
    John R. Williams, as Receiver of the Holbrook Insole Company, Appellant, v. Fire Association of Philadelphia, Respondent.
    Fourth Department,
    May 1, 1907.
    Insurance — contract of fire insurance requiring action to he brought within one year — compliance with limitation prerequisite to action — waiver of condition must be alleged —nonsuit reversed.
    When a policy of fire insurance provides that no suit shall be brought thereon unless commenced within twelve months next after the fire, the requirement is a condition precedent to action and must be alleged and proved.
    Although the Statute of Limitations is ordinarily a matter of defense, a compli- " anee therewith may become a prerequisite to action if so provided in a contract. The time within which an action must be brought may be regulated by the parties the same as any other condition contained in their agreement.
    When a plaintiff alleges the performance of siich condition precedent by stating that he has “duly'performed” as permitted by section 533 of the Code of Civil Procedure, which allegation the defendant denies and alleges affirmatively-that the action, was not commenced within the time stipulated in the contract, the' plaintiff is not entitled -to excuse his failure to commence action by showing that the defendant waived the condition. Waiver of performance by the defendant must be pleaded to be proved. But when in an action to recover on such policy evidence is admitted'tending.to show that a. prior arbitration between the parties had been abandoned by the defendant, a nonsuit, granted upon the ground that the action would not lie because the arbitration agreement was still effective, will be reversed for the plaintiff may be entitled'to an-amendment to show a waiver of the short statute by the defendant’s entering upon arbitration.
    McLennan,'!?. J.", and Kruse, J., concurred in result only, with opinions."
    Appeal by'the plaintiff, John R. Williams, as receiver, etc., from a judgment of the Supreme Court in favor of the defendant, entered in'the office of the clerk .of the county of Erie on the 10th day of April, 1906, upon a nonsuit directed by the court upon a trial at the Erie' Trial Term, and. also from an order entered in said clerk’s office on the 10th .day of April, 1906, denying the plaintiff’s motion for a new trial made upon the minutes.
    
      Eugene If. Bartlett; for the appellant.
    
      J. H. Metcalf, for the respondent.
   Spring, J. :

A statement of the facté is contained in the opinion of the presiding justice.: .

The policy of insurance contains this provision: “ Yo suit or action on this ..policy for the recovery of any; claim shall .be sus: tamable in any court of law or equity until after full compliance by the insured with all the foregoing requirements, nor unless commenced within ' twelve months next after the fire.” By this clause in their contract the parties made compliance with the requirements in the ■ policy and the commencement .of the action within; twelve months after the fire conditions precedent to the maintenance of the action. (Clemens v. American Fire Ins. Co., 70 App. Div. 435; Ketchum v. Belding, 58 id. 295; Meres v. Emmons, 103 id. 381, 384; Reining v. City of Buffalo, 102 N. Y. 308; 4 Ency. Pl. & Pr. 641; 2 May Ins. [4th ed.] 1373.)

And their performance must be alleged'in the complaint. (Oases cited; Thrall v. Cuba Village, 88 App. Div. 410; Rosenstock v. City of N. Y., 97 id. 337; Bogardus v. N. Y. Life Ins. Co., 101 N. Y. 328, 334.)

■ In Clemens v. American Fire Ins. Co. (supra),- in construing the provision in the insurance contract providing that-sixty days must elapse after proofs of loss have been furnished before an action on the policy can be commenced, this court held unanimously that such requiremen t was ,a. condition precedent to sustain, the action and must be alleged in the complaint.

May in his work on Insurance (Yol. 2 [4th ed.], p.. 1373, n. 4) states the rule as' follows:' “.The petition must always aver the lapse of the time necessary before action can be brought —the sixty days after proof, or other time allowed'for payment.”

The Encyclopaedia - of Pleading and Practice (Yol. 4,-p. 641) contains the following': “ So. in an action .upon an, insurance policy providing that a loss shall not be payable until a certain time after notice and. proof of the same, the complaint must show" that the action was not commenced until the. lapse of the. specified time after the notice and proofs were- furnished,” citing ■ many authorities' in support of the proposition.

Unquestionably the plea of the Statute. of Limitations and the Statute of Frauds is ordinarily a defense. The parties to a contract, however, may prescribe that the performance 'of any requirement is a prerequisite to a recovery, and, in that event, due performance must be alleged in the complaint or adequate excuse for failure be averred. The time when an action is to be brought may as well be regulated by the parties as any other condition contained in. their agreement. (Code Civ. Proc. § 414, subd. 1.)

