Connecticut Fire Insurance Company v. Ferrara

• Decision Date: 02 June 1960
• Docket Number: No. 16051.,16051.
• Citation: 277 F.2d 388
• Parties: CONNECTICUT FIRE INSURANCE COMPANY and Hawkeye-Security Insurance Company, Appellants, v. Anthony FERRARA, Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

277 F.2d 388 (1960)

CONNECTICUT FIRE INSURANCE COMPANY and Hawkeye-Security Insurance Company, Appellants, v. Anthony FERRARA, Appellee.

No. 16051.

United States Court of Appeals Eighth Circuit.

April 22, 1960.

Rehearing Denied June 2, 1960.

Glenn E. McCann, Kansas City, Mo., for appellants.

Joseph S. Levy, Kansas City, Mo., for appellee.

Before GARDNER, VOGEL and VAN OOSTERHOUT, Circuit Judges.

VOGEL, Circuit Judge.

Connecticut Fire Insurance Company and Hawkeye-Security Insurance Company, appellants here, brought suit in the federal District Court for the Western District of Missouri seeking a declaration of their liability under two fire insurance policies issued to the appellee, Anthony Ferrara, in the amount of $5,000 each. Simultaneously the insured initiated an action in the state court of Missouri to recover the full amount of the policies. The state court action was then removed to the federal court and consolidated for the purposes of trial with the declaratory proceedings. The District Court, sitting without a jury, found for the insured and entered a judgment against each insurance company in the amount of $5,000.00 plus interest and costs, from which result this appeal is taken.

The insured property, consisting of a fruit and grocery market in Kansas City, Missouri, was destroyed by fire on September 21, 1955. The proofs of loss filed by the insured contained the following provision:

"The said loss did not originate by any act, design or procurement on the part of your insured, or this affiant; nothing has been done by or with the privity or consent of your insured or this affiant, to violate the conditions of the policy, or render it void; no articles are mentioned herein or in annexed schedules but such as were destroyed or damaged at the time of said loss; no property saved has in any manner been concealed, and no attempt to deceive the said company, as to the extent of said loss, has in any manner been made. Any other information that may be required will be furnished and considered a part of this proof."

The policies in question provided that:

"This entire policy shall be void if, whether before or after a loss, the insured has wilfully concealed or misrepresented any material fact or circumstance concerning this insurance or the subject thereof, or the interest of the insured therein, or in case of any fraud or false swearing by the insured relating thereto."

The insurance companies maintained that the insured had rendered the policies void in that he had falsely sworn that the fire was not due to any act or design on his part and in that he had fraudulently sworn to the values and extent of the property damaged. During the course of the trial the insured was asked on cross examination whether or not on February 14, 1957, he had been convicted in the Circuit Court of Jackson County, Missouri, of the crime of arson in connection with the destruction of the insured premises. An objection to this question was sustained on the grounds that the state court criminal conviction was then on appeal to the Missouri Supreme Court. Thereafter counsel for the insurance companies offered to prove the fact of the conviction, to which the insured's objection was sustained. The District Court then found that, on the basis of the evidence before it, the destruction of the insured premises was not due to the act or design of the insured and that he was guilty of no fraud in valuing the destroyed property.

Subsequent to the entry of judgment and to the filing of the notice of appeal therefrom, the insured's criminal conviction was affirmed by the Missouri Supreme Court. State v. Ferrara, Mo., 1958, 320 S.W.2d 540. The insurance companies thereupon petitioned the District Court to vacate the judgment and to enter judgment for them or, in the alternative, to reopen the proceedings on the grounds that the affirmance of the conviction constituted newly discovered evidence. Because of the previously filed appeal the motion was denied, the District Court stating:

"It is the opinion of the court that the question is now one for determination by the Court of Appeals and not this court."

