the court.

In the case of Insurance Co. v. Hamilton, reported in 8 C. C. A. 114, 59 Fed. 258, it was held by this court, all the judges concurring, that the joint demand for a joint, appraisal by the 12 insurance companies contained in the joint correspondence was not within the ternas of the policy of the Connecticut Fire Insurance Company providing for an appraisal, for the reason that such a policy stipulated for a separate appraisal. This holding is equally applicable to the case at bar, for the appraisal clauses in the Connecticut and Phoenix policies are substantially similar. In the Connecticut case, Judge Severens, referring to the demand for an appraisal in the joint correspondence, said:

"This was not a demand for an appraisal by the insurance company sueh as its policy gave it a right to make, it did not. acquire its rights in any respect from the policies of other companies, anil it. had no legal concern with their disputes or the mode to he adopted for Ihcir settlement, and had no obligation to champion their cause or mix its controversy with theirs; and the insured was not hound to accept such proposition for determining the value and damage as was demanded by ihe companies, this among them. If he had done so, it would have boon an arbitration aside and independent of the policy, standing on the general ground of common-law arbitration.”

Judge Severens was of the opinion, however, that the joint correspondence did contain a notice that ihe loss fixed in the proofs was not satisfactory to the insurer, and that, therefore, an appraisal became a condition precedent to Ihe payment of any money under the policy, and that, by the sale of the property before the expiration of the 60 days, Hamilton had rendered such an appraisal impossible, had prevented the performance of the condition precedent, and had therefore deprived himself of any right of recovery under the policy. Judge Swan was of the opinion that the appraisal was not a condition precedent, and that the failure to make a demand for such appraisement within the terms of the policy was a waiver of it, and that the proof of loss having been filed, and not objected to otherwise than in the joint demand for an appraisement, the insurance company was estopped to deny that the proofs of loss were sufficient under the policy. I was of the opinion that, while the joint demand for the joint appraisal was not within the terms of the policy, that there was enough in the correspondence to notify Hamilton that the Connecticut Insurance Company did not agree with his valuation of the loss, and that this notice made proofs of loss with an appraisal a condition precedent to recovery of the loss under the policy. But it seemed to me that by the last letter from all the companies under date of May 7, 1886, each company assumed an obligation to take the initiative in the matter of appraisal, and submit a form of appraisal to Hamilton, failing which the Connecticut company waived the defect in the proofs of loss made by the absence of the appraisal. If an appraisal was waived, the right to take the goods at an appraised value went with it, and it was therefore immaterial what had been done with the stock by the insured. To quote the language used in the opinion:

“By this letter the defendant company assumed an obligation to submit a form of appraisal to Hamilton. Whatever duty under the policy there might have been upon Hamilton to take the initial step towards an appraisement after receiving notice of a disagreement as to valuation so as to fulfill the condition precedent to his recovery, this communication was a clear waiver of that duty by the defendant company. It was a clear invitation to Hamilton to- do nothing until the company had acted. The company never did act. It cannot now be heard to say that Hamilton lost all his rights under the policy by delay which the company itself occasioned. The appraisement was, under this policy, a part of the proof of loss. The conduct of the company was as much as to say: ‘We have -your proof of loss; we object to it; and we will hereafter point out to you the method by which it can be remedied.’ Subsequent failure to point out the method of remedying it estops the company from asserting that the proof of loss does not comifiy with the requirements of the policy.”

I am authorized to say that the court, as at present constituted, concurs in the view just stated of the effect of the letter of May 7th upon the mutual relations and obligations of the parties to the policy involved in the Connecticut Fire Insurance Company Case; and, as that policy is in all substantial respects the same as the one in suit at bar, we are of the opinion that if the Phoenix Insurance Company had failed, as the Connecticut Insurance Company did fail, to take any action after the letter of May 7th, it could not now be heard to claim that the proofs of loss already filed were not a sufficient compliance with every condition precedent to a recovery of the actual loss. In this case, however, the Phoenix Insurance Company did, on May 24th, make a demand for arbitration in accordance with the prolusions of their policy, and protested against the proposed sale of the property insured, as in direct conflict with the right of the insurer. We. are of the opinion that if this letter was written within a reasonable time after the letter of Muy 7, 1886, closing the joint correspondence, it did properly and unquestionably demand an appraisement, and that a failure to comply therewith was a failure of the condition precedent to the recovery under (.his policy, which must defeat the plaintiff’s right of action. In other words, we think the sole question in the case, as now presented, is whether the demand for a separate appraisal, in accordance with the terms of the policy of the Phoenix Insurance Company, was made within a reasonable time after the close of the joint correspondence.