In order to obviate the necessity of alleging in detail the facts constituting performance of the conditions precedent embodied in the contract, the pleader is permitted by section 533 of the Code of Civil Procedure to state that he has duly performed ” these requirements ; but “ if that allegation is controverted, he must, on the trial, establish performance.”

The complaint in the present action contained this Code allega- • tion, and the answer set out a general denial and alleged affirmatively that the action was not commenced within the time stipulated in the contract. On the trial the plaintiff did' not attempt to show that the action was commenced within one- year after the fire. Concededly, it was not commenced within that time. He proved facts under the objection of the defendant tending to excuse his failure ■ for commencing the action within the prescribed period. He must establish that he “duly performed” all the conditions imposed upon him conformably to the allegation in his complaint. He did not meet this burden by showing waiver of performance. (Beecher v. Schuback, 1 App. Div. 359; affd. on opinion below, 158 N. Y. 687; Burr v. Union Surety & Guaranty Co., 86 App. Div. 545 ; Brandt v. City of N. Y., 110 id. 396, 399; Stern v. McKee, 70 id. 142,146; Ryer v. Prudential Ins. Co., 85 id. 7.)

If the plaintiff expected to show a waiver of performance by the insured he must plead it. (Elting v. Dayton, 43 N. Y. St. Repr. 363; Fox v. Davidson, 36 App. Div. 159; Allen v. Dutchess County Mut. Ins. Co., 95 id. 86; Todd v. Union Casualty & Surety Co., 70 id. 52.)

He could not allege due performance with the provisions of the policy, and, when this is denied, change front on the trial, conceding his averment is untrue and establish facts excusing the performance. If the plaintiff relies upon a waiver he should apprise the defend- ' ant in his -complaint of his position. (Porter v. Kingsbury, 5 Hun, 597; affd., 71 N. Y. 588.)

■ It is urged that the plaintiff could not anticipate that the defendant would insist upon the Statute of Limitations, and, consequently, he was not obliged to allege any excuse for full performance'. That might be stated with equal propriety as to any other requirement in the insurance contract which is made a condition precedent, for the defendant assuredly may waive any of these provisions: If, however, they are preliminaries' essential to the maintenance of the action, the plaintiff mtist in his complaint either allege due performance, or facts excusing it, and the time limitation' in the policy is within this rule of pleading as well as any other condition.

"The defendant did not set up the pendency of the arbitration proceeding as a defense. . Tt preferred to stand on the.issue of performance. The defendant was not required to interpose the other defense when it was satisfied that no recovery could be had on the pleadings as they were framed..

The trial judge received the evidence of waiver and granted the motion for nonsuit on the ground that the arbitration agreement was still effective. That issue was certainly not raised-by the pleadings. ■ The evidence, in my judgment, was sufficient to permit the jury to find , that the arbitration proceedings had been abandoned. Had the court excluded the evidence of .the waiver,, an amendment .to the complaint might have been allowed,; and the case eventually been disposed of on the merits:

I am, therefore, in favor of a reversal, so that the issues may be properly set forth in the pleadings and a trial had on the substantial issues.

Williams and Robson, JJ., concurred.

McLennan, P. J.

(concurring):

The action was commenced on the :20th day of January, 1905, to recover upon what is knówn as a “ use and occupancy policy,” an insurance or indemnity against loss from being unable to occupy or use the. insured property by .reason of a fire, not exceeding fifteen dollars per day for 150 working days, which was.issued and delivered to plaintiff’s assignor by the defendant.

Practically the only questions presented by this appeal arise upon the' pleadings. The complaint is' in the form usual in such cases. It is alleged in' substance that on' the 19th day of October, 1899, the defendant issued its policy of insurance dated and delivered on that day to plaintiff’s assignor and thereby insured such assignor in the sum of' $2,250 against loss of use and occupancy of its factory premises situate in the city of Utica,. 1ST. Y., and of the machinery therein contained, if the same should be disabled by fire during the term of, and under the conditions specified in said policy; that by • reason of a fife so occurring on the 9th day of October, 1900, the loss which is the subject of this controversy was sustained; that the insured prepared and served upon the defendant proper proofs of loss as required by, and within the time specified' in the policy; and it is further alleged in the complaint that plaintiff’s assignor complied with all the conditions of said policy which he was thereby required to perform to entitle him to recover the amount of loss sustained; that upon demand duly made, the defendant refused to pay such loss or any part thereof, and thereupon judgment was demanded for the amount of the same. The policy in question was annexed to and made a part of the complaint, and one of the provisions of such policy was' as follows : “ ¡No suit or action on this policy for the recovery of any claim shall be sustainable in any court of law or equity until after full compliance by the insured with all the foregoing requirements, nor unless commenced • within twelve months next after the fire.” Concededly this action was not commenced until long after the expiration of said twelve months. ■

