79 N.C. App. 213 | N.C. Ct. App. | 1986
Lead Opinion
The sole question presented on appeal is whether the trial court erred in allowing defendant’s motion for directed verdict at the close of the evidence. Plaintiffs contend that the issues as to whether they complied with the provision of the policy requiring the insured to produce books of account and other documents would be subject to a test of reasonableness, which would necessarily have to be determined by the jury. We disagree.
Plaintiffs’ fire insurance policy is the “Standard Fire Insurance Policy for North Carolina” as provided by G.S. 58-176. The provisions of this policy, including the provisions that compliance with its terms is a condition precedent before the insured can establish a claim for relief, have been held by the Supreme Court to be valid and just to the insured and the insurer. Zibelin v. Insurance Co., 229 N.C. 567, 50 S.E. 2d 290 (1948). Both the insured and the insurer are presumed to know the terms, provisions, and conditions of the policy, and are bound by them. Midkiff v. Insurance Company, 197 N.C. 139, 147 S.E. 812 (1929).
Neither plaintiffs nor defendant cite any authority from this jurisdiction dealing specifically with the provision requiring the insured to produce books of account and other records at the request of the insurance company. However, courts of other jurisdictions have held that similar provisions are valid and that the unexcused refusal to produce the required documents precludes recovery on the policy. Pogo Holding Corp. v. New York Property Ins., 73 A.D. 2d 605, 422 N.Y.S. 2d 123 (1979); Southern Guaranty Ins. Co. v. Dean, 252 Miss. 69, 172 So. 2d 553 (1965); Beasley v. Pacific Indemnity Co., 200 Cal. App. 2d 207, 19 Cal. Rptr. 299 (1962); Georgian House of Interiors v. Glens Falls Ins. Co., 21 Wash. 2d 470, 151 P. 2d 598 (1944). The object of provisions requiring the insured to submit to an examination under oath is to enable the insurance company to obtain information to determine the extent of its obligation and to protect itself from false claims, Claflin v. Commonwealth Ins. Co., 110 U.S. 81, 3 S.Ct. 507, 28 L.Ed. 76 (1884), and the provision requiring the production of documents is designed to serve the same purpose. See Southern Guaranty Ins. Co. v. Dean, 252 Miss. 69, 172 So. 2d 553 (1965).
While these provisions do not give the insurer license to harass plaintiff with aimless questions and demands for docu
Compliance with provisions of an insurance policy requiring the insured to produce documents “as often as may be reasonably required” at a “reasonable time and place” is a condition precedent to bringing suit where the insurer notifies the insured of the time and place for production. Taubman v. Allied Fire Ins. Co. of Utica, 160 F. 2d 157 (4th Cir. 1947). The “reasonable time and place” clause ordinarily means that a demand must be made within a reasonable period of time and that the location must be in the locality of the insured property. Butler Candy Co. v. Springfield Fire and Marine Ins. Co., 296 Pa. 552, 146 A. 135 (1929).
In Tire Co. v. Morefield, 35 N.C. App. 385, 241 S.E. 2d 353 (1978), this Court said that “[a] condition precedent is a fact or event, occurring subsequently to the making of a valid contract, that must exist or occur before there is a right to immediate performance, before there is a breach of contract duty, before the usual judicial remedies are available.” Id. at 387, 241 S.E. 2d at 355, citing Cargill, Inc. v. Credit Assoc., Inc., 26 N.C. App. 720, 722-23, 217 S.E. 2d 105, 107 (1975). The burden is on plaintiff to offer evidence in support of all essential elements to establish his claim. Tire Co. v. Morefield, 35 N.C. App. 385, 241 S.E. 2d 353 (1978). The occurrence of a condition precedent is an essential element of plaintiff’s case, and it is therefore incumbent upon plaintiff to offer proof of compliance with the terms of the contract. Id.
Plaintiffs, in the present case, have offered no evidence tending to show that they have complied with the terms of the insurance contract by producing the information requested. In fact, the evidence discloses that plaintiffs had steadfastly refused to comply with defendant’s requests to produce copies of their bank and loan accounts. Pursuant to a letter written to plaintiffs’ attorney on 25 November 1981, plaintiffs appeared at the court
Plaintiffs do not contend that the time or place for the production of these documents was unreasonable. Rather, they argue that there was an issue for the jury as to whether defendant could reasonably require them to produce these documents. Under the principles discussed above, information about plaintiffs’ financial condition was clearly relevant to defendant’s arson defense and defendant therefore had the right to inspect the requested records.
