Bockser v. Dorchester Mut. Fire Ins. Co.

• Decision Date: 05 June 1951
• Citation: 99 N.E.2d 640,327 Mass. 473
• Parties: , 24 A.L.R.2d 1215 BOCKSER v. DORCHESTER MUT. FIRE INS. CO. and fourteen other cases.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 640

99 N.E.2d 640

327 Mass. 473, 24 A.L.R.2d 1215

BOCKSER v. DORCHESTER MUT. FIRE INS. CO. and fourteen other cases.

Supreme Judicial Court of Massachusetts, Suffolk.

Argued April 3, 1951.

Decided June 5, 1951.

W. G. Todd, Boston, for the plaintiff.

C. W. O'Brien, Boston, for the defendants.

Before QUA, C. J., and LUMMUS, WILKINS, SPALDING and COUNIHAN, JJ.

WILKINS, Justice.

The plaintiff was engaged in the wholesale plumbing and heating and oil burner supply business. These actions of contract on policies of insurance are to recover for a fire loss at the plaintiff's store at 303-307 Summer Street, Lynn, on February 12, 1947. The insured property included stock in trade, store and office furniture and fixtures, betterments, and improvements. There were verdicts for the plaintiff, and the defendants' exceptions are to the denial of their motions for directed verdicts. The policies, which are in the Massachusetts standard form, provide that they 'shall be Void * * * if the insured shall make any attempt to defraud the company either before or after the loss * * *.' G.L.(Ter.Ed.) c. 175, § 99, as amended. The defence now relied upon is that a public adjuster hired by the plaintiff attempted to defraud the companies, and that the plaintiff is bound by the adjuster's acts. It is not now contended that the plaintiff personally had attempted any fraud, for the jury could have found to the contrary on the evidence.

The public adjuster was one Shalek, who died before the trial. The entire testimony as to the circumstances and terms of his hiring came from the plaintiff. The employment was made on the day after the fire at the suggestion of an insurance agent of the plaintiff. Shalek came to the store and told the plaintiff that he could handle the loss on a percentage basis; that the plaintiff 'did not know the first thing about adjusting a loss'; that Shalek 'would take care of all the details in the adjustment of the loss'; and that all the plaintiff had to do was to take care of the inventory. He engaged Shalek to act as his public adjuster, and he did as Shalek said. He hired Shalek 'to adjust his loss and do whatever was necessary to adjust the loss.' Shalek did not do much except supervise and hand out orders. The plaintiff gave no instruction to Shalek but let him do exactly as he saw fit, relying upon him. He left the whole course of the adjustment to Shalek. He 'had put everything in his hands, he trusted him and told him that he was the boss, and he would leave it to him to a certain extent as far as adjusting loss was concerned * * * originally he told Mr. Shalek to take care of adjusting the loss.' The plaintiff priced the stock inventory and totaled the amount, and Shalek had nothing to do with that.

The fraud allegedly attempted by Shalek concerned two bills for improvements presented by him to one Patten, a representative of the defendants, which were in evidence: (1) A receipted bill of one Crooker, a carpenter and builder, for $17,519.90 for work done for the plaintiff in December 1944, which the defendants contended had been increased from $5,200. (2) Bills of one Lee, an electrician, totaling $2,498.17, for labor and materials furnished the plaintiff in 1943, which the defendants contended had been marked up from $400. The plaintiff testified that he did not know that a statement had been filed by Shalek with Patten until he attended a hearing at the Lynn fire department; that he never saw the Crooker and Lee bills before they were filed with Patten by Shalek, and that he first learned about them at the inquest; that the plaintiff had called Crooker on the telephone, as a result of which Crooker came to his office; that he introduced Crooker to Shalek, saying that he wanted an estimate on putting the store back into shape; that he asked Crooker if the latter had duplicate bills, and Crooker replied in the negative; that he could not find Crooker's original bills; that he did not ask Crooker to bring any blank billheads; that he never knew that Shalek told Crooker to build up the bill from less than $6,000 to more than $17,000; that he never paid Crooker $14,004.90 to make four thousand four hundred forty-six bins, as shown on the bill; that Crooker never made four thousand four hundred forty-six bins for him, never submitted a bill for $17,519.90, and he never paid Crooker any such amount; that the first time he learned that such a claim had been made for him by anybody was at the inquest; and that it was then that he first learned that Shalek had presented such a bill. The plaintiff testified that at Shalek's request he telephoned Lee, who came to the store; that he did not ask Lee to bring a blank billhead; and that he did not know whether he was present when they were first together.

The foregoing is a summary of evidence binding upon the plaintiff. This shows, as matter of law, an attempt to defraud by his adjuster. In Gechijian v. Richmond Ins. Co., 298 Mass. 487, 11 N.E.2d 478, the trial judge found that the insured furnished the insurers a schedule wherein he 'knowingly exaggerated the sound value of the property in order to be in a more advantageous position to be paid for the real loss suffered, but not with the intent to defraud the insurers.' 298 Mass. at page 488, 11 N.E.2d at page 479. In holding that such conduct was an attempt to defraud within the meaning of the clause in the standard policy with which we are concerned in the cases at bar, it was said, at pages 489-490, of 298 Mass., at page 479 of 11 N.E.2d: 'Intent to defraud is not to be presumed, and the trier of fact should make all reasonable allowance for lack of knowledge or sound judgment or for honest mistake on the part of the insured as well as for the tendency to believe that which is to one's own interest, but when it is established * * * that the insured has knowingly made false statements, even in such a matter as value, for the purpose of influencing the adjustment of the loss, public policy demands that the contract be so construed as to discourage such conduct and to give full protection to the insurer.' When the same case came before this court a second time, it was said, 'The law of this Commonwealth is settled that the furnishing to the insurers by the insured of a statement of value that he knows to be false, for the purpose of securing an advantageous position in the settlement of the loss, is a fraudulent design which constitutes an attempt to defraud within the provisions of the standard policies and vitiates such contracts of insurance even though the insured may not have intended to secure more than his actual loss. * * * This established principle of law is decisive if the evidence * * * is incompatible with any reasonable conclusion other than that the plaintiff made an attempt to defraud the defendants. And this is so, although the burden of proof rested upon the defendants to show the existence of such an...