Central Mfrs. Mut. Ins. Co. v. Jim Dandy Markets

Decision Date15 April 1948
Docket NumberNo. 6833.,6833.
Citation77 F. Supp. 171
PartiesCENTRAL MFRS. MUT. INS. CO. et al. v. JIM DANDY MARKETS, Inc. et al.
CourtU.S. District Court — Southern District of California

Thomas P. Menzies and Harold L. Watt, both of Los Angeles, Cal., for plaintiffs.

Harry G. Sadicoff, of Los Angeles, Cal., for defendant Jim Dandy Markets, Inc.

Hindman & Davis and E. Eugene Davis, all of Los Angeles, Cal., for defendant Fireman's Fund Ins. Co. Clyde Thomas and Milan Medigovich, both of Los Angeles, Cal., for defendant E. F. Smith.

YANKWICH, District Judge (after stating the facts as above).

The above-entitled cause heretofore tried, argued and submitted, is hereby decided as follows:

I. On the plaintiff's complaint seeking declaratory relief, the declaration will be for the defendant as follows:

(a) The defendant Jim Dandy Markets, Inc., had an insurable interest in the building which was covered by the policies of fire insurance dated respectively June 19, 1946, and July 19, 1946, under their conditional sales contract for the assignment of the leasehold, dated June 27, 1946 (Defendant's Exhibit 10).

(b) The loss payable under the policies totaling the sum of $25,000.00 is due from the plaintiffs to the defendant Jim Dandy Markets, Inc., and is not apportionable between the plaintiffs and the defendant Fireman's Fund Insurance Company, under the policy of insurance between the latter company and the defendant and cross-claimant, E. F. Smith, dated July 5, 1945.

II. Under the cross-claim of the defendant E. F. Smith against the defendant Jim Dandy Markets, Inc., a corporation, seeking reformation of that certain assignment of lease, dated June 27, 1946, judgment is ordered in favor of the defendant Jim Dandy Markets, Inc., on the finding that said assignment of lease conveyed to the defendant Jim Dandy Markets, Inc., all the rights, title and interest of E. F. Smith to the leasehold, including all the rights he had to the building thereon, and that there is no showing of mutual mistake in the execution of said assignment.

III. Under the cross-claim of the defendant Jim Dandy Markets, Inc., against defendant E. F. Smith, judgment is ordered in favor of the defendant E. F. Smith, that the defendant and cross-claimant Jim Dandy Markets, Inc., is not entitled to any of the proceeds of the insurance policy issued to the defendant E. F. Smith by the defendant Fireman's Fund Insurance Company.

For the guidance of counsel in preparing the findings, the Court states the grounds for its conclusions.

Comment.

The action being based on diversity of citizenship, the rights of the parties under the policies of insurance and under the assignment of lease are governed by state law. Angel v. Bullington, 1947, 330 U.S. 183, 191, 192, 67 S.Ct. 657. Under California law, the vendee under a conditional sales contract has an insurable interest, as the sole owner of the property. Kaufman v. All Persons, etc., 1911, 16 Cal. App. 388, 117 P. 586; Kavanaugh v. Franklin Fire Ins. Co., 1921, 185 Cal. 307, 311, 312, 197 P. 99. Such title is not, in any way, affected by the fact that the assignment is executory, so far as the vendee is concerned, and is dependent for full execution upon the performance by it of certain condition precedent, i. e., the payment of the full purchase price. For this reason, cases like Vierneisel v. Rhode Island Insurance Co., 1946, 77 Cal.App.2d 229, 175 P.2d 63, relied on by the plaintiffs do not apply. There, the court was dealing with an outright sale of real property which was not to become effective until the deed had actually been delivered. When this is the case, delivery into escrow does not pass title and any loss by fire is payable to the owner who remains, until the delivery of the deed, the sole owner of the property. Here the vendee was in possession and all that remained to be done by him was the payment of the price.

