41 Misc. 2d 727 | N.Y. Sup. Ct. | 1964
At the conclusion of the evidence the parties stipulated that the issues be determined by the court and the jury was discharged.
The action is to reform a policy of fire insurance to conform to the agreement between plaintiff and defendant’s agent as to the coverage to be afforded and for judgment on the policy as reformed. The defendant denies that the plaintiff is entitled to the relief sought and affirmatively alleges as a defense that the action was not commenced within one year after the fire as required by the policy and section 168 of the Insurance Law. Plaintiff contends that the limitation is not applicable to this action to reform the policy and further that, if applicable, the defendant by its conduct has waived the limitation.
I find the following facts established. In September, 1960 the plaintiff, a guard at Auburn Prison, with little, if any, business experience, having decided to go into business buying,
On or about September 9,1960 Backus, Jr., came to plaintiff’s place of business and discussed the placing of fire insurance. Item by item, values totaling $20,000 were placed upon the building, machinery and corn expected to be on hand. Of this amount $4,500 was allocated to the building including electrical wiring, $2,000 for corn, and the balance to machinery and equipment. Backus, concededly authorized by the defendant to issue binders and policies, agreed to issue a binder to that effect and in due course to furnish plaintiff with a policy. On the same date, on behalf of the defendant, Backus issued a binder for fire insurance in the amount of $20,000 ‘ ‘ On — Frame bldg, under construction to be used for storage of Machinery & Grain — Completed Value —$20,000.”
Before the policy was delivered and on November 5, 1960 a fire occurred on the premises which I find resulted in damage in the amount of $4,067.71. Of this amount $1,319.72 consisted of damage to the building including the electrical wiring, $1,740 loss of corn, and the balance various items of machinery and equipment. The defendant takes the position, and it seems conceded, that by the terms of the binder and the policy when issued, coverage was afforded only for the loss occasioned to the building itself including the electrical wiring.
While conceding that it was intended that the machinery and equipment be covered, Backus, Jr., claims that when issuing the binder, it was his impression that the machinery and equipment was to be so attached to the building as to become part of the building and thus be covered by the policy as written. While that may be his present recollection, the language of the binder “ On — Frame bldg, under construction to be used for storage of Machinery ” affords convincing evidence to me that such was not his then understanding. I find that at the time of issuing the binder, Backus was aware that the machinery and equipment were not to be part of the building and that he had agreed to afford coverage for those items. In view of my finding that Backus’ present recollection is faulty in the respects heretofore indicated, I also reject his contention that the corn
I find that the issuance of the binder and policy in the form they took was brought about by a clerical error or negligence of Backus in reducing the agreement to writing, and therefore conclude that unless this action be barred by the one-year limitation provided by section 168 of the Insurance Law, plaintiff is entitled to have the policy reformed to include coverage for all of the items of damage heretofore found by me to have been sustained. (29 N. Y. Jur., Insurance, §§ 691, 693 and cases therein cited; Male Choir Bavaria v. Concordia Fire Ins. Co., 257 App. Div. 1030.) Plaintiff’s failure to comprehend the legal significance of the binder description does not bar such relief. (Lewitt & Co. v. Jewelers’ Safety Fund Soc., 249 N. Y. 217, 223.)
The action was commenced February 21, 1962, more than a year after the fire, and in determining whether the plaintiff must therefore be denied relief, I shall first consider his contention that, if applicable, the defendant has waived compliance with the limitation. By letter dated January 10, 1961, plaintiff mailed proof of loss to the defendant. It appears without contradiction and I find that sometime prior to March 3, 1961, defendant’s claim representative called upon plaintiff’s attorney, requested that the plaintiff sign a so-called nonwaiver agreement, and informed the attorney that unless such an agreement was signed, there would be no further discussion of the claim. I further find that no such agreement was ever furnished the defendant. On or about March 3, 1961, the defendant addressed a letter to the plaintiff which, although to me a masterpiece of obscurity, the plaintiff understood to be a rejection of his claim and so alleged in his complaint. From that date, some eight months before the expiration of the year’s limitation, until the commencement of this action, the record is completely silent as to any negotiation or contact, written or oral, between the plaintiff or his attorney and defendant’s claim representatives. Under these circumstances, I am obliged to hold as a matter of law that plaintiff has failed to establish that the limitation, if applicable, has been waived by the defendant. (Palazzola v. Pennsylvania Fire Ins. Co., 273 App. Div. 856.)
There remains the question whether the one-year limitation is applicable to this action. Section 168 of the Insurance Law requires that every fire insurance policy provide 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 commenced within twelve months next after inception of the
The defendant has cited Steel v. Phenix Ins. Co. (47 F. 863, revd. on other grounds 51 F. 715) in which, in reaching a contrary conclusion, the court distinguished the Hay case in that the contractual limitation contained in that policy was not contained in the original policy. In Hay, however, the court did not appear to base its decision on that fact, and in Arthur v. Homestead Fire Ins. Co. (78 N. Y. 462, 470) decided six
In Cooley’s Briefs on Insurance (vol. 2 [2d ed.], p. 1472 [1927]) appears the following: “ The leading case of Hay v. Star Fire Ins. Co., 77 N. Y. 235, seems authority for the proposition that such a clause [limitation], though valid in general, will not apply to a suit asking for a reformation of an essential part of the contract and for recovery on the policy as reformed.
“In Arthur v. Homestead Fire Ins. Co., 78 N. Y. 462, an essentially similar clause was, however, given full effect in a similar action; the distinction, as drawn by the court, being that in the Hay Case the variant clause * * * left him with an entirely different contract from the one agreed upon, while in the Arthur Case the reformation sought was one merely of a phrase in relation to incumbrances. An attempt to distinguish the Hay Case was also made in Steel v. Phoenix Ins. Co. (C. C.) 47 Fed. 863, on the ground that the reformation sought in the Hay Case was an elimination of the limitations clause. It is true that it appears in the Hay Case that the original contract, in accordance with which reformation was sought, did not contain the limitations clause. But it does not appear that any reformation was sought in regard to such clause, nor does the court appear to base any argument upon it, merely mentioning the fact. The Steel Case * * * must be considered as asserting a doctrine contrary to the Hay Case; for the clause in each case was practically identical, and the variance in the Steel Case was as to so essential a matter as the person insured.”
New York Jurisprudence (vol. 31, Insurance, p. 448 [1963]) cites Hay as authority for the unequivocal textual statement: 1 ‘ A contractual limitation of time within which to bring suit applies only to actions upon the policy and does not apply to a suit to reform a policy.”
On the basis of the foregoing authorities I conclude that this action is not barred by the one-year limitation. No violence will
The plaintiff is entitled to judgment reforming the policy to provide coverage for the machinery, equipment and corn contained in the insured building and to judgment on the policy as reformed, in the sum of $4,067.71, with costs.