
    Home Fire Insurance Company of Omaha v. Catharine Kennedy.
    Filed February 18, 1896.
    No. 6184.
    1. Insurance: Failure to Declare Forfeiture: Waiver oe Breach oe Warranty. An insurance company which., after a loss of the property covered by its policy, with a knowledge of acts amounting to a breach of warranty by the insured, fails to declare such policy forfeited, but, on the contrary, continues to recognize its liability thereon, by demanding repeated proofs of loss, and by insisting upon arbitration under a stipulation which applies to the measure of damage only, will be held to have waived all defenses based upon such breach of warranty and resulting forfeiture of the policy.
    2. -: -: -. So held, notwithstanding the secretary of the defendant company, in returning the proof of loss for correction, added: “This company neither admits nor denies its liability nor waives any of its rights under said policy.”
    3. -: Arbitration. A stipulation for arbitration which does not provide for submitting the matters in dispute to a particular person or tribunal, but to one or more persons to be mutually chosen, is revocable by either party, and will not oust the jurisdiction of the courts having cognizance of the subject of the controversy.
    4. -: -: Waiver. An insurance company, by denying its liability on' the ground of a forfeiture of the policy by reason of a breach of warranty by the insured, waives whatever right it may have had to insist upon arbitration as a means of determining the amount of the plaintiff’s damage.
    Error from the district court of Douglas county. Tried below before Doane, J.
    
      Jacob Fatocett, for plaintiff in error.
    
      I. J. Dunn and Martin Langdon, contra.
    
   Post, C. J.

This was an action by tbe defendant in error, Catharine Kennedy, against tbe plaintiff in error, tbe Home Fire Insurance Company of Omaha, upon a policy of insurance. Tbe defendant company for answer admitted tbe insuring of tbe plaintiff’s property, to-wit, a two-story frame and brick building, and that said building was destroyed by fire within tbe period covered by said policy. It, however, alleged that said policy was not in force at tbe time of the loss, for reasons which will be hereafter noticed. A trial was bad in tbe district court for Douglas county, resulting in a verdict and judgment for tbe plaintiff below, which has been removed into this court for review by tbe defendant company.

It is first contended that tbe risk was increased in violation of tbe policy, (1) from tbe fact that tbe building described therein was at tbe time of the loss used and occupied as a tenement bouse, whereas it was insured as a private dwelling only; (2) by tbe use and keeping therein of gasoline in excess of tbe amount permitted by tbe policy. In support of tbe first of tbe alleged violations we are referred to tbe following questions and answers shown by tbe application for tbe policy: “Q. Is tbe bouse occupied for private dwelling only? A. Yes. Q. By owner? A. Yes.” And also to tbe following conditions of tbe policy: “Or if tbe risk be increased in any manner without consent indorsed hereon, * * * then this policy shall be null and void.” It is not claimed that tbe representations of tbe insured respecting tbe occupancy of tbe premises at tbe date of tbe policy were false as to any essential fact. Tbe only evideuce we discover bearing upon that question is the following testimony of the defendant in error, Mrs. Kennedy:

Q. Who was occupying the house at the time the policy was issued, March 30, 1889?
A. I could not say whether there was any one but myself or not.
Q. The house was not complete at the time the policy was issued?
A. No, sir.

It is, however, contended that the foregoing condition of the policy, in connection with the application, is to be construed as a continuing warranty or affirmative agreement that the validity of the said policy should depend upon the literal fulfillment of the contract by the insured. Applying the rule thus asserted to the facts disclosed by this record, counsel argue that the policy is void and of no effect, for the reason that there were at the time of the loss, in addition to the family of the insured, consisting of herself and son, three families occupying rooms in said house, although the record is silent respecting the number of such occupants or the character of their tenure. It is deemed unnecessary to review the many authorities cited in support of that contention, since it is, we think, conclusively shown that the defendant company has, by its action subsequent to the loss, waived whatever right it may have had to declare the policy void on account of the facts stated, or by reason of the violation of the condition regarding the keeping of gasoline in the building insured. The company, according to the testimony of its own witnesses, was fully advised of the facts constituting the alleged violation of the contract by the insured, five days after the loss, to-wit, on March 16, 1891. Fourteen days later, on March 30, the plaintiff below served upon the defendant what appears to be formal proof of loss, sworn to before a notary public and attested by two disinterested neighbors, in the presence of a justice of the peace. On the same day Mr. Barber, secretary of the defendant company, acknowledged the receipt thereof as follows:

“Omaha, Neb., March 30,1891.
“Mrs. Catharine Kennedy, Holder of Policy No. 30715, Issued by the Home Fire Insurance Company of Omaha, Nebraska.
“Papers purporting to be proofs of an alleged loss under said policy have been received, but same are irregular, defective, and deficient, in that they do not comply with the terms of the said policy, in that it requires that proofs duly executed and sworn to by the assured under th'e said policy be made and furnished the said company. You have been- required, and are hereby required, to render under oath a particular account of said alleged loss, setting forth the date and circumstances of the same, together with title, occupancy, and other insurance, if any, and itemized estimate of the value of the property destroyed, said proofs to be signed and executed in accordance with the terms of said policy. No estimate of the said building insured under the said policy, nor the alleged damage thereto, made by J. P. Gar-diner, nor any other person, have been furnished this company by you. The papers purporting to be proofs of loss are not signed and sworn to by you-, and are defective and deficient as to every requirement of said policy, the same are herewith returned declined.
“The said company neither admits nor denies liability, nor waives any of its rights under said policy.
“Very truly, Chas. J. Barber,
“Secretary Home Fire Insurance Company.”

In accordance with the direction contained in the above communication the plaintiff, on April 1, served upon the company an additional, or, as described by the witnesses, an amended proof of loss, which was likewise returned, accompanied by the following letter:

“Omaha, Neb., April 3,1891.
“Mrs. Catharine Kennedy, Holder of Policy No.
30715, Issued by the Home Fire Insurance
Company of Omaha, Neb.
“Madam : Papers purporting to be proof of your alleged loss and damage under the said policy have been received, but same are defective, deficient, and incomplete, in that they do not fully set forth the occupancy of the said building alleged to have been damaged, nor are they accompanied by an itemized estimate of value of property destroyed, nor are said alleged proofs signed by two disinterested neighbors, nor by nearest magistrate, as required by terms of the said policy. The estimates given in said proofs are in lump, and not itemized, and are not made by competent party. The estimate must be specific and in detail in order to be an itemized estimate. The papers are therefore herewith returned, declined.
“Very truly, Chas. J. Barber,
“Secretary Fire Insurance Company.”

And on April 6 the plaintiff prepared and served a third statement of her loss, which, so far as appears, conforms to all the suggestions of the defendant company. She was in the meantime notified by the defendant of its election to arbitrate the differences between them, by letter of Mr. Barber, under date of March 31, in the following language:

“Omaha, March 31, 1891.
“Mrs. Catharine Kennedy, Holder of Policy No. 30715, Issued by the Home Fire Insurance Company of Omaha.
“Madam: Arbitration of the differences that have arisen between you and the said company, as to the actual damages by fire to building insured under the said policy, is hereby demanded. Please name arbitrator and date agreeable to have said arbitration take place. The said company, by calling for arbitration, neither admits nor denies liability, nor waives any of its rights under the said policy.
“Very truly, Chas. J. Barber,
“Sec. Home Fire Insurance Company.”

The foregoing was followed by communications bearing date of April 3d, 4th, 8th, and 24th, each, in positive terms, demanding arbitration in accordance with a provision of the policy for the adjustment by that means of controversies relating to the amount of loss or damage by the insured.

