D.I. Felsenthal Co. v. Northern Assur, Co.

• Decision Date: 02 October 1918
• Docket Number: No. 11746.,11746.
• Citation: 120 N.E. 268,284 Ill. 343
• Parties: D. I. FELSENTHAL CO. v. NORTHERN ASSUR, CO., LIMITED, OF LONDON.
• Court: Illinois Supreme Court

284 Ill. 343

120 N.E. 268

D. I. FELSENTHAL CO.

v.NORTHERN ASSUR, CO., LIMITED, OF LONDON.

No. 11746.

Supreme Court of Illinois.

June 20, 1918.

Rehearing Denied Oct. 2, 1918.

Appeal from First Branch Appellate Court, First District, on Appeal from Municipal Court of Chicago; Hosea W. Wells, Judge.

Action by the D. I. Felsenthal Company against the Northern Assurance Company, Limited, of London. From a judgment of the Appellate Court (205 Ill. App. 610) affirming a judgment for defendant, the plaintiff appeals. Affirmed.

Landon & Holt and John J. Beilman, all of Chicago (Robert N. Holt, of Chicago, of counsel), for appellant.

Paden & Kropf, of Chicago, for appellee.

DUNCAN, C. J.

The D. I. Felsenthal Company, a corporation, brought suit in the municipal court of Chicago, for the use of Charles R. Carpenter, against the Northern Assurance Company, Limited, of London, appellee, on a fire insurance policy issued in favor of said corporation, appellant. Two defenseswere interposed by appellee: (1) That the policy became void because gasoline was kept, used, or allowed on the premises, contrary to the terms of the policy; (2) that said gasoline was fraudulently, knowingly, and purposely ignited by said corporation, its officers, agents, and employés, in such manner as to cause the fire and for the purpose of causing the fire and destroying the property. The jury found the issues against the plaintiff, and after overruling the motions for new trial and in arrest of judgment the court gave judgment for appellee and against appellant. On appeal the Appellate Court affirmed the judgment, and the cause comes to this court on appeal on a certificate of importance.

The undisputed facts in this record are that appellant is an Illinois corporation capitalized at $15,000. The entire capital stock of 150 shares was up to the fall of 1910 owned in equal portions by David I. Felsenthal and Harry Felsenthal, brothers, and their father, Isaac Felsenthal. The corporation was engaged in the wholesale business of dealing in tailors' clippings, and had its warehouse and assorting rooms in leased buildings located at 902-904 South Morgan street, in Chicago, consisting of a three-story brick building with a small barn in the rear. In the fall of 1910 appellant was indebted to the Ft. Dearborn National Bank in the sum of more than $20,000, and was called on by the bank for the payment of the debt. David I. Felsenthal went to Morris L. Fox, an old friend of the Felsenthal family, a dealer in metal at Racine, Wis., and doing an extensive business with Chicago dealers, and induced him to come to the financial assistance of appellant. An inventory of the property of appellant was taken, and Fox went into the company about December, 1910, as finance man, not pretending to have any particular knowledge of the particular merchandise handled by appellant. Fox did not purchase any of the stock of appellant, but for his financial aid was given half of the stock outright,and the three Felsenthals retained 25 shares each, which were assigned in blank and delivered to Fox, as expressed by David I. Felsenthal in his testimony, so that he would have full control, and so he would know just where his money went. Fox took 50 of the shares given to him in his own name, and took the other 25 shares in the name of Nate I. Silver, his brother-in-law, who, so far as the record shows, paid nothing for the stock taken in his name. About January, 1912, another inventory of the property of appellant was made. On February 20, 1912, David I. Felsenthal and Harry Felsenthal became connected with B. Cohen & Sons, of Chicago, who were also engaged in the tailors' clippings business, and ceased their active connection with the business of appellant, but continued to be officers of appellant. Shortly before that D. I. Felsenthal spoke to Fox about going in business with Cohen & Sons, and proposed to Fox that they close up the business of appellant and sell out the material and stock and pay Fox the money owed him by appellant, and told him that he thought that Cohen & Sons would pay him whatever the stock was worth; that he (Fox) could get his money out of the concern, and that they could divide up what was left. Fox said that he liked the business and wanted to stay in it; that he had no objection to David and his brother going with Cohen & Sons, but wanted further guaranty of them that he would get his money out of the business. He then required each of the Felsenthal brothers to give him their individual note for $15,000, and that each brother's note be signed by his wife and indorsed by the other brother, and in addition thereto he required each of said brothers to assign to him his profits in the business of Cohen & Sons. He also still held as security the 75 shares of capital stock in appellant held by the three Felsenthals. On March 7, 1912, about 3 or 4 o'clock a. m., the property of the appellant, consisting of loose and bailed tailors' clippings, was destroyed or damagedby fire. At that time the total amount of insurance on the property of appellant, as found by the appraisers, was $31,500; the total cash value of the property $30,721.42; the total loss and damage $29,471.73; the amount of insurance carried by appellee $1,500; and the amount claimed to be due from appellee on its policy to the appellant was $1,403.42. The amount of sound value and loss and damage was determined by the appraisers largely from information gained from the books of appellant kept by it before the fire and shown to have been made up during the course of the business. The officers of appellant, at the time the fire occurred and for some time prior thereto, were: Morris L. Fox, president; Harry Felsenthal, vice president; David I. Felsenthal, treasurer; and Nate I. Silver, secretary. Ben Silver, another brother-in-law of Fox, was shipping and receiving clerk and kept a record of the goods shipped by and to appellant.

