Day v. Home Ins. Co.

• Decision Date: 17 February 1912
• Citation: Day v. Home Ins. Co., 177 Ala. 600, 58 So. 549 (Ala. 1912)
• Parties: DAY v. HOME INS. CO.
• Court: Alabama Supreme Court

58 So. 549

177 Ala. 600

DAY v. HOME INS. CO.

Supreme Court of Alabama

February 17, 1912

Rehearing Denied May 1, 1912.

Appeal from Law and Equity Court, Morgan County; Thomas W. Wert Judge.

Action by J. L. Day, as trustee in bankruptcy, against the Home Insurance Company. From a judgment for defendant, plaintiff appeals. Reversed and remanded.

Sayre J., dissenting in part.

The iron-safe clause is as follows: "The following covenant and warrant is hereby made a part of this policy: (1) The assured will take a complete itemized inventory of stock on hand at least once in each calendar year, and unless such inventory has been taken within twelve calendar months prior to the date of this policy, one shall be taken in detail within thirty days of issuance of this policy, or this policy shall be null and void from such date, and upon demand of the assured the unearned premium from such date shall be returned. (2) The assured will keep a set of books, which shall clearly and plainly present a complete record of the business transactions including all purchases, sales and shipments, both for cash and credit from date of inventory as provided for in the first section of this clause and during the continuance of this policy. (3) The assured will keep such books and inventory and also the last preceding inventory, if such has been taken, securely locked in a fireproof safe at night, and at all times when the building mentioned in this policy is not actually open for business or failing in this, the assured will keep such books and inventories in some place not exposed to fire which would destroy the aforesaid building. In the event of failure to produce such set of books and inventories for the inspection of this company, this policy shall become null and void, and such failure shall constitute a perpetual bar to any recovery thereon."

Special replication C is as follows: "The policy of insurance here sued on was originally written to cover a risk located at lot No. 3, block 2, Main street, Hartselle, Ala subsequent thereto, and on the 2d day of February, 1910, the policy of insurance was transferred by written indorsement thereon so as to cover a stock of general merchandise located in general merchandise warehouse as described in the complaint. That said transfer was made by one Arthur Stephenson, general agent of the company, and that, at the time the transfer was made, said Stephenson had notice that said policy of insurance was to cover goods purchased by said Harmon from wholesale dealers. Said Harmon informed said Stephenson that the insurance rates in the building where the goods covered by said policy of insurance were originally located were so high that he was unable to carry insurance on his stock of goods in said building; that he desired insurance on the goods located in his warehouse, being the warehouse containing the goods on which said policy of insurance was transferred. The said Stephenson, as agent of the defendant, was informed, or had notice of the fact, that said goods would not be kept for sale in said warehouse, and that said goods would remain in the original packages and would not be opened by said Harmon, but that such of said goods would be transferred from said warehouse to said storehouse, as it was necessary for the said Harmon to transfer in the conduct of his real estate business located some distance from said warehouse. That said Stephenson, as agent of the defendant, had notice that said goods would remain in the original packages or boxes in which they were shipped, and would not be opened, and with notice of this fact, and with notice of the fact that by reason thereof it would be impossible to make an inventory of said goods as required by said policy of insurance, the defendant did not make objection to the failure of said W. C. Harmon to make an inventory of said goods as required by said policy, nor did it return to the insured the unearned premiums thereof. The defendant had a reasonable time within which to make such objection and defense, cancellation, and repayment after notice and before the loss occurred."

The demurrers are that no facts are alleged which excuse the assured from taking the inventory which he agreed to take; it is not shown that the defendant knew that the assured could not take the inventory he agreed to take at the time of the consent to the removal of the goods; it is not shown why an inventory could not have been taken of the goods in said warehouse; the assured is not excused from taking the inventory he agreed to take by keeping his said goods in the original packages, and in such condition as rendered the taking of an inventory impracticable; and it is not shown that the defendant or any authorized agent would or did abrogate the provisions of the policy requiring an inventory to be taken.

Tidwell & Sample and E. W. Godbey, both of Decatur, for appellant.

Steiner, Crum & Weil, of Montgomery, and Callahan & Harris, of Decatur, for appellee.

SAYRE J.

Day brought this action, as trustee in bankruptcy of the estate of W. C. Harmon, against the Home Insurance Company on a policy insuring a stock of merchandise against loss by fire. Defense was interposed in the way of a plea setting up a breach of the covenant contained in the "iron-safe clause" of the policy. The covenant will be stated by the reporter. The plea was that the covenant had been broken in this: "That the insured had not taken a complete itemized inventory of stock on hand within 12 calendar months prior to the date of the policy, and failed to take such inventory 30 days after the issuance of said policy." Confessing this plea, plaintiff sought to avoid its effect in several special replications which put forward the propositions, to state them generally in the language of appellant's brief, that where a merchant who has been in business for less than 12 months keeps a part of his stock of goods in a warehouse distant from the store in which he does business, the goods remaining unpacked and in the boxes in which they have been received from jobbers, and being removed from time to time as needed to replenish the active stock on his shelves, the iron-safe clause in a policy of insurance on the stock in the warehouse does not require that an inventory be kept, or, if it does, the requirement is substantially met when the insured keeps all original invoices and a detailed account of all sales.

The circumstances stated as conditions of appellant's first alternative contention are not sufficient to require or permit a declaration that the covenant for an inventory has no office to perform in the policy of insurance. The clause is a perfectly reasonable condition, and is...