Opinion
No. 39437.
January 10, 1955.
1. Insurance — federal crop insurance — proof of loss — regulations — sufficiently complied with.
Where insured, whose cotton crop was damaged, did not file written notice of probable loss and written statement in proof of loss as required by regulations promulgated by Federal Crop Insurance Corporation under authority of Federal Crop Insurance Act, but he did give notice of probable and actual loss at time and in a manner previously accepted and approved by the corporation, he was not precluded from recovering for crop damage because of failure to comply with regulations. Sec. 501, et seq., Federal Crop Insurance Act; Title 7, U.S.C.A., Sec. 1501, et seq.
2. Insurance — federal crop insurance — acreage report — insured bound by.
Where regulation of Federal Crop Insurance Corporation provided that cotton crop insurance acreage report submitted by insured shall be considered final and not subject to change by insured, and acreage report form stated that acreage reported by insured could not be increased by insured later, and insured reported his cotton acreage as 39.4 acres instead of 78.4 acres, he was bound by his acreage report and could recover cotton crop damage only for 39.4 acres. Sec. 501, et seq., Federal Crop Insurance Act; Title 7, U.S.C.A., Sec. 1501, et seq.
3. United States — governmental corporations — interest.
In absence of express provision to contrary, interest on unpaid claims cannot be recovered against the United States, but this rule does not extend to governmental corporations for such corporations are not presumed to be clothed with the immunity of the United States.
4. Insurance — governmental corporations — interest — delay — default.
Where Federal Crop Insurance Corporation wrongfully denied claim of insured for cotton crop damage, corporation's regulation providing that if payment of any indemnity is delayed for any reason beyond time specified, corporation shall not be liable for interest or damages on account of such delay, did not preclude recovery of interest by insured, since there was a default on part of the corporation and not a mere delay. Secs. 501, et seq., 506 (d), Federal Crop Insurance Act; Title 7, U.S.C.A., Secs. 1501, et seq., 1506(d); Sec. 39, Code 1942.
5. Appeal — governmental corporations — costs — statutory damages.
In such case, where Supreme Court affirmed money judgment for insurance benefits for cotton crop damage against Federal Crop Insurance Corporation, costs and statutory damages in the amount of five per centum would be assessed against the corporation. Secs. 501, et seq., 506(d), Federal Crop Insurance Act; Title 7, U.S.C.A., Secs. 1501, et seq., 1506(d); Sec. 1971, Code 1942.
Headnotes as approved by Lee, J.
APPEAL from the circuit court of Yazoo County; M.M. McGOWAN, Judge.
Warren E. Burger, Asst. Atty. Gen., Washington, D.C.; Robert E. Hauberg, U.S. Atty., Edwin R. Holmes, Jr., Asst. U.S. Atty., Jackson; Melvin Richter, Morton Hollander, T.S.L. Perlman, Attorneys, U.S. Dept. of Justice, Washington, D.C., for appellant.
I. The Court below erred in failing to hold that appellee's failure to file a written notice of probable loss and a written statement in proof of loss barred his recovery.
A. The Federal Crop Insurance regulations forbid recovery unless the insured gives written notice and proof of loss. Federal Cotton Crop Insurance Regulations (1947), Secs. 419.13, 419.16.
(1) The regulations have the force of law. Federal Crop Ins. Corp. v. Merrill, 332 U.S. 380; Smith v. Federal Crop Ins. Corp., 214 Miss. 55, 58 So.2d 95.
(2) The requirements of written notice and proof of loss are conditions precedent to recovery. Callen v. Massachusetts Protective Assn., 24 F.2d 694; Felder v. Federal Crop Ins. Corp., 146 F.2d 638; Harris v. North British Mercantile Ins. Co., 30 F.2d 94; Mock v. United States, 183 F.2d 174; United States v. Blackburn, 109 F. Supp. 319; Wachovia Bank Tr. Co. v. Independence Indemnity Co., 37 F.2d 550; Federal Crop Insurance Act, Secs. 508(c), 516, 519(b), 52 Stat. 72, as amended, 7 U.S.C.A., Sec. 1501; Federal Cotton Crop Insurance Regulations of 1947 (11 F.R. 8763), Sec. 419.1, et seq.
B. No waiver or estoppel arising from knowledge on the part of the Government's agents can eliminate the requirements for notice in writing. Federal Crop Ins. Corp. v. Merrill, supra; Felder v. Federal Crop Ins. Corp., supra; Frier v. Federal Crop Ins. Corp., 152 F.2d 149 (cert. denied, 328 U.S. 856); Mock v. United States, supra; Smith v. Federal Crop Ins. Corp., supra; United States v. Blackburn, supra; Federal Cotton Crop Insurance Regulations of 1947, Sec. 419.40.
