Coggins v. Aetna Ins. Co.

• Decision Date: 19 February 1907
• Citation: 56 S.E. 506,144 N.C. 7
• Parties: COGGINS v. AETNA INS. CO.
• Court: North Carolina Supreme Court

56 S.E. 506

144 N.C. 7

COGGINS v. AETNA INS. CO.

Supreme Court of North Carolina

February 19, 1907

Appeal from Superior Court, Jackson County; McNeill, Judge.

Action by M. L. Coggins against the Aetna Insurance Company. From a judgment for defendant, plaintiff appeals. Affirmed.

Invoices and entries in a ledger made from them, stating the aggregate value of goods sent from one store to another by the proprietor of both, not in all cases specifying the kind of goods, was not an inventory within the iron-safe clause of a policy of fire insurance making the taking of "inventory" at least once a year a condition precedent to the insurer's liability on the policy.

Civil action to recover on a policy of insurance, tried before McNeill, J., and a jury at May term, 1906, of Jackson superior court. There was evidence tending to show that plaintiff, having conducted for several years a general mercantile business at Fernhurst, Jackson county, N. C., in May, 1904, established a subsidiary business at Erastus, N. C., two miles distant from the other store, and conducted same till the loss hereafter referred to. This second enterprise was carried on in a small storehouse 18 by 25 feet, and a sideroom 7 by 25 feet, making the entire floor space 25 by 25, the house being valued by estimate at $300. In January, 1905, the plaintiff procured a policy of insurance in defendant company on the structure at Erastus, N. C., and the merchandise therein contained, consisting principally of groceries, boots and shoes, and clothing; the amount of insurance on the store being fixed in the policy at $200 and that on the goods at $1,500. On the night of the 17th of April, 1905, the storehouse at Erastus and all the goods therein contained was destroyed by fire, and defendant company, having failed and refused to pay the insurance, the plaintiff, claiming that his loss, by reason of destruction of store was $300 and that the goods destroyed at the time amounted to $2,100 instituted the present action to recover the amount due on the policy. At the close of plaintiff's testimony, on motion of defendant, the action was dismissed as on judgment of nonsuit, and plaintiff excepted, and appealed.

Walter E. Moore, Shepherd & Shepherd, and Coleman C. Cowan, for appellant.

Merrick & Barnard and King, Spalding & Little, for appellee.

HOKE J.

Defendant resists recovery in this case by reason of alleged breach of certain stipulations of the policy comprehended under the general term, the "iron safe clause." These stipulations, as contained in the present policy, are as follows: "1st. The assured will take a complete itemized inventory of stock on hand at least once in each calendar year, and unless such inventory has been taken within twelve calendar months prior to the date of this policy, one shall be taken in detail within 30 days of issuance of this policy or this policy shall be null and void from such date, and upon demand of the assured the unearned premium from such date shall be returned. 2nd. The assured will keep a set of books which shall clearly and plainly present a complete record of business transacted, including all purchases, sales and shipments, both for cash and credit, from date of inventory as provided for in first section of this clause and during the continuance of this policy. 3rd. The assured will keep such books and inventory, and also the last preceding inventory, if such has been taken, securely locked in a fire proof safe at night, and at all times when the building mentioned in this policy is not actually open for business; or, failing in this, the assured will keep such books and inventories in some place not exposed to a fire which would destroy the aforesaid building. In the event of failure to produce such set of books and inventories for the inspection of this company, this policy shall become null and void and such failure shall constitute a perpetual bar to any recovery thereon." And the breach assigned is for violation of the first and second items of the clause, to wit, that the insured made no inventory and kept no books as required by these provisions of the contract. This "iron safe clause," frequently attached to policies of insurance has been very generally upheld by the courts as a reasonable contract limitation on the risk which should be properly borne by the company. Insurance Co. v. Knight, 111 Ga. 622, 36 S.E. 821, 52 L. R. A. 70, 78 Am. St. Rep. 216; Sowers v. Insurance Co., 113 Iowa, 551, 85 N.W. 763; Lozano v. Insurance Co., 78 F. 278, 24 C. C. A. 85; Insurance Co. v. Kearney, 94 F. 314, 36 C. C. A. 265. These decisions and the reasons given to support them are, we think, well considered, and the clause, therefore, when properly made a part of the contract of insurance, will be adjudged with us a valid and binding stipulation.

In the two cases before this court where the question has been raised, Bray v. Ins. Co., 139 N.C. 390, 51 S.E. 922, and Parker v. Insurance Co., 143 N.C. 339, 55 S.E. 717, and in which recovery by the plaintiff was sustained, the fire occurred within 30 days from the date of the policy, and, by the express terms of the contract, the provision known as the "iron safe clause," while incorporated in the policy, had not become effective. In construing this clause the better-considered authorities seem to be to the effect that it should receive a reasonable interpretation, and that only a substantial compliance should be required. Brown v. Insurance Co., 89 Tex. 591, 35 S.W. 1060; Insurance Co. v. Kemendo, 94 Tex. 367, 61 S.W. 1102; Insurance Co. v. Redding, 68 F. 708, 15 C. C. A. 619; Insurance Co. v. Kearney, 94 F. 314, 36 C. C. A. 265; Id., 180 U.S. 132, 21 S.Ct. 326, 45 L.Ed. 460. There are decisions, however, which hold that a literal compliance should be exacted. But, whatever may be the correct rule, there has been no compliance in the present case.

The plaintiff, giving evidence in his own behalf (and his was the only oral testimony produced at the trial), testified as follows: "The defendant's agent asked me in regard to an inventory, and I said to him I did not have an inventory; that I only took an assay of the goods about once a year. He then asked me if I had any inventory of my stock here at home and I told him 'No."D" DD" Record, p. 17. And again, on pages 21 and 22, plaintiff testified further as follows: "Yes; I had another store. The two stores were two miles--maybe a little further--apart. I have been running the other store about six or seven years. The first stock in the new store was made partly out of the old store, the goods were in boxes, and were just carried to the other store. I had moved these goods there in May, 1904. They had been in my other store, and had not been there but just a little bit. They consisted of dry goods, clothing, hardware, tin hardware, groceries, and shoes. I never separated those bills. ...