Otherwise he would hardly have said, as he did, that the circumstances seemed to bring the case fairly within the principle of Thomas v. Winchester.

I do not see how we can uphold the judgment in the [400] present case without overruling what has been so often said by this court and other courts of like authority in reference to the absence of any liability for negligence on the part of the original vendor of an ordinary carriage to any one except his immediate vendee. The absence of such liability was the very point actually decided in the English case of Winterbottom v. Wright (supra), and the illustration quoted from the opinion of Chief Judge Ruggles in Thomas v. Winchester (supra) assumes that the law on the subject was so plain that the statement would be accepted almost as a matter of course. In the case at bar the defective wheel on an automobile moving only eight miles an hour was not any more dangerous to the occupants of the car than a similarly defective wheel would be to the occupants of a carriage drawn by a horse at the same speed; and yet unless the courts have been all wrong on this question up to the present time there would be no liability to strangers to the original sale in the case of the horse-drawn carriage.

The rule upon which, in my judgment, the determination of this case depends, and the recognized exceptions thereto, were discussed by Circuit Judge Sanborn of the United States Circuit Court of Appeals in the Eighth Circuit, in Huset v. J. I. Case Threshing Mach. Co. 120 Fed. 865, 57 C. C. A. 237, 61 L.R.A. 303, in an opinion which reviews all the leading American and English decisions on the subject up to the time when it was rendered (1903). I have already discussed the leading New York cases, but as to the rest I feel that I can add nothing to the learning of that opinion or the cogency of its reasoning. I have examined the cases to which Judge Sanborn refers, but if I were to discuss them at length I should be forced merely to paraphrase his language, as a study of the authorities he cites has led me to the same conclusion; and the repetition of what has already been so well said would contribute nothing to the advantage of the bench, the bar or the individual litigants whose case is before us.

[401] A few cases decided since his opinion was written, however, may be noticed. In Earl v. Lubbock [1905] 1 K. B. (Eng.) 253, 1 Ann. Cas. 753, the Court of Appeal in 1904 considered and approved the propositions of law laid down by the Court of Exchequer in Winterbottom v. Wright (supra), declaring

that the decision in that case, since the year 1842, had stood the test of repeated discussion. The master of the rolls approved the principles laid down by Lord Abinger as based upon sound reasoning; and all the members of the court agreed that his decision was a controlling authority which must be followed. That the Federal courts still adhere to the general rule, as I have stated it, appears by the decision of the Circuit Court of Appeals in the Second Circuit, in March, 1915, in the case of Cadillac Motor Car Co. v. Johnson, 221 Fed. 801, 137 C. C. A. 279, L.R.A.1915E 287. That case, like this, was an action by a subvendee against a manufacturer of automobiles for negligence in failing to discover that one of its wheels was defective, the court holding that such an action could not be maintained. It is true there was a dissenting opinion in that case, but it was based chiefly upon the proposition that rules applicable to stage coaches are archaic when applied to automobiles and that if the law did not afford a remedy to strangers to the contract the law should be changed. If this be true, the change should be effected by the legislature and not by the courts. A perusal of the opinion in that case and in the Huset case will disclose how uniformly the courts throughout this country have adhered to the rule and how consistently they have refused to broaden the scope of the exceptions. I think we should adhere to it in the case at bar and, therefore, I vote for a reversal of this judgment.

Hiscock, Chase and Cuddeback, JJ., concur with Cardozo, J., and Hogan, J., concurs in result; Willard Bartlett, Ch. J., reads dissenting opinion; Pound, J., not voting. Judgment affirmed.

NOTE.

The reported case discusses at length the rule that the manufacturer of an article which, by reason of a defect therein discoverable by inspection, is a source of peril to a user thereof, is liable to an ultimate purchaser for an injury resulting from the existence of that defect. The rule, the court holds, is applicable to an automobile having a defective wheel, and it is held that the manufacturer is not exonerated by the fact that he purchases the defective wheel from a reputable manufacturer. The liability of the maker of an automobile to a third person for the defective construction thereof is discussed in the note to Olds Motor Works v. Shaffer, Ann. Cas. 1913B 689.

BATES

V.

GERMAN COMMERCIAL ACCIDENT COMPANY.

Limitation of

Validity.

Time to Sue A provision in an accident policy requiring suit to be brought, if at all, within one year from the date of the accident on which the suit is predicated is valid.

Waiver of Limitation.

