Bakhaus v. Caledonian Insurance

Thomas, J., delivered the opinion of the Court. In 1901, John Bakhaus, the appellant, and his wife, who for fifteen years, and practically ever since they came to America, had been engaged in keeping a stall in Cross Street Market, in Baltimore City, where they sold smoked fish, eels and “German Produce,” purchased for $575.00, an unimproved lot in Brooklyn, Anne Arundel County, near Baltimore, containing about three acres of land, on which, a year latex-, they gave a mortgage for $350.00. In 1904 they erected on a portion of this lot, on the corner of Sixth street and Stools road, a dwelling house, said to be worth $1,500 or $1,600, in which they i*esided with their children at the time of the fire hereinafter inferred to. In April, 1907, they began the erection of six other dwelling houses on said lot, the nearest of them being about thirty feet from their dwelling.

They were not built by contract, but the appellant and his wife purehased the materials and employed the carpenters and other mechanics, the appellant and his son, who was seventeen years of age, assisting in the work. The condition of these houses, which were unoccupied and, with their dwelling were destroyed by fire on January 19th, 1908, is described in the’record as follows: “The six houses were all under roof, three wei-e plastered and painted and x-eady for occupancy, except that the porches wex-e not built and yards wex-e not fenced; lumber for porches and fences was there; and three ⁶⁷⁹ were lathed but not plastered or painted on the inside; all six were painted on the outside; the doors were all on or fitted and standing in the houses and were burnt; the shutters were in the dwelling and were saved; the houses were two stories and basement containing four rooms, basement kitchen and cellar, or counting the cellar, six rooms in all; these houses were all frame; the nearest of them was about thirty feet from his dwelling; none of the porches had been put up and the lumber which was intended for the porches was piled between the six houses and the dwelling and was removed by them at the time of the fire and not burnt.” At the time of the fire there were two policies of fire insurance on the dwelling in which the appellant and his family resided, one issued by the German Insurance Company to the appellant and his wife, for $500.00-on the dwelling, and $350.00 on their furniture, and the other by the Caledonian Insurance Company, May 3rd, 1905, for three years, in favor of the appellant for $500.00; and there were also two policies on the six dwelling houses, one for $3,000.00 to the appellant and his wife, issued by the Germania Eire Insurance Company, and the other issued by the Caledonian Insurance Company, November 27th, 1907, in favor of the appellant, for $1,200.00 or $200.00 on each house. The German Insurance Company settled with the appellant and his wife the loss occasioned by said fire, but the Caledonian Insurance Company, through Thomas E. Bond, its adjuster, notified the appellant by letter, dated April 6th, 1908, that it denied liability under its said policies, and on the 9th of May the appellant brought two suits against the appellee, one on the $500.00 policy and the other on the $1,200.00 policy. These policies contain the usual clauses found in the New York Standard Eire Insurance Policies, requiring the insured to give written notice of a loss; to furnish, within sixty days after the fire, unless the time is extended in writing by the company, proofs of loss, and providing that the amount of loss, as ascertained in accordance with the terms of the policy, shall be payable sixty days after satisfactory' ⁶⁸⁰ proofs of loss, eto., have been received by the company.

