Columbian Ins. Co. of Indiana v. Modern Laundry, Inc.
| Decision Date | 21 December 1921 |
| Docket Number | 5838. |
| Citation | 277 F. 355 |
| Parties | COLUMBIAN INS. CO. OF INDIANA v. MODERN LAUNDRY, Inc. |
| Court | U.S. Court of Appeals — Eighth Circuit |
Nathan H. Chase, of Minneapolis, Minn., for plaintiff in error.
Le Roy Bowen, of Minneapolis, Minn. (M. H. Boutelle and A. H. David both of Minneapolis, Minn., on the brief), for defendant in error.
Before SANBORN and STONE, Circuit Judges, and TRIEBER, District Judge.
The plaintiff in error questions the correctness of a portion of the charge of the court to the jury in a trial of an action by the plaintiff, Modern Laundry, Incorporated, against the Columbian Insurance Company of Indiana, a corporation, to recover $10,000 on a policy of insurance against fire for that amount issued to the plaintiff by the defendant on December 16, 1919. The property insured consisted of motors belts, pulleys, and shafting, tables, chairs, typewriters stationery, books of account, soaps, cleaning compounds tools, and implements, and other articles customarily used in the conduct of a laundry. On January 29, 1920, a fire occurred, which destroyed a part and injured other parts of the articles insured. On March 23, 1920, the president and secretary of the laundry company made oath to the correctness and truth of schedules of the value of the articles insured, and of the loss and damage on account of the fire thereto, and served these schedules and their affidavit to the correctness thereof upon the insurance company as a preliminary proof of loss. This verified notice of loss stated the value of the articles insured at the time of the fire to have been $20,131.20, and the damage and loss by the fire thereto to have been $12,100. Upon this verified notice the plaintiff demanded the payment by the insurance company of $10,000. The company refused to pay this amount. Thereupon the laundry company sued upon the policy; the insurance company in its answer denied that the property insured was of any such value as that stated in the verified statement of loss, denied that there had been any such loss or damage thereto caused by the fire as was stated therein, alleged that the policy of insurance provided that it should be void if the insured should make any attempt to defraud the insurer either before or after the loss, and that the laundry company, after the fire, had made such an attempt, in that it had knowingly and willfully greatly overvalued the property insured, and the amount of the loss and damage in its sworn notice of loss. These issues were tried to a jury, which found the loss to the laundry company, plus the interest on the amount of that loss from June 3, 1920, to December 6, 1920, to have been $7,210, while the laundry company's verified notice made that loss $12,100.
There was substantial evidence at the trial that the defendant in error, in its verified notice of the value of the insured property and of the loss and damage, knowingly and willfully greatly overvalued that property, and greatly overstated the damage and loss thereto from the fire, although there was also evidence to the contrary. Evidence was introduced at the trial that before the verified statement was made the insurance company had sent men to the scene of the fire from time to time, and that they had been through a portion, but not all, of the laundry building, and that the adjuster of the insurance company had been through the entire building and had examined every piece of machinery.
In this state of the proof the court charged the jury that if they believed from the evidence that the laundry company, by its officers in the verified statement of loss, knowingly and intentionally made oath to substantial overvaluations of the insured property, or to substantial overstatements of the amount of the loss or damage by the fire, with intent to deceive the insurance company, that would constitute an attempt to defraud the company, and they should return a verdict for the defendant, unless they further found from the evidence that, before the verified notice was served on the insurance company, the latter had investigated and learned the actual value of and the real loss and damage to the insured property, or had had full opportunity so to do, so that the verified statement could not deceive it, but that in case they should find that, before the verified notice was delivered to the insurer, it had investigated and learned the true value of the property and the actual amount of the loss and damage to it from the fire, or had had full opportunity so to do, so that the verified notice could not deceive it, the facts that the laundry company, in that notice had, by its officers, with intent to deceive and defraud the insurance company, knowingly and willfully falsely sworn that substantial overvaluations of the property were the actual values thereof, and that greatly excessive statements of the loss and damage to the property from the fire were the actual loss and damage, did not constitute an attempt to defraud or any defense to this action under the contract in the policy that 'the policy shall be void if the insured has made any attempt to defraud the company either before or after the loss.'
To this charge the insurance company excepted, and it insists that it was erroneous, because the service of the verified intentionally false statement of overvaluation and of the excessive amount of the loss and damage as clearly constituted, under the terms of this contract just quoted, an attempt to defraud, if it did not and could not deceive the insurance company, as if it could have done so and had done so, and that it as clearly constituted an attempt to defraud if that attempt failed to defraud, as it would have done if it had succeeded.
Counsel for the assured met this contention with this argument: Proof of the avoidance of an insurance policy, under a contract therein that it shall be void if the insured attempts to defraud the insurance company, consists of the same indispensable elements as does proof of the avoidance of a policy under a contract that it shall be void if the insured is guilty of fraud or false swearing in his proof of loss or other evidence relating to the value of the insured property or the loss of or damage thereto by the fire; proof of the deceit of the insurer and substantial injury to it by the fraud or false swearing is indispensable to an avoidance of the policy, under the contract that it shall be void for such fraud or false swearing, and the impossibility of such deceit is fatal...
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