GR 36701; (March, 1934) (3) (Digest)
G.R. No. 36701 -36707; March 28, 1934
TEAL MOTOR COMPANY, INC., plaintiff-appellant, vs. ORIENT INSURANCE COMPANY, INC., et al., defendants-appellants/appellees.
FACTS
Teal Motor Company, Inc. (plaintiff) filed seven separate suits against various insurance companies (defendants) to recover on fire insurance policies covering goods damaged in a fire on January 6, 1929. The insurance companies formally rejected the claims in writing on April 15, 1929. The suits were filed between August 3 and 15, 1929, which was more than three months after the rejection. Six of the insurance policies contained a clause forfeiting all benefits if an action is not commenced within three months after rejection of the claim. The policy of Atlas Assurance Company, Ltd. (G.R. No. 36705) contained a different clause requiring arbitration proceedings to be commenced within three months after rejection, which was not done. The parties and the trial court initially treated all the forfeiture clauses as having the same effect.
ISSUE
Whether the actions filed by Teal Motor Company were barred due to its failure to commence suit (or arbitration, for Atlas) within the three-month period stipulated in the insurance policies after the formal rejection of its claims.
RULING
Yes, the actions were barred. The Supreme Court affirmed the trial court’s judgment. The three-month period to file suit after rejection of the claim is a valid contractual limitation. The informal settlement negotiations between the parties after the rejection were insufficient to toll the running of the period or to lull the plaintiff into inaction, as they were inconclusive and terminated by the end of May 1929, leaving plaintiff ample time to file suit before the period expired in mid-July 1929. Regarding the Atlas policy (G.R. No. 36705), the Court, noting that both parties’ attorneys had treated its clause as identical to the others in their arguments, resolved the case on that submitted basis and likewise found the action barred. The Court deemed it unnecessary to rule on other defenses like overinsurance and false claims.
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