Before HASTINGS, Chief Judge, CASTLE, Circuit Judge, and MERCER, District Judge.
This action was brought by appellant, Advanced Methods, Inc. (Advanced), to recover on a binder or contract of fire insurance issued by appellee, Grain Dealers Mutual Insurance Company (Grain Dealers), to Advanced covering the contents of a certain garage in Harrisburg, Illinois. Advanced seeks recovery for loss by fire which occurred on November 4, 1954.Suit was commenced on October 2, 1956. Grain Dealers denied liability on the grounds of fraud and misrepresentation in Advanced's statement of its loss and on the further ground that the suit was not timely filed since the agreement between the parties required filing suit within one year. By stipulation, the court tried the latter issue first and, after full hearing, entered judgment for Grain Dealers.
Advanced attacks this judgment on three grounds: that Grain Dealers is equitably estopped from asserting that the suit was not timely filed; that Advanced was not put on constructive notice of the twelve month limitation on filing suit; and that the finding of fact that Advanced was negligent, careless and indifferent in failing to file suit was clearly erroneous.
On August 17, 1954, Grain Dealers had entered into a fire insurance contract in the form of a written binder with Irving I. Hudes to insure the contents of the garage in question for $40,000. On August 21, 1954, at Hudes' request, a written binder was issued increasing the amount of insurance to $60,000 which was to remain in effect until October 21, 1954. On September 25, 1954, Hudes requested that the name of the insured as shown in the binder be changed from Irving I. Hudes to Advanced Methods, Inc., as Hudes had incorporated his business, and further that coverage be increased from $60,000 to $75,600. Grain Dealers' agent, Leberman, orally agreed to this request. A written binder evidencing the last insurance coverage was never delivered to Advanced.Both parties agree that this oral binder incorporates the provisions of the compulsory standard form of fire insurance policy used in Illinois, prescribed by the Director of Insurance in Executive Bulletin No. 397, promulgated on September 15, 1945.
On November 4, 1954, fire destroyed the insured's garage and its contents.
Suit was filed on October 2, 1956, in Circuit Court of Cook County, Illinois; the action was properly removed to the district court by Grain Dealers. The original complaint alleged that the oral binder incorporated the provisions of "the standard fire insurance policy for the State of Illinois," that the property destroyed was covered by that policy, and that Advanced had fulfilled all its obligations under that policy.
Grain Dealers answered that this suit is barred by provision of the Illinois standard fire insurance policy which provides:
"Suit. No suit or action on this policy for the recovery of any claim shall be sustainable in any court of law or equity unless * * * commenced within twelve months next after inception of loss."
The district court dismissed the complaint, stated that the pleading revealed Advanced had not complied with the provisions of the standard policy, and granted Advanced leave to amend its complaint.
An amended complaint was filed omitting all reference to the standard fire insurance policy but alleging that Leberman had promised to deliver a written policy to Advanced and to secure prompt payment of Advanced's claim and that Grain Dealers had refused Advanced's request for a copy of the policy.
Grain Dealers moved to dismiss the amended complaint. After considering the sharply conflicting affidavits of Hudes and Leberman concerning the representations made by the latter, the district court refused to dismiss. It stated:
"The amended complaint * * * asserts a waiver of this time limitation arising out of actions and alleged representations of defendant's agents, which have been denied in exhibits submitted in support of the motion to dismiss. Thus an issue of material fact is presented."
Grain Dealers then answered, again alleging suit was barred because of failure to file within twelve months and charging fraud in the ...