Case Title: Steadman v. Pearl Assurance Company

Citation: 134 So. 2d 884, 242 La. 84

Docket Number: 

State: louisiana

Court: Louisiana Supreme Court

Date: 1961-11-06T00:00:00Z

Document:
134 So. 2d 884 (1961) 242 La. 84 Henry STEADMAN, Jr. v. PEARL ASSURANCE COMPANY, Limited. No. 45601. Supreme Court of Louisiana. November 6, 1961. Rehearing Denied December 11, 1961. Roccaforte & Rousselle, Leo W. Rousselle, Frank W. Roccaforte, New Orleans, for plaintiff-appellant. Lemle & Kelleher, Allen R. Fontenot, New Orleans, for defendant-respondent. HAMLIN, Justice. We granted Certiorari in this matter to review a judgment of the Court of Appeal, Fourth Circuit (127 So.2d 366), which affirmed a judgment of the trial court maintaining an exception of no right or cause of action filed by the defendant, Pearl Assurance Company, Limited. Article VII, *885 Section 11, Louisiana Constitution of 1921, LSA. On June 24, 1959, defendant issued to plaintiff, Henry Steadman, Jr., a three year theft insurance policy covering "One man's 14K yellow gold ring set with a diamond weighing approx. 2.85 carats, silver cape in color, American cut and containing a very slight feather near the girdle." The policy recited that the ring had a value of $2,950 and stated (Condition 5): On September 6, 1959, while the above mentioned policy was in full force and effect, plaintiff's ring was stolen from his automobile, and a short time thereafter the loss was reported to defendant's representative. On October 1, 1959, plaintiff mailed a written proof of loss to Miazza Adjustment Company, defendant's agent. Plaintiff was not paid his loss, and he filed the present action on December 2, 1959, alleging in part: In answer to plaintiff's petition, filed on January 7, 1960, defendant denied that it had acted arbitrarily, capriciously or without probable cause, or that plaintiff had made amicable demand. It averred: On February 3, 1960, defendant filed a motion to deposit the draft in the Registry of the Civil District Court for the Parish of Orleans; an order was duly signed, and the draft was deposited on said date. On March 7, 1960, defendant filed an exception of no right or cause of action, averring that plaintiff's petition did not allege that subsequent to the expiration of the alleged lapse of sixty days following receipt of proof of loss by defendant, and prior to the filing of the instant suit, plaintiff made demand for payment as required by law. Defendant prayed for dismissal of plaintiff's suit, contending that the demand, supra, was an indispensable predicate for the proper filing of a suit such as the instant one. The trial court rendered judgment in favor of the plaintiff in the amount of $2,950 with interest and costs; it maintained the exception of no right or cause of action, thereby dismissing plaintiff's demand for penalties and attorney's fees. Plaintiff appealed from that part of the judgment dismissing his demand for penalties and attorney's fees. Defendant answered the appeal, praying that the portion of the judgment awarding interest and costs to plaintiff be set aside. Relying on the case of Sbisa v. American Equitable Assurance Co. of New York, 202 La. 196, 11 So. 2d 527, 145 A.L.R. 332, the Court of Appeal affirmed the judgment of the trial court. It held that it is no longer an open question that LSA-R.S. 22:658 contemplates a demand being made after expiration of the sixty-day period where the insurer is merely guilty of a passive denial of liability of a claim presented to it. In this Court, plaintiff relator assigns the following errors by the Court of Appeal in its opinion and decree: Defendant contends that plaintiff has not brought himself within the penalty statute and cannot do so because he admits that he failed to make the demand as required by the statute. It summarizes as follows: LSA-R.S. 22:658 provides: In the Sbisa case, supra, this Court held that denial by the Company was tantamount to a concession by it that the filing of the proof of loss constituted an adequate demand, since one did not deny prior to the receipt of a claim. In speaking of LSA-R. S. 22:658, however, it stated: A review of the jurisprudence interpreting LSA-R.S. 22:658 discloses that an insured must make a demand to his insurer unless such demand is waivedfor loss suffered by him before he is entitled to penalties and attorney's fees for non-payment of such loss. Tedesco v. Columbia *888 Ins. Co. of New Jersey, 177 La. 142, 148 So. 8; Ouachita Parish Police Jury v. Northern Ins. Co. of New York, La.App., 176 So. 639. LSA-R.S. 22:658 provides that payment to an insured of a claim for loss suffered by him shall be paid within sixty days after receipt of satisfactory proofs of loss from the insured or any party in interest. Failure to make such payment within sixty days after receipt of such proofs and demand therefor when such failure is arbitrary, capricious, or without probable cause subjects the insurer to penalties and attorney's fees. The statute is mandatory and must be given effect in every case where the insurance company resists payment of the whole or any part of a loss covered by its policy, provided the insured judicially recovers more than the insurer admits to be due and timely tenders or pays to him. Hardy v. Commercial Standard Ins. Co., 172 La. 500, 134 So. 407; Reed v. Fidelity & Guaranty Fire Corporation of Baltimore, Md., 17 La.App. 567, 136 So. 757; Isaac Bell, Inc. v. Security