American Home Fire Assur. Co. v. Juneau Store Co.

• Decision Date: 19 July 1935
• Docket Number: 5390.,No. 5387,5387
• Citation: American Home Fire Assur. Co. v. Juneau Store Co., 78 F.2d 1001 (7th Cir. 1935)
• Parties: AMERICAN HOME FIRE ASSUR. CO. et al. v. JUNEAU STORE CO. JUNEAU STORE CO. v. AMERICAN HOME FIRE ASSUR. CO. et al.
• Court: U.S. Court of Appeals — Seventh Circuit

78 F.2d 1001 (1935)

AMERICAN HOME FIRE ASSUR. CO. et al. v. JUNEAU STORE CO.

JUNEAU STORE CO. v. AMERICAN HOME FIRE ASSUR. CO. et al.

Nos. 5387, 5390.

Circuit Court of Appeals, Seventh Circuit.

July 19, 1935.

Loomis & Roswell, of Mauston, Wis., and Rubin & Zabel, of Milwaukee, Wis. (W. B. Rubin, of Milwaukee, Wis., and Orland S. Loomis, of Mauston, Wis., of counsel), for Juneau Store Co.

W. H. Farnsworth and Daniel H. Grady, both of Portage, Wis., for American Home Fire Assur. Co.

Before EVANS, FITZHENRY, and ALSCHULER, Circuit Judges.

The Juneau Store Company, hereinafter called appellee, brought this action against the American Home Fire Assurance Company and six other insurance companies (hereinafter called appellants) to recover $45,000 due on policies of insurance written by them and covering a stock of merchandise owned by appellee, which was destroyed by fire on February 21, 1933. The total insurance was $56,000, but appellee recovered $11,000 from two Wisconsin insurance companies after trial and judgment in a Wisconsin court.

Appellants' principal defense was predicated upon the provisions of the Wisconsin Standard Fire Insurance Policy, which read as follows:

"This entire policy shall be void if the insured has with intent to deceive, concealed or misrepresented any material fact or circumstance concerning this insurance or the subject thereof; or if the matter misrepresented increased the risk or contributed to any loss; or in case of any fraud or false swearing by the insured touching any matter relating to this insurance or the subject thereof, whether before or after a loss."

Appellee's sworn proof showed a $72,882.43 loss (corrected total) of which $26,162.84 covered groceries and $46,125.87, dry goods. The loss was a total one. The jury found the value of the goods destroyed was $33,000.

At the close of the trial appellee moved for a directed verdict which was denied, and upon the rendition of the verdict in appellee's favor, appellants moved for judgment notwithstanding, or upon the verdict, or upon the verdict less the amount of the state court judgment. Appellee moved for judgment for $45,000, and in case such motion was not granted it moved to raise the amount of damage, as determined by the verdict, to $45,000. In disposing of the case, the judge said:

"I have had this case in mind ever since we tried it — thought it over considerably — and it is difficult for me to divorce my mind from the fact that the plaintiffs were pretty close to what the Court would deem false swearing. Nevertheless, the jury has found that they were not, although the finding as to the value of the property is perhaps by implication a finding of false swearing. However, the issues involved were jury questions. I am going to let the verdict stand, and plaintiff may have judgment for forty-five fifty-sixths (45/56) of the $33,000.00. Counsel may prepare the proposed judgment and submit it to the defendants' counsel, and then present it to the Court."

He subsequently directed the entry of the judgment for appellee for 45/56ths of $33,000 with interest and costs. Judgment was thereupon entered for said amount, and both parties appealed.

EVANS, Circuit Judge.

An elaborate statement of facts is rendered unnecessary because of our conclusion respecting one of appellants' contentions.

Does the verdict of the jury permit appellee to recover thereon? Stated differently, Was the jury's verdict inconsistent? The answer to this question in appellants' favor is decisive of the case.

It is appellants' argument that, where the sworn proof of loss shows an aggregate fire damage of approximately $73,000 and the verdict of the jury fixes the fire loss at $33,000, the jury could not find other than that false and fraudulent proofs of loss were made.

Appellee, on the other hand, argues that the findings can and should be reconciled. It first contends that the evidence was such that there existed no support for a finding which fixed the damage as low as $33,000. It also argues that though the loss was fixed at only $33,000, the court cannot say, as a matter of law, that the difference between it and appellee's sworn statement of $73,000 conclusively established the presentation of a false and fraudulent statement.

Innumerable cases may be cited to support¹ and an equal number to oppose² appellants' position. Each case is somewhat distinguishable from the instant case, and it is the different fact situations which account for the varying conclusions. The principles of law applicable are not doubtful nor difficult of statement. Our trouble has arisen over the application of the rule to the facts of this case. We would have no difficulty in accepting the views expressed in Wiesman v. American Insurance Company, 184 Wis. 523, 199 N. W. 55, 200 N. W. 304, if the record before us showed any possible basis for the discrepancy in values through difference of opinion as to value.

To illustrate, if the property destroyed were a dwelling house and the opinion evidence as to value varied one hundred or even two hundred per cent., it would still be possible to reconcile the larger and the smaller estimates without attributing false swearing to the claimant who made demand for the larger sum. Likewise, where the inventory consists of a stock of merchandise, some of which was old and some of which consisted of old styles, there would exist a basis for a wide difference of opinion as to value. In the present case, however, there is no such basis to explain the difference in the amount claimed in the proof of loss and the amount found by the jury as the loss sustained.

Appellants directly challenged the accuracy of appellee's inventory. They charge that the same was padded and that false and forged entries were made on the books of the wholesale house from which the merchandise was purchased and in which the principal owner of appellee was directly interested.

They attack the accuracy of the inventory rather than the value of the articles appearing in the inventory. True, there is a slight difference which might be traceable to value, but such items are inconsequential in accounting for the difference of $40,000. And there is no escaping the conclusion that if invoices were padded, if false book entries were made, Jake Marachowsky, the president of appellee, knew it.

In disposing of this case every possible effort has been made to reconcile the two findings of the jury. Appellee carried $56,000 of insurance upon which it paid premiums which the insurance companies accepted. A fire occurred while the policies were in force, and appellee suffered a total loss of its stock of merchandise. The liability of the insurers thereupon became fixed. Its existence is not disputed. Avoidance of that liability, however, is sought because of the...