Commercial Bank v. Fireman's Ins. Co. of Dayton, Ohio

• Decision Date: 16 March 1894
• Citation: 58 N.W. 391,87 Wis. 297
• Parties: COMMERCIAL BANK v. FIREMAN'S INS. CO. OF DAYTON, OHIO.
• Court: Wisconsin Supreme Court

87 Wis. 297

58 N.W. 391

COMMERCIAL BANK

v.FIREMAN'S INS. CO. OF DAYTON, OHIO.

Supreme Court of Wisconsin.

March 16, 1894.

Appeal from superior court, Milwaukee county; J. C. Ludwig, Judge.

Action by the Commercial Bank against the Fireman's Insurance Company of Dayton, Ohio, to recover a sum agreed on, on an adjustment of a loss by fire. From a judgment for defendant, plaintiff appeals. Reversed.

The other facts fully appear in the following statement by NEWMAN, J.:

The defendant is a fire insurance company. On January 26, 1891, it issued a policy of insurance to the Island Sash & Door Company, on its factory, and stock in its dry kilns and warehouse, and lumber in the yard, for the amount of $1,000. On the 7th day of June, 1891, a loss occurred. On the 18th day of June, 1891, the loss was adjusted at $691.88, which sum the defendant promised to pay. Afterwards, the Island Sash & Door Company sold the claim to the plaintiff. The action is on the adjustment, to recover the sum agreed upon. The defense is that the Island Sash & Door Company had procured such adjustment of loss by fraud practiced upon the adjusters; that such adjustment had been based upon an inspection of the books of the insured, which had been altered and falsified for the purpose of deceiving the adjusters, and which did deceive them as to the amount of the loss; and that the insured suppressed an inventory of its stock for the purpose of defrauding the defendant. It was conceded on the trial that an account, which is called by the witness the “manufacturing account,” had been changed after the fire, by erasure and overwriting, so as to be reduced by the sum of $13,000, and the lumber account had been increased by the same sum. The insured, while admitting the alteration, claimed that it was made for the purpose of showing more truly the amount of property on hand at the time of the loss, and that that was its effect. It was not decided, or submitted to the jury, whether the effect of the alteration was to approximate it more nearly to the true condition of the business. There was evidence which tended to show that that was its effect. It was also controverted upon the trial whether the insured suppressed an inventory of the manufactured stock taken in January, 1891. This inventory was produced on the trial. It is not claimed that it showed a different state of facts from those apparent by the books used at the adjustment. There was a special verdict as follows: “First Question. Had the manufacturing account upon the books of account of the Island Sash & Door Company been reduced thirteen thousand dollars, by changing two entries upon the debit side of such account, before it was submitted to the adjusters? Answer (by the Court). Yes. Second Question. Was the lumber account upon the books decreased thirteen thousand dollars upon the credit side before it was submitted to the adjusters? Answer (by the Court). Yes. Third Question. Did the adjusters, in making up the account, rely upon the correctness of the manufacturing account, as submitted to them? Answer. Yes. Fourth Question. Did the adjusters, in making up the adjustment, rely upon the correctness of the lumber account, as submitted to them? Answer. Yes. Fifth Question. Were the adjusters of the defendant ignorant of such alterations at the time of making such adjustment? Answer. Yes. Sixth Question. Did the Island Sash & Door Company make the alterations in the account books for the purpose of deceiving the adjusters, and inducing them to make such adjustment? Answer. Yes. Seventh Question. Was the inventory book containing the inventory of January 1, 1891, withheld or concealed from the defendant at the time and prior to the settlement in question by the Island Sash & Door Company, or any of its officers or agents? Answer. Yes. Eighth Question. If you answer the foregoing questions in the affirmative, were the adjusters induced by the concealment of such inventory to make such adjustment? Answer. Yes. Ninth Question. Do you find for the plaintiff or defendant? Defendant. G. O. Tichner, Foreman.” There was judgment for the defendant on the special verdict, from which the plaintiff appeals.Turner & Timlin, for appellant.

Miller, Noyes & Miller and Geo. N. Wald, for respondent.

NEWMAN, J. (after stating the facts).

The litigated question was whether, by the alteration of the books of the Island Sash & Door Company the defendant was defrauded. The alteration was not denied, nor that the books, as altered, were presented to the adjusters as representing, with substantial correctness, the true condition of the business of the insured at the time of the loss. The case was tried, on the part of the defendant, and submitted to the jury by the court, upon the theory that the alteration of the books, if from a bad motive, was a complete defense against the action on the...