They also contain the following conditions: “This entire policy shall be void if the insured has concealed or misrepresented, in writing or otherwise, any material fact or circumstance concerning this insurance or the subject thereof; or if the interest of the insured in the property be not truly stated herein; or in case of any fraud or false swearing by the insured touching any matter relating to this insurance or the subject thereof, whether before or after a loss.. “This entire policy, unless' otherwise provided by agreement endorsed hereon or added hereto, shall be void * * * if the interest of the insured be other than unconditional and sole ownership; or if the subject of insurance be a building on ground not owned by the insured in fee-simple; * * * or if a building herein described, whether intended for occupancy by owner or tenant, be or become vacant or unoccupied and so remain for ten days. “Eo 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 twelvemonths next after the fire.” - There was also added to the policies the following warranty: “Warranted by the assured that this dwelling shall be occupied by a family during the life of this policy; which shall not be construed as meaning the occupancy of an apartment or apartments by a man or men, and which, however, shall not prejudice assured’s right to the ten (10) days’ vacancy permitted by the conditions of this policy.” ' In the first case the defendant pleaded “never promised as alleged1” and that it “never was indebted as alleged,” -and, relying upon the above provisions of the policy, set up the further defenses: first, that the plaintiff did not furnish the proofs of loss as required by the policy; second, that the interest of the insured in the property was not truly stated in the policy, the policy having been made to the plaintiff ⁶⁸¹ alone, whereas the property belonged to the plaintiff and his wife as tenants by the entireties; third, that the plaintiff was not the unconditional and sole owner of the property, as required by the policy, and that said provision of the policy had not been modified by any agreement added to or endorsed thereon; and, fourth, that at the time of the execution of the policy, and at the time of the fire, there was a mortgage on the property for $350.00, which fact was concealed by the plaintiff and was not stated in the policy, and that, therefore, the interest of the insured in the property was not truly stated in the policy. In the second case, in addition to the pleas relied on in the first case, the defendant further alleged: first, that the buildings remained vacant and unoccupied for more than ten days, and had never been occupied by families as required by the policy; second, that the plaintiff, at the time of the execution of said policy, represented that the houses were occupied by tenants, whereas said houses were not' so occupied; and, third, that at the time of the execution of said policy the plaintiff represented to the defendant that there was $300.00 insurance on each of the houses, whereas there was $500.00 insurance on each of the houses, and that said representations were as to material facts, were relied on by the defendant and were fraudulently made. Issues were joined on the first and second pleas, and to the other pleas the plaintiff replied: first, that the defendant waived the furnishing of proofs of loss; second, that there were attached to said policies riders containing the following provision: “Loss if any payable to the assured as interest may appeal’,” and that he did not conceal the existence of said mortgage or make any misrepresentation concerning the same; third, that the houses covered by the policy for $1,200.00 “were in course of construction at the time the policy was- issued; that the defendant’s agent saw them and knew it,—that the fire occurred before they were completed and ready for occupancy, and the policy contained the following endorsement: ‘Permission to make alterations, additions, completions and repairs and this policy to cover materials on premises for mak ⁶⁸² ing same” fourth, that he did not represent to the defendant at the time of the issuing of the policy that the houses therein mentioned were occupied hy tenants, and that the agent of the defendant knew that the houses were not occupied and' were not completed or ready for occupancy; and, fifth, that he did not represent to the defendant at the time the policy was issued that there was $300.00 insurance on each of the houses, and that he told the defendant’s agent that there was $500.00 insurance on each house. There are numerous pleas, replications and rejoinders, occupying a large part of the record, hut the above statement of .the pleadings is sufficient to indicate the defenses relied on hy the defendant, the contentions of the parties, and the more important questions to he determined on this appeal.

The record contains five exceptions, the first is to the order of the Court consolidating the two cases, the second, third and fourth to rulings on the evidence, and the fifth to the granting of the defendant’s second prayei’. At the conclusion of the testimony produced hy the plaintiff the defendant offered the following prayers: 1. At the request of the defendant, the Court instructs the jury that under the pleadings in this case, there is no evidence legally sufficient to entitle the plaintiff to recover, and the verdict must, therefore, he for the defendant. 2. At the request of the defendant, the Court instructs the jury that hy the uncontradicted evidence in this case, the plaintiff did not furnish to the defendant the proofs of loss required to he rendered by the plaintiff to, the defendant under each policy sued on, and there being no evidence in this case legally sufficient to show any waiver by the defendant of this requirement of the policies, the verdict of the jury must be for the defendant. 3.

At the request of the defendant, the Court instructs the jury that with respect to the $1,200.00 policy offered in evidence, the same contained a warranty that -the insured premises should be occupied by a family during the life of the policy (except that ten days vacancy was permitted), and ⁶⁸³ that by the uncontradicted evidence the insured property was not occupied by a family for a period of more than ten days preceding the fire; and that there is no evidence in this case legally sufficient to show any waiver by the defendant of this warranty, and that, therefore, there is no evidence in this case legally sufficient to entitle the plaintiff: to recover against this defendant on said $1,200 policy. 4. The defendant prays the Court to instruct the jury that under the pleadings there is no evidence in this case legally sufficient to show any value of the plaintiff’s interest in the property destroyed by fire, and for the damage to which this suit is brought, and that therefore, the jury can award the plaintiff only nominal damages. The Court rejected the first, third and fourth prayers but granted the second prayer, instructing the jury that there was no evidence legally sufficient to show a waiver by the defendant of. the provision of the policies requiring the plaintiff to furnish proofs of loss. The verdict and judgment were accordingly in favor of the defendant, and from that judgment this appeal was taken.

