This is a motion for summary judgment by Hartford Fire Insurance Company (herein defendant) against plaintiffs on the ground that this action was not commenced within the time limitation provided in a fire insurance contract which is the subject of this suit. The material facts are not in dispute. In support of its motion, defendant relies on the pleadings, answers to interrogatories of plaintiff Arthur A. Peloso and an affidavit of defendant's counsel. Plaintiffs have filed no affidavits or other proofs in opposition.
Defendant insured plaintiffs' premises, which were damaged by fire on September 12 and 13, 1965. At the time of the fire, the premises were mortgaged to the defendant Schiller, who was named as a co-insured in the insurance policy. Plaintiffs gave prompt notice of the fire and resultant damage to defendant, which then advised them that it intended to investigate the claim, following which notice would be given of its decision. Between November 1965 and March 1966, plaintiffs were informed by defendant, in response to inquiries made by them with regard to their claim, that it was being investigated. In February, plaintiffs' counsel informed defendant in writing that unless the claim was immediately adjusted, suit would be commenced. In response, plaintiffs were notified to submit to depositions, as required by the policy, which they did in April. When in May plaintiffs' attorney called defendant's counsel to ascertain the status of the claim, he was told that defendant would be advised to reject the claim, and it was suggested that plaintiffs
start suit on the policy. Early in June Mr. Peloso, stating that he was no longer represented by counsel, called William P. McGuire, Esq., a member of the law firm representing defendant, and was told by him that the company was denying liability. When Mr. Peloso requested Mr. McGuire to put this in writing he did so by letter dated June 15, 1966, in which he said that pursuant to reports furnished by him to defendant, "liability has been declined insofar as the loss of September 12-13, 1965 is concerned. Please be guided accordingly". In July, defendant's position was reaffirmed by Mr. McGuire in telephone talks with Mr. Peloso. The latter ended their final conversation on July 21 by stating he would sue, and was told in turn that this would be the appropriate course to take. At no time did defendant furnish plaintiffs with a blank form of proof of loss or demand or receive a proof of loss from them.
Plaintiffs did nothing further about their claim until March 10, 1967, when they instituted this action to recover for their loss. The complaint was filed some eighteen months after the date of the fire and approximately nine months after plaintiffs had received Mr. McGuire's letter. By way of separate defense in its answer and now by this motion, defendant claims that the action is barred by virtue of the following provision of the insurance contract, the terms of which are expressly required by N.J.S.A. 17:36-5.20 which was enacted in 1954:
"No suit or action on this policy for the recovery of any claim shall be sustainable in any court of law or equity unless all the requirements of this policy shall have been complied with, and unless commenced within twelve months next after the inception of the loss."
Plaintiffs resist the motion on two grounds. They contend that under the circumstances present here, they were unable to bring suit until June 16, 1966, the date on which they received Mr. McGuire's letter declining liability, that their cause of action did not therefore accrue on the date of the fire, and that they are within time, since they started this
action within twelve months of receipt of the letter. They also argue that even if the above-quoted provision of the policy required that they start suit within twelve months from the date of the fire, recovery should not be barred because defendant either waived its rights under this provision or should be estopped by its conduct from presenting this defense.
Courts in many jurisdictions have held that the words "inception of the loss" mean the occurrence of the casualty or event insured against, and that the prescribed period within which suit thereon may be brought is measured from the date of the damaging event, rather than from the date of the denial of liability or from sixty days after the fire when the company could first be liable for payment under loss payable provisions. See Sager Glove Corporation v. Aetna Insurance Company, 317 F.2d 439 (7 Cir., 1963); General Insurance Co. v. Lee Chocolate Co., 97 Ga. App. 588, 103 S.E. 2 d 632 (Ct. of App., 1958); Olsen Enterprises, Inc. v. Citizens Insurance Company of New Jersey, 255 Iowa 141, 121 N.W. 2 d 510 (Sup. Ct., 1963); Ramsey v. Home Insurance Company, 203 Va. 502, 125 S.E. 2 d 201, 95 A.L.R. 2 d 1019 (Sup. Ct., 1962); Proc v. Home Insurance Company, 17 N.Y. 2 d 239, 270 N.Y.S. 2 d 412, 217 N.E. 2 d 136 (Ct. of App., 1966); Margulies v. Quaker City Fire & Marine Ins. Co., 276 App. Div. 695, 97 N.Y.S. 2 d 100 (App. Div., 1950); Boyd v. Bankers & Shippers Insurance Company, 245 N.C. 503, 96 S.E. 2 d 703 (Sup. Ct., 1957); Naghton v. Maryland Casualty Company, 47 Ill. App. 2 d 74, 197 N.E. 2 d 489 (Ct. of App., 1964). Although we have not been cited to or found any reported opinion of any court of our state in which the precise words of the quoted provision of the policy have been construed after debate, it was recently said in Warren v. The Employers' Fire Insurance Company, Boston, Mass., 100 N.J. Super. 464 (App. Div., 1968), that the quoted clause "was unambiguous" and "required" that suit for the loss there claimed "be instituted within 12 months thereafter". In Sherwood Jewelers-Newark,
Inc. v. Philadelphia National Insurance Co., 102 F. Supp. 103 (D.C.N.J., 1952), which involved a policy written before N.J.S.A. 17:36-5.20 was enacted, the court rejected the contention that the period of limitations began to run on the date the company declined liability and held that the action was barred since it was "not commenced within twelve months after the date of the occurrence which [gave] rise to the loss", as provided in the policy.
Plaintiffs contend that where no form of proof of loss is furnished by the company or proof of loss is not demanded by it, the twelve-month period runs from the denial of liability by the insurance company, rather than from the date of the fire. They argue that the quoted provision provides that no action for the recovery of any loss is sustainable unless all the requirements of the policy shall have been complied with. Among these, they say is the obligation imposed upon them by the statute (N.J.S.A. 17:36-5.20) and policy to render a proof of loss to the company within sixty days after the loss unless the company extends the time. They also point to the provision that the company is not liable to pay until sixty days after proof of loss is received by it. The provisions relied upon read as follows: -
"The insured shall give immediate written notice to this Company of any loss * * *; and within sixty days after the loss, unless such time is extended in writing by this Company, the insured ...