#### W. B. HIGSON and Wife v. NORTH RIVER INSURANCE COMPANY.

(Filed 23 March, 1910.)

1. Insurance — Policies—Proof of Loss — Denial of Liability — Waiver.

A denial of liability under its policy by a fire insurance company for a loss occasioned by tbe burning of tbe property insured is a waiver of tbe stipulation in tbe policy requiring tbe insured to file with the company, within sixty days, a notice of proof of loss; and tbe company may not set up a plea that tbe insured procured tbe burning of the property, deny liability and avoid payment under its contract, by proving matters relating to this stipulation.

2. Same — Interpretation—Policies, How Construed.

To ascertain tbe meaning of a contract of insurance tbe courts will construe tbe language most strongly against tbe company; and there being no words of forfeiture in a contract of insurance to that effect, the failure of the insured to file proofs within sixty days after tbe occurrence of the fire does not have tbe effect of forfeiture when tbe company has denied all liability under its contract. (derringer v. Insurance Go., 133 N. C., 407, cited and approved.)

3. Same — Arbitration.

Tbe failure to perform a promise in the contract as to arbitration which refers only to tbe ascertainments of tbe amount of loss, does not work a forfeiture of tbe policy, upon the same principles, when the company denies all liability.

4. Insurance — Ownership—Title—Bill of Sale — Evidence.

When an insurance company seeks to avoid liability under its policy for a loss, by denying the insured’s ownership of tbe property, it is competent for the insured to put in evidence a bill of sale thereof made to him, in order to show his title.

5. Pleadings — Inconsistent Pleas — Defenses.

Inconsistent pleas may be made in defense to an action, but tbe defendant cannot succeed as to both, when one naturally destroys the other.

Appeal by defendant from Guión, J., at August Term, 1909, of Pitt.

Tbe facts are stated in tbe opinion.

Skinner & Whedbee for plaintiff.

Moorfi & Long for defendant.

Walker, J.

This action was brought to recover tbe amount of a policy issued by tbe defendant to tbe plaintiff, upon a steamboat. Tbe ship was destroyed by fire, and tbe company denied its liability, both before and after tbe suit was brought, *207for the reason that the husband of the feme plaintiff had caused the boat to be burned in order to secure the insurance. The following issues were submitted to the jury:

1. Was the feme plaintiff the owner of the steamer Isabelle, described in the pleadings, at the time of her destruction' by fire, as alleged in the complaint? Answer: Yes.

2. Did the plaintiff furnish and forward to the defendant proofs of loss of said 'steamer Isabelle within sixty days after the fire which destroyed the same, in accordance with the provisions of the policy set out in the pleadings? Answ^: No.

3. Was this action instituted within sixty days after the furnishing of said proofs of loss, if any such were furnished, as provided for in said policy? Answer: No.

4. Prior to the institution of this action, did the plaintiff tender to or demand of the defendant the submission of the loss, and an ascertainment thereof to arbitration and appraisal, as is provided in said policy? Answer: No.

5. Has the plaintiff complied with the said terms of the policy as conditions of her right to maintain this action ? Answer: No.

6. Did the defendant, by its acts and declarations, made and done prior to the institution of this action, waive the duty of the plaintiff to comply with the conditions mentioned in issues numbered 2, 3, 4 and 5? Answer: Yes.

1. Did the defendant, by its acts and declarations and the denials of liability, as set out in the answer verified and filed by it in this cause, waive the duty of the plaintiff to comply with the conditions mentioned in issues numbered 2, 3, 4 and 5 ? Answer: Yes.

8. In what amount is the defendant company indebted to the plaintiff by reason of the execution of the policy of insurance referred to in the complaint and answer, and the subsequent burning and loss of the said steamer Isabelle? Answer: $1,500, with interest from the date of this action.

It will be observed that the defendant did not tender any issue as to the very serious charge made against the plaintiff’s husband, even if an affirmative finding upon such an issue would have acquitted the defendant company of liability, without any allegation and finding by the jury of collusion on her part. The sole question presented is whether the failure to give notice of the loss and to file proofs of the same are sufficient to defeat the plaintiff’s recovery. The pleadings and the findings of the jury, under a very fair, impartial and clear-cut charge from Judge Guión, shows conclusively that this cannot be so, if we are to be guided by the established principles of the law in *208such cases. Tbe defendant does not come before this Court in a way which entitles it to a favorable consideration of the case in its behalf. Insurance companies should deal honestly and fairly with their patrons, and after they have received the premiums upon the risk undertaken.by them, they should not-attempt to avoid their responsibility by merely technical defenses, especially when those defenses are absolutely without any substantial merit. Their right to the trust and confidence of the public is necessarily based upon the public confidence in them. If they ask the public to trust them, they must, at least, not show themselves unworthy of this confidence. We must not be understood as condemning the general principle of insurance, as founded upon a false and unsafe confidence, but we do - say that the integrity of the company which insures, and upon the faith of which it obtains the patronage of the public, should be sacredly maintained, otherwise insurance is but a “game of chance,” depending for its value to the insured upon the honesty and good management of individuals. We will always hold them to their contract as written in their policies, without adhering too much to the letter, but looking to the substance of their undertaking.