In Hollis v. State Ins. Co., 65 Ia., 454, the rule is thus stated: “Where the insured, at the time of the loss, has forfeited his right to recover on the policy, and the company, knowing the facts, continues to treat the contract as of binding force, thereby inducing the insured to act and incur expense in that belief, the company thereby waives the forfeiture;” and in Titus v. Glens Falls Ins. Co., 81 N. Y., 410, we obserye the following language: “But it may be asserted broadly that if, in any negotiations or transactions with the insured, after knowledge of the forfeiture, it (the insurer) recognizes the continued validity of the policy, or does acts based thereon, or requires the insured by virtue thereof to do some act or incur some trouble or expense, the forfeiture is, as a matter of law, waived; and it is now settled in this court, after some difference of opinion, that such a waiver need not be based upon any new agreement or an estoppel.” (See, also, Webster v. Phœnix Ins. Co., 36 Wis., 67; Cannon v. Home Ins. Co. of New York, 53 Wis., 585; Knickerbocker Life Ins. Co. v. Norton, 96 U. S., 234; Silverberg v. Phenix Ins. Co., 67 Cal., 36; Marthinson v. North British & Mercantile Ins. Co., 64 Mich., 372; Eddy v. Merchants, Manufacturers & Citizens Mutual Fire Ins. Co., 72 Mich., 651; German Ins. Co. v. Gibson, 53 Ark., 494.)

The foregoing, among the many cases in harmony therewith, serve to illustrate the rule applicable to the present controversy. The demand for successive proofs of loss after knowledge of all the facts, upon grounds which are, to say the least, highly technical, thus imposing upon the insured the labor and expense incident to their preparation, and the repeated peremptory calls for arbitration, in accordance with the terms of the policy relating to the measure of damage only, cannot be construed otherwise than as a waiver of the alleged forfeiture. And the rulings complained of, so far as they relate to that branch of the case, if erroneous, are manifestly not prejudicial to the plaintiff in error; nor are we unmindful of the fact that Mr. Barber, on the return of the first proof of loss, disavowed the admission thereby of any liability on the part of the defendant company or a waiver of any of its rights. But such a disavowal will not vary the legal effect of his actions in behalf of the defendant. In Marthinson v. North British & Mercantile Ins. Co., supra, a case in point, the managing officer of the company, on returning the proof of loss for correction, used this language: “You will further take notice that, in returning said papers and making the ■objection thereto, and in all other matters herein, this company waives none of its rights and defenses under their said policy, but expressly reserves each and every one thereof unto itself.” In •commenting upon the foregoing the court, by Morse, J., say: “We do not think this general reference to other possible defenses was sufficient. It devolved upon the defendant to specifically state its defenses, or some of them, if it had ány other than those going to the defects in the proof of loss. If the company had frankly stated that it refused to pay the alleged loss because of the breaches of warranty and forfeiture by the conditions of the policy, the knowledge of which it then possessed, the assured would have, in all probability, gone no further into cost and trouble to perfect such proofs of loss, as its refusal to pay on other grounds would have rendered it unnecessary. This loose and general reservation of its rights cannot be considered as an adequate notice •of the defenses insisted upon at the trial, and it must be held that such defenses were waived by its conduct.”

The only remaining question relates to the effect of the provision of the policy for determining, in case of loss, by arbitration of the amount of damage. It has been repeatedly held that a stipulation for arbitration which does not provide for submitting'the matters in dispute to a particular person or to a particular tribunal, but to one or more persons to be mutually chosen, is revocable by either party, and will not oust the jurisdiction of the courts having cognizance of the subject-matter of the controversy. (Hostetter v. City of Pittsburgh, 107 Pa. St., 419; Commercial Union Assurance Co. of London v. Hocking, 115 Pa. St., 407; Donnell v. Lee, 58 Mo. App., 288; Rison v. Moon, 22 S. E. Rep. [Va.], 165; Canfield v. Watertown Fire Ins. Co., 55 Wis., 419; German-Americai Ins. Co. v. Etherton, 25 Neb., 505.) The last mentioned case furnishes an additional reason for the rejection of the defense based upon the refusal of the plaintiff below to arbitrate, viz., that the denial by the defendant company of its liability under the policy is a waiver of whatever right it. may have had to insist upon the means therein provided for ascertaining the amount of the plaintiff’s damage.

The judgment of the district, court is right and. must be

Affirmed.  