Court Opinion

ID: 7134604
Source: CourtListenerOpinion
Date Created: 2022-07-24 15:22:32.721068+00
Date Added: 2024-06-11T16:14:34.928223
License: Public Domain

*70Dissenting opinion by Judge Gutty in which Judges White and O’Rear concur:
Appellee Herd had an insurance policy issued by the British-American Assurance Company upon certain property in Lexington, Ky. Soon after the policy was issued the property was destroyed by fire. After an arbitration as to the sound value and loss sustained was had, Herd seems to have declined to take any steps to recover or collect the amount due. Soon thereafter the appellant sued Herd, and garnished the insurance company, Which seems not to have answered for more than a year after the loss, and then denied any indebtedness to Herd. Thereupon appellant dismissed his suit, and immediately brought suit in equity, seeking a recovery against the insurance company. Among other defenses relied on by the company was the plea of limitation mentioned in the policy, it being provided in the policy that no suit in law or equity should be maintained upon this policy unless commenced within twelve months from the lire. The majority of this court holds that the twelve-months’ limitation is valid and binding, and the court below dismissed appellant’s petition; hence this- appeal.
I 'respectfully and earnestly dissent from such conclusion. It is provided by section 2514, Kentucky Statutes, that actions other than these for the recovery of real estate shall be commenced within the “following periods,” and not afterward. The period mentioned in said action is fifteen years1, and among the causes of action mentioned is a bond or obligation for the payment of money or property, or the peformance of any undertaking. The above is a general law of the State. Section 59 of the Constitution of the State provides that “the General Assembly shall not pass local or special acts concerning any *71of the following subjects or for any of the following purposes.” Among the subjects and purposes mentioned is to regulate the limitation of civil or criminal causes. It must be conceded that the General Assembly could not pass an act malting one year a bar to a recovery upon the policy in question, yet this court holds that the defendant by a stipulation in the policy can create such a bar. In other words, the insurance company and the assured can by agreement make valid as between them a statute of Limitation different from the general law, and a statute or bar that the lawmaking power of the State- could not enact. If parties can by contract create a statute of limitation, then we may have as many different limitations as the skill or caprice of parties may desire to agree to. One of the chief objects of the Constitution was to abolish or prohibit special legislation, but, if the majority opinion in this case is to be the law of the State, special legislation, or what is the same thing, can be enacted by parties to ail contracts. If parties can fix twelve months as a bar to a right to recover, they can as well make twelve days’ delay bar a right of -action; for, if the opinion in this case has any foundation to rest upon, it is solely1 upon the agreement or consent of the parties, and it necessarily follows that, if they can make valid one length of time as a bar, they can make any time, long or short, a bar, — either shorten or lengthen the time. One insurance company may require suits to be brought in thirty days, and another may extend the time thirty years. This question was, in effect, decided by this court in Telegraph Co. v. Eubanks, 100 Ky., 604, (38 S. W., 1068), — a reported case. In that ease it was part of the contract .as to sending messages- that the claim for damages must be filed within sixty days after default. In discussing *72That defense, this court said: “It is the province of the lawmaking power to prescribe the limit in which an action may be brought; hence the limitation of sixty days, if not an attempt to vary the statute of limitation, would, if enforced, have that effect.” In Gorley v. City of Louisville (Ky.) 47 S. W., 263, it was decided that section 2882, Kentucky Statutes, which required all suits for salary or compensation for services against the city to be brought within six months after the accrual of the cause of action, was unconstitutional and in violation of subsection 5 of section 59, heretofore referred to. In City of Louisville v. Kuntz (Ky.) 47 S. W., 592, the city pleaded as a defense a statute for the government of cities of the first class which provided that actions against such cities for injuries to persons or prdperty must be begun within six months after the cause of action accrued! This court held the said statute'to be unconstitutional because1 in conflict with said section 59. Both of these cases were carefully considered, and the questions involved thoroughly discussed, and are both reported cases. The reasoning in the cases, supra, is unanswerable, and, to- my mind, conclusively settles that the one-year limitation in the policy in question is -invalid and of no effect. Is it possible that an insurance company is more potent than the General Assembly of the great State of Kentucky? Gan an insurance company or any individual make a statute of limitation despite the Constitution? There might be some reason assigned why the chief city of the State should have a shorter statute of limitation than the citizens of the State generally. It might be argued that, in the rush of commercial life and press of business, persons dealing with the city should promptly press their demands; yet it was held, and properly held, in the case, supra, that the *73Constitution forbade any sucli legislation. ■ Yet it seems an insurance company may fix any limitation it desires, if the insured will accept such a policy, and it may safely be assumed thait but few ever read or understand near all the conditions and stipulations in the modern insurance policies'.