The complaint, however, states a good and perfect 'cause of action against the defendant, unless because of the fact that it appears on the face thereof that such action was not brought within twelve months after the fire occurred, as required by the express provisions-of the policy. Such fact, although appearing upon the face of the complaint, did not'render it demurrable, because it only constituted a defense if pleaded as such. The Statute off Limitations is an affirmative defense, and if relied upon must be asserted by the defendant, and must always be specially pleaded in actions at law, and can never be availed of otherwise than by special plea.

The case of Crane v. Powell (139 N. Y. 379) presented the question as to whether or not the Statute of Frauds must be pleaded in order to be available to the defendant ais a defense, and it was held that such a defense must be pleaded in order to be so available. It was said by Judge O’Brien, who wrote the opinion of the court (p. 388): “ The Statute of Frauds is a shield which a party may use or not for his protection, just as he may use the Statute of Limita-' tions, the statute against usury, that against betting and gaming, and others that might be mentioned. I take it to be- a general rule of - universal application that the statutes last mentioned are not available to a party unless specifically pleaded, and there is no reason for making the Statute of Frauds an exception to the rule.” ' The true rule is also stated in -general language in Fischer v. Metropolitan Life Ins. Co. (37 App. Div. 575) as follows (p. 579): “Under tlm Code of Procedure it has been settled for many years that whenever it is necessary for the defendant, by way of defense, . to show any fact which, starting with the proposition that there has been a valid contract between ■ parties, operates to defend a claim under it by .establishing a subsequent performance or a subsequent forfeiture of it, such performance or forfeiture is. an affirmative defense and must be affirmatively set out before it can be proved.”

The defendant in the case at bar fully recognized the correctness of the rule adverted to and s]3ecifically pleaded in its- answer that plaintiff’s action was barred because not brought within twelve months after the. fire occurred, as required by the express terms of the policy.

But if the complaint was sufficient before the'interposition-of such defense, did such plea by the defendant render it bad? Or was it incumbent upon the plaintiff to have anticipated that the defendant would plead the time limit, which was entirely optional with it, and because of such anticipated defense to have stated in-his. original- complaint -facts showing,that such time limit had been waived ? We think there is no rule of pleading which imposes such obligation upon the plaintiff; that a plaintiff is not required to allege in his complaint facts showing a waiver of a defense which may or may not- be insisted upon by defendant, and which, if not specifically pleaded, is waived.

Assuming then that the complaint states a good cause of action . against the defendant, and it being conceded that the defendant specifically pleaded that the action was barred - because not commenced within twelve months after the fire occurred, as required by the policy, what are the rights of. the parties under such plead ing ? Without doubt, at some stage of the litigation, the plaintiff was entitled to show that the time limited for the commencement of the action as specified in the policy had been waived by the defendant. A good cause of action having been stated in the complaint originally served, and by the answer thereto practically the Statute . of Limitations having been pleaded by the defendant, was it necessary for the plaintiff to serve a supplemental complaint or a reply in order-to prove -facts constituting a waiver of the limitation? There is no rule, so far as we have been able to. discover, which requires such action on the part of the plaintiff. Under-section 514 et seq. of the Code of Civil Procedure a reply, is required only where new matter is set up as-a defense in the answer.

The precise question now being considered may be illustrated by a case common in. the experience of every lawyer. A, brings an action upon a promissory note made by B. It appears .upon the face of the complaint that more than - six years have elapsed since the note became' due and payable and that the whole amount thereof, principal and interest, is due and unpaid, for which amount judgment is demanded: Such complaint states a good cause of action, notwithstanding it appears upon the face thereof that it is subject to the defense, if pleaded, that the note is outlawed.” -The defendant pleads such defense. May not the plaintiff in such case without any change in the pleadings prove upon the trial of such action that the Statute of Limitations had been waived by the defendant? Ho amendment of the complaint is necessary in order to entitle the plaintiff' to make proof of such waiver.