Herman B. Decell, Yazoo City, for appellee.
I. The written and oral notice of loss given by appellee was substantial and sufficient compliance with the requirements of the Federal Cotton Crop Insurance Regulations. Sanborn v. Federal Crop Ins. Corp., 93 Cal.App.2d 59, 208 P.2d 728; Federal Crop Insurance Act, 7 U.S.C.A., Sec. 1501, et seq.; Federal Cotton Crop Insurance Regulations for 1947 and succeeding years (11 F.R. 8761, 9067, 13576, 13739 — 1946; 12 F.R. 1073, 8766 — 1947), Secs. 419.6, 419.13, 419.16.
A. Appellee gave sufficient notice of probable loss. Sanborn v. Federal Crop Ins. Corp., supra; Federal Cotton Crop Insurance Regulations, supra, Sec. 419.13.
B. Appellee filed sufficient written proof of loss. Federal Crop Ins. Corp. v. Merrill, 332 U.S. 38, 68 S.Ct. 1; Federal Crop Ins. Corp. v. Thompson (Tex.), 220 S.W.2d 689; Felder v. Federal Crop Ins. Corp., 146 F.2d 638; Frier v. Federal Crop Ins. Corp., 152 F.2d 149; Mock v. United States, 183 F.2d 174; Smith v. Federal Crop Ins. Corp., 214 Miss. 55, 58 So.2d 95; United States v. Blackburn (Mo.), 109 F. Supp. 319; United States v. Solomon, 219 Ark. 308, 241 S.W.2d 369; Federal Cotton Crop Insurance Regulations, supra, Secs. 419.7, 419.15-6.
C. Alternatively, even if it should be found that appellee's written proof of loss was not adequate, still recovery is not barred since provision for filing such proof was merely a covenant and not a condition precedent. Callen v. Massachusetts Protective Assn., 24 F.2d 694; Harris v. North British Mercantile Ins. Co., 30 F.2d 90; Massachusetts Protective Assn. v. Cranford, 137 Miss. 876, 102 So. 171; Southern Surety Co. v. MacMillan Co., 58 F.2d 541; Federal Cotton Crop Insurance Regulations, supra, Secs. 419.13, 419.16; A.L.I., Restatement of the Law (Contracts), Secs. 258, et seq., 261; Vol. III, Williston on Contracts (rev. ed., 1936), Sec. 665, et seq.
II. The insured is not chargeable with an internal mistake of the corporation made by its agent in transposing acreage covered from a field memorandum to the corporation's special form FCI-719-C. Federal Crop Ins. Corp. v. Merrill, supra; Sanborn v. Federal Crop Ins. Corp., supra; United States v. Cain (Okla.), 112 F. Supp. 617; United States v. O'Brien, 220 U.S. 321, 31 S.Ct. 406; Federal Cotton Crop Insurance Regulations, supra, Secs. 419.2-3, 419.11, 419.11(c).
III. The corporation is liable for interest allowed by both lower courts. Ferguson v. Union Natl. Bank, 126 F.2d 753; F.H.A. v. Burr, 309 U.S. 242, 84 L.Ed. 724; Keifer Keifer v. R.F.C., 306 U.S. 381, 83 L.Ed. 784; National Home for D.V.S. v. Parrish, 229 U.S. 494, 57 L.Ed. 1296; R.F.C. v. Menihan Corp., 312 U.S. 81, 85 L.Ed. 595; Standard Oil Co. v. United States, 267 U.S. 76, 69 L.Ed. 519; State ex rel. Whall v. Saenger Theatres Corp., 190 Miss. 391, 200 So. 442; State Highway Comm. v. Wunderlich, 194 Miss. 119, 11 So.2d 437; United States v. O'Brien, 220 U.S. 321, 55 L.Ed. 481; Federal Crop Insurance Act, 7 U.S.C.A., Sec. 1501, et seq.; Federal Cotton Crop Insurance Regulations, Sec. 419.18; Rule 6, Rules of Supreme Court; 54 Am. Jur., United States, Secs. 95, 99; Anno. 24 A.L.R. 2d pp. 928, 983.
IV. The corporation as unsuccessful litigant is liable for costs in all courts. Canal Bank Trust Co. v. Brewer, 147 Miss. 885, 114 So. 127; Davis, Director Gen. of Railroads v. Wilkins, 127 Miss. 490, 90 So. 180; R.F.C. v. Menihan Corp., supra; State Highway Comm. v. Mason, 192 Miss. 576, 6 So.2d 468; Federal Tort Claims Act, 28 U.S.C.A., Sec. 2671, et seq.; Sec. 1971, Code 1942.