A provision in an accident policy requiring suit to be brought within a year, if at all, is matter for the benefit of the company and may be waived.

[See note at end of this case.] Same.

An accident policy was issued October 19, 1908, and two days thereafter plaintiff suffered accidental injuries which were the basis of the suit. He seasonably filed proofs of injury which were rejected, and nothing further was done until October 26, 1911, when defendant, at the suggestion of the State Insurance Commissioner, requested full information concerning the nature of the accident, stating that on receipt of the same the company would open the case. This request was complied with, and plaintiff continued from time to time to furnish other papers and proofs until on November 9, 1911, when defendant sent plaintiff a check for $25 in full settlement, which he promptly returned and brought suit. Held, that defendant's acts constituted a waiver of the policy provision requiring suit to be brought, if at all, within a year after the date of the accident on which the suit was predicated.

[See note at end of this case.] Reduction of Benefits

Construction

An accident policy provided that, in the event of disability due wholly or in part to or resulting directly or indirectly from hernia commencing or appearing after the policy had been in force for 60 days preceding, the limit of the company's liability should be one-third of the amount that would otherwise be payable under the policy. Held, that such clause, construed most strongly against the insurance company, provided no limitation in case hernia resulted within the 60-day period, in which case the company was liable for full indemnity.

Exceptions from Franklin County Court: FISH, Judge.

exceptions. The facts are stated in the opinion. REVERSED.

A. B. Rowley for plaintiff.
W. B. Locklin for defendant.

He

[129] POWERS, J.-The accident policy which the plaintiff held in the defendant company contained a provision which, read in connection with P. S. 4823, limited the period within which a suit thereon could be brought to one year from the date of the accident on which it was predicated. This policy was issued October 19, 1908, and on the twentyfirst the plaintiff suffered the accidental injuries which form the basis of this suit. seasonably filed with the defendant proofs of his injury and his [130] claim was promptly rejected. Nothing further was said or done by either party until October 26, 1911, when, as stated in the defendant's brief, at the suggestion of the State Insurance Commissioners, the defendant began a correspondence with the plaintiff regarding the matter. On that date, the defendant's treasurer wrote the plaintiff a letter in which, after referring to the company's desire to meet all requirements of the commissioner's committee, he said: "Will you be kind enough to give us full information regarding the nature of the accident which occurred to you on October 21, 1908. Kindly be specific in your dates giving us the length of time you were disabled from this injury, and stating the nature of the accident and how it occurred. On receipt of same, this Company will reopen your case." This request was complied with, and on October 31, 1911, the treasurer again wrote the plaintiff, saying: "We are enclosing herewith final claim papers which you and the attending physician will kindly fill in with the information relative to your accident of Oct. 21, 1908. Also kindly give the name of the hospital at Burlington, Vt., in which you were operated on. In forwarding you these blanks, we must request that you kindly answer each and every question asked as it will facilitate matters greatly and we are very anxious to have your claim finally disposed of." These requests were also complied with by the plaintiff. On November 6, 1911, the treasurer again wrote the plaintiff acknowledging receipt of his claim papers, and calling for still further information by way of an attested statement of a notary public that the plaintiff was physically sound and without any hernia prior to the accident. This, too, was furnished. Finally, on November 9, the treasurer sent the plaintiff a check for $25 expressed to be in full settlement, and called attention to certain provisions of the policy to show that this was the amount recoverable. The plaintiff returned the check and brought this suit. The

