Arnold v. Indemnity Fire Ins. Co. of New York

• Decision Date: 31 March 1910
• Parties: ARNOLD v. INDEMNITY FIRE INS. CO. OF NEW YORK et al.
• Court: North Carolina Supreme Court

67 S.E. 574

152 N.C. 232

ARNOLD v. INDEMNITY FIRE INS. CO. OF NEW YORK et al.

Supreme Court of North Carolina

March 31, 1910

Appeal from Superior Court, Craven County; Guion, Judge.

Consolidated actions by one Arnold against the Indemnity Fire Insurance Company of New York and others. From a judgment for plaintiff, defendants appeal. Affirmed.

Under an iron-safe clause providing that, if assured had not taken a complete itemized inventory within a year prior to the issuance of the policy, he should take one within 30 days of the issuance of the policy, and should keep such inventory and also the last preceding inventory, if taken, securely locked in a fireproof safe at night, etc., the fact that at the time of fire assured had an inventory taken 8 or 9 months before the fire, and another taken within 30 days of the fire, and that the first inventory was inadvertently left on the desk and destroyed, would not affect a finding that the clause had been substantially complied with.

An iron-safe clause provided for annual inventories, and that if assured had not taken a complete itemized inventory within a year prior to the issuance of the policy, he should take one within 30 days of the issuance of the policy, and provided for the keeping of books, etc., and also provided that the assured should keep such books and inventories, and also "the last preceding inventory," if taken, securely locked in a fireproof safe, etc. Held, that the stipulation as to the last preceding inventory referred to was confined to inventories taken under the contract of insurance and after it was entered into.

Civil action to recover on three insurance policies. The policies in three different companies bearing date October 23, 1906 contained an agreement to indemnify plaintiff in different sums for one year against loss by fire, etc., "On his stock of carriages, buggies, wagons, and other vehicles, also harness, robes, whips, and saddlery, stable utensils and supplies, including medicines, feed, hay, grain, and on office furniture and fixtures, including iron safe stationery, and signs, all while contained in the two-story brick metalroof building and from extension and additions, situated west side of Middle street, No. 122 1/2, New Bern, N. C." Three suits were instituted, but as the policies all contained the same stipulations, and recovery on each depended on the same state of facts, the actions were consolidated by order of court and tried together, and no objection to this course was made or noted.

It was proved that the property insured was destroyed by fire on the night of April 2, 1907, and defendants resisted recovery chiefly by reason of alleged violation of the stipulations in the policy, very generally known as the "iron-safe clause," and there was evidence on the part of plaintiff tending to show substantial compliance with its requirements, and evidence contra on the part of the defendants. Among other things, and as relevant to this attempted defense, the court charged the jury as follows: "(I charge you that the alleged inventory offered upon the part of the plaintiff in this case purporting to have been made by him in February preceding the fire, in a book produced and offered in evidence before you, and called as I recollect 'Exhibit B,' is a substantial compliance with that form that is required to be kept by him under the terms and provisions of the iron-safe clause.)" Each defendant excepts to part in above parentheses. "He is required under the terms and provisions of this iron-safe clause to keep a set of books which clearly and plainly present a complete record of the business transactions, including his purchases, sales, and shipments, both for cash and credit as set out in this clause. A ledger is offered in evidence before you--a book termed a 'ledger'--by the plaintiff, which has been exhibited to you and is part of the evidence in the case. A book offered in evidence which is termed the 'blotter' has likewise offered an inventory to you, and is likewise a part of the evidence in this case. The plaintiff contends that in addition thereto he kept a bankbook in which the cash transactions, that every cash sale was entered upon his bankbook, which he likewise contends is a part of the set of books which were kept by him in his business transactions. (I therefore charge you that if you shall find by the greater weight of all the evidence, and the burden is upon the plaintiff in this case to satisfy you by the greater weight--the preponderance of evidence--that he did comply with the terms and provisions of this clause; that he kept a set of books, called an 'inventory book'; that it was made up by him during the month of February, 1907; that he kept a ledger, offered in evidence before you, in which he stated was kept a record of the credit sales made by him and the entries thereon; that he kept a blotter, in which his cash sales were made other than his credit sales, and entered by him; and that he kept a bankbook, which other than the sales upon the blotter and credit sales as evidenced upon the ledger were placed as cash deposited by him from sales in the bank; if you shall further find that such books and inventories so compiled were kept securely locked in a fireproof safe at night, and kept in such safe at all times when the building in which the goods were kept was not kept open for business; and if you further find that these books, such as the ledger, blotter, and inventories, were required to be produced by the defendants, and when so required the plaintiff did so produce such books and inventories on inquiry of the company--I charge you that that would be a substantial compliance with the requirements of the iron-safe clause as to keeping a set of books and producing them on demand; therefore, if you find from the greater weight of the evidence, the burden being upon the plaintiff to satisfy you that he kept a set of books, and that they were produced for inspection on demand of the companies, then it is your duty to answer the first issue, 'Yes.')"