The decisions of the courts of other States are entitled to no weight in a case like this unless the constitutions and laws thereof are the same as ours, and even then should not be followed unless sound. The Federal Government has no general statute of limitation; hence the decisions of the Sxipreme Court as to agreements such as is claimed in this case can in no wise affect the question, nor be considered' authority in support of the majority opinion. I confidently assume that no decision of this court can be found heretofore which sustains such an agreement made after the adoption of the present Constitution. I have found one case in which the question «fan attempt to extend the statute of limitation by agreement was considered, and in an elaborate opinion this court decided that such an agreement was invalid and could not be enforced. I refer to the case of Wright v. Gardner, 98 Ky., 454, (33 S. W., 622), (35 S. W., 1116). In this case it appeared that J. A. Wright was an inspector of tobacco in 1893; that as such he entered into a contract with J. T. Wright and others, who were brokers buying tobacco, whereby J. A. Wright undertook to guaranty to the brokers aforesaid that the samples drawn by him should correctly represent the quality and character contained in the hogshead, and to further guaranty that if within six months in the United States, or within nine months in any other country, a second inspection showed that the first was not correct, he (Wright) would make *74good any loss to said brokers by reason thereof. Another contract to the same effect was made between other parties and said Wright. It was- sought to enforce these' contracts. Section 4805, Kentucky Statutes, fixed ninety days within the United States, and six months in other countries, as the period in which such claims should be made. This court held that the contracts relied on were invalid because of the statute which fixes a time, thus- holding that parties could not by contract extend the period of limitation. It does seem to me that, if a contract to extend the period of limitation is void, a contract to shorten the same must also be void. I quote as follows from the opinion, supra: “Then the question presented is whether it is lawful for parties, by a contract in reference to a matter of public concern,' in advance, to so ignore, set aside, and annul the statute of limitation established and fixed by the Legislature in reference to the business and the subject-matter about which they are contracting. While it is true that the statute of limitation declared by the Legislature as applicable to the time within which demands must be made for these reclamations is not mentioned in either contract, yet it is manifest that this extension of time was the material thing about which they were contracting, and which they undertook to abrogate or ignore. ’Phis extension of time is undertaken to be supported upon behalf of appellant by an allegation that the time fixed by the parties to these two contracts was' in accordance with the long-established usage and custom of the tobacco trade done by these public warehousemen ■in the city of Mayfield, and of which all parties had knowledge, — both seller, inspector, and buyer; and, it is argued by appellant’s counsel that this longer time than that fixed by the statute was but reasonable, and in fact de*75manded by the necessities of said trade, and that the given time by the statute was and is too short. In effect, it is for the parties interested in these contracts to say that, notwithstanding the Legislature had established by law a time within which these reclamations must be made, yet said time is too short, and that, though such statutes apply to a public business, and were passed to regulate the same, yet we will now, by reason of this custom and by these contracts, establish a different period of limitation of our .own. Of course, if this may be done by any combination of sellers of tobacco, the inspector, and the buyers of same, on any one of the markets of the State, then it may be done on each and all of the markets, and thus the general law be set at defiance, and other laws established by these several contracting parties, be' submitted for the law of the State. As to this pre-existing custom, claimed to have existed in the tobacco trade on that market before the passage of the statute of limitation in question, it may be said to bd axiomatic that no custom can be established or maintained in opposition to an express statute of the Legislature; that customs of trade may exist where they do not contravene an express statute, but, when the Legislature speaks, then all pre-existing customs in. conflict therewith must cease. Custom ¡irevails in the absence of statute law, not in defiance of it. In speaking of statutes of limitation, Mr. Wood says that, while formerly they were not regarded with favor by the courts, ‘latterly they are considered as beneficial and as resting on principles of sound public policy, and as not to be evaded except by the methods provided therein. Indeed they are now termed “statutes of repose,” and are regarded as essential to the security of all men.’ Section 4. In 13 Am. & Eng. Enc. *76Law, 692, it is said: ‘Statutes of limitation are now almost universally regarded as statutes of repose, and liberally construed/ In Moxley v. Ragan, 10 Bush., 159, this court said: ‘The right to plead the statute of limitations is a personal privilege, but .will it be insisted that an agreement never to plead the statute is binding? If so, the grocer and merchant, and all others engaged in the business affairs of life, would have only to agree with those Who promised to pay, verbally or in writing, that the statute of limitations should never be relied on, . . . in order to render nugatory these wholesome laws enacted for the peace and welfare of society, and in accord with an enlightened public policy/ And again, same case, speaking of a contract in advance to waive the benefit of all exemption laws, as against the debt contracted, the court said: ‘A contract fraught with such consequences to the family of a debtor is totally at variance with public policy, and therefore void.-' It now appears to us that the statutes of limitation declare the public policy of the V State in reference to actions brought as clearly as the policy of the State is found in its exemption laws in favor of the family of debtors. In the same case the court quotes a decision by Judge Denio, saying that ‘the law does not permit its process to -be used to accomplish ends which its policy forbids, though the parties may, by a prospective contract, agree to such use.' In Allen v. Froman, 96 Ky., 317, (28 S. W., 497), this court said: ‘It has become the legislative policy of this State to fix in every case a limit of time for beginning every action or proceeding for relief/ Mr. Bishop, in his work on Contracts (section 439), says that ‘the law is to be deemied a part of every contract/ And in section 442 he says -it is because of this doctrine that the law constitutes a part of *77every contract ‘that no stipulation of parties can cause their rights to flow otherwise than in the channels of the law/ Again, in section 477, he >says: ‘To enforce a contract in direct subversion or evasion of any regulation which the law has made for the general good would be against sound, policy/' Again, in section 473, the same author says: ‘A contract involving any one of the other interests which the law' cherishes, though to do what is neither indictable nor prohibited by a statute, termed a contract against public policy (or sound policy), is likewise void/ ”
The majority opinion says that the great weight of authority in this country seems to favor the validity of such a provision; that is, such a limitation. The opinion of the United States Supreme Court in Riddlesbarger v. Insurance Co., 7 Wall., 389, (19 L. Ed., 257), is referred to and liberally quoted from. That opinion is not entitled to any weight in this case, for the reason that the United States has no general statute of limitation. It is worthy of note that that opinion proceeds upon the idea that a statute of limitation is in part, at least, allowed to bar a claim because time raises a presumption of payment. The modern doctrine is that it is a statute of repose, and that it is wholly immaterial whether the claim is paid or not, and that the statute is a complete bar. It is not the policy of law to encourage litigation or impel the creditor to malm haste to prosecute his debtor. Upon the contrary, the law does not encourage a multiplicity of suits. It may be true, as stated in the quotation, that it is to the interest of insurance companies that the extent of losses sustained by them should be speedily ascertained; but it is equally true that the insured should be entitled to the time given by the general law of the State *78to enforce their demands against insurance companies. It is stated in fhe .quotation, supra, that a stipulation in a policy to refer all disputes to arbitration is invalid because it is an attempt to oust courts of jurisdiction by excluding the insured from all resort to them for remedy. I am unable to see the difference between ousting the courts of jurisdiction to determine a controversy, and ousting them of jurisdiction to hear and determine a controversy within the period prescribed by the general law of the State. The opinion in Owen v. Insurance Co., 87 Ky., 574, (10 S. W., 119), is referred to in tlhe majority opinion. It will be seen by an examination of that case that this court did not hold the special limitation clause either valid or invalid, but, at most, seemed to concede its validity, but held that the insured in that case was not barred. Rut, if it be conceded that the opinion did recognize the stipulation as valid, yet that opinion was rendered under the Constitution of 1849, under which special statutes of limitation as to particular companies were not prohibited by the Constitution. I venture the opinion that no court of last resort in any State having the same provision in its Constitution as section 59 in our Constitution has ever held any such stipulations as the