The court below treated the question of reasonable time as one of law, and told the jury that a sufficient demand for a separate appraisal within due time had been made, and thereupon directed a verdict for defendant. It is contended on behalf of plaintiff in error that, under the circumstances of this case, the question of what was reasonable time was a mixed question of law and fact, to be left with the jury with proper instructions. The delay between the close of the joint correspondence and the letter demanding a separate appraisement from the Phoenix Insurance Company was 17 days. The provision of the policy was that the loss was to be paid 60 days after due notice and satisfactory proof of the same had been received at the office in accordance with the terms of the policy. The learned trial judge seems t,o have thought the effect of this clause to be that the company had 60 days within which to object to the proofs of loss. Was this a proper inference? Could the company wait until the fifty-ninth day after receiving proof, and then object; to it, and postpone the time of payment for 60 days more? It seems to us clear that the company would have no right; to do so. The 60 days is the period between the reception of the satisfactory proof and the time of payment, and not the period between the tendering of any proof and the acceptance of it as satisfactory. It is true that a delay of 60 days before rejecting a proof of loss would certainly be unreasonable, but it by no means follows that any time short of 60 days would he reasonable. The reasonableness of time depends on all the surrounding circumstances. In the opening of the negotiations, Hamilton had informed all the companies, including the defendant, that delay in the settlement so much interfered with his business as to cost him $500 a day. The negotiations for a joint appraisal occupied from April 26 th until May 7th, during which Hamilton was constantly pressing for an early settlement. When, then, on the 7th of May, the Phoenix Insurance Company assumed to submit a form of appraisal, it was certainly under an obligation to act with greater celerity than at the beginning of the negotiation in April. If the company had the right to delay submission of an appraisal for 17 days from May 7th, then it had the right to delay for a longer time the sale of the stock of goods, because appraisal and notice of sale must take place thereafter.. These and many other circumstances might be relevant in considering the question of reasonable time. A case just like this has probably never occurred before. It is not quite clear what the delay was for. It might have been to investigate further the amount of the loss, or to secure the services of a proper appraiser. At all events, the circumstances are numerous enough to render the inference as to reasonable time from them not so certain as to make it a question of law.

We are met in this view, however, by the vigorous contention on the part of counsel for the company that the question of reasonable time is always a question of law to be decided by the court. If it were so, we then should feel compelled to go on and consider the question whether, as a matter of law, 17 days was not an unreasonable time for the company to delay its demand for an appraisement; but, as we view the authorities, the contention by counsel for the company cannot be sustained. In Tindal v. Brown, 1 Term R. 168, Lord Mansfield said:

“What is reasonable notice is partly a question of fact and partly a question of law, and, wherever a rule can be laid down with respect to this reasonableness, that should be decided by the court and adhered to by every one, for the sake of certainty.”

In Insurance Co. v. Stark, 6 Cranch, 268, the suit was on a policy of marine insurance, and one question was whether the assured had made an abandonment of the captured vessel within a reasonable time. Chief Justice Marshall said:

“The law is settled that an abandonment, to be effectual, must be made in reasonable time; but what time is reasonable is a question, compounded of fact and law, which has not yet been reduced to such certainty as to enable the court to pronounce upon it without the aid of a jury. Certainly the delay may be so great as to enable every man to declare, without hesitation, that all will admit it to have been made in reasonable time; but there may be such a medium between these extremes as to render it doubtful whether the delay has been reasonable or otherwise. If it was a mere question of law, which the court might decide, then the law would determine, to a day' and an hour, on the time left for deliberation, after receiving notice of the loss. But the law has not so determined, and it therefore remains a question, compounded of fact and law, which must be found by a jury, under the direction of the court.”

In Cocker v. Manufacturing Co., 3 Sumn. 530, Fed. Cas. No. 2,932, the question whether goods that had been ordered from England had been delivered within a reasonable time was submitted to the jury. Mr. Justice Story said to the jury:

“The whole question now before the jury is, whether these articles were manufactured and offered to be'delivered within a reasonable time. That reasonable , time must be judged of by all the circumstances, and, of course, with all the natural calculations, which might fairly arise from the distance of the countries, the season of the year, the state of the markets, and orders, the pressure of business, and the common disappointments and retardations incident to the manufacture of any new article.”