It is also clear, both under California and general law of insurance, that the insurance contracts between the plaintiffs and the defendant Jim Dandy Markets, Inc. and the insurance contract between the defendant E. F. Smith and the defendant Fireman's Fund Insurance Co. are distinct and separate contracts of insurance and are not governed by any apportionment clause contained in them. Or, to be more exact, that the loss which, under the decision now announced, the plaintiffs must pay to Jim Dandy Markets, Inc., is not apportionable between the plaintiffs and the Fireman's Fund Insurance Company. See, Fireman's Fund, etc., v. Palatine Insurance Co., 1907, 150 Cal. 252, 255, 256, 88 P. 907; Newark Fire Insurance Company v. Turk, 3 Cir., 1925, 6 F.2d 533, 43 A.L.R. 496; see also, Insurance Co. of North America v. Detroit & Security Trust Co., 9 Cir., 1931, 51 F.2d 155, 158; Fidelity, etc., Co. v. Firemen's Fund Insurance Co., 1940, 38 Cal.App.2d 1, 5, 6, 100 P.2d 364; Hager v. Hanover Fire Ins. Co. of N. Y., D.C.Mo. 1945, 64 F.Supp. 949, 952.

The relief sought by the cross claim of E. F. Smith is, in like manner, governed by state law. The cross claim charges mutual mistake. Such mistake, to be ground for relief, must be mutual or a mistake of one party which the other, at the time, knew or suspected. California Civil Code, secs. 3399, 3400, 3401; Auerbach v. Healy, 1916, 174 Cal. 60, 161 P. 1157; Harding v. Robinson, 1917, 175 Cal. 534, 541, 542, 166 P. 808; Burt v. Los Angeles Olive Growers Association, 1917, 175 Cal. 668, 675, 166 P. 993; National Bank of California at Los Angeles v. Exchange National Bank, 1921, 186 Cal. 172, 181, 199 P. 1; Coneland Water Co. v. Nickalls, 1925, 75 Cal.App. 212, 218, 219, 242 P. 518; California Trust Co. v. Cohn, 1932, 214 Cal. 619, 627, 7 P.2d 297; Goodfellow v. Barritt, 1933, 130 Cal. App. 548, 556, 20 P.2d 740; Miller v. Lantz, 1937, 9 Cal.2d 544, 71 P.2d 585; California Trust Co. v. Cohn, 1935, 9 Cal. App.2d 33, 40, 48 P.2d 744.

The presumption that a contract expresses the true intention of the parties flows from its voluntary execution. And the burden of showing that it did not conform to such intention rests upon him who seeks to avoid its express terms. See, Welk v. Conner, 1929, 102 Cal.App. 286, 289, 282 P. 963; Oakdale Mercantile Co. v. Baer, 1932, 128 Cal.App. 350, 354, 17 P.2d 779; Menning v. Sourisseau, 1933, 128 Cal. App. 635, 639, 18 P.2d 77; California Trust Co. v. Cohn, 1935, 9 Cal.App.2d 33, 40, 48 P.2d 744.

Evidence warranting reformation must be clear, convincing and "not loose, equivocal, or contradictory, leaving the mistake open to doubt". Burt v. Los Angeles Olive Growers Association, supra, 175 Cal. 675, 166 P. 996, quoting Lestrade v. Barth, 1862, 19 Cal. 660, 675; and see cases cited under the preceding paragraphs. The mistake claimed is alleged to have occurred in the instrument denominated "assignment of lease" and dated June 27, 1946. This instrument assigned, sold and transferred to the individuals now composing the Jim Dandy Markets, Inc. "an indenture of lease dated February 1, 1942, between Thomas H. McClenaghan as...

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2 cases
  • Tri-State Mutual Grain Dealers Fire Ins. Co. v. Morris, 16226.
    • United States
    • U.S. Court of Appeals — Ninth Circuit
    • June 29, 1959
    ...Tri-State, although we doubt if the case should be extended that far. We regard the decision in Central Manufacturers' Mutual Insurance Co. v. Jim Dandy Markets, Inc., D.C., 77 F. Supp. 171, affirmed 9 Cir., 172 F.2d 616, as wholly consistent with Vierneisel. Furthermore, it is entirely pos......
  • In re Kelly, 46164.
    • United States
    • U.S. District Court — Southern District of California
    • August 18, 1949
    ...in the Circuit Court, U. S. v. Jones, 9 Cir., 176 F.2d 278; Cal.Civil Code, secs. 1577, 3399, 3400, 3401; Central Mfrs. Mut. Ins. Co. v. Jim Dandy Markets, D.C.Cal.1948, 77 F.Supp. 171. And Mrs. Bottomfield should be permitted to show, if she can, that a representation was made to her or he......

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