1. Where the insured could not be located, the reasonable time elapsing during attempts to locate her and in obtaining appointment of a conservator of her estate may be found by the jury to have tolled the limitation of action provision of the fire insurance policy.
2. Under the circumstances of this case, where the facts were such as might be found to excuse the missing insured from filing proof of loss and there is evidence sufficient to authorize a finding that the insurer waived the policy requirement as to time of filing such proof, there was not such a failure of the insured to file proof of loss as to require the mortgagee to file proof of loss under the provisions of the policy.
3. Under the circumstances of this case, the insurer was not subject to the imposition of the statutory penalty or attorney fees for bad faith in refusing to pay the loss.
Plaintiff, individually as mortgagee and in his representative capacity as conservator of the estate of Kathleen Brooks, the insured, who was presumed to be dead, brought this action against the defendant to recover on a fire insurance policy together with 25 per cent of the amount sued for as a penalty and for attorney's fees. The insurer defended the action upon the grounds that proof of loss was not furnished, and that the action was not commenced within the time provided in the insurance policy.
The defendant's demurrers were overruled. After trial, the jury rendered a verdict against the defendant for the principal amount of the policy together with attorney's fees. The defendant filed a motion for judgment notwithstanding the verdict upon the grounds that the evidence did not show that either the insured, the conservator of her estate, or the mortgagee had complied with the terms of the policy relating to the time of filing the proofs of loss and the time of filing the suit, and therefore, under the terms of the policy, no action was sustainable in any court unless all requirements of the policy had beets complied with.
The relevant policy provisions required the rendering of proof of loss, signed and sworn to by the insured, to be filed with the company within 60 days after the loss, and further, "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."
The evidence showed that the insured had not been heard from in three or four years at the time of the fire; that the agent who issued the policy reported the fire to the General Adjustment Bureau, Inc., which was designated by the insurer to handle their losses; that the agent was not able to locate the insured; that the insurer refused to settle the loss until the insured was located; and that the policy was in full force at the time of the fire.
The plaintiff testified that the manager of the Adjustment Bureau stated the house was a total loss, that he was advising the company to issue vouchers to the plaintiff and the insured, "but first we have to get a proof of loss signed by the insured," that he sent the proof of loss to the insured at the last known address but it was returned unclaimed; that he advised the manager of the Adjustment Bureau, who said, "Well, don't worry about it"; "The company is holding your money"; "We've already determined that there's a total loss, and the company has the $1,500.00"; and "You keep on trying to find Kathleen and when you find her, get her to sign the Proof of Loss and let us know so that we can make out our vouchers payable to you and Kathleen Brooks."
Plaintiff testified that he continued in his efforts to locate the insured, who was last heard from in Detroit; that he kept up correspondence with various governmental agencies there continuously until he was appointed conservator of the insured's estate, and that during all this time he was in correspondence with the adjuster and the defendant's attorney, and that after he was appointed conservator he was instructed to file a proof of loss in his representative capacity as conservator of the insured's estate and to forward it to the defendant's attorney, which he did.
The insurer presented no oral testimony, but introduced documentary evidence consisting of two exhibits: The first was a letter dated July 15, 1958, from the defendant's attorneys to the plaintiff requesting advice as to whether he wished to enforce the provisions of the mortgagee clause in the insurance policy or whether he wished to retain the security instrument "and thus waive the provision under the policy," and, "The company is not in a position to keep this matter open indefinitely, and must rely on the provisions of its policy, which is a contract between it and the insured." This letter was written more than ten months after the loss had occurred. As an enclosure to the above letter, there was another letter from the defendant's attorneys to the Adjustment Bureau, which pointed to that portion of the mortgagee clause which provided, "Whenever this company shall pay the mortgagee . . . any sum for loss under this policy and shall claim that, as to the mortgagor or owners, no liability therefor existed, this company shall, to the extent of such payment be thereupon legally subrogated to all the right of the party to whom such payment shall be made," and may at its option pay the mortgagee and receive a full assignment and transfer of the mortgage and of all other securities. This enclosure concluded: "It appears that the proper way to discharge the obligation of the company under the provisions of this policy is that the company pay the loss to Mr. Steinberg and at the same time obtain from him a transfer and assignment of the 'mortgage' and notes held by him. If the loss is handled in any other manner, the company could probably have to pay the same also to the owners when and if they appear and make claim."
