W. & H. JEWELRY CO. v. Aetna Casualty & Surety Co.

• Decision Date: 13 April 1956
• Docket Number: Civ. A. No. 1742.
• Court: U.S. District Court — District of Rhode Island
• Parties: W. & H. JEWELRY CO., Inc. v. The AETNA CASUALTY AND SURETY COMPANY.

141 F. Supp. 296

W. & H. JEWELRY CO., Inc. v. The AETNA CASUALTY AND SURETY COMPANY.

Civ. A. No. 1742.

United States District Court D. Rhode Island.

April 13, 1956.

Mortyn K Zietz, Aram A. Arabian, Providence, R. I., for plaintiff.

Matthew W. Goring, Stephen B. Ives, Jr., Providence, R. I., for defendant.

DAY, District Judge.

This is an action upon an insurance policy issued by the defendant to the plaintiff insuring it against direct loss from water damage. Jurisdiction is based upon diversity of citizenship and the existence of a controversy of the requisite amount.

In its complaint the plaintiff alleges that on, to-wit, November 15, 1952 it entered into a contract of insurance with the defendant whereby the defendant agreed in consideration of the premium paid by plaintiff to insure it after November 15, 1952 for a specific period against all direct loss by water damage as contained in its policy of insurance No. 43 WD 674; that the defendant agreed that water damage shall be held to mean accidental discharge of water or steam from heating systems, industrial or domestic appliances; that on, to-wit, September 7, 1953, while said policy was in full force a loss occurred in accordance with the terms of the policy caused by the accidental discharge of steam from a heating or steam system or steam boiler located on the premises covered by the policy, and that as a result thereof certain property of the plaintiff was either damaged or destroyed, and that the plaintiff seeks to recover these damages.

In its answer the defendant admits that it entered into said contract of insurance, known as a water damage policy, No. 43 WD 674, and denies the remaining allegations of the complaint. It further sets up therein by way of defense to this action that the plaintiff failed to comply with the provisions of said contract of insurance in the following particulars, i. e., (1) that the first notice of loss was not given by the plaintiff to the defendant until April 5, 1954, and (2) that no proof of loss was filed by the plaintiff with the defendant within the sixty-day period provided in the policy or at any other time.

From the evidence it appears that said policy No. 43 WD 674 was issued at Providence, Rhode Island, on November 15, 1952; it insured the plaintiff against all direct loss by water damage as stipulated therein; the policy provides that it is made and accepted subject to the provisions and stipulations therein stated; by its provisions the term "Water Damage" is held to mean the accidental discharge, leakage or overflow of water or steam from divers sources, including plumbing systems, (excluding sprinkler systems) and heating systems; that the provisions thereof concerning notice of loss and the filing of proofs of loss are as follows:

"The insured shall give immediate written notice to this Company of any loss, protect the property from further damage, forthwith separate the damaged and undamaged property, put it in the best possible order, furnish a complete inventory of the destroyed, damaged and undamaged property, showing in detail quantities, costs, actual cash value and amount of loss claimed; and within sixty days after the loss unless such time is extended in writing by this Company, the insured shall render to this Company a proof of loss, signed and sworn to by the insured —;"

the policy also contains the following provision:

"No suit or action on this policy for the recovery of any claim shall be sustainable in any court of law or equity unless all the requirements of this policy shall have been complied with, and commenced within the limitation of time permitted by law."

Subsequent to the issuance of this policy and while it was in effect the plaintiff's plant, located in Providence, was closed at the end of the working day on Friday, September 4, 1953 for the Labor Day week-end which was to follow with its re-opening scheduled for September 8, 1953; that on the morning of September 8, 1953, the manager of the plaintiff arrived at plaintiff's plant and found that steam had been escaping for an indefinite time in the coloring room of plaintiff's plant and had done considerable damage to the property located therein; that upon entering the premises the manager had encountered an employee who had served notice on the previous Friday that he was "fed up" with his job and was quitting that day, and who gave an unusual explanation for his presence there on September 8th; that it was the duty of this employee to shut off the boiler of the plaintiff's plant when steam was not needed for its operations; that the task of repairing the damage discovered on September 8, 1953 continued until October 18, 1953; on October 26, 1953, a notice of loss was given by the plaintiff to a number of fire insurance companies, including the Automobile Insurance Company, which had issued policies of fire insurance on the plaintiff's premises and their contents which contained extended coverage against loss from "malicious mischief"; this notice of loss stated the loss occurred on September 5, 1953; that the kind of loss (meaning the cause thereof) was malicious mischief and that the probable amount of the entire loss was $5,000; from October 26, 1953 until March 26, 1954 the officials of the plaintiff both orally and in writing continuously insisted to its insurers that its loss had been caused by a disgruntled employee who had served notice on September 4, 1953 that he was quitting and who deliberately left the steam lines open with a malicious design to do damage, affidavits of other employees to this effect were obtained by the plaintiff and submitted to these fire insurance companies, including Automobile Insurance Company, in support of plaintiff's claim that its loss was due to malicious mischief; on March 26, 1953, the president of the plaintiff while still insisting plaintiff's damage was caused by "a malicious act of a disgruntled employee who had been informed of his discharge" called the attention of the agent who sold plaintiff the policy involved here to the fact that this policy had not been considered by him in previous conferences pertaining to the loss; this agent replied to the effect that he found nothing encouraging in the policy but suggested that he send him a complete story of the loss; upon the following day the president replied, asserting a claim under water damage policy No. 43 WD 674 and enclosing a statement of estimated loss...