In Facey v. Hurdom, 3 Barn. & C. 213, the question was whether the crop out of which the tithe was to be collected had been left on the ground a reasonable time for the tithe owner to compare the tenth set out for him with the residue. The court said:

“There are certainly cases where it is for the judge to say what is a reasonable time, but in this instance the question depended on a variety of circumstances, such as the residence of the respective parties, the time when notice was given that the corn would be tithed, the state of the weather, and other things most proper for the consideration of the jury; and I think the question was properly left to them.”

In Donahue v. Insurance Co., 56 Vt. 374, the suit was upon an insurance policy, which required that the person claiming remuneration for loss should forth with give notice thereof to the office of the company. This was held by the court to mean that he should give notice with due diligence, and within a reasonable time, without unnecessary delay, under all the circumstances of the case; and so it was further held that where the facts and circumstances were many, and the question of reasonableness depended on the general inference from those facts, the inference became a question of fact to be submitted to the jury. To sustain this, the language of the supreme court of Connecticut in Lockwood v. Assurance Co., 47 Conn. 558, is quoted, as follows:

“Extreme cases offered here may he easily determined. Between them there is a wide belt of debatable ground, and cases falling within it are governed so much by the peculiar circumstances of each case that it is much better to determine the matter as a question of fact.”

In Haskins v. Insurance Co., 5 Gray, 432, the question was whether repairs made by insurers under the right reserved in the policy were made within a reasonable time. This depended on the dates of various notices given by the parties, the delay occasioned by the sickness and death of workmen employed, and the peculiar nature of the property. It was held that., although the particular* circumstances were not disputed, the question was one of fact to be submitted to the jury.

The case of Davis v. Insurance Co., 8 R. I. 277, was quite like the present case in its facts. There tin; suit was upon a policy of Are insurance on the plaintiffs’ stock of dry goods in their store in Providence. The goods were burned on the 22d of April, 18(52. Preliminary proofs of loss were Aled on tlie 31st: day of May, 18(52. The defendants made no reply to the claim of proofs until the 19th of June following. The court left, it to the jury to say whether the written objection of the defendants to the preliminary proofs of loss of plaintiffs was furnished within a. reasonable time. And the supreme court of Ivhode Island held this course proper. The,court said:

“The question of reasonable time is in many and perhaps most cases a question for the court, if was said by Lord Mansfield, in Tindal v. Brown, 1 Term it. 107: ‘Whenever a. rule can be laid down with respect to reasonableness, it should be decided by the court, and adhered to by every one for the sake of certainty.' The courts have accordingly in many eases, as in ihe case of notice of dishonor of a promissory note'or bill of exchange, or of notice to quit between landlord and lenanl, adopted fixed rules; and there are numerous cases depending on particular facts and circumstances in which a court cannot dispense with the aid of a jury. 1 Starkie, Ev. 455; Howe v. Huntington, 15 Me. :’5<>. The ease before us was not a case where, in the language of Lord Mansfield, a rule could be laid down in respect to reasonableness. Tt belongs to a class of cases in which the circumstances affecting the reasonableness of notice would seldom be the same, and therefore we Ihink the court did not err in leaving Che question of reasonableness to the jury.”

See, also, Cochran v. Toher, 14 Minn. 385 (Gil. 293); Luckhart v. Ogden, 30 Cal. 548; Magee v. Carmack, 33 Ill. 289; 3. Starkie, Ev. 514, 516, and note 1 on 517.

The rule is sometimes staled to be that, where the facts are not in dispute, the question of reasonable time is always for tbe court; but in the foregoing cases the facts were not in dispute. The facts, though undisputed, were so numerous that the inferences from them as to reasonableness of the time taken were disputable as inferences of fact.

The number of authorities on this subject is myriad; and there are many in which the rule is stated without qualification that the question of reasonable time is a question of law for the court, but we think it will be found that such cases may be divided into two classes. The first class embraces commercial transactions which happen in the same way, day after day, and present the question of reasonable time on the same data in continually recurring instances, so that, by a series of decisions of the courts, the reasonable time has been rendered certain. The second class of cases is where the time taken is so clearly reasonable or unreasonable that there can be no room for doubt as to the proper answer to the question. Where, however, the answer to the question is one dependent on many different circumstances which do not constantly recur in other cases of like character, and with respect to which no certain rule of law has heretofore been laid down, or could be laid down, the question is one of fact for the jury.

