Boone v. Royal Indemnity Company

• Decision Date: 02 June 1972
• Docket Number: No. 71-1469.,71-1469.
• Parties: G. L. BOONE, Plaintiff-Appellant, v. ROYAL INDEMNITY COMPANY, Defendant-Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

460 F.2d 26 (1972)

G. L. BOONE, Plaintiff-Appellant, v. ROYAL INDEMNITY COMPANY, Defendant-Appellee.

No. 71-1469.

United States Court of Appeals, Tenth Circuit.

May 3, 1972.

Rehearing Denied June 2, 1972.

Isaac Mellman, Denver, Colo., for plaintiff-appellant.

Sam F. Lowe, Jr., of Smith, Ringel, Kohler, Martin & Lowe, Atlanta, Ga. (William H. Hazlitt of Weller, Friedrich, Hickisch & Hazlitt, Denver, Colo., on the brief), for defendant-appellee.

Before PICKETT, HILL and DOYLE, Circuit Judges.

WILLIAM E. DOYLE, Circuit Judge.

In this case the plaintiff Boone sought to recover on a fire insurance policy which had been issued on a business property located in Atlanta, Georgia, which property was destroyed by an incendiary fire. The suit was first filed in the state court and was removed to United States District Court for the District of Colorado.

The policy covered the plant and equipment of Hickory Manor Portion Foods, Inc., of Georgia, which company was substantially (80 percent of the stock) owned by the plaintiff, G. L. Boone of Denver, Colorado. Some months before the fire there was an assignment of the policy from Hickory Manor to G. L. Boone, which occurrence explains his appearance as the sole plaintiff. The amount sought was $260,243.00. The insurance company interposed the defense of arson caused, procured or ratified by the plaintiff. Following submission of the case to a jury a defendant's verdict was returned in favor of the Royal Indemnity Company.

On this appeal reversal is sought, first, on the contention of appellant that the evidence was insufficient to support the jury's verdict; secondly, on his claim that the trial court was incorrect in dealing with burden of proof on the arson defense; and, further, the reception of some hearsay evidence.

G. L. Boone was shown by the evidence to have been engaged in the barbeque frozen food processing and merchandising business. He had plants in Denver and Atlanta and was engaged in other unrelated business ventures. The plaintiff's brother, J. K. Boone, was the manager and part owner of the Atlanta plant and was also at the time in question the sole employee of that business. Plaintiff's wife was secretary of both the Colorado and the Georgia corporations.

The evidence showed that at the time of the fire plaintiff was plagued with severe financial problems. Neither the Denver nor the Atlanta plants had shown any net profit for several years. The Atlanta company was in debt to a local bank in the amount of $140,000.00 on the date of the fire (January 4, 1970). During this period the Atlanta plant was substantially idle, and the processing equipment located there had not been used for over a year.¹ Plaintiff's other businesses were also in poor financial condition. However, just prior to the fire one David Barnes had invested $10,000.00 in the frozen food operations. Notwithstanding this fact, and the further fact that other assets had been sold during the summer of 1969, the evidence showed that plaintiff continued to be in very poor financial condition through 1969. He had tried without success to sell the Atlanta property and had renegotiated the Atlanta bank loans twice and had been unable to stay current on the payment of interest on these loans. However, soon after the destruction of the building by fire, the defendant insurance company paid plaintiff's $140,000.00 debt to the bank.

There was no dispute at trial concerning the cause of the fire. Arson was conceded to have been the source. Several pounds of explosive substance had been placed in the building alongside a gas main between the storage and freezing rooms. An explosion preceded the fire which destroyed most of the building and a substantial part of the equipment including all the frozen products, all of which had been covered by the policy.

Occurrences on the day of the fire were shown. On Saturday a truck driver had been scheduled to load 10,000 pounds of frozen meat for transfer back to Denver. Plaintiff had been unable to sell this in the Atlanta market. The driver was unable to make the pickup on Saturday due to repairs on his vehicle. When he called J. K. Boone on Sunday morning and offered to load up that day, he was told to postpone it until Monday morning.

On the Sunday just mentioned, J. K. Boone went to the plant early and talked to his brother by phone. He then went outside to wait for David Barnes and Ted Higgins who were scheduled to appear. Barnes, as mentioned above, had invested $10,000.00 in the business and had hired Higgins. The evidence showed that when Boone went outside to wait for Barnes and Higgins the door closed and locked, and he was unable to re-enter because of not having a key. He testified that he had left the key on a desk inside the building and did not have another one. After his arrival Barnes suggested that they break in, but Boone told him that to do so would activate the alarm at the central office of the protection system. The truth was that this service had been discontinued some weeks before. Boone, in the company of Barnes and Higgins, drove to his house in search of another key, notwithstanding that he knew that he did not have one. After this they drove to a motel for dinner, following which they proceeded to Barnes' room in the motel where Boone received a message that G. L. Boone had called from the Denver airport. J. K. Boone left Barnes' room and crossed the street to another motel in order to return this call. It was then 7:30 p. m. Atlanta time and the explosion occurred within the hour. After this incident J. K. Boone, who was still in the company of Barnes and Higgins, sought to call G. L. Boone in Denver, notwithstanding that he knew that his brother was en route to Las Vegas.

G. L. Boone registered at a hotel in Las Vegas and about 3:00 a. m. he awakened, according to his testimony, to discover that $6,000.00 had been taken from his suit coat or wallet.²

Both J. K. and G. L. Boone denied any knowledge of the arson. J. K. Boone testified that the reason for his unusual behavior on Sunday was his irritation with David Barnes, growing out of his dislike for Barnes. G. L. Boone's explanation for having $6,000.00 on his person was that he was en route to Los Angeles to satisfy a loan made to him in the amount of $2,500.00 by a female acquaintance six months previously.

J. K. Boone, who was the agent of plaintiff, had exclusive control of the premises and had the only keys, was well aware of the design of the building and was in a position whereby he could have arranged the fire if he was not directly accountable for it. Some doubt exists as to whether he was directly involved, but his control of the keys and the evidence that the job was done by a professional give rise to an inference that he had some part in it. As to plaintiff, there was ample proof of motive and the unusual events which occurred on the Sunday when the explosion took place supported an inference that the plaintiff either caused or ratified the fire.

I.

Arson cases are difficult to prove. The chance that there will be a motion picture of the arsonist in the act of setting the dynamite is most unlikely. The probability is that the evidence will be circumstantial as it is here. We have in the case at bar 1) arson unquestionably; 2) ample motive; and 3) unexplained surrounding, inculpating circumstances which are relatively strong.

It...