The central issue presented by this appeal is whether or not a criminal conviction may be considered in a subsequent civil proceeding for the purpose of establishing the truth of the facts upon which it was based. The courts of Missouri have uniformly held that a criminal judgment may not be so used. Sklebar v. Downey, Mo.App., St. Louis, 1926, 220 Mo.App. 5, 285 S.W. 148; Summers v. Rutherford, Mo.App., Springfield, 1917, 195 S.W. 511; Myers v. Maryland Cas. Co., Mo.App., Kansas City, 1907, 123 Mo.App. 682, 101 S.W. 124. The rationale of these and similar rulings of other jurisdictions has been that criminal and civil proceedings differ as to the issues, objects and procedures involved. Additionally, it has been thought that the fact that a judgment of acquittal could not be binding upon the new civil party prevents, upon the principle of mutuality, a converse result having this effect upon the criminal defendant. See, Annotation, 18 A.L.R.2d 1297. It should be noted, however, that each of the Missouri decisions cited involved a civil proceeding brought against the criminal defendant to recover damages for the acts previously found unlawful. We believe that the same rule does not and should not apply where the subsequent civil action is brought by the criminal defendant for the purpose of profiting from his criminal conduct.

In Mineo v. Eureka Security Fire & Marine Ins. Co., 1956, 182 Pa.Super. 75, 125 A.2d 612, the Supreme Court of Pennsylvania held that it was error for the trial court to refuse to admit in evidence in a suit to recover on a fire insurance policy a judgment of conviction against the insured for arson. The court noted that:

"The tendency is to abandon any general rule of exclusion applicable to all criminal judgments, and to approach the problem from the point of view of the particular judgment of conviction * * *", 125 A.2d at page 616,

and found that a rule permitting admission of a criminal conviction was necessary under the circumstances of the instant case as:

"This rule is founded upon the public interest which requires that the laws against crime be enforced, and that courts aid no man in any effort he may make to benefit from his own violation of them. The rule is enforced upon the ground of public policy alone and not out of consideration for the defendant to whom the advantage is incidental. * * *

"The insureds have had their day in court with the opportunity to produce their witnesses, to examine and cross examine witnesses and to appeal from the judgment and to be acquitted unless the evidence established their guilt beyond a reasonable doubt.

"To now permit them to recover for the loss which they have been convicted of fraudulently causing would be against public policy. It would tend to destroy the confidence of the public in the efficiency of the courts; it would stir up litigation that would reopen tried issues; it would impress the public with the belief that the results of trials of the gravest nature were so uncertain that the innocent could not escape condemnation; and it would convince the public that the courts themselves have no confidence in the judicial processes." 125 A.2d at pages 617-618.

Similarly, in Eagle, Star and British Dominions Ins. Co. v. Heller, 1927, 149 Va. 82, 140 S.E. 314, 57 A.L.R. 490, the

Supreme Court of Virginia recognized a distinction between civil proceedings brought against the criminal defendant and those brought by him to take advantage of his criminal act. In reference to the latter, the court stated:

"It is certainly clear in such cases that the plaintiff who is seeking redress in the civil case for the injury, not having been a party to the criminal prosecution, is not bound by its result. We confess our inability to perceive, however, why the accused person himself should not be held either as bound or affected by the result of the prosecution, if adverse to him. He has had his day in court * * *. (140 S.E. at page 316.)

* * * * * *

"* * * To permit a recovery under a policy of fire insurance by one who has been convicted of burning the property insured, would be to disregard the contract, be illogical, would discredit the administration of justice, defy public policy and shock the most unenlightened conscience. To sustain such a judgment would be to encourage and give support to the current thoughtless and carping criticisms of the legal procedure, and to justify the jibe that the administration of the law is (the) only remaining legalized lottery." 140 S.E. at page 323.

This distinction has been recognized in other jurisdictions. Austin v. United States, 7 Cir., 1942, 125 F.2d 816; Rosenberger v. Northwestern Mut. Life Ins. Co., D.C.Kan.1959, 176 F.Supp. 379; Sovereign Camp. W.O.W. v. Gunn, 1933, 227 Ala. 400, 150 So. 491; Fidelity-Phenix Fire Ins. Co. of New York v. Murphy, 1933, 226 Ala. 226, 146 So. 387; North River Ins. Co. of City of New York v. Miletello 1937, 100 Colo. 343, 67 P.2d 625, affirme...