Aetna Ins. Co. v. Murray

• Citation: 66 F.2d 289
• Decision Date: 20 July 1933
• Docket Number: No. 805.,805.
• Parties: ÆTNA INS. CO. v. MURRAY.
• Court: U.S. Court of Appeals — Tenth Circuit

66 F.2d 289 (1933)

ÆTNA INS. CO. v. MURRAY.

No. 805.

Circuit Court of Appeals, Tenth Circuit.

July 20, 1933.

John F. Webster, of Oklahoma City, Okl. (F. A. Rittenhouse, O. R. Rittenhouse, and Walter D. Hanson, all of Oklahoma City, Okl., on the brief), for appellant.

Stansell Whiteside and Lonnie B. Yates, both of Altus, Okl., for appellee.

Before LEWIS and McDERMOTT, Circuit Judges, and KENNEDY, District Judge.

McDERMOTT, Circuit Judge.

The defendant below appeals from a judgment rendered on a verdict of a jury in a suit on a fire insurance policy covering a stock of shoes. The fire destroyed part of the stock and damaged the balance. The errors assigned are grouped in the briefs under four heads.

1. It is contended that the evidence disclosed that plaintiff was not the sole and unconditional owner of the property insured. The only support in the record for this defense is the testimony of plaintiff that he had arranged with two of his employees to pay them for their services a percentage of the net earnings of the business, in addition to their salaries; and the testimony of one of his employees that she "did not have any interest in the business but would have had a 25% bonus in addition to her salary when Mr. Murray was paid back his $11,000.00 with interest, then she would have a 25% interest." From all the testimony, a finding was warranted that the arrangement was simply to compensate employees for services by supplementing their salaries by a percentage of net earnings. Such a profit-sharing arrangement does not give the employees any title to the properties of the employer. London Assurance Corp. v. Drennen, 116 U. S. 461, 6 S. Ct. 442, 29 L. Ed. 688; Brown v. Franklin Fire Ins. Co., 178 Cal. 302, 173 P. 403; Martin Co. v. O'Connor, 120 Okl. 92, 250 P. 529. A participation in the profits as compensation for services rendered, does not create a partnership. Berthold v. Goldsmith, 24 How. 536, 543, 16 L. Ed. 762; Meehan v. Valentine, 145 U. S. 611, 619, 12 S. Ct. 972, 36 L. Ed. 935. In an exhaustive note to the case of Cudahy Packing Co. v. Hibou, 18 L. R. A. (N. S.) 1032, decisions from forty jurisdictions are cited in support of this statement and none to the contrary.

2. Appraisers were appointed, as provided by the policy, to ascertain the amount of the loss, and an award made. The binding effect of that award was an issue in the case and was submitted to the jury without objection, under an instruction requested by the defendant. The defendant now, for the first time, objects to the submission of this equitable issue to the jury, although it requested the trial court so to do by tendering an instruction on the issue. This is a trifling with the court which the law does not tolerate. Long ago the Supreme Court of the United States paid its respects to such objections first made on appeal, in these words: "The objection that the matter of plaintiff's demand is one of equitable cognizance in the federal courts cannot prevail. No such objection was raised in the court below at any stage of the proceedings, and it cannot be permitted to a defendant to go to trial before a jury on the facts of a case involving fraud, and let it proceed to judgment on the verdict without any attempt to assert the equitable character of the suit, and then raise that question for the first time in this court." Burbank v. Bigelow, 154 U. S. 559, Append., and 14 S. Ct. 1163, 1164, 19 L. Ed. 51.

3. It is contended that there was no substantial evidence that the award was invalid.

The submission of a disagreement as to the amount of a loss to disinterested appraisers is a lawful and commendable method of determining such a controversy; the awards of such appraisers are presumptively correct, and should not be set aside except upon clear and convincing evidence of fraud, gross mistake, misconduct of the appraisers, or their failure to perform the duties committed to them by the agreement of submission. St. Paul Fire & Marine Ins. Co. v. Eldracher (C. C. A. 8) 33 F.(2d) 675; Phœnix Ins. Co. v. Everfresh Food Co. (C. C. A. 8) 294 F. 51. The evidence in this case discloses these facts:

In response to a notice given immediately after the fire, defendant's adjuster advised plaintiff that he must have an inventory taken of the stock; a written agreement was entered into between the parties hereto "that all merchantable property that remains in said building shall be turned over to a salvage company, to be by them inventoried * * *." An inventory of such merchantable property, damaged by the fire, was made by Mr. Garrett, but it did not include shoes so far destroyed as not to be merchantable. The damaged goods were moved to another location. A disagreement arising as to the amount of the loss, the parties agreed that each would appoint an appraiser and that such appraisers should "appraise and ascertain the sound value of and loss upon the property damaged and destroyed by the fire." The appraisers subscribed to an oath that they would appraise and estimate "the sound value and the loss and damage upon" the property insured. Plaintiff told the appraisers that as soon as they had organized he would like to show them by his books and inventories the sound value of the stock before the fire, and that he would be at the Elks Club subject to call, to which they agreed; but they did not call him.

The appraisers viewed the damaged goods in the building...