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OAKLEY GRAIN & SUPPLY CO. v. INDEMNITY INSURANCE CO.

April 21, 1959

OAKLEY GRAIN & SUPPLY COMPANY, A CORPORATION, PLAINTIFF,
v.
INDEMNITY INSURANCE COMPANY OF NORTH AMERICA, A CORPORATION, DEFENDANT.



The opinion of the court was delivered by: Poos, District Judge.

The plaintiff sues for recovery of loss under a policy of fidelity insurance. Two of the conditions and limitations clauses of the policy are as follows:

    (1) "Loss shall be covered only if discovered while
  this insurance is in force or within two years after
  its termination. The assured shall notify the Company
  in writing of any loss within fifteen days after
  discovery thereof, and such notice shall set forth
  the position of the Employee and his last known
  address; and the assured shall file with the Company
  a sworn itemized proof of loss within 90 days after
  the date of discovery of the loss. No suit, action or
  proceeding shall be brought in respect of such claim
  after the termination of twelve (12) months after the
  filing of the proof. Should any of the foregoing
  limitations be void under any applicable law any
  period of limitations so voided shall be extended to
  the period stipulated in such law."
    (3-C) "Upon discovery by the assured of any
  dishonest, fraudulent or criminal act of the
  Employee."

The defendant moves to strike the complaint on the ground that the plaintiff failed to give the sworn proof of loss required within the 90 day period.

The allegations of the complaint in reference to these basic provisions of the policy are found in Paragraphs 5, 6, 7, 8, 9 and 10 of the amended complaint wherein the following allegations of facts are found, viz.:

    "(5) That between June 1, 1955 and December 7,
  1956, plaintiff sustained a loss of money and other
  property belonging to it in the value of more than
  $5,415.27 by and through the acts of larceny, theft,
  embezzlement, forgery, misappropriation, wrongful
  abstraction, wilful misapplication or other
  fraudulent, criminal or dishonest acts of said
  employee while in the performance of his aforesaid
  duties as such.
    "(6) That on or about the 28th day of August, 1956,
  the plaintiff notified the defendant in writing of
  the loss due to the acts of the aforesaid Hubert
  Glenn Holcomb.
    "(7) That on December 26, 1956, the plaintiff filed
  with the defendant an itemized proof of loss due to
  the acts of Hubert Glenn Holcomb.
    "(8) That the defendant received and retained the
  aforesaid notices sent to it by the plaintiff without
  objection thereto or complaint thereof.
    "(9) That the defendant, during the months of
  October and November, 1957, repeatedly informed the
  plaintiff that the defendant denied all liability
  under the aforesaid fidelity bond, and assigned as
  their reason for so doing, the insufficiency of the
  evidence pointing to a loss by the plaintiff, due to
  any of the acts enumerated in said Fidelity Bond.
    "(10) That having failed to object to the notices
  theretofore given defendant by the plaintiff but on
  the contrary having denied any and all liability
  under said Fidelity Bond as aforesaid, the defendant
  has waived any errors or defects in the notices of
  loss or proof of loss required to be given defendant
  by the terms of said Fidelity Bond."

Thus under the allegations above set forth defendant, on August 28, 1956, at which time liability under the policy ceased under the provisions of 3-C of the conditions and limitations of the Fidelity Bond, was notified of the loss and proof of loss was filed on December 26, 1956, which was more than 90 days after loss, and thus the plaintiff recognizes that the above quoted provisions of the Fidelity Bond have not been complied with, but seeks to avoid the requirement of sworn proof of loss by the allegations of Paragraph 10 wherein plaintiff pleads a waiver of this provision. Thus it must be determined whether or not the allegations of the complaint show a factual situation that amounts to a waiver. A summarization of all the allegations of the complaint show that between June 1, 1955 and December 7, 1956, plaintiff sustained a loss by theft, larceny, embezzlement, or dishonest acts of the employee; that on August 28, 1956, plaintiff notified the defendant in writing of the loss; that on December 26, 1956, plaintiff filed with defendant an itemized proof of loss; that defendant received the notice and proof of loss without objection; that defendant repeatedly informed the plaintiff that defendant denied all liability under the Fidelity Bond and assigned as the reason for so doing the insufficiency of the evidence pointing to a loss due to any of the acts enumerated in the Fidelity Bond; that defendant having failed to object to the notice or proof of loss and having denied all liability, the defendant waived any errors or defects in the notice or proof of loss required by the terms of the Fidelity Bond.

The plaintiff, relying on a waiver, must plead and prove the waiver. In order to have a waiver there must be some affirmative act on the part of defendant that amounts to a waiver of the requirement and the burden is on the plaintiff to allege and prove the waiver. There is no allegation of fact in the complaint that sets out any affirmative act of waiver, but plaintiff seeks to rely on a waiver by nonaction of the defendant and by its general denial of any and all liability under the bond.

In Buysse v. Connecticut Fire Insurance Co., 240 Ill. App. 324, a quite similar factual allegation was relied upon as ...


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