Firemen's Ins. Co. v. Lasker

• Decision Date: 22 March 1927
• Docket Number: No. 7611.,7611.
• Citation: 18 F.2d 375
• Parties: FIREMEN'S INS. CO. v. LASKER et al.
• Court: U.S. Court of Appeals — Eighth Circuit

18 F.2d 375 (1927)

FIREMEN'S INS. CO. v. LASKER et al.

No. 7611.

Circuit Court of Appeals, Eighth Circuit.

March 22, 1927.

Frederick D. Silber, of Chicago, Ill. (Andrew H. Scott and Verne McMillen, both of Little Rock, Ark., and Clarence J. Silber, of Chicago, Ill., on the brief), for appellant.

George A. McConnell, of Little Rock, Ark. (G. De Matt Henderson, of Little Rock, Ark., on the brief), for appellees.

Before LEWIS and VAN VALKENBURGH, Circuit Judges, and PHILLIPS, District Judge.

PHILLIPS, District Judge.

This is an appeal from a decree in a suit in equity brought by Myron B. Lasker (hereinafter called the plaintiff) against the Firemen's Insurance Company (hereinafter called the defendant) to reform a use and occupancy insurance policy, and recover for a loss under the policy as reformed. It was originally commenced as an action at law. After the defendant filed its answer, the plaintiff filed an amended complaint, in which he alleged that the provision in the policy of insurance with reference to the liability for partial suspension, because of a mutual mistake of the parties, failed to express the contract agreed upon and intended, and prayed for reformation of the contract. The trial court thereupon entered an order transferring the cause to the equity docket.

On June 25, 1921, the plaintiff took out three use and occupancy insurance policies, each for the sum of $10,000. Each policy, computed on a basis of 300 working days in the year, provided a maximum daily total suspension loss indemnity of $33.33. Renewal policies were taken out in the years 1922 and 1923, and the loss occurred on April 11, 1924. This suit is upon one of such renewal policies issued by the defendant. The portions thereof material to this inquiry read as follows:

"The conditions of this contract are that if the building, described above, and/or machinery and/or equipment or stock (insert `and/or stock' if covering liability for suspension of business due to damage to, or destruction of stock, otherwise policy shall not so cover) contained therein, be destroyed or damaged by fire occurring during the term of this policy so as to necessitate a total or partial suspension of business, this company shall be liable under this policy for the actual loss sustained of net profit on the business which is thereby prevented, and such fixed charges and expenses pertaining thereto as must necessarily continue during a total or partial suspension of business and such expenses as are necessarily incurred for the purpose of reducing the loss under this policy, * * * subject to the following conditions and limits, to wit:

"Total Suspension Clause: The per them liability under this policy during the time of total suspension of business of all the properties described herein shall be limited to the `actual loss sustained,' not exceeding 1/300 33.33 of the amount of this policy for each business day of such suspension, due consideration being given to the experience of the business before the fire and the probable experience thereafter.

"Partial Suspension Clause: The per diem liability under this policy during the time of partial suspension of business shall be limited to the `actual loss sustained,' not exceeding that proportion of the per diem liability that would have been incurred by a total suspension of business which the actual per diem loss sustained, during the time of such partial suspension, bears to the per diem loss which would have been sustained by a total suspension of business for the same time of all properties described herein, due consideration being given to the experience of the business before the fire and the probable experience thereafter."

The amended complaint contains, among others, the following allegations:

"Plaintiff states that at the time he purchased and paid for said insurance that he purchased the same from W. B. Worthen Company, bankers, of Little Rock, Arkansas, agent for the defendant herein, and also agent for the insurance companies issuing the other two policies above referred to. Said agent solicited the business from the plaintiff, and stated to the plaintiff that he ought to purchase an amount of insurance which would be sufficient to pay him in case of fire on account of the loss of use and occupancy of his business, the sum of $100 per day, or such portion of said $100 per day as his actual loss would be in the case of partial suspension; that said agent represented to the plaintiff that he should purchase an aggregate of $30,000 of insurance, in order to procure such use and occupancy protection, and this the plaintiff agreed to do and ordered the same from said agent, and said agent represented and stated to the plaintiff at the time of the issuance of said policies to the plaintiff that the insurance which it procured for him in the defendant company, together with the other two policies referred to, which were of like terms and amount, would pay him for use and occupancy loss in case of fire an amount not to exceed $100 per day in the event of total suspension, and that in the event of partial suspension it would pay him his actual loss not to exceed the sum of $100 per day." (Italics ours.)

Plaintiff also filed a pleading, which he denominated "Response to Motion of Defendant to Make More Specific," in which he alleged that he suffered a partial suspension for 121 days, resulting in an actual loss of $84.11 per day, or a total of $10,177.31, and that he paid out for expenses necessarily incurred for the purpose of reducing the loss $310.78, and that in the negotiation with the adjusters he agreed that, if the suspension had been total during the period of 121 days, the actual per diem loss would have been $275.92 per day.

The terms of the policy defining the liability for partial suspension of business provided that it should be such proportion of the maximum per diem liability, as the amount of the actual loss resulting from the partial suspension would be of the amount of the loss which would have resulted had the suspension been total. It therefore follows that plaintiff's per diem loss for the partial suspension, computed according to the written provisions of the policy, is such proportion of $33.33 as $84.11 is of $275.92, or $10.16 per day. On this basis, the loss for the 121-day period was $1,229.36. To this amount must be added $103.59, one-third of the expenses incurred for reducing the loss. The total liability under the policy as written, therefore, was $1,332.95. The insurance company admitted its liability for this amount and tendered such sum to the plaintiff. This the plaintiff refused. In its answer, the insurance company denied the allegations upon which the prayer for reformation was based, and renewed its tender of $1,332.95.

The only issues of fact raised by the pleadings were with reference to the question of reformation. On these issues, the plaintiff testified in his own behalf, in part, as follows:

"At the time I took out this U. and O. insurance I had carried $50,000 worth of insurance on my machinery, and upon the suggestion of Mr. Newell — he declared that I ought to carry this U. and O. insurance in case of a loss by fire or otherwise, and at that time he explained to me that this policy would cover $100 insurance per day in case of a total loss, and the pro rata of $100 per day in case of a partial loss.

"This policy states it is for $33.33 per day, and I had two other policies for a like amount aggregating $100 a day use and occupancy loss.

"As I stated, Mr. Newell declared to me that $100 a day insurance covered in these three...