DOROTHY GALLANT & another vs. FEDERAL MUTUAL INSURANCE COMPANY (and two companion cases [Note 1]).

CUTTER, J. The plaintiffs, as partners, conducted a store which was struck by a motor vehicle on May 4, 1962. Damage to the contents ensued. The loss was reported promptly to each of two insurance agencies which had written one or more of three policies. The policies required that suit be "commenced within two years from the time the loss occurred." [Note 2]

At first, so one plaintiff testified, an agent denied that the policies covered the loss. In July or August, 1962, that agent, David Caddell, brought an independent adjuster named Johnson to the plaintiffs' store. The plaintiffs talked with him and Caddell. After September, 1962, another insurance company representative named Noon, also "came out and gave the impression that he was there to try to arrive at some . . . way . . . of settling the thing." He later spoke to the plaintiffs' accountant and went over the plaintiffs' ledger. Johnson was instructed by the three defendant companies to "sign and take non-waiver agreements." On May 21, 1963, such agreements were executed. [Note 3]

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Each such agreement was signed (a) by Johnson (as adjuster) for one of the companies and (b) by both plaintiffs.

In September, 1962, the plaintiffs had placed the case with an attorney, who, "six or seven weeks after the loss," had told the plaintiffs that he was of "opinion that the loss was covered" by the policies. A two year period after the loss expired on May 4, 1964. On May 29, 1964, Johnson sent a letter to the plaintiffs' then attorney, which said that "[a]fter lengthy investigation . . . [the interested companies] have instructed us to deny liability in their behalf for this claim." An action (contract or tort) against each company was commenced by writ dated May 1, 1965.

The cases, consolidated for trial, were heard before a judge of the Superior Court, sitting without a jury. Each insurance company "filed a motion for a directed finding," all of which were denied. See Menici v. Orton Crane & Shovel Co. 285 Mass. 499, 500-501; Forbes v. Gordon & Gerber, Inc. 298 Mass. 91, 94-96; Hooper v. Kennedy, 320 Mass. 576; Wire & Textile Mach. Inc. v. Robinson, 332 Mass. 417, 418. Each company also filed requests for rulings, two of which (nos. 1 and 4) were denied. [Note 4] The trial judge found for the plaintiffs in each case. The cases are before us on each insurance company's exceptions to the denial of

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"a directed finding" (which we treat as, in effect, denial of a request for a ruling that a finding for the plaintiff was not warranted by the evidence), and of the requested rulings. The insurance companies contend that the plaintiffs' actions are barred because they were not commenced until May 1, 1965, nearly three years after the loss (see Goldsmith v. Reliance Ins. Co. 353 Mass. 99, 101-102), and more than eleven months after the companies explicitly denied liability on May 29, 1964. [Note 5]

1. An insurance company adjuster may take action so "contrary to general principles of fair dealing" (see McLearn v. Hill, 276 Mass. 519, 524) as to estop the company to assert protective provisions in a policy. MacKeen v. Kasinskas, 333 Mass. 695, 697-699. This principle was applied in Swift v. American Universal Ins. Co. 349 Mass. 637, 640, 641-642 (justifiable reliance upon adjuster's statement that "the claim had been established . . . and that payment would be made"). See Appleman, Insurance Law and Practice (1962) Sections 11,637-11,640, 12,415, 12,416; Couch, Cyc. Ins. Law (1st ed.) Sections 1656-1656b; note, 29 A. L. R. 2d 636. See also Fratto v. New Amsterdam Fire Ins. Co. 359 F. 2d 842, 844 (3d Cir.). Cf. Blanton v. North-western Natl. Ins. Co. 335 F. 2d 965, 970-971 (9th Cir.).

The plaintiffs contend that the companies have either waived the two year limitation or are estopped to contend that these actions were commenced too late, in part because of the last sentence of the nonwaiver agreements (fn. 3, at point [A]) and in part because of conduct of the adjusters, not directly involving the nonwaiver agreements. So far as the nonwaiver agreements are advanced as a basis for estoppel of the companies, the contention is essentially that the last sentence of each agreement was intended "to preserve," or in effect entirely to suspend, "the [parties'] rights . . . during the time" it might take each company to make

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its investigation. The companies, on the other hand, appear to regard the nonwaiver agreements [Note 6] as indication of their intention to preserve and to rely at all times upon, the policy provisions.

We perceive no conduct by the companies or their agents (including the execution and the provisions of the nonwaiver agreements) which gives basis for a contention that the companies had permanently estopped themselves to rely upon the provisions of the policies. Most conduct and investigation by the insurance companies seem to have been of a routine character and to have taken place in the twelve months immediately following the loss and before the nonwaiver agreements were given. Such discussions as took place did not involve company offers or promises of settlement. The nonwaiver agreements themselves cannot be construed, in any event, as a permanent waiver of any rights of the companies under the policies. Following the signing of the nonwaiver agreements on May 21, 1963, after the plaintiffs had "placed the case with" their attorney, the record shows no settlement negotiations or other action prior to May 29, 1964. Because, however, of (a) what happened on May 21, 1963, and thereafter, and (b) our decision in the second part of this opinion, we now need not decide whether the nonwaiver agreements were ambiguous or should have been more explicit on the issues raised by the plaintiffs, or created any temporary estoppel to rely on the policy limitations on the time for commencing suit, or effected any suspension or modification of the parties' rights under the policies. See Proc v. Home Ins. Co. 17 N. Y. 2d 239, 245-246; Preston v. Northern Ins. Co. 35 Misc. 2d (N. Y.) 784, 785-787 (Supr. Ct. Spec. Term). Cf. Meekins v. Aetna Ins. Co. 231 N. C. 452, 457; McMeekin v. Prudential Ins. Co. 348 Pa. 568, 572-573.

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2. In our opinion, the plaintiffs, in any event, cannot recover because they did not commence their actions reasonably promptly after May 29, 1964. On that day, even if it be assumed that they were not already barred by the two year limitation, it became plain that the companies denied all liability and that it would be necessary to sue the companies if the plaintiffs were to obtain any settlements of the loss. Had any estoppel existed, we think it would not have continued for as long as the eleven months between May 29, 1964, and May 1, 1965.

Accordingly, the plaintiffs thereafter had only such reasonable time as was necessary to give them fair opportunity to commence litigation. We regard this as the sound view in an area where the authority is not uniform. Insurance Co. of No. America v. Board of Educ. 196 F. 2d 901, 904 (10th Cir.). Collins v. Home Ins. Co. 110 Pa. Super. Ct. 72, 82-83. See Continental Ins. Co. v. Fire Assn. of Philadelphia, 152 F. 2d 239, 240-241 (6th Cir.); note, 29 A. L. R. 2d 636, 646-648. A reasonable time, perhaps, might be measured by analogy to the ninety days allowed by the policy (fn. 2) for commencing after an arbitration award or a waiver of arbitration. Estoppels are not to be regarded with favor nor are they to be extended beyond the requirements of the situation which gave rise to them. See Delaware & Hudson Co. v. Boston R.R. Holding Co. 328 Mass. 63, 80.

The evidence did not permit the trial judge to find any estoppel of the companies to rely upon the two year limitation provision for any period extending as late as the commencement of these actions. Upon all the evidence, a finding for each defendant was required and findings for the plaintiffs would not have been warranted.

Exceptions sustained.

Judgments for the defendants.