ON CROSS-APPEAL.
II. The Circuit Court erred in modifying the judgment of the County Court to allow recovery for loss on only so much of the acreage as appeared on the form FCI-719-C, on which form an error had been made by appellant's agent.
APPELLANT IN REPLY.
A. No notice of probable loss. Federal Crop Ins. Corp. v. Merrill, 332 U.S. 380; Sanborn v. Federal Crop Ins. Corp., 93 Cal.App.2d 59, 208 P.2d 728; Smith v. Federal Crop Ins. Corp., 214 Miss. 55, 58 So.2d 95; Federal Cotton Crop Insurance Regulations, Sec. 419.13.
B. No notice of proof of loss. Federal Cotton Crop Insurance Regulations, Secs. 419.10, 419.16.
ON CROSS-APPEAL.
II. Neither interest nor costs may be assessed against the Federal Crop Insurance Corporation.
A. Interest. Federal Crop Ins. Corp. v. Merrill, 332 U.S. 380; Federal Land Bank v. Bismarck, 314 U.S. 95, 102; Graves v. New York ex rel. O'Keefe, 306 U.S. 467-7; In re The Wright, 109 F.2d 699; Jackson v. United States, 281 U.S. 344; Pittman v. Home Owners Corp., 308 U.S. 21; United States v. Blackburn (Mo.), 109 F. Supp. 319; United States v. Commonwealth Line, 278 U.S. 427; United States v. Solomon, 219 Ark. 309; United States v. Thayer West Point Hotel Co., 329 U.S. 585, 588; United States v. Verdier, 164 U.S. 213; United States v. Worley, 281 U.S. 339; Federal Cotton Crop Insurance Regulations, Sec. 419.18.
B. Costs. Ewing v. Gardner, 341 U.S. 321; Federal Crop Ins. Corp. v. Merrill, supra; R.F.C. v. Menihan Corp., 312 U.S. 81; United States v. Chemical Foundation, 272 U.S. 1, 20; United States v. Poling Russel, Inc., 212 F.2d 184, 185.
Suit was instituted by J.E. DeCell in the County Court of Yazoo County against Federal Crop Insurance Corporation to recover certain benefits on account of crop damage for the year 1947. The cause was tried before the county judge, sitting as both judge and jury. There was a judgment for the plaintiff in the sum of $2,026.90, principal, and $130.68 interest to December 3, 1951, the date of the judgment, together with interest thereafter at the rate of 6% per annum until paid.
The circuit court, on the Corporation's appeal, affirmed the judgment of the county court in part, but reversed it in part, and gave judgment for $1,035.07, plus interest thereon at the rate of 6% per annum from December 3, 1951, adjudged to be the difference between the total cash loss of $1,608.51, plus interest, or a total of $1,979.27, and the unpaid premium on insurance of $500.53, plus interest, or a total of $944.20. The Corporation prosecuted a direct, and DeCell a cross, appeal here.
The proof showed that the administrative officer of the Production and Marketing Association — PMA — was responsible for the program which included Federal crop insurance. The crop insurance program was in effect in Yazoo County for the year 1946. James Moore was the administrative officer. Under the approved procedure for the establishment of losses for that year, the farmers were instructed to turn in their gin tickets to the county office as soon as the ginning was completed, at which time the Corporation would send an adjuster to inspect the crop and prepare the claim from the gin tickets.
DeCell had a contract for that year on Kern's Bend Farm. Some time after he had begun harvesting, he went to the PMA office and notified Moore that he anticipated a loss. Moore advised him to proceed with the harvesting, and as soon as it was completed, to turn in his gin tickets. DeCell followed the instructions and turned in his tickets. The adjuster came about the middle of November, inspected the crop, checked the tickets, prepared the proof of loss, directed DeCell to sign the same, which he did in the PMA office, and the claim was subsequently paid. He did not give notice in writing of probable loss, nor did he give notice of loss in writing, other than the gin tickets, until the adjuster prepared the proof and processed the claim.
DeCell's application for insurance for 1947 was accepted. John R. Pepper inspected the cotton acreage in June. DeCell signed the acreage report in blank. During the month of August, he received a copy of the report, after the inspector had made it out. About thirty days later, he checked the report, found a mistake, namely that Kern's Bend Farm should have shown 78.4 acres, whereas the report showed 39.4. He reported this error to Moore, who, he thought, would correct it, but no correction was ever made.