validity of the limitation clause is not and could not be questioned. Wilson v. Etna Ins. Co. 27 Vt. 99; Morrill v. New England F. Ins. Co. 71 Vt. 281, 44 Atl. 358. It was, however, inserted in the policy for the benefit of the company, and may be waived. Thompson v. Phenix Ins. Co. 136 U. S. 287, 10 S. Ct. 1019, 34 U. S. (L. ed.) 408. It stands just like any other such provision in the policy, no better and no worse. The waiver may be oral or written, express or implied, before or after forfeiture; it requires no new consideration and need not amount to an estoppel [131] to be effective. Webster v. State Mut. F. Ins. Co. 81 Vt. 75, 69 Atl. 319. The facts here relied upon to constitute a waiver were subsequent to the forfeiture, and while one or two isolated cases can be found holding that the waiver must occur within the period of limitation, by the better reason the true rule is that if, in any negotiations with the assured, after knowledge of the forfeiture, the company recognizes the continued validity of the policy, does acts based thereon, or requires the insured by virtue thereof to incur trouble or expense, the forfeiture is, as matter of law, waived, and cannot thereafter be asserted by the company. And so are the authorities. Titus v. Glens Falls Ins. Co. 81 N. Y. 410; Roby v. American Cent. Ins. Co. 120 N. Y. 510, 24 N. E. 808; Covenant Mut. L. Assoc. v. Baughman, 73 Ill. App. 544; DeFarconnent v. Western Ins. Co. 110 Fed. 405, affirmed 122 Fed. 448, 58 C. C. A. 612; Coursin v. Pennsylvania Ins. Co. 46 Pa. St. 323; New England Mut. L. Ins. Co. v. Springate, 129 Ky. 627, 112 S. W. 681, 113 S. W. 824, 19 L.R.A. (N.S.) 227; Rundell v. Anchor F. Ins. Co. 128 Ia. 575, 105 N. W. 112, 25 L.R.A. (N.S.) 20; Oshkosh Gas-Light Co. v. Germania F. Ins. Co. 71 Wis. 454, 37 N. W. 819, 5 Am. St. Rep. 233; Brown v. State Ins. Co. 74 Ia. 428, 38 N. W. 135, 7 Am. St. Rep. 495; Queen Ins. Co. v. Young, 86 Ala. 424, 5 So. 116, 11 Am. St. Rep. 51; Bonnert v. Pennsylvania Ins. Co. 129 Pa. St. 558, 18 Atl. 552, 15 Am. St. Rep. 739; Murray v. Home Ben. L. Assoc. 90 Cal. 402, 27 Pac. 309, 25 Am. St. Rep. 133; Knickerbocker L. Ins. Co. v. Norton, 96 U. S. 234, 24 U. S. (L. ed.) 689; Webster v. State Mut. F. Ins. Co. 81 Vt. 75, 69 Atl. 319.

This record presents a typical case of waiver under this rule. It shows in unmistakable terms that the company, with full knowledge, treated the policy as valid; that it acted upon it; and that it required the plaintiff to go to trouble and expense under it, on the assurance that the company would thereupon re-open his case.

But the defendant says that our own cases stand in the way of this result, and calls attention to Williams v. Vermont Mut. F. Ins. Co. 20 Vt. 222; Wilson v. Etna Ins. Co.

27 Vt. 102; Higgins v. Windsor County Mut. F. Ins. Co. 54 Vt. 271, and Morrill v. New England F. Ins. Co. 71 Vt. 281, 44 Atl. 358. Of these, only the first-named requires special consideration, for the others are manifestly no authority for the defendant's position The Williams case was decided in 1848, and it was held that the cause of action upon the fire policy there involved having become barred by a limitation in the charter of the company could not be revived by an acknowledgment or new promise. It is apparent [132] that this decision is predicated upon a theory of insurance contracts which has long been abandoned. But it is not necessary to criticise the case, for it is clearly distinguishable from the case in hand. The limitation there involved was in the charter of the company; here it is in the policy. There the forfeiture was statutory; here it is contractual. There the court regarded the provision as a limitation of the liability; here it must be regarded as a limitation of the remedy. This distinction is pointed out in the case and it was said that it was unneces sary to consider what effect the conduct of the directors would have had in the ordinary case of debt,-thus leaving undecided the very question here involved.

The policy contains a provision which, so far as need be recited, is as follows: "In the event of . . . disability due wholly or in part to, or resulting directly or indirectly from hernia

cancer or any chronic disease commencing or appearing after this policy has been maintained in continuous force for sixty days preceding, . . . then . . the limit of the company's liability shall be one-third of the amount that would otherwise be payable under this policy."

As we have seen, the plaintiff's injury was received on the second day after the policy was issued; one of its immediate results was a hernia. The parties disagree as to the effect of the foregoing provision on the amount recoverable. Construing the language of this paragraph against the company, as we are bound to do, Brink v. Merchants', etc. Ins. Co. 49 Vt. 442, Mosley v. Vermont Mut. F. Ins. Co. 55 Vt. 142, the clause regarding the sixty days relates to and modifies the word "hernia." Indeed, counsel for the defendant so construes it in his brief; and he says that the injury to the plaintiff comes within the excepting clause, "which," he says, "when fairly construed, is this: For disability on account of hernia occurring within sixty days from the date of the policy, no liability on the company; hence no right of action." And if the hernia occurs after the sixty days, one-third indemnity.