Let us apply these general observations to the facts of this case. It must be conceded that the only defense which the insurance company pleads relates to the failure of the plaintiff, the insured, to file a notice and proof of loss; and yet prior to the bringing of the suit, and by its answer, too, the insurance company denied outright its liability, upon the ground that the husband of the feme plaintiff had burned the boat — in other words, had committed an outrageous act of incendiarism. If this invalidated the policy, so that the plaintiff cannot recover upon it, why did not the defendant rely Upon it and ask the jury, under instructions from the court, to pass upon an allegation which it deemed so vital in this litigation? But it did not, and preferred to rest its defense upon a technical failure to comply with certain provisions of the policy which did not at all affect the liability of the company, but related altogether to the measure of damages — the quantum of the plaintiff’s recovery.

At this stage of the case the defendant is met and his objection answered by the case of Gerringer v. Insurance Co., 133 N. C., 407, wherein the Court, quoting from May on Insurance (4 Ed.), sec. 469, thus states the law: “ CA distinct denial of liability and refusal to pay, on the ground that there is no contract, or that there is no liability, is a waiver of the condition requiring proofs of loss. It is equivalent to a declaration that they *209will not pay, tbougb tbe proofs be furnished; and to require tbe presentation of proofs in sueb a case, wben it can be of no importance to either party, and .the conduct of tbe party in whose favor tbe stipulation is made has rendered it practically superfluous, is but an idle formality, tbe observance of which tbe law will not require.” Tbe Supreme Court of tbe United States, in Life Insurance Co. v. Pendleton, 112 U. S., 696, uses tbe following language: ‘The plaintiffs in error further contend that tbe charge was erroneous in bolding that no formal proof of tbe death of S. H. Pendleton was necessary in this case. On this point tbe charge was as follows: ‘As to tbe proof of loss not being filed, it is conceded that notice of tbe death was given. If, wben that was done, tbe agents of tbe company repudiated all liability and informed tbe parties that tbe policy bad lapsed, then no proof of loss-was required by them, and tbe failure to file them cannot alter tbe ease.’ We think that there was no error in this instruction. Tbe weight of authority is, in favor of tbe rule that a distinct denial of liability and refusal to pay, on tbe ground that there is no contract or that there is no' liability, is a waiver of tbe condition requiring proof of loss or death. It is equivalent to a declaration that they will not pay, though tbe proof be furnished.’ Mr. Justice Bradley further says that, ‘The preliminary proof of loss or death required by a policy is intended for tbe security of tbe insurers in paying tbe amount insured. If they refuse to pay at all, and base their refusal upon some distinct ground, without reference to tbe want or defect of tbe preliminary proof, tbe occasion for it ceases and will be deemed to be waived. And this can work no prejudice to tbe insurers, for in an action on tbe policy, tbe plaintiff would be obliged to prove tbe death of tbe person whose life' was insured, whether the preliminary proofs were exhibited or not.’ ” Tbe Court says, in Gerringer’s case, that tbe clause in tbe policy requiring proofs of loss to be filed with tbe company, and forbidding tbe bringing of any suit upon tbe policy until sixty days have elapsed after tbe filing of tbe proofs, is a .continuing one. It does not mean that a failure to file proofs within sixty" days after tbe occurrence of tbe fire works a forfeiture of tbe policy. We say now that such an interpretation of tbe policy would clearly be against tbe letter and spirit of tbe contract, and certainly unjust. Tbe true intent of tbe parties was, as decided in tbe case cited, that no suit should be brought until sixty days have elapsed after tbe filing of tbe proofs. There are no words of forfeiture annexed to tbe failure to file proofs of loss. The policy was written by tbe defendant, and will be construed most *210strongly against it. If it intended that the plaintiff should lose her insurance by failing to file proofs of her loss, it should have said so in plain and unambiguous language. Haying failed to do so, we must construe the contract as we find it expressed in the words chosen by the defendant. The case of Gerringer v. Insurance Co. is sustained by the great weight of authority. The authorities cited in the opinion of the Court are all-sufficient to support the conclusion we then reached in regard to the question under consideration. We merely add the following: Insurance Co. v. Edmundson, 104 Va., 486; Debbrell v. Insurance Co., 110 N. C., 193; Strauss v. Insurance Co., 122 N. C., 64; 19 Cyc., p. 858, sec. B., and cases cited in note 1.

The promise as to arbitration refers only to the ascertainment of the amount of the loss, and falls easily and naturally within the general principle we have stated with reference to the proof of loss. 19 Oye., 857, sec. 2, note 83; Jordan v. Insurance Co., 151 N. C., 341.

We have carefully examined the exceptions to the evidence and find no real merit in any one of them. It would unnecessarily prolong this opinion to consider them, one by one. We may remark, though, that as the defendant denied the plaintiff’s ownership of the boat, it was surely competent to show her title by the bill of sale. Why not? The other exceptions to the testimony relate to the defendant’s denial of liability before this suit was brought. If the agent sent by the company to adjust and settle the loss denied all liability of the company upon the policy, out and out, why was the plaintiff not compelled to prove it? The testimony to show this fact was brought before the court in a competent way, and the fact itself was relevant to the issues evolved from the pleadings.

The motion to nonsuit was, of course, properly overruled. The defendant will not be permitted to “blow hot and cold.” It must be fair with the plaintiff and choose upon what plea it will rely. It may set up inconsistent pleas, but this does not mean that it can succeed in the' case as to both pleas, when one of its defenses necessarily destroys the other.

We find no error in the trial of the cause, and we must so adjudge.

No error.