In Wiggins v. Burkham, 10 Wall. 129, the question was whether an account rendered had been objected to within a reasonable time, so that it could not be introduced as prima facie evidence of its correctness. It was held that the question of reasonable time, in such a case, was a question of law; that between merchants at home an account which has been presented, and no objection made thereto after the lapse of several posts, must be treated, under ordinary circumstances, as being, by acquiescence, a stated account. Now, it is obvious that in such a case the data upon which a reasonable time can be fixed are few and simple. It is also obvious that it is of the class of cases constantly recurring with similar circumstances in dealings between merchants, so that for years it has been settled law that, if a merchant allows several posts to go by without objecting to an account sent to him, it is to be regarded as stated. Mr. Justice Swayne used this language in delivering the opinion of the court:

“The proposition that what is reasonable time in such cases is a question for the jury, as laid down by the court below, cannot be sustained. Where the facts are clear, it is always a question exclusively for the court. The point was so ruled by this court in Toland v. Sprague, 12 Pet. 336. Where the proofs are conflicting, the question is a mixed one of law and of fact. In such cases the court should instruct the jury as to the law upon the several hypotheses of fact insisted upon by the parties.”

He was dealing with accounts, and it was to “such cases” that the rule, as he states it, applies. Toland v. Sprague, referred to, was also a case of a stated account.

In Nunez v. Dautel, 19 Wall. 560, the question was when money under the following contract became due:

“Columbus, G-a., September 1st, 1865.

“Due Joseph Dautel, or order, $1,619.66, being balance of principal and interest for four years and six months’ services. This we will pay as soon as the crop can be sold, or the money raised from any other source, payable with interest.

T. M. Nunez & Co.'

Suit was brought more than five years after the date of the instrument. The court held that the stipulation secured to the defendants a reasonable amount of time within which to procure, in one mode or other, the amounts ‘necessary to meet the liability, and that five years was more than a reasonable time, so that the obligation was due at the time suit was brought. In this case there could be no doubt that five years was ample time within which payment should have been made. The case comes under the head of the second class of cases mentioned above, because, in the absence of all circumstances, except the instrument itself, every one would say that five years was an unreasonable delay in paying the debt. In neither of these decisions by the supreme court of the United States is the rule as laid down by Chief Justice Marshall in the case in 6 Crunch, already quoted, criticised or overruled. Indeed, in the very volume (10 Wall.) which contains the case of Wiggins v. Burkham, is the case of Feild v. Farrington, at page 141, in which the question was whether factors had held cotton too long in view of a falling market. They Feld it 10 months, during which time cotton fell from 43 cents to 20 cents. Said Justice Strong, delivering the opinion of the supreme court:

“Whether tills long delay, in view of a falling market, was in the exercise of a sound discretion, good faith, and reasonable diligence, was a question that shonld have been submitted to the jury. If the delay was unreasonable, if it was in violation of the plaintiffs’ duty as factors, they, rather than the defendant, should bear the loss that resulted from it.”

In the case of Brewing Co. v. Bullock, 8 C. C. A. 14, 59 Fed. 83, we held that a question of reasonable time was a question of law, citing as authority Wiggins v. Burkham, 10 Wall. 129; but that was a case where the time was so long that no fair-minded man could have any doubt that the delay was unreasonable. There a dealer in rice at New York shipped to a brewing company in Cincinnati two car loads of rice, without any order for the same. The brewing company, by mistake, paid the freight, and took the rice into its warehouse. Its officers discovered the mistake within a week after the receipt of the rice, and for more than 30 days, when rice was a commodity of fluctuating market value, with no excuse of any kind for the delay, they failed to notify the shippers that the company would refuse to take the rice. It was held that, from such delay in rejection, acceptance mast he conclusively presumed, and that the trial court had the right to treat the matter as one of law. We think that because the case at bar presents so many facts which may more or less affect the question of reasonable time, and because it is not a, case, parallels to which, by constantly recurring in courts of justice, have led to the establishment of any certain rule, the question of reasonable time was for the jury. The court erred, therefore, is not submitting it to that tribunal.

For this reason, the judgment of the court below is reversed, and a new tidal ordered.