Every insurer shall have the right to prescribe regulations as to notice and preliminary proofs of loss, which shall be substantially complied with by the insured, but conduct by the insurance company inconsistent with an intention to enforce strict compliance will be deemed a waiver of a contractual provision which provides, as a condition prerequisite to any valid claim against the company, that the insured shall file sworn proofs of loss with the company within 90 days after the date of loss.
Horace Noles and others filed a petition in the City Court of Newnan for $7,500, alleged to be due under the provisions of an insurance policy issued by the defendant, New York Underwriters Insurance Company. Carroll Realty & Insurance Company and the West Georgia National Bank are only nominal parties. Hereinafter Horace Noles will be referred to as the plaintiff, and New York Underwriters Insurance Company will be referred to as the defendant. Succinctly, the petition alleged that the defendant issued a policy of insurance to insure the plaintiff against loss by fire to a caterpillar tractor; that on October 20, 1958, the plaintiff's tractor was damaged by fire in the amount prayed for. The plaintiff attached to the petition a copy of the insurance policy which contained the following provision: "The assured shall as soon as practicable report to this company or its agent every loss or damage which may become a claim under this policy and shall also file with the company or its agent within ninety (90) days from date of loss a detailed sworn proof of loss. Failure by the assured to report the said loss or damage and to file such sworn proof of loss as hereinbefore provided shall invalidate any claim under this policy for such loss." The plaintiffs' petition, as amended, alleged that the defendant by its conduct and action waived the requirement of filing a scorn proof of loss. Paragraph 7 of the petition, as amended, alleged that on notice of the fire the defendant's authorized agent directed the plaintiff to transport the tractor to a concern in Atlanta, Georgia; that the plaintiff complied with the directions of the defendant's agent and transported the tractor to the Atlanta concern; that the defendant authorized repairs of certain damage to the tractor; that, on notification that the tractor had been repaired, the plaintiff brought the tractor to his home and placed it in use. It is further alleged that immediately on use of the tractor the plaintiff discovered that the tractor had not been completely repaired and so notified the adjustor for the defendant. The adjustor directed the plaintiff to continue to use the tractor but it continued to operate improperly. Whereupon the plaintiff again notified the adjustor for the defendant who directed the plaintiff to retransport the tractor to the Atlanta concern. After re-examination by the Atlanta concern additional damages were discovered, and the plaintiff continued to negotiate with the defendant's adjustor; that at no time during the negotiations did either of
the defendant's two adjustors state that the plaintiff would be required to file a sworn proof of loss and that such negotiations were continuous between the plaintiff, the plaintiff's attorney and the defendant's adjustors to and after the time for the filing of a sworn proof of loss as required by said policy had elapsed; that the defendant has waived all conditions imposed upon the plaintiff to file a sworn proof of loss, and the defendant is estopped from requiring that the plaintiff file a proof of loss.
The trial court overruled the defendant's general demurrer. To such ruling the insurance company excepts.
The sole question to be determined, as admitted by the attorneys for both parties, is whether or not the conduct of the defendant's agent and adjustors will amount to a waiver of a contractual provision in a policy of insurance that requires the insured to submit sworn proofs of loss within a specified time as a prerequisite to any claim against the insurance company.
Where the effect of such contractual provision works as a forfeiture of the policy benefit upon the insured, the court will strictly construe the provision against the insurance company and small circumstances will be sufficient to show a waiver by the company. Aetna Ins. Co. of Hartford v. Mosely, 47 Ga. App. 25 (169 S. E. 695). See 49 A. L. R. 2d 89. As discussed by Judge Guerry in the Mosely case, supra, the damages and not the formal proof is the essence of the contract. "The courts infer waivers of such nonessential parts by conduct [by the insurance company] for the reason that they are in the nature of penalties and are not favored under the law." A refusal to pay will operate as a waiver of the sworn proof of loss (Central Manufacturers Mut. Ins. Co. v. Graham, 24 Ga. App. 199 (3) 99 S. E. 434), as well as an unqualified promise to pay (Sentinel Fire Ins. Co. v. McRoberts, 50 Ga. App. 732, 179 S. E. 256), or conduct inconsistent with an intention to enforce the strict contractual compliance. Industrial Life &c. Ins. Co. v. Winn, 59 Ga. App. 289 (200 S. E. 452); Life Ins. Co. of Va. v. Williams, 48 Ga. App. 10 (172 S. E. 101). See Barkley v. American Nat. Ins. Co., 36 Ga. App. 447 (136 S. E. 803); Knights of the K. K. K. v. Fidelity & Deposit Co., 47 Ga. App. 12 (169 S. E. 514).
Also, once the incidental right or contractual benefit has been waived or relinquished, it cannot be reclaimed. Sentinel Fire Ins. Co. v. McRoberts, 50 Ga. App. 732, supra; Firemen's Ins. Co. v. Blount, 52 Ga. App. 223 (183 S. E. 111), reversed upon other grounds, 182 Ga. 459, 185 S. E. 717.
The allegations of the petition show a continuous negotiation with the insurance company through the entire time interval within which such proof of loss must be filed and for a period after such time had elapsed. On two occasions the plaintiff transported the tractor to a designated concern at the direction of the defendant's agent and adjustors. It is further alleged that the various agents and adjustors for the insurance company never intimated that the plaintiff must satisfy an additional requirement before a settlement could be consummated. The approval of the insurance company of certain damages authorizing repairs would operate as a waiver of a proof of loss as to that item of damage under the general rule announced ran Sentinel Fire Ins. Co. v. McRoberts, 50 Ga. App. 732, supra. Further, the acts of the defendant's agents were inconsistent with an intention to require a sworn proof of loss. Directing the plaintiff to transport the property to a designated concern and continuously negotiating with the plaintiff and his attorney concerning a settlement implied that a liability existed and all that was required was an agreement upon the damages. An insurance company cannot, by its own acts of continuously negotiating a settlement through a time period within which the insured must file a sworn proof of loss, thereafter insist on a strict compliance with the contractual provision when the insured has been misled into believing that no other requirement was necessary to a settlement.
The defendant insists that Northern Assurance Co. v. Pate, 29 Ga. App. 90 (114 S. E. 69), is controlling upon the facts of the instant case, but the ruling in the Northern Assurance Co. case was controlled by the decision of Williams v. Atlas Assurance Co., 22 Ga. App. 661 (97 S. E. 91). The conclusion reached in the Williams case was criticized and held as unjustified in Corporation of the Royal Exchange Assurance of London v. Franklin, 158 Ga. 644, supra. Hence, anything in the two Court of Appeals' opinions contrary to the rule announced in the Franklin case will not be followed by this court. See Life Ins. Co. of Va. v. Williams, 48 Ga. App. 10, 20, supra.
Delta Ins. Co. v. Wood, 107 Ga. App. 58 (107 S. E. 2d 693), is distinguishable because the petition did not allege a waiver or show any facts which would amount to an estoppel. Whereas, in the instant case waiver and estoppel was expressly relied upon and specific acts. of the defendant's agents are alleged to show a waiver.
Under the authorities above cited the allegations of the petition are sufficient to show the insurance company to have waived the requirement for sworn proof of loss.
Judgment affirmed. Gardner, P. J., Townsend and Carlisle, JJ., concur.