And further: "(If the plaintiff has satisfied you by this greater weight of the evidence that he kept a set of books that clearly and plainly presented his sales, purchases, and shipments, both for cash and credit; that he kept inventories as required by the terms of the policies; that his books and papers were kept in an iron safe, fireproof, if you find that he acted in all respects in compliance with the iron safe clause--your answer to the first issue will be, 'Yes,') and you will proceed to the second issue."

This bankbook referred to, as its name imports, containing a statement of cash deposited with the bank, arising from some of sales by plaintiff in his business, does not seem to have been kept with the other books in the safe or in the store, but was cared for under the provision in the iron-safe clause; "or failing with this (keeping books in an iron safe) the insured will keep such books and inventories in some place not exposed to a fire, which would destroy the building."

Under the charge, and the issues submitted, the jury rendered the following verdict: "(1) Did the plaintiff comply with the terms and provisions of the policies declared on in the complaint? Answer: 'Yes.' (2) If so, what damage, if any, is the plaintiff entitled to recover? Answer: 'Give $3,500 without interest."'

Judgment on verdict for plaintiff, and defendants excepted and appealed.

Simmons, Ward & Allen, D. L. Ward, and W. H. Pace, for appellants.

Moore & Dunn and W. D. McIver, for appellee.

HOKE J.

The policies sued on express the stipulations, commonly known as the "iron-safe clause," as follows: "The following covenant and warranty is hereby made a part of the policy: First. The assured will take a complete itemized inventory of stock on hand at least once in each calendar year, and unless such inventory has been taken within twelve calendar months prior to the date of this policy, one shall be taken in detail within thirty days of issuance of this policy, or this policy shall be null and void from such date; and upon demand of the assured, the unearned premium from such date shall be returned. Second. The assured will keep a set of books, which shall clearly and plainly present a complete record of business transacted, including all purchases, sales, and shipments--both for cash and credit-- from date of inventory, as provided for in first section of this clause, and during the continuance of this policy. Third. The assured will keep such books and inventory, and also the last preceding inventory if such has been taken, securely locked in a fireproof safe at night and at all times when the building mentioned in this policy is not actually open for business; or, failing in this, the assured will keep such books and inventories in some place not exposed to a fire which would destroy the aforesaid building."

The general purpose of these provisions is to "furnish data by which to ascertain the amount of goods on hand at the time of the fire, and estimate with reasonable correctness the amount of the loss," and it is held by the great weight of authority that a substantial compliance on the part of the insured is all that should be required. Coggins v Insurance Co., 144 N.C. 7, 56 S.E. 506, 8 L. R. A. (N. S.) 839, 119 Am. St. Rep. 924; Liverpool Ins. Co. v. Kearney, 180 U.S. 132, 21 S.Ct. 326, 45 L.Ed. 460, affirming decision of 36 C. C. A. 265, 94 F. 314; Western Assur. Co. v. Redding, 68 F. 708, 15 C. C. A. 619; Malin v. Mercantile Town Mut. Ins. Co., 105 Mo.App. 625, 80 S.W. 56; Western Insurance Co. v. Kemendo, 94 Tex. 367, 60 S.W. 661; Brown v. Palatine Ins. Co., 89 Tex. 590, 35 S.W. 1060; Fire Ass'n v. Short, 100 Ill.App. 553; Connecticut Ins. Co. v....