The first important question to be considered relates to the granting of that instruction. It is conceded that the plaintiff did not furnish proofs of loss, and that, under the terms of the policies, unless there was evidence of a waiver of the provisions requiring him to do so, there was no error in the Court’s ruling. It is said in 13 Am. & Eng. Ency. of Law, 345 (2nd ed.), that: “A great variety of acts and circumstances have been held to constitute waiver of the terms and conditions of policies as to proofs of loss, but these may be brought together under three general heads, namely: First, acts, conduct 'or statements of the insurer or those representing it by which the insured is induced not to make proofs or to believe that they are not required or will not be insisted on; second, acts or conduct of the insurer or its representatives recognizing its liability and showing an intention not to require proofs or to dispense with them; third, acts or conduct making it ⁶⁸⁴ apparent that the furnishing of proofs would be an unnecessary formality and nugatory.” It is also-said that the waiver may be “by a general agent, and adjuster or special agent of the insurer for adjusting the loss or like losses, or another agent of the insurer acting within the apparent scope of his authority.” 13 Am. & Eng.

Ency. of Law, 350 (2 ed.); 19 Cyc. 859-860. In the case of Rokes v. Amazon Insurance Co., 51 Md. 512 , this Court held that proofs of loss are required for the benefit of and may be waived by the insurer, and that it is not “necessary to prove an express agreement • to waive,” but that “it may be inferred from the acts and conduct of the insurer inconsistent with an intention to insist upon the strict performance of the condition.” Judge Page. in Hartford F. Ins. Co. v. Keating, 86 Md. 149 , referring to the provisions in a policy requiring proofs of loss to be furnished within sixty days, says, “all authorities agree that the condition may be waived, either expressly or by acts and conduct of the insurer himself, or of his agent, having real or apparent authority,' and the waiver may be inferred from such acts and conduct as are inconsistent with an intention to insist upon a strict performance.” In the case of Continental Ins. Co. v. Reynolds, 107 Md. 96 , Judge Burke, dealing with a provision in the policy making the loss payable sixty days after the furnishing of satisfactory proofs of loss, after stating that the provision was inserted' for the benefit of the company, and that it ’may- waive the provision or deny liability under" the policy, in either of which events, the insured may bring suit without waiting for the. expiration of the time limit, says: “But whether there, has been a waiver, an estoppel, or a repudiation of liability under the contract, is a question to be ascertained from the conduct of the insurer and from all the facts and circumstances of the case. * * * And where the evidence tends to show that the company had definitely determined not to pay the loss, or had waived the provision under consideration, or was estopped by its conduct to insist upon it, it would be error to declare as a matter of law that the suit was premature.” And it had ⁶⁸⁵ been repeatedly held in this State that provisions in policies limiting and restricting the power of agents to waive the conditions and provisions of the policy have reference to conditions and provisions that enter into and form a part of the contract, and which are essential to make it a binding contract, and do not refer to stipulations to be performed after a loss has occurred.

Franklin F. Ins. Co. v. Chicago Ice Co., 36 Md. 102 ; Rokes v. Amazon Ins. Co., supra; Farmers’ F. Ins. Co. v. Baker, 94 Md. 545 ; 19 Cyc. 360.

It is not necessary to refer to the many cases in this State and elsewhere for illustrations of the application of the doc.trine. The rule is well settled, and the question of waiver in any case must depend' upon the facts and circumstances of •that case. The provisions relating to proofs of loss are, as has been stated, inserted in the policy for the exclusive benefit of the insurer, in order that it may be informed of the nature, character and extent of the loss, and while the insurer may stand on its contract and exact compliance with its terms, there is no reason why these provisions may not be waived by it. The business in which insurance companies are engaged is one in which the security and protection of the insured are largely entrusted to the honesty and1 fairness of the insurer, and this Court has frequently said that good faith demands of them “frank and open dealing with their policy holders.” Any acts or conduct of the insurer, or 'its representative, that are, under the circumstances, calculated to mislead the insured and to induce him to believe that performance of the condition will not.be required, or that proofs of loss would be ineffectual and nugatory, will, if he is thereby misled, amount to a waiver.

Turning to the facts in the case, we find, in addition to what has already been stated, that the fire which caused the loss sought to be recovered in this case, was first discovered by the appellant and his wife while on their way home from Cross Street Market, between twelve and one o’clock Saturday night, January 18th, 1908. The houses and their contents, except the foundations and the furniture, etc., on the ⁶⁸⁶ first floor of appellant’s dwelling, were completely destroyed. The appellant sent his son to notify the insurance companies, and on the second day after the fire Doctor Brooks, the agent of the appellee from whom the policies in this case were obtained, Mr. Bond-, the adjuster for the appellee and the Ger-mania Eire Insurance Company, and Mr. Deming, the adjuster for the Gennan Insurance Company, went to the scene of the fire and asked for the appellant but he was not at home. They measured the foundations of the houses and questioned the appellant’s son.

