Carpenter v. Union Insurance Society of Canton, Ltd.

• Citation: 284 F.2d 155
• Decision Date: 18 November 1960
• Docket Number: No. 8129.,8129.
• Parties: Frank CARPENTER as Trustee in Bankruptcy of the Estate of Greenville Paper Stock Company, Inc., Bankrupt, Appellant, v. UNION INSURANCE SOCIETY OF CANTON, LIMITED, Northern Insurance Company, American Aviation & General Insurance Company, Assurance Company of America, Home Insurance Company, Pacific Fire Insurance Company, Maryland Casualty Company, Buffalo Insurance Company, Merchants Fire Assurance Corporation, Travelers Fire Insurance Company, North River Insurance Company, Insurance Company of North America, Fireman's Fund Insurance Company and National Fire Insurance Company, Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (4th Circuit)

284 F.2d 155 (1960)

Frank CARPENTER as Trustee in Bankruptcy of the Estate of Greenville Paper Stock Company, Inc., Bankrupt, Appellant, v. UNION INSURANCE SOCIETY OF CANTON, LIMITED, Northern Insurance Company, American Aviation & General Insurance Company, Assurance Company of America, Home Insurance Company, Pacific Fire Insurance Company, Maryland Casualty Company, Buffalo Insurance Company, Merchants Fire Assurance Corporation, Travelers Fire Insurance Company, North River Insurance Company, Insurance Company of North America, Fireman's Fund Insurance Company and National Fire Insurance Company, Appellees.

No. 8129.

United States Court of Appeals Fourth Circuit.

Argued October 10, 1960.

Decided November 18, 1960.

Ray R. Williams, Greenville, S. C. (J. A. Henry, Hubert E. Nolin, Greenville, S. C., and Williams & Henry, Greenville, S. C., on brief), for appellant.

Bert Cotton, New York City, and Wesley M. Walker, Greenville, S. C. (Leatherwood, Walker, Todd & Mann, Greenville, S. C., and Rein, Mound & Cotton, New York City, on brief), for appellees.

Before SOPER and BOREMAN, Circuit Judges, and STANLEY, District Judge.

BOREMAN, Circuit Judge.

The plaintiff, Trustee in Bankruptcy for the Greenville Paper Stock Company, Inc., hereinafter referred to as "Greenville," brought this action on fire insurance policies issued by the defendants to recover the amount of a fire loss sustained by Greenville in a fire occurring at its plant in Greenville, South Carolina, on January 13, 1956. The finding in favor of the defendants on their third affirmative defense of arson, by the Special Master appointed to hear the case, was sustained on review by the District Court for the Western District of South Carolina. We conclude the evidence was sufficient to sustain this defense.

At the time of the fire, Greenville was wholly owned by one Alvin Garblik, hereinafter referred to as "Garblik," and by members of his family. Prior to Garblik's acquisition, Greenville had traded as the Piedmont Scrap and Metal Company at a location on the New Buncombe Road outside of the corporate limits of Greenville, South Carolina. When Garblik and his family purchased the company in May 1955 Garblik became the new president and sole manager. In late 1955 Garblik sought to locate the plant in a larger structure, selecting a location at 2-6 Rutherford Street, within the corporate limits of the City of Greenville. City Fire Department objections to the processing of Greenville's flammable goods within the city limits interrupted the lease negotiations, but were overruled by the City Building Commission upon agreement by Greenville's lessor to install a sprinkler system and make other improvements on the premises. Greenville subsequently occupied the Rutherford Street building and commenced operations on or about December 1, 1955.

At this time Greenville was engaged solely in the processing, sorting and packing of textile remnants. The principal types of fabrics handled by Greenville included acetates, rayon acetates, orlons, dacron and cotton blends, nylon and viscose blends, viscose and acetate blends, acetate and cotton, viscose and cotton, and cotton. To prepare the textile remnants for sale, the defective and soiled parts were torn or cut away from the merchantable fabric, and the remaining pieces, along with the nondefective remnants, were sorted into bins according to their general types and grades. When the bins became sufficiently full, they were removed and the fabric was then either packed in paper cartons or more generally baled in power presses. When baled, paper was wrapped around the outer sides of the remnants, and a burlap covering was secured about the outside with metal bands.