About the middle of November, after harvesting had begun, DeCell realized that he would probably have a loss. He therefore went to the PMA office and notified Moore who told him, as he did the year before, to go ahead and finish the harvesting and turn in his gin tickets. In December, he also notified Moore that, because of the late planting and early snow, harvesting had been delayed and would be late in completion. Moore said, "Finish as soon as you can and bring your gin tickets in."
Upon completion of the harvest, DeCell had his cotton ginned and turned in the tickets about the 19th or 20th of February 1948. In other words, he followed the exact procedure of 1946, and the literal instructions which he had for 1947.
He had used good farming methods. He fertilized the cotton and poisoned against insects. His loss was due solely to flood water, drought, weather and insects, against which hazards the insurance protected him.
However, no adjuster ever came to check the residue of the crop or the gin tickets, or to make out proof of loss, or to process the claim.
The proof further showed that it was Moore's duty, upon receipt of the gin tickets, to make out a form, which was in fact a notice of loss, and to send copies thereof to the state office, to the adjuster and to DeCell, and to retain a copy in the files in his office. But neither the state office, nor DeCell, nor an adjuster received this information, nor was a copy placed in the files.
In June 1948, when collectors sought payment of DeCell's insurance premium, he informed them that his loss would exceed the premium. From time to time, he made inquiry about his claim, but without any result. While the state director of the Corporation knew, at that time, that DeCell was claiming a loss, he did nothing about it because the evidence of the previous crop had disappeared and the sixty-day limitation, as he called it, had elapsed. Consequently, the Corporation denied liability, and DeCell filed his suit.
The proof further showed that no farmer had ever prepared a formal writing giving notice of probable loss on his crop. In every previous instance of loss, the Corporation's employees prepared the proof and processed the claim. It was unknown for a claimant to prepare a proof of loss, except when he was dissatisfied with the adjuster's appraisal. In that event, he could make up and file his own version. A letter or the gin tickets, the approved practice, sufficed for the requirement of notice in writing as soon as the farmer saw that he was going to have a loss. In fact, the administrative officer testified that, if such notice had been received, nothing would have been done about the matter until the proof of loss was prepared.
The proof was ample to show that DeCell gave notice of probable and actual loss at the time and in the manner, which was accepted and approved by the Corporation in 1946 — which method was not changed for 1947 — and in compliance with the Corporation's instructions to him on his 1947 loss.
It is clear that the only reason why his proof of loss was not filed was because the Corporation, through its employees, failed to perform the duty which it undertook and assumed, namely, the forwarding of notice from the county administrative officer to its state office, and the preparation of proof of loss by its adjuster, and the processing of the claim.
(Hn 1) The Corporation's contention in the court below and here is that DeCell's failure to file a written notice of probable loss and a written statement in proof of loss barred a recovery.
Under Section 419.13 of the cotton crop insurance regulations, promulgated by the Corporation under authority of the Federal Crop Insurance Act, 52 Stat. 72, as amended, 7 U.S.C. § 1501, et seq., provision was made for notice in writing of probable loss, as follows: "Notice of loss or damage of cotton crop. Unless otherwise provided by the Corporation, if a loss is probable, notice in writing shall be given the Corporation at the office of the county association immediately after any material damage to the insured crop and before the crop is harvested, removed, or any other use is made of it. Any such notice shall be given in time to allow the Corporation to make appropriate inspection." (Emphasis supplied.) But, it was evidently contemplated that this rule was subject to change. Note the emphasized clause. The proof in this case showed that the Corporation evidently provided otherwise. See Sanborn v. Federal Crop Insurance Corporation, 208 P. 728.
Section 419.16 of such regulations, in reference to proof of loss, provided: "Proof of loss. If a loss is claimed, the insured shall submit to the Corporation a form entitled, `Statement in Proof of loss,' containing such information regarding the manner and extent of the loss as may be required by the Corporation. The statement in proof of loss shall be submitted not later than sixty days after the time of loss, unless the time for submitting the claim is extended in writing by the Corporation. * * *" (Emphasis supplied). But the Corporation never did prepare or furnish its form, as above described, to DeCell, or process the claim. Because of that dereliction, it was impossible for DeCell to comply with this requirement. The Corporation cannot be permitted, by its act in rendering DeCell impotent to assert proof, to nullify his claim. The loss obviously occurred between the time of planting and January 31, 1948.
Federal Crop Insurance Corporation v. Merrill, 332 U.S. 380, and Smith v. Federal Crop Insurance Corporation, 214 Miss. 55, 58 So.2d 95, have little, if any, bearing, on the question here. Other cases cited by the Corporation are likewise not in point.