Ins. Co. of New Haven, Conn., 175 La. 599, 143 So. 705; Brooks v. Liverpool & London & Globe Ins. Co., La.App., 144 So. 788; Perot v. Carolina Ins. Co. of Wilmington, N. C., La.App., 171 So. 458; Rickerfor v. Westchester Fire Ins. Co., La.App., 186 So. 109; Ware v. American Druggists' Fire Ins. Co., La.App., 38 So. 2d 531; Wright v. National Surety Corp., 221 La. 486, 59 So. 2d 695; Daigle v. Great American Indemnity Co., La.App., 70 So. 2d 697; Darvie v. American Bankers Insurance Company of Florida, La.App., 80 So. 2d 541; Broussard v. Dumas Chevrolet Co. and Royal Indemnity Company, La. App., 120 So. 2d 863. In Hammett v. Fire Ass'n of Philadelphia, 181 La. 694, 160 So. 302, 304, we stated: Plaintiff alleged amicable demand without avail in his petition, but did not file any evidence of demand therewith. Defendant denied this allegation in its answer. In its brief Pearl Assurance Company, Limited, concedes that the filing of a proof of loss in itself constitutes an implied demand. In argument counsel for said company conceded that there was a demand with the filing of the proof of loss. In his brief plaintiff alleges that he filed a proof of loss along with written demand on October 1, 1959. Under the foregoing circumstances, we are constrained to ask the following questions: What was the date of the demand? Who wrote the document making demand, plaintiff or his attorney? What was the wording and tenor of the document? Was it a demand, or was it a letter or document of transmittal enclosing the proof of loss? Was the purported demand so worded as to preclude any necessity of following it up with another demand after sixty days had elapsed? What was the wording and tenor of the proof of loss? It is conceded by both the plaintiff and the defendant that proof of loss was submitted by the plaintiff to defendant's *889 agent on October 1, 1959, but neither party filed this document with their pleadings. By furnishing satisfactory proofs of loss, the insured exercises his power to make absolute the insurer's duty to pay, which before was only conditional. Vance on Insurance, 2nd Edition, p. 67. The proof of loss being the foundation of the procedure to enforce collection, a copy thereof should be in the record as part of the pleadings. The statute under consideration is penal in nature, and, therefore, is subject to strict construction. Nichols v. Iowa Mutual Insurance Company, 232 La. 856, 95 So. 2d 338; Tedesco v. Columbia Ins. Co. of New Jersey, 177 La. 142, 148 So. 8. This strict construction applies to both the plaintiff and the defendant. The present condition of the record does not enable us to properly pass upon the serious question submitted. We should have before us both the proof of loss and the demand made by plaintiff. In 1936, in the case of Reeves v. Globe Indemnity Co. of New York, 185 La. 42, 168 So. 488, 490, this Court held: Therefore, because of the exceptional circumstances in the instant case, we conclude that plaintiff must be ordered to amend his petition within a delay to be fixed by the trial court, and file with the amended petition a copy of the proof of loss and the document or letter of demand. For the reasons assigned, the judgment of the Court of Appeal, Fourth Circuit, is affirmed, insofar as it maintains the exception of no right or cause of action; in all other respects, the judgment is reversed and set aside, and the case is remanded to the lower court for plaintiff to file amended pleadings, consistent with the views herein *890 expressed. All costs to await the final outcome of this cause. HAMITER, J., concurs in part and dissents in part. McCALEB, J., concurs in the result but is of the opinion that the exception should be overruled. HAMITER, Justice (concurring in part and dissenting in part). While I agree that this cause should be remanded to the district court for further proceedings, I entertain the view that the exceptions of no right and no cause of action should be overruled. The petition clearly discloses a failure to pay within sixty days after defendant was furnished a satisfactory proof of loss which itself, as defense counsel concede, constituted a demand. Therefore, it is my opinion that, according to plaintiff's pleadings, the requirements for recovering the statutory penalty and attorney's fees have been satisfied. [1] The reasoning of the above authorities was incorporated in Article 934 of the Louisiana Code of Civil Procedure, LSA, which recites: "When the grounds of the objection pleaded by the peremptory exception may be removed by amendment of the petition, the judgment sustaining the exception shall order such amendment within the delay allowed by the court. If the grounds of the objection cannot be so removed, or if plaintiff fails to comply with the order to amend, the action shall be dismissed." The comment under the above article states: "Though it is contemplated that in most instances the maintaining of the peremptory exception will necessarily result in a judgment dismissing the action, this article authorizes the trial judge to permit amendment of the petition whenever possible and whenever dismissal of the suit would not be in the interests of justice. This rule is simply declaratory of the liberality of amendment characterizing the recent decisions of our appellate courts. See Reeves v. Globe Indemnity Co. of New York, 185 La. 42, 168 So. 488 (1936); * * * Doyle v. Thompson, 50 So. 2d 505 (La.App.1951)."