The Rutherford Street plant was built on three levels. The first, which faced Rutherford Street, contained the offices. The second, which was several feet lower and behind the first level, consisted of a large room approximately seventy by eighty feet in size, equipped with twenty-three large bins for use in the sorting operation. The third level, which dropped several feet behind the second, measured approximately twenty-one by forty-two feet in area, was equipped with a scale and two baling presses, and was used for the packing and storage of the remnants. There was a brick wall separating the second and third levels with three openings therein measuring, respectively, twelve by twelve, nine by nine, and nine by four feet. A wooden ramp connected the second and third levels at the largest opening in the brick wall, and wooden steps connected the various levels at all other passageways.

On the day of the fire, January 13, 1956, the third level storage area was filled to within fifteen bales of capacity with bales stacked end on end, one against the other, from the wall out into the work area. An aisle of about six feet in width was left in the center of the third level, and an area of approximately twelve square feet was open around the baling presses and the scales. Boxes of recently received rayon remnants were stacked on top of the bales lining the aisleway. Throughout the day three men worked in this area, and on the second level the women employees sorted and processed remnants under the supervision of one Alfred D'Ambrosio. On the first level Garblik worked along with his secretary and the bookkeeper. At five o'clock that evening the employees left work, with Garblik and D'Ambrosio being the last to depart. Garblik was to drive D'Ambrosio home and, on leaving the plant, the two walked to the parking lot on the north side of the building and entered Garblik's automobile. Deciding to have a beer after they had gotten into the car, Garblik then drove around the plant and parked in a small lot on the south side of the building, from which point they walked to an establishment across the street from the plant. After finishing their beer they returned to the car, but before entering it D'Ambrosio walked down an alley behind the plant allegedly to investigate a shed adjacent to the building. After D'Ambrosio returned to the car, the two men proceeded to a service station located approximately nine-tenths of a mile from the plant in the opposite direction from D'Ambrosio's home. After the car had been serviced, Garblik and D'Ambrosio drove back towards the plant, stopping and parking in front of another restaurant across from the plant where they had a coffee. After the coffee was finished, the day being rather cold and windy, Garblik, accompanied by D'Ambrosio, re-entered the plant building so that Garblik might obtain his overcoat. When this was done they departed for D'Ambrosio's home at approximately five-thirty or five-thirty-five, the time by their own reckoning being based on their prior activities.

Within approximately ten minutes of their final departure from the plant, one Henry Irby, a grocery delivery boy, noticed a small white fire in the third level as he walked down the alley behind the plant. Irby immediately proceeded up the alley to report the fire to his employer, Philip Howard. Rushing to the back of his store, Howard saw the rear of the Greenville plant enveloped in an explosion which shattered its windows with a "whooshing noise" and shot flames forty to fifty feet into the air and out onto the ground. Howard telephoned the City Fire Department and, on receipt of the alarm at five-fifty-four, fifty to sixty firemen were dispatched to the site. When they arrived the entire third level was enveloped in flames, the fire billowing out of the windows and coming from between and under the stored bales. The fire in this area burned out of control for thirty to forty minutes. All of the doors and windows of the plant were securely locked and entrance in every instance had to be obtained forcibly. After approximately twenty minutes, one fireman attempted to enter the third level through a broken doorway but was shortly overcome by the unusual fumes. Although the main part of the conflagration was in the third level, a separate and distinct fire was burning in the bottom of a sorting bin in the second level, adjacent to the partition wall of the first level. A blackened and burned trail was discovered on the floor leading from the second level down the ramp into the third level.

Garblik had just arrived at the D'Ambrosio home when he heard the car radio announcement of the fire, and he immediately returned to the plant. Later that evening he returned to the plant and his office to retrieve a "valuable paper" assertedly left about his desk and worth fifteen thousand dollars. This document was never identified or explained.

As a result of the fire, Greenville's entire remnant inventory was either burned or severely damaged. The building's wooden overhead beams, the wooden ramp from the second to the third level, some of the wooden partitions, and the skylights and the roof had to be replaced, and the metal baling presses were so damaged as to have only junk value. Six months after the fire, a petition in bankruptcy was filed against Greenville and on July 25, 1956, Greenville was adjudged bankrupt, the plaintiff being duly elected trustee. The insurance policies upon which the plaintiff then brought this action covered a risk in the aggregate amount of $150,000.

By an order of the District Court and with the consent of all parties, the cause was referred to a Special Master for the taking of testimony and the determination of all issues of law and fact. The trial commenced before the Master on January 14, 1959, and continued through February 5, 1959. After this trial and the transcription of testimony, the filing of briefs and presentation of oral arguments, the Master filed his report sustaining the affirmative defenses of fraud and false swearing and of arson. The plaintiff filed objections thereto and, after the submission of briefs and argument to the District Court, judgment was entered for the defendants sustaining the...