Evidence was produced by appellee in support of its defense tending strongly to prove, in substance, that Morris L. Fox and David I. Felsenthal, about two months prior to the fire, went to the saloon of Moe Rosenberg, then at the corner of Franklin and Van Buren streets, Chicago, and from there went with Rosenberg into the restaurant adjoining the saloon and there had dinner. Fox and Felsenthal there told Rosenberg that they were going out of business and were planning to have a fire at their place. Fox had known Rosenberg from his early boyhood. Rosenberg told them that Ben Fink, who was in the saloon with him, was in the business of firing and destroying buildings and property insured. Rosenberg saw Fink for them and gave them his terms for firing the building and goods in question, to wit, 10 per cent. of the amount of insurance that should be collected from the insurance company, $500 thereof to be paid in advance. They told Rosenberg they had $32,000 or $33,000 of insurance; that they had shipped out some of the stock, but had not canceled any of the insurance; and that they did not know whether any of the policies would hold. Rosenberg then told them he would take up the matter with Fink and have Fink take it up with Nathan Spira, an insurance adjuster, and who was at the fire when it occurred and afterwards appeared as a representative of appellant in adjusting the loss. The burning of the building was agreed to upon paid Rosenberg $500 advance deposit. Rosenberg paid Rosenberg $500 advance deposit. Resenberg afterwards took Fink to the premises of the appellant, and on looking them over Fink directed Rosenberg to buy and put into the premises 75 gallons of gasoline. On the afternoon of March 6, 1912, Rosenberg employed a Russian Jew by the name of Machilinsky, an expressman, to buy the gasoline of Bartell Bros., on Plymouth court, and gave him $15 to pay for and deliver the gasoline at the premises of appellant. Accordingly Machilinsky bought and delivered 15 5-gallon cans of gasoline at the appellant's premises about 6 o'clock that evening, and Rosenberg assisted in unloading the gasoline and storing it in the building from the rear. Fox was at the building, and was informed that the gasoline was there. Fink entered the building about 1 o'clock that morning, cut open the cans of gasoline, scattered the contents on the first and second floors and upon the bales of clips piled upon those floors, set a time fuse, and left the building. The fuse ignited the gasoline, and a raging hot fire, accompanied by explosions, followed as a result of such ignition early in the morning of the same day.

Rosenberg and Fink were witnesses for appellee and testified to the above facts. Machilinsky corroborated them as to the buying of the gasoline and the delivery thereof to Rosenberg at the building. A number of the members of the fire department of Chicago further corroborated their evidence by testifying that they noted a strong odor of gasoline on the first and second floors of the building while assisting in the work of putting out the fire,...