The defendant's motion for new trial as amended assigned, as ground 4, error in the court's charging the jury upon the issue of bad faith. Movant contended the charge was not authorized by or adjusted to the evidence, since the defendant had reasonable grounds for contesting payment and that there was no evidence that a demand for payment had been made upon the company at a time when the right to demand and receive payment existed, since the proof of loss was not filed within 60 days after the loss occurred and the only demand in the evidence was by letter dated more than 12 months after the loss occurred, while the policy provided no action should be sustainable unless all requirements of the policy had been complied with and unless commenced within 12 months after the loss.
Ground 5 of the amended motion for the new trial contended that the verdict for the plaintiff against the defendant in the principal amount of the policy plus $450 attorney's fees was contrary to the evidence, and without evidence to support it because the court should not have submitted the issue of bad faith of the defendant when there was no evidence authorizing the penalty for bad faith, and that so doing was harmful to the defendant in that it led the jury to believe there was some evidence upon which they might rely to increase the verdict, which the jury did. This ground further urged that the evidence at the trial showed as a matter of law that the defendant's defense was not frivolous and unfounded.
The trial court overruled the motion for judgment notwithstanding the verdict and the amended motion for new trial, to which rulings and judgments the defendant excepted.
1. The defendant's motion for judgment notwithstanding the verdict is based upon the contention that there was no compliance with the terms of the policy relating to time of filing of proof of loss and of filing suit, and the terms of the contract prevent any action being maintained on the policy. In response the plaintiff contends that the insurer waived the provision of the policy concerning the time for filing the proof of loss and that the circumstances in the case concerning the presumption of death of the insured, together with the time required for appointment of a conservator of her estate, have abated the enforcement of the provision of the policy requiring that the action be brought within 12 months after the inception of the loss.
A review of the evidence shows that the insured's whereabouts were unknown from a time beginning prior to the loss, and diligent efforts to locate her proved unavailing; that after a period of time searching for the insured, the mortgagee instituted proceedings climaxing in his appointment as conservator of her estate; that promptly thereafter he filed proof of loss in the name of the insured with the company's representatives and made demand for the payment, which was refused. During this entire period the uncontradicted evidence does not show any denial by the insurer of liability under the policy, but, on the contrary, there is shown a continuing contact between the mortgagee, the insurer's adjuster, and finally the attorney representing the defendant insurer, with a view to having the proof of loss filed by the insured.
In Pilgrim Health &c. Ins. Co. v. Chism, 49 Ga. App. 121 (2, 3) (174 SE 212), this court held that while the clause in a policy of life insurance which required furnishing of notice and proof of death of the insured within one year from the date of death and that suit must be brought within one year from the death is valid and the beneficiary is bound thereby, where the death of the insured was unknown to the beneficiary and occurred while the policy was in force and it was not the fault of the beneficiary that the death of the insured was unknown to her and thereby a literal compliance with the terms of the policy was rendered impossible, the giving of notice within a reasonable time after discovery of the death of the insured, or within the time stipulated after the cause preventing prior compliance had ceased to exist, would be a sufficient compliance to prevent the forfeiture of the policy. "The questions of the sufficiency of the excuse offered, and the diligence of the beneficiary in giving notice after the removal of the disability, are generally questions of fact, to be determined by the jury, according to the nature and circumstances of each case." Ibid., p. 123. See also, Godley v. North River Ins. Co., 51 Ga. App. 242, 243 (180 SE 385); Progressive Life Ins. Co. v. Haygood, 53 Ga. App. 231 (185 SE 534); and Hulme v. Mutual Benefit Health &c. Assn., 60 Ga. App. 65 (2 SE2d 750).
In Krauss v. Brooklyn Fire Insurance Co., 130 N.J.L. 300 (33 A2d 100) the insured disappeared two days after the fire. He not having been seen or heard from, his widow waited the statutory period of seven years, after which the presumption of death arose and the insured was adjudged legally dead. She then brought suit upon the policies. In holding the action was maintainable and was not barred by the one-year limitation clause in the insurance policy nor the six-year statute of limitations in the State, the court held that, "the limitation on the beginning of an action on these policies, whether by the terms of the policies or by statute, did not begin to run until a cause of action accrued . . . and that . . . a cause of action had not accrued until there was someone competent to sue as well as someone competent to be sued."
