Commonwealth Ins. Co. of NY v. O. Henry Tent & Awn. Co.

• Decision Date: 05 April 1961
• Docket Number: No. 13143.,13143.
• Citation: 287 F.2d 316
• Parties: COMMONWEALTH INSURANCE COMPANY OF NEW YORK, The Continental Insurance Company, Milwaukee Insurance Company of Milwaukee, Wisconsin, and United States Fire Insurance Company, Plaintiffs-Appellants, v. O. HENRY TENT & AWNING COMPANY, a corporation, Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

287 F.2d 316 (1961)

COMMONWEALTH INSURANCE COMPANY OF NEW YORK, The Continental Insurance Company, Milwaukee Insurance Company of Milwaukee, Wisconsin, and United States Fire Insurance Company, Plaintiffs-Appellants, v. O. HENRY TENT & AWNING COMPANY, a corporation, Defendant-Appellee.

No. 13143.

United States Court of Appeals Seventh Circuit.

February 21, 1961.

Rehearing Denied March 27, 1961.

Further Rehearing Denied April 5, 1961.

John P. Gorman, Donald N. Clausen, Herbert W. Hirsh, Jerome H. Torshen, Chicago, Ill., for plaintiffs-appellants.

Morris A. Haft, Haft, Shapiro & Davis, Chicago, Ill., for appellee.

Before HASTINGS, Chief Judge, DUFFY, Circuit Judge, and GRUBB, District Judge.

GRUBB, District Judge.

This is an appeal from a judgment entered in an action for declaratory judgment brought by plaintiffs-appellants to determine the extent of their liability under policies of fire insurance containing a monthly reporting form endorsement. O. Henry Tent & Awning Company (hereinafter referred to as the "Insured") counterclaimed in the suit for the amount of its actual loss. For previous appeals in this case see Commonwealth Insurance Company of New York v. O. Henry Tent & Awning Company, 7 Cir., 1959, 266 F.2d 200 and 7 Cir., 1959, 273 F.2d 163.

On March 31, 1955, The Commonwealth Insurance Company, The Continental Insurance Company, Milwaukee Insurance Company, and United States Fire Insurance Company (hereinafter referred to as the "Insurers") each issued to the Insured an Illinois standard policy of fire insurance with Form No. 111 (Ed. June, 1953) "Multiple Location Reporting Form A, Monthly Average, With Premium Adjustment" attached thereto, for a period of one year, covering stock, materials, and supplies owned by the Insured while located at 3222-24 North Halsted Street, Chicago, Illinois. Total maximum liability in the sum of $50,000.00 was apportioned among the Insurers as follows:

                  Company                                   Percentage of Limit
                                                               of Liability
                  -------------------------------------------------------------
                  The Commonwealth Insurance Company               15%
                  The Continental Insurance Company                15%
                  Milwaukee Insurance Company                      35%
                  United States Fire Insurance Company             35%
                

These policies contain the following provisions:

"Value Reporting Clause — It is a condition of this policy that the Insured shall report in writing to this Company not later than thirty (30) days after the last day of each calendar month, the exact location of all property covered hereunder, the total actual cash value of such property at each location and all specific insurance in force at each of such locations on the last day of each calendar month. At the time of any loss, if the Insured has failed to file with this Company reports of values as above required, this policy, subject otherwise to all its terms and conditions, shall cover only at the locations and for not more than the amounts included in the last report of values less the amount of specific insurance reported, if any, filed prior to the loss, and further, if such delinquent report is the first report of values herein required to be filed, this policy shall cover only at the respective locations specifically named herein and for not exceeding 75% of the applicable limit of liability of this Company specified in the Limit of Liability Clause." (Emphasis supplied.)

"Premium Adjustment Clause — The premium named in this policy is provisional only. The actual premium consideration for the liability assumed hereunder shall be determined, at the expiration of this policy, by application of the following formula:

"`A\' After deducting the amount of specific insurance, if any (not exceeding, however, the amount of value reported), at each location, an average of the total remaining values reported at each location shall be made, and if the premium on such average values at the rate applying at each location herein provided or in the case of locations acquired (see Limit of Liability Clause), the rate used shall be the rate that is applicable to each such location at the time the location was first reported, exceeds the provisional premium, the Insured shall pay to the Insurer the additional premium for such excess; and, if such premium is less than the provisional premium, the Insurer shall refund to the Insured any excess paid."

The Insured has been insured from 1940 through March 31, 1956, under policies of insurance containing a "Value Reporting Clause." The individual Insurers have been carrying the risk, wholly or in part, beginning with the years stated: The Continental Insurance Company, 1940; Milwaukee Insurance Company and United States Fire Insurance Company, 1949; and The Commonwealth Insurance Company, 1953.

On March 28, 1956, a fire occurred at 3222-24 North Halsted Street wherein certain property insured under these policies of an actual value of $32,188.29 was damaged and destroyed. The last report of value prior to the fire was for the month of December, 1955, and was filed on March 21, 1956. It reported a value on the contents located at the insured premises in the amount of $14,360.76. On April 27, 1956, the Insured filed reports of value with the Insurers for the months of January, February, and March, 1956, in the following amounts respectively: $16,726.76, $24,200.44, and $32,188.29. The premium computation in accordance with the Premium Adjustment Clause of the policies in question for the calendar year 1955-1956, resulting in a credit to the Insured, was based on an average value determined by inclusion of the declared March valuation.

At meetings held between the Insurers and the Insured after the fire, the Insurers expressed their willingness to pay to the Insured the amount of $14,360.76, the amount of value last reported prior to the fire, conditioned on a complete release as to further claims by the Insured. On or about February 15, 1957, the Insured filed with the Insurers sworn statements in proof of loss in the amount of $32,188.29, to be prorated among the Insurers according to their respective liability, and made claim for that amount.

Following the fire, the Underwriters Salvage Company of Chicago took custody of the salvageable property pursuant to an Agreement and Direction signed by the Insured's President, B. A. Mendelson. Net return of the proceeds of the salvage is being held in escrow by the salvage company pending determination of ownership and interest...