Gechijian v. Richmond Ins. Co.

Decision Date31 January 1940
Citation305 Mass. 132,25 N.E.2d 191
PartiesGEORGE GECHIJIAN v. RICHMOND INSURANCE COMPANY(and nine companion cases [*]).
CourtUnited States State Supreme Judicial Court of Massachusetts Supreme Court

November 7, 1939.

Present: FIELD, C.


Insurance, Fire proof of loss, attempt by insured to defraud insurer, extent of insurer's liability. Fraud. Evidence, Relevancy. Practice, Civil, Jury trial.

Evidence warranted findings that one insured by a Massachusetts policy of fire insurance had not made an overstatement to the insurer of the value of property lost with intent to secure an advantage in determining his loss and therefore that such overstatement was not an attempt to defraud the company barring him from recovery.

An exception to a refusal, at the trial of an action upon a policy of fire insurance, to rule that market value was the fair test of indemnity was overruled where it appeared that the plaintiff prevailed on counts of the declaration based upon an amount of loss which had been agreed upon by the parties.

Instructions, given at the trial of an action upon a policy of fire insurance upon the issue of the value of property lost, so far as material were consistent with the established principle that the extent of the insurer's liability