But this cannot be so. The clause only mentions hernias which occur after the sixty

It is well settled that a provision in an accident insurance policy limiting the time within which the insured or his beneficiary can bring suit to enforce payment of the policy is for the benefit of the insurance company and therefore can be waived by the company. North American Acc. Ins. Co. v. Williamson, 118 Ill. App. 670; Hansell-Elcock Co. v. Frankfort Marine Acc. etc. Ins. Co. 177 Ill. App. 500; Continental Casualty Co. v. Hunt, 53 Ind. App. 657, 101 N. E. 519; Turner v. Fidelity, etc. Co. 112 Mich. 425, 70 N. W. 898, 4 Detroit Leg. N. 85, 67 Am. St. Rep. 428, 38 L.R.A. 529; Wondra v. National L. Ins. Co. 126 Minn. 136, 147 N. W. 961; Association v. Beidelman, 1 Mona (Pa.) 481; American Acc. Ins. Co. v. Norment, 91 Tenn. 1, 18 S. W. 395. See also the reported case. And see generally the cases cited throughout this note. In Turner v. Fidelity, etc. Co. supra, the court said: "Such clauses in policies of insurance, while held valid as contracts, may be waived by the company. The law does not favor clauses of limitation in policies of insurance, and they are strictly construed, and it does not

Ann. Cas. 1916C.-29.

require the positive aet of the company inducing postponement; but, where the evidence is conflicting, the question of waiver is one for the jury."

The waiver may be by agreement, supported by a sufficient consideration; or it may be independent of any agreement. Thus, in Creem v. Fidelity, etc. Co. 141 App. Div. 493, 126 N. Y. S. 555, wherein it appeared that the defendant had contracted to insure the plaintiff against loss on account of accident to certain third persons, both classes of waiver were discussed as follows: "The promise, necessarily involved an agreement to waive the limitation clause, and it was supported by sufficient consideration because it was made to obtain the co-operation of these plaintiffs in the defense which counsel desired to make and to induce them not to employ other counsel who might have insisted upon a different defense. However, we do not need to rest the decision on the ground of an agreement to waive the limitation clause, supported by a sufficient consideration, because a case of technical waiver, as well as estoppel, is established, not by reason of the promise alone, because no forfeiture had then occurred, but by reason of the promise together with the subsequent conduct. While the defendant had the right under the policy to insist upon noninterference by the plaintiffs and was obliged to defend in their behalf, it could not exercise that right or discharge that duty so as to prolong the litigation until the plaintiffs' rights were forfeited. By giving the plaintiffs notice of the suits and by then proéuring them not to interfere the defendant assumed the defense on their behalf pursuant to the provisions of the policy and the promise to protect them, which was but a renewal of its obligations under the policy, and it could not continue in that relation a moment beyond the three-year period without recognizing its continued obligation under the policy. When it ceased to represent the plaintiffs it was bound to turn the defense over to them, and its failure to do that amounted to a technical waiver of the limitation clause."

Waiver of Final Limitation of Time to Sue.

IN GENERAL.

It is generally held that where the insurance company causes the insured, or the beneficiary, to delay suit beyond the time limited in the contract the company thereby waives the limitation. Metropolitan Acc. Assoc. v. Froiland, 161 Ill. 30, 43 N. E. 766, 52 Am. St. Rep. 359; Continental Casualty Co. v. Hunt, 53 Ind. App. 657, 101 N. E. 519; Creem v. Fidelity, etc. Co. 141 App.

