Brand Distributors, Inc. v. Insurance Co. of North America, 74-2344
| Decision Date | 21 January 1976 |
| Docket Number | No. 74-2344,74-2344 |
| Citation | 532 F.2d 352 |
| Parties | BRAND DISTRIBUTORS, INC., Plaintiff-Appellant, v. INSURANCE COMPANY OF NORTH AMERICA, Defendant-Appellee. |
| Court | U.S. Court of Appeals — Fourth Circuit |
Robert C. Nusbaum, Norfolk, Va. (James M. Gallagher, Howard E. Gordon, Hofheimer, Nusbaum & McPhaul, Norfolk, Va., on brief), for plaintiff-appellant.
Edward A. Marks, Jr., Richmond, Va. (Arch Wallace, III, Sands, Anderson and Marks, Richmond, Va., on brief), for defendant-appellee.
Before WINTER, BUTZNER and WIDENER, Circuit Judges.
This diversity case is upon Jeweler's Block Policy No. JB 29381, issued by defendant-insurance company to plaintiff-assured, and is on account of a loss by robbery. The sole question is the construction of the policy.
Suit was originally brought in the Circuit Court of the City of Norfolk and was moved to the district court because of diversity of citizenship of the defendant. Trial was before the court and a jury; however when defendant moved for a directed verdict at the close of all the evidence, the jury was withdrawn by stipulation and the controlling question of law was submitted to the court. Judgment was entered for plaintiff in the amount of $67,861.82. Plaintiff has appealed, contending that judgment should have been in the amount of $84,918.60. We reverse and direct entry of judgment in the larger amount.
There are no disputed questions of fact, and the outcome of the appeal depends upon the construction to be placed upon three clauses of the policy. It is stipulated that on July 23, 1973 two unidentified robbers entered plaintiff's store in Norfolk, Virginia, and, at gun point, took and carried away four categories of merchandise: 19 diamond watches, 6 gold bracelets, 6 items of customers' property in plaintiff's possession, and 306 other items of diamond jewelry. There is no dispute but that the loss is covered by the policy issued by defendant. It is also stipulated that all conditions in the policy, such as the filing of proofs of loss, have been complied with. Liability on the policy is now conceded by the insurance company. The only issue is as to the amount of liability.
The parties have stipulated that plaintiff is entitled to recover the following amounts for the first three of the above enumerated categories of loss:
Diamond watches $4,864.85
Gold bracelets 598.76
Customer's property 933.15
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Total $6,396.76
The only dispute is on the amount allowable for the miscellaneous diamond items. Defendant contends, and the district court held, that the correct amount is $61,465.06, for a total of $67,861.82. Plaintiff contends that said amount should be $78,521.84, for a total of $84,918.60. Thus, $17,056.78 is in dispute.
The disputed amount of $17,056.78 is the difference between the original cost to plaintiff of the stolen items and what it would have cost plaintiff to replace said items at the time of the loss. Defendant contends that original cost is the proper basis for its liability. Plaintiff's position is that the policy protects it to the extent of the replacement cost. No issue was raised as to the amount of the original cost. Plaintiff offered evidence which tended to establish the amount of the replacement cost by the testimony of its president, Milton Kaplan, supplemented by the expert testimony of two diamond merchants, John Linley and Eli Nhaissi. When the final stipulation was made, at the time the jury was withdrawn at the end of the trial, defendant agreed to stipulate to plaintiff's figures as to replacement cost, and it was expressly agreed that if plaintiff's interpretation of the policy is correct, plaintiff is entitled to recover the amount specified by Kaplan as the replacement cost, but that if defendant's interpretation is correct, the recovery is limited to the established original cost.
The proper interpretation of the policy requires the consideration of three paragraphs: 8(A), 9(A) and 13. First to be considered is 9(A), dealing with valuation, as follows:
Defendant contends, and the district court held, that only in the Unit Control Cards, kept by assured in compliance with Paragraph 8(A), did the plaintiff "put upon" the stolen merchandise an evaluation. Acquisition cost and sales price are the two figures mentioned in the control cards, acquisition cost being the lower of the two figures. Thus, the argument runs, the defendant's protection of the stolen merchandise does not exceed that amount.
Paragraph 8(A), generally referred to as the iron safe clause, provides as follows:
Such a clause has long been customary in all policies issued on a shifting stock of merchandise. Phoenix Ins. Co. v. Sherman, 110 Va. 435, 438, 66 S.E. 81 (1909).
In compliance with Paragraph 8(A), assured maintained what was known as Unit Control cards. There was a separate card on each of the 306 items of stolen merchandise in issue. One of these cards, the one used as an example in the explanatory testimony, is reproduced as follows:
NOTE: OPINION CONTAINS TABLE OR OTHER DATA THAT IS NOT VIEWABLE
It is stipulated that these Unit Control cards are an adequate compliance with the requirements of Paragraph 8(A). Said cards, with specific reference to the one above reproduced, were explained by witness Seymour B. Levinson, Vice-President, Secretary, Controller, and chief financial officer of plaintiff-assured. His testimony was as follows:
Defendant contends, and plaintiff's witnesses concede, that at no place on the Unit Control cards, or other place in plaintiff's books or records, do figures appear which purport to state the current replacement cost of the 306 diamond items in issue. Therefore, the insurance company contends that the "exact amount" of the replacement cost cannot "be accurately determined (from the Unit Control cards) by the Company", as required by paragraph 8(A), and that plaintiff's recovery is limited to the lessor of the two figures stated on the face of the cards. The essence of its argument is that unless the replacement cost can be ascertained from writings previously "put upon" the face of the cards the recovery is limited to the lesser of the two figures appearing thereupon.
Plaintiff contends that the phrase "put upon" in paragraph 9(A) does not refer to the statement of acquisition cost on the Unit Control cards. That argument is predicated upon the theory that "put upon" refers to an evaluative act by plaintiff. Plaintiff's statement of the amount of the acquisition cost is merely a statement of what it did in fact pay. No judgment by plaintiff was required to arrive at that figure. Thus, the only figure "put upon" the diamonds, appearing on the Unit Control cards, was the sales price. No contention is made but that the recovery claimed by plaintiff is less than that price.
Plaintiff further contends that the requirement in Paragraph 8(A) that assured maintain a sufficiently detailed inventory that "the exact amount of loss can be accurately determined therefrom by the Company" requires only that the number, identity and characteristics of the items lost be capable of being determined from the inventory, and that the inventory provide sufficient information to enable a determination of the actual cash value at the time of the loss. In this connection, plaintiff did offer the testimony of three witnesses 2 which showed that replacement cost can be readily calculated from the acquisition cost and the records of price increases shown by the published price lists of the plaintiff's suppliers of diamonds. This testimony served two purposes at the time it was offered: first, to establish the...
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