one under consideration to be valid or binding. So far as I am advised, the tendency of all the courts is against the validity of any such stipulations. The Supreme Court of Nebraska, in Barnes v. McMurtry, 29 Neb., 184, (45 N. W., 286), had a similar provision under consideration, and in discussing the question said: “The most that can be claimed for these words is that they constitute a contract between the parties for a special limitation differing from, and much less than, the statute. But to support a contract there must be a consideration. If there be no consideration in *79support of the provision, it would be, like any other contract having no consideration to support it, a nudum pactum. If such a provision was in the contemplation of the parties when the application for insurance was made, or was in the application itself, then, no doubt, the original consideration paidi for the insurance, and the policy issued thereon, would bind the insured; but a mere voluntary restriction, not in the application nor in the contemplation of the parties, placed in the policy as a proviso, in print too fine to be read by a. person of middle age without spectacles, can not be considered a part of the contract. Suppose A. should apply to B. for a loan of money, and B., believing A. to be an honest man, should send him the money with a request that he forward Ms note for the same; and suppose A. should send a note for the amount borrowed, in proper form, 'but should write on the margin thereof that B. must bring an action on the note six months after it became due, or be barred? would 'Such a proviso bar the action in less than the period fixed by statute? That it would not will be conceded. The contract in such ease was for the loan of a certain amount of money for a specified period at lawful interest, and any provision restricting, the right of recovery would be without cdnsideration and void. So in the case of insurance. A party who desire's insurance on his property applies to an agent of some company in which he has confidence, and is furnished with á blank application to fill out, and does prepare the same and deliver it to the agent and pays the premuim demanded. The premium he has just paid is for the insurance, and he may reasonably suppose that, having paid the ordinary rates, -the company in case of loss may pay the same promptly after proof thereof is duly made. If it fails to *80do so, he may reasonably expect that the time to bring an action against the company is the eame as upon any other written contract, where there has been a breach thereof. A policy is issued, and, he believing the company to be honorable and to have based its policy on the application, the policy is not read, but placed among his valuable papers, and only after a loss occurs is it examined. Every person familiar with the subject well knows that such is the ordinary course in very many cases, at least. If it is sought to interpose conditions or restrictions of this kind, they should be set forth in the application, or be brought to the attention of the insured when the premium is paid; otherwise, unless there is a consideration Sihown for them, they will not be sustained. If it is said that the business of insurance is peculiar, and that it is necessary to try the cases as soon as possible after a loss occurs, so the proof may be available, the answer is that the insurer well knows that it may be called upon to make good the loss at any time after -one occurs; and has the right and authority of any other litigant to take and perpetuate testimony; and there seems to be no good reason for ian exception in favor of one company more than another. In the many complex actions brought against railway, telegraph, and other companies, where the defense largely depends upon the testimony of witnesses, it has never been seriously urged that such companies were entitled to a shorter limitation than other persons because of the liability -of their witnesses to go away, or for other causes. It is the policy of the law to have but one law of limitations alike for the poor and the rich, for the wealthy corporation and the insolvent; and, to establish a limitation by contract, there must be a sufficient consideration. otherwise it will not be available-. In the *81very able exposition by Lord Mansfield, in Carter v. Boehm, 3 Burrows, 1905, of statements made by the insured to obtain a policy, and their effect, the general rules govern* ing the rights of the insured and insurer are considered at length; and an examination of the early causes' will show that a special limitation within which the action should be brought in ease of loss was a part of the original contract. Such a contract was absolutely essential at that time, as the statute of limitations was held to be one of presumption that the debt was paid, and not, as at present, one of repose.” In Phenix Ins. Co. of Brooklyn v. Rad Bila Hora Lodge, 41 Neb., 29, (59 N. W., 755), the court again considered a special limitation in an insurance policy, and said: “The limitation clause in the policy was as follows: 'No suit or action against this com pany shall be sustainable in any court of law or chancery unless commenced within six months next after the loss shall occur, any statute of limitations to the contrary notwithstanding.’ A respectable line of authorities is found in support of the validity of similar provisions. There have been at least two cases in this court whose language indicates that such provisions, under certain conditions, are enforceable. Barnes v. McMurtry, 29 Neb., 178, (45 N. W., 285); Insurance Co. v. Fairbank, 32 Neb., 750, (49 N. W., 711). In no case, -however, has effect been given to such a provision in this State. Notwithstanding the authorities upon the subject, the writer would hesitate to commit himself to the view that the parties to a contract may bind the courts to a period of limitations other than that prescribed by the statute.” In Miller v. Insurance Co., 54 Neb., 122, (74 N. W., 416), the supreme court again had under consideration the same provision here*82tofore discussed. The insurance company pleaded the period of limitation fixed in the policy. The case was tried by the court without a jury, and the court found in favor of the plaintiff as to all the issues of the pleading, except as to the issue that the action was not brought within six months from the time the cause of action accrued, as provided in the policy; and upon that issue the court found in favor of ¡the defendant, dismissing Miller’s action. The opinion then says: “The statutes of this State provide in what time- all actions may be brought, and a contract which provides that no action shall be brought (hereon, or for a breach thereof, unless within a time therein specified, which is different from the time which the statute fixes for bringing an action on such contract or for a breach thereof, is against public policy, and will not be enforced by the courts of this State. Barnes v. McMurtry, 29 Neb., 178, (15 N. W., 285). In Eagle Ins. Co. v. Lafayette Ins. Co., 9 Ind., 443, such a clause was held to be absolutely void. Phenix Ins. Co. of Brooklyn v. Rad Bila Hora Lodge, 41 Neb., 21, (59 N. W., 752), was a suit on an insurance policy which contained a clause similar to the one in question here. Discussing the validity of such a provision in a contract, Irvine, 0., while admitting that a respectable line of authorities supports the validity of such a stipulation, said: ‘In no case, however, has effect been given to such a provision in this State. Notwithstanding the authorities upon the subject, the 'writer would hesitate to commit himself to the views that the parties to a contract may bind the courts to- a period of limitations other than that prescribed by statute.’ The' court adopts the views of the commissioner as expressed in that case, and declines to be bound to a period of limitations fixed by any contract, other than the *83period prescribed by the statute." The judgment is reversed, and the cause remanded, with instructions to the district court to enter a judgment in favor of the plaintiff in error upon the special finding's made by the court.”
It will be seen from the foregoing that the tendency of modern thought and judicial decisions is against the validity of any such special provisions in contracts. A recognition of such provisions would inevitably tend to greatly increase litigation, and bring up innumerable contests as to the waiver of such stipulations, and as to what would estop a party from relying* on such stipulations.Moreover, it seems clear to me that one of the leading features- and objects of the present Constitution was to have uniformity in the law and to prohibit special legislation, and to prevent undue advantage being taken of the uneducated, unthinking, and unwary. The object of insurance. is to obtain indemnity for loss by fire, or payment on life insurance policies; and, as a general rule, the insured party will never look in a policy to see whether or not there is any statute of limitation embodied. I doubt if two per cent, of the parties now in the State holding insurance policies have any idea that there is- any stipulation in such policy requiring suit to be brought within a certain time. The applications for insurance have no such stipulation, and it would be a harsh rule- to require a man to be bound by a stipulation in a policy different from the general law of the State, unless he had agreed knowingly and specifically to such a provision. ■ I am, however, clearly of the opinion that no agreement, however clearly made and asisented to by both parties, can have the effect to shorten the general statute of limitation, or bind a court to hold any contract barred within a shorter period *84than is provided fox’ by the general law of the State. T 'think my conclusion is fully sustained by the decisions referred to by xne in the first part of this opinion. For the reasons indicated, I dissent from the majority opinion herein, which holds the twelve-months provision in the policy in question to have any validity whatever.
Judges ■ White and O’Rear concur.
Petition for rehearing by appellant overruled.