Div. 493, 126 N. Y. S. 555. A waiver frequently results from a delay beyond the period of limitation caused by the company's holding out to the insured a hope of an adjustment. Lynchburg Cotton Mill Co. v. Travelers' Ins. Co. 149 Fed. 954, 79 C. C. A. 464, 9 L.R.A. (N.S.) 654, reversing 140 Fed. 718; North American Acc. Ins. Co. v. Williamson, 118 Ill. App. 670; Clark v. Pacific Mut. L. Ins. Co. 185 Ill. App. 580; Turner v. Fidelity, etc. Co. 112 Mich. 425, 70 N. W. 898, 4 Detroit Leg, N. 85, 67 Am. St. Rep. 428, 38 L.R.A. 529; Dolsen v. Phoenix Preferred Acc. Ins. Co. 151 Mich. 228, 115 N. W. 50, 14 Detroit Leg. N. 894; Mastenbrook v. U. S. Accident Assoc. 154 Mich. 16, 117 N. W. 543, 15 Detroit Leg. N. 697; Harold v. People's Mut. Acc. Ins. Co. 2 Pa. Dist. 503, 12 Pa. Co. Ct. 454. See also Norwood v. Preferred Acc. Ins. Co. 56 Misc. 529, 107 N. Y. S. 104. Thus in Dolsen v. Phoenix Preferred Acc. Ins. Co. supra, the court said: "On November 5, 1906, defendant's general counsel wrote the following letter: 'Yours of Oct. 30th duly received. In reply will say that files and your letter were handed to me some time in September, and by me referred back to the secretary of the Insurance Co. for further investigation as to some of the facts and has not been returned to me. I will get the files at my earliest convenience, and thereupon give the matter my prompt attention. Owing to my absence from the eity, your letter of the 30th was not received by me or called to my attention until this afternoon, and unfortunately I will leave the city today, and will therefore be unable to give the Dolsen matter any attention until the latter part of the week. Asking you to patiently bear with me, I beg to remain,' etc.

[The] letter of November 5th authorized the delay of plaintiff's counsel, in the absence of further communication, and waived the contract limitation as to the time of bringing suit."

In Continental Casualty Co. v. Hunt, 53 Ind. App. 657, 101 N. E. 519, it was held that a request not to bring suit waived the limitation. In Metropolitan Acc. Assoc. v. Froiland, 161 Ill. 30, 43 N. E. 766, 52 Am. St. Rep. 359, it appeared that the by-laws of the insurance association were expressly made a part of the contract of insurance. Soon after the death of the insured, the beneficiary of the policy went to the office of the association and asked for a copy of the by-laws. This request was refused.. The beneficiary then inquired how much time she had within which to bring suit and was informed that she had three months. She brought suit within three months but after the expiration of the period limited in the by-law. The court held that the association had waived the by, law.

It has been said that slight evidence is suf ficient to establish a waiver of the contractual limitation. North American Acc. Ins. Co. v. Williamson, 118 Ill. App. 670. See also Creem v. Fidelity, etc. Co. 141 App. Div. 493, 126 N. Y. S. 555.

The holding of the reported case to the effect that the acts of the company constituting a waiver may occur after the expiration of the period of limitation finds support in the following cases. Norwood v. Preferred Acc. Ins. Co. 56 Misc. 529, 107 N. Y. S. 104; Harold v. People's Mut. Acc. Ins. Co. 2 Pa. Dist. 503, 12 Pa. Co. Ct. 454. In Norwood v. Preferred Acc. Ins. Co. supra, the court said: "The defendant could have insisted that, as no suit had been brought prior to August 20, 1902, the insured had forfeited or lost all right of recovery by reason of the short Statute of Limitations fixed by the policy. But, instead of that, it continued to treat the policy as valid and induced the plaintiff's attorney not to sue until further investigation could be made; and, after such further investigation, the letter of October 7, 1902, was sent, from which it appears that the defendant had concluded to renew an offer to settle, fixing a limit of time within which the offer must be accepted, and if not accepted the insured would then be at liberty to take such course as he deemed for his best interest; implying that, if he rejected the offer, he could then sue. In Titus v. Glen Falls Ins. Co. 81 N. Y. 410, 419, Judge Earl said: 'It may be asserted broadly that if, in any negotiations or transactions with the insured, after knowledge of the forfeiture, it recognizes the continued validity of the policy, or does acts based thereon, or requires the insured by virtue thereof to do some act or incur some trouble or expense, the forfeiture is as matter of law waived; and it is now settled in this court, after some difference of opinion, that such a waiver need not be based on any new agreement or an estoppel.'"

It seems that a waiver results from a failure to plead the contractual limitation, for such a limitation when not pleaded has been held to be unavailable. Keeffe v. National Acc. Soc 4 App. Div. 392, 38 N. Y. S. 854. See also Harold v. People's Mut. Acc. Ins. Co. 2 Pa. Dist. 503, 12 Pa, Co. Ct. 454.

EFFECT OF WAIVER.

Where the final limitation of the time within which suit can be brought is waived, the effect is to nullify, and not merely to postpone, the contractual limitation; and the claim remains subject only to the general statutory limitation. Lynchburg Cotton Mill Co. v. Travelers' Ins. Co. 149 Fed. 954, 79 C. C. A. 464, 9 L.R.A. (N.S.) 654, reversing