Mr. Bond’ asked him where he was at the time of the fire, “how near the houses were finished,” and if the shutters were on the houses. After talking to some of the people in the neighborhood, they told the appellant’s son to tell his father to come to Mr. Deming’s office the next day. On his way home from Baltimore the appellant met Mr. Bond, Dr. Brooks and Mr. Deming returning to Baltimore, and Mr. Bond and Mr. Deming told him to meet them at Mr. Deming’s office the next day. He accordingly went to Mr. Deming’s office and there met Mr. Deming, Mr. Bond and Mr. Deming’s son.

In reply to the question “what took place there,” the appellant said: “They asked me how I discovered the fire, and I told them all about it, that I came from town with my wife, and they asked me how far the houses were finished and I told them and how much those houses would cost to finish them and all those questions that Mr. Bond asked me. He asked me who made the concrete foundations, and I told him I did, with two or three men to help me, and he told me I had made a good job of it. And then Mr. Deming told me that I should make a list of the furniture, Mr. Bond told me as he went out, he said, ‘You will hear from me.’ ” The appellant further testified that neither Mr. Bond nor Mr. Deming said anything to him “about making up written proofs about the houses.” When asked, “When was the next time you saw Mr. Bond,” appellant replied: “It was about eight days afterwards. Me and my wife went to the German Fire Insurancé Company and from there they told us we should go to Mr. Deming. ⁶⁸⁷ As we came into Mr. Deming’s office Mr. Bond was in there hilt Mr. Bond did not give me any chance to talk with him.

Once he saw me and my wife and' went ont of the door.” He stated that the next time he saw Mr. Bond was at the Eire Marshal’s office, and when asked how he happened to be in the Fire Marshal’s office, he said: “The Deputy Fire Marshal came up there and he ordered me down to his office and I made a statement to him and one day I went to the mail and there was a letter there to John Baekhaus from the State Fire Maishal to come up to his office. As I came up there they found out they had the wrong man, that letter was intended for mv son, and as I was sitting there Mr. Deming he came and Mr. Bond came out and asked me a lot of questions about the fire, asked how far the houses were finished, and the State Fire Marshal he ordered me out of the door and he says, step out a minute. Mr. Deming went out before that. Then the Fire Marshal came and he said, you can tell your son to come up tomorrow morning about 11 o’clock, and I said alright.

But I did not go away, I waited in the corridor and wanted to talk with Mr. Bond. Mr. Bond came out and I asked Mr. Bond, I said: ‘What are you going to do about my insurance’ and he told me again, he said: ‘I cannot do a thing, you will hear from me, I cannot do a thing.’ ” Appellant stated further that Mr. Bond asked him in the Fire Marshal’s office if he knew about the shavings and a barrel; “how it was the doors and shutters were in his dwelling;” if he had left the barrel in one of the houses with shavings in it, and if he had refused to let people in the stables to take the horse out, and that after this conversation with Mr. Bond, he waited to hear from him, and “about fourteen days after I waited and waited and didn’t hear anything from Mr. Bond or from anybody, I went up to the German Fire Insurance Company again, and the German Fire Insurance Company sent me to Mr. Deming and Mr. Deming, he was not ready for me then, and I went into Mr. Bond right in Mr. Bond’s office. While I came in there Mr. Bond was sitting on the telephone and I asked him again and he says, ⁶⁸⁸ I have just been telephoning to Hr. Deming and I am going to see Hr.

Deming tomorrow and we will- let you know.” The appellant did not hear anything further from Hr. Bond ■ until he received the following letters: “Baltimobe, April 6th, 1908. . Mr. John Backhaus, Baltimore Maryland. ■Dear Sir: The Caledonian Insurance Company instructs me that it admits no liability under its policy Eo. 1776827, and hereby tenders you the return of the full amount of premium paid thereon, being the sum of Twelve 00/100 Dollars, which find en- • closed. .Please receipt for same on this letter and return to me. Yours truly, Thomas E. Bond, Adjuster Caledonian Insurance Company.” “Baltimobe, April 6th5 1908. •Me.

John Backhaus, Baltimore Maryland, Dear Sir: The Caledonian Insurance Company instructs me that it admits no liability under its policy Eo. 1643483, and hereby tenders you the return of the full amount of premiums paid thereon, being the sum of Seven 50/100 Dollars, which find enclosed. Please receipt for same on this letter and return to me. Yours truly, Thomas E. Bond, Adjuster Caledonian Insurance Company.” Hr. Hutton, the Deputy Eire Harshal, testified that at the request of Hr.

Bond he made an investigation of the burning of the appellant’s houses; that he talked with a number of people; that he examined the appellant under oath on the 25th January, 1908, and that his questions and the appellant’s answers were written down; that “Hr. Bond was thor ⁶⁸⁹ oughly conversant with everything;” that he; Mr. Bond, read over the statement of the appellant “the same day or the next day after it