(Hn 2) Section 419.6 of the regulations provided: "Determination of insured acreage and interest. (a) Promptly after planting a cotton crop each year, the insured shall submit to the Corporation, on a form entitled, `Cotton Crop Insurance Acreage Report,' a report over his signature on the acreage planted to cotton on each insurance unit in which he has an interest at the time of planting and his interest at the time of planting in the cotton crop planted. This report submitted by the insured shall be considered final and not subject to change by the insured." (Emphasis supplied.)
The acreage report form stated: "Since the acreage which you report cannot be increased by you later, be sure to include ALL acreage of cotton in the county in which you had a share at the time of planting. * * * BEFORE YOU SIGN THIS FORM BE SURE THAT THE ACREAGE OF COTTON AND YOUR SHARE THEREIN ARE ENTERED CORRECTLY FOR EACH FARM IN THE COUNTY IN WHICH YOU SHARE A COTTON CROP." (Emphasis in the original.)
On the basis of DeCell's acreage report form of 39.4 acres, his lint production on Kern's Bend Farm was 8,317 pounds. Hence there was a net loss of 4,460 pounds, which at $.3295 amounted to $1,459.57.
On the basis of 78.4 acres, instead of 39.4 acres, his loss was $2,883.35.
But clearly he was bound by his acreage form. It was expressly provided in the regulations that it was not subject to change. Besides, there was no promise or agreement by the county administrative officer to correct this alleged error, even if he had the authority to do so.
(Hn 3) The Corporation maintains that it is not liable for interest, damages or costs.
Section 419.18 of the regulations provided: "When indemnity payable. The amount of loss for which the Corporation may be liable with respect to any insurance unit covered by the insurance contract shall be payable within thirty days after satisfactory proof of loss is approved by the Corporation. However, if payment of any indemnity is delayed for any reason beyond the time specified, the Corporation shall not be liable for interest or damages on account of such delay."
It is true that, in the absence of an express provision to the contrary, interest on unpaid claims cannot be recovered against the United States. U.S. v. Worley, 218 U.S. 339; Jackson v. U.S., 281 U.S. 344; U.S. v. West Point Hotel Co., 329 U.S. 585; 54 Am. Jur., United States, Section 95; 24 A.L.R. 2d 928, 983. But this general rule does not extend to a governmental corporation. National Home for D.V.S. v. Parish, 229 U.S. 494, 57 L.Ed. 1296; 54 Am. Jur., United States, Section 99; 24 A.L.R. 2d 983. A government corporation is not presumed to be clothed with the immunity of the United States. R.F.C. v. Menihan Corporation, 312 U.S. 81, 85 L.Ed. 595; Keifer and Keifer v. R.F.C., 306 U.S. 381, 83 L.Ed. 784.
In the Parish case, supra, it was said: "It is quite true that the United States cannot be subjected to the payment of interest unless there be an authorized engagement to pay it or a statute permitting its recovery. (Citations omitted.) But this exemption has never as yet been applied to subordinate governmental agencies. * * * Without now attempting to lay down a rule for all governmental agencies, we think the exemption of the United States is not applicable to the Home. It is a distinct corporate entity, invested with power, duties and responsibilities, which, in the judgment of Congress, required that it be given power to sue in its own name, and be subjected to liability to be sued."
In Standard Oil Company v. United States, 267 U.S. 76, 69 L.Ed. 519, it was said: "Some question was made as to the allowance of interest. When the United States went into the insurance business, issued policies in familiar form, and provided that, in case of disagreement, it might be sued, it must be assumed to have accepted the ordinary incidents of suits in such business."
By paragraph (d), Section 1506, 7 U.S.C.A., the Corporation may sue and be sued. Hence it is in the same position as the government was in the Parish and Standard Oil cases, supra. Since this is true, the government has evidently accepted the ordinary incidents of suits in its insurance business. See also State Highway Commission v. Wunderlich, 194 Miss. 119, 11 So.2d 437, and Ferguson v. Union National Bank, 126 F.2d 753.
(Hn 4) Under the above Section 419.18 of the regulations, the payment of interest is excluded on account of mere delay. But in this case, it was not mere delay. It was a default. The Corporation denied liability.
(Hn 5) Consequently the judgment of the circuit court is affirmed. Interest at the rate of 6% per annum follows as a matter of law. Section 39, Code of 1942. Costs and damages in the sum of 5% upon the amount of the judgment are also assessed against the appellant. Section 1971, Code of 1942.
Affirmed on direct and cross appeals.
Roberds, P.J., and Hall, Kyle and Holmes, JJ., concur.