The extensive regulation of insurance shows conclusively that it is a matter highly affected with a public interest. To allow the insurer to be relieved of liability for an admitted loss falling within the terms of the policy, under the circumstances of this case, would be unreasonable and would confer a totally unwarranted gratuity upon the company at the expense of the premium payor or his estate. While admittedly the contractual period limiting the bringing of an action is valid, it must not be held to be unconscionably inflexible. Accordingly, where, as here, there was no one competent to bring the action for the insured until appointment by the court, the limitation may be found by the jury to have been postponed for the period required to accomplish the appointment, plus a reasonable period in which to bring the suit. To hold otherwise would violate the long established precept of the law that forfeitures are not to be favored against innocent and helpless victims of unfortunate circumstances.
Under the factual situation of the present case, we hold that the bringing of the action by the conservator of the estate of the insured was not barred, as a matter of law, by the twelve-month provision for bringing the action on the policy of insurance nor by the failure to file proof of loss within sixty days after the loss. The circumstances could be found by the jury to show reasonable diligence in efforts to locate the insured, after which the plaintiff was appointed her conservator and he thereupon, without unreasonable delay, filed proofs of loss, demand upon the company, and then brought the action to recover under the policy.
Nothing in Dean v. Northwestern Mutual Life Ins. Co., 175 Ga. 321 (165 SE 235), two justices dissenting, compels a different conclusion here. While the Dean case accepted the principle that the filing of a proof of disability for waiver of premiums was a condition precedent to invoking the waiver of premium provision, it held that the policy was not in force at the time of the insured's death despite the facts that the insured could not make proof because of his insanity without a lucid interval prior to death, and no one else could make it for him for the reason that no one knew he had the policy of insurance. In the Dean case the supreme Court was not concerned with a question of delay in furnishing the proof, but of failure to do so. Here we are concerned merely with a delay; we are not confronted with a failure to furnish the proof of loss. In addition, the company had actual knowledge of the loss; the policy was in force at the time of loss; and there was evidence from which the jury could conclude that the filing of proof of loss was waived or the time for filing was extended.
Under the authority of the Pilgrim case and other decisions cited, the sufficiency of the excuse offered was a question of fact for the jury to determine, which it has determined adversely to the defendant.
2. The defendant cites the provision of the policy which declares that, "If the insured fails to render proof of loss such mortgagee, upon notice, shall render proof of loss in the form herein specified within 60 days thereafter and shall be subject to the provisions thereof relating to appraisal, time of payment, and of bringing suit," and urges that the provision placed the burden upon the mortgagee here to render the required proof of loss. We do not agree. In the present case there were facts which could be found by the jury to have excused the insured from making the proof of loss. There was, therefore, no failure to render proof of loss within the above clause.
The trial court properly overruled the motion for judgment notwithstanding the verdict.
3. Special grounds 4 and 5 of the defendant's amended motion for new trial assign error in the court's charging the jury upon the refusal to pay in bad faith and the right of the jury to return penalties and attorney's fees if they found bad faith and that the verdict for the principal amount of the policy plus attorney's fees was contrary to the evidence and without evidence to support it.
As repeatedly defined, "bad faith" which will justify the jury in awarding penalties and attorney's fees under Code 56-706 means a frivolous or unfounded refusal in law or in fact to pay according to the terms of the policy.
The persuasiveness of the evidence offered as to the seasonableness of the bringing of the action and that offered in justification of the failure to comply with the time requirements of the policy for the filing of proof of loss were matters exclusively for determination by the jury. Certainly, the insurer had a defense which warranted its submission to the jury, and it cannot be held in this situation to have refused to pay the loss in bad faith.
Furthermore, the question presented here as to whether the provision of a fire insurance policy requiring institution of the suit within twelve months may be tolled by the inability to find the insured does not appear to have been passed upon by the appellate courts of this State. For this additional reason, the insurer may not be held to be guilty of a frivolous or unfounded refusal to pay in bad faith.