Thus, all the evidence at trial discloses plaintiffs’ failure to comply with the terms of the contract and particularly with the condition precedent by failing to provide the requested financial information. The evidence discloses an insurmountable bar to plaintiffs’ claim, and the trial court properly allowed defendant’s motion for a directed verdict.
Affirmed.
Dissenting Opinion
dissenting.
An insurance policy being but a special kind of contract, it is fundamental, of course, that an insured must comply with the terms of the policy before he can recover under it, and the validity of this rule is not questioned by plaintiffs’ appeal. What is questioned is whether, as a matter of law, plaintiffs’ policy required them to permit defendant to examine the records of every
Though defendant argued here that the dismissal is also based on plaintiffs’ refusal to produce various papers requested by it other than those referred to in the refused authorization, this is not borne out by the record. That plaintiffs had no duty to produce any documents at all until defendant made a request is conceded, and the record plainly shows that the only request defendant made that was refused was the request to sign the disputed authorization. The only other request to examine documents that defendant made concerned plaintiffs’ income tax returns and that request was complied with. The authorization that plaintiffs refused to sign was as follows:
Authorization and Releases of Information and Records
I, Cecil K. Chavis and Vickie Chavis, do hereby authorize any representative of all banks and/or any type of lending institution which I have done any business with to consult with and/or deliver to any representative of State Farm Fire and Casualty Company any and all records referred to or requested by any representative of State Farm Fire and Casualty Company.
This the 4th day of December, 1981.
The scope of this authorization is without parallel. It would enable the company to examine every financial statement and loan application that plaintiffs have ever made, every check they have ever written, and every bank deposit they have ever made. Nothing in the policy obligated plaintiffs to sign such an authorization and the dismissal of plaintiffs’ case is clearly without foundation.
The insured, as often as may be reasonably required, shall exhibit to any person designated by this Company all that remains of any property herein described, and submit to examinations under oath by any person named by this Company, and subscribe the same; and, as often as may be reasonably required, shall produce for examination all books of account, bills, invoices and other vouchers, or certified copies thereof if originals be lost, at such reasonable time and place as may be designated by this Company or its representative, and shall permit extracts and copies thereof to be made.
(Emphasis supplied.) This sentence is about the insured property, and it seems plain to me that the only papers it required plaintiffs to produce at defendant’s request were the “books of account, bills, invoices and other vouchers” that pertain to the insured property. It did not require them to produce all other books of account, bills, invoices and vouchers that they happened to have access to. Nor did it require them to produce papers such as bank and loan company records, which are neither books of account, bills, invoices nor vouchers. “[B]ooks of account, bills, invoices and other vouchers” are documents which tend to show the ownership and cost of properties; which is why, no doubt, the General Assembly phrased the Standard Fire Policy as it did. Requiring that such documents be produced on request when properties covered by them are the subject of a fire insurance claim serves a necessary purpose and makes sense. But requiring insureds to permit insurance companies to examine personal papers that clearly have nothing to do with the insured property and that may only support one of the myriad defenses that can be asserted in such cases makes no sense whatever. Though fishing expeditions of that type can be indulged in through the discovery process, the General Assembly has not required insureds to acquiesce in such expeditions as a condition to enforcing their rights under the policy. If the General Assembly had intended to deprive insureds of their policy benefits if they did not furnish their companies all information requested that might be relevant to the case —which is utterly inconceivable — it would not have used the language that it did.
The record, as I view it, shows that plaintiffs not only met the policy conditions covering disclosure, but went beyond them. They submitted to examination under oath at the time and place defendant suggested. They answered questions not only about the insured property, but about their assets, debts, and earnings. They also answered questions about claims they had made against others and about claims and charges that had been made against them; and they authorized defendant to obtain copies of their state and federal tax returns for each of the preceding five years. The only thing they did not do that defendant requested of them was sign the authorization quoted above. Their refusal was entirely justified, as banking records are neither “books of account, bills, invoices and other vouchers,” and the scope of the authorization was unreasonably broad in any event.