So in the. case at bar, the plaintiff upon his complaint and under the'answer interposed by the defendant' was entitled to show that the defense that the action liad not been brought within the time specified in the policy had been waived by the defendant. In this case the defendant interposed' a general denial; also pleaded that the action was barred because not commenced within the time limit specified in the policy; also that the. plaintiff’s assignor kept kerosene or gasoline upon the premises in violation of the express terms . of the policy, and further that the plaintiff had not used proper means to restore the property to its former state of usefulness as soon as required under the terms of the policy. The issues raised by the last two defenses were not tried, and it is not claimed by the respondent that the judgment of nonsuit can be sustained upon the ground that it was shown that such provisions of the contract had been violated. The parties, so far as it is important' to note, went to trial upon the issues raised by the pleadings, eliminating the two last-mentioned defenses. . The complaint, so far as we need consider, alleged the issuance of the policy; that while it was in force a fire occurred which resulted in loss and for which under its conditions the defendant was liable, the plaintiff having complied with all precedent conditions. The only answer interposed, so far as important to consider upon this appeal, was' that the action was not commenced within twelve months' after the fire occurred.

"Upon such pleadings the plaintiff "was entitled to prove any facts tending to show that such time limit had been waived by the defendant, and so without alleging in his original complaint such facts on the assumption that such defense would be interposed or without serving a supplemental complaint or reply setting up such facts, after the interposition of such defense.

The authorities to which attention has been called are not in conflict with this proposition. In the case of Fox v. Davidson. (36 App. Div. 159) it was held that “ When a • complaint alleges performance of a contract, the plaintiff may not, without amendment of his pleading, recover by proving that a breach on his part was either -waived or justified by the defendant’s conduct, unless the latter, by not objecting, consents to such a recovery.” In that case.it. appeared, that the defendant put in issue by general denial the plaintiff’s right to recover. "Ho rule could be invoked against the defendant in that case that he waived the non-performance of the contract by not specifically pleading'such defense, as it has been held in case the Statute of Limitations is not specifically pleaded such defense is waived, and, therefore, in that case it was held as stated in the head' note above.quoted. In the case of Allen v. Dutchess County Mut. Ins. Co. (95 App. Div. 86) it was held that “ Where, in an action upon the policy, the plaintiff pleads a waiver of the provisions of the policy regulating the filing of the proof of loss and certain .procedure thereupon and alleges performance of ‘ all the other conditions of said policy of insurance on his part,’ he is not entitled to prove a waiver of the limitation clause contained in the policy.” In other words, in that case the plaintiff sought to prove under his complaint, which alleged facts tending to show a waiver of the provisions of the policy regulating the filing of proof of .loss, that the defendant had waived the twelve months’ limitation for the commencement of the action, specified in the policy. Ho suggestion is made in that case to the effect that if the plaintiff had stood squarely upon the provisions of the policy and the defendant had denied its liability because of failure to commence the action within twelve months, that the plaintiff could not have given proof of any facts tending to show that such limitation had been waived.

The case of Todd v. Union Casualty & Surety Co. (70 App. Div. 52), we think, has no application to the question here involved. In that case it was simply held “ that the complaint was demurrable, as it alleged'simply that the defendant insured the plaintiff upon certain terms and conditions which were not specified, against certain hazards which were not set forth, and that the plaintiff had performed in so far as performance had not been waived — setting forth no facts from which a waiver could be presumed.”

We think no case can be found in which it has been held or even suggested that it is incumbent upon a plaintiff who brings suit to enforce a cause of action which upon the face of the complaint ■appears to be “ outlawed,” to allege facts which will show that the Statute of Limitations has been waived, upon the assumption that the defendant will plead such statute as a defense; or when such statute is pleaded, that it is incumbent upon the plaintiff to serve a supplemental complaint or reply setting up facts constituting such waiver in order to entitle him to prove the same.

We conclude that, under the complaint and answer, it was entirely competent for thé plaintiff in this case to prove any facts tending to show that the time limit in the policy within which an action could be brought to enforce the same had been waived.

In the case at bar the plaintiff sought to accomplish this result by proving that shortly after the fire occurred, the parties entered into an arbitration agreement, looking to the settlement of the -loss, and that Such agreement continued in force until shortly before the ■ commencement of this action, when the defendant repudiated the same and refused to proceed further thereunder and that after such ■ repudiation and refusal this action was brought. The fact that such arbitration agreement had been entered into is not disputed, and we think' that the evidence offered by the plaintiff as to defendant’s repudiation and failure to proceed thereunder was such as to -make a question of fact for the. jury, and such, as if found favorably to the plaintiff, would have, constituted a waiver 'by the defendant of the time limit specified in the policy within which an action must be brought.

In the case of Williams v. German Ins. Co. (90 App. Div. 415), an action’brought upon a like policy to recover for the same loss, this court held that while the arbitration .agreement was. in force . and the proceedings-thereunder were pending, no action could be maintained upon the policy,, and that the time within which such action could be brought as specified in the policy, did not run during the pendency of such, proceedings. In this case, as we have seen, there was proof given tending to show that the proceedings under the arbitration agreement were-continued until shortly before the commencement of -this action and that then the defendant repudiated the -same, refused to proceed further and wholly abandoned such proceedings. The learned trial judge seemed . to think and held that, it being shown by the plaintiff that such arbitration agreement had been entered into and not formally terminated, that fact constituted a bar to the maintenance of this action. We think that such defense in order to be available to the defendant should have been pleaded, precisely the same as the Statute of Limitations, the Statute of Frauds and like defenses are required to be pleaded.

But in this case, as we have seen, the pendency of the proceedings under the arbitration agreement was proven by the plaintiff only for the .purpose of showing that the time limit- specified in the contract did not run during such pendency and that the same ' immediately prior to the commencement of this action had been repudiated.-and abandoned by the defendant, and, therefore, that it - was entirely competent for the plaintiff to bring this action to enforce the contract which his assignor had entered into.

To recapitulate, we conclude that upon the complaint' and the answer of the defendant setting up as a defense the time limit specified in the policy, within which an action could’ be brought, the plaintiff had -a right without any additional allegation or amendment to his complaint, and without reply, to prove any facts tending to show that the defendant had waived such time limit; that . the plaintiff having given proof that an arbitration agreement had been entered into, that the proceedings thereunder had been continued until shortly before the commencement of this action and were then repudiated and abandoned by the defendant, such evidence presented an issue of fact for the jury as to whether the time limit specified in the contract had not been waived by the defendant, which, if found favorably to the plaintiff, entitled him to recover so far as that issue was concerned; also that if the defendant wished to raise thé question that the action was not maintainable because of the' arbitration agreement and because the proceedings thereunder had not been terminated, such defense should have been raised by answer. In this case there -was no motion made by either party to amend the pleadings or to make the same conform ' to the proof.

It is concluded that the nonsuit was wrong and that a new trial should be granted, with costs to the appellant to abide event.

Kruse, J.

(concurring):

I'agree with the presiding justice that it was necessary for the, defendant to raise by answer the. objection that the action was not commenced within the time limited by the terms of th,e policy, as was done by the defendant.' (Code Civ. Proc.' § 413 ; Hamilton v. Royal Ins. Co. 156 N. Y. 327; Bannister v. Michigan Mutual, Life Ins. Co., 111 App. Div. 765.)

2. While ordinarily the defendant , insurance company could not avail itself of the defense that the arbitration was'.pending at the time of the commencement of the action without pleading that defense affirmatively, yet if the plaintiff for the purpose of avoiding the effect of the failure upon his part to commence the action within twelve months after the fire, as provided by the policy, proved in rebuttal the pendency of the arbitration proceedings without showing that they had been abandoned or terminated, I think the insur-' anee company could avail itself of that fact without specially pleading it, just as a. defendant can avail himself of a payment proven by the-plaintiff for the purpose of recovering upon a debt which otherwise would be barred by the Statute of Limitations.

I think the trial judge would have been right in nonsuiting regardless of the pleadings, had the facts proven by the plaintiff ' warranted the conclusion, as a matter of law, that the arbitration \ • . ‘ proceedings were pending at the time of the commencement of the action, but I do not take the view that the evidence conclusively established the pendency of the arbitration proceedings, and I, therefore, concur in reversing the judgment and granting a new trial.

Judgment and order reversed and new trial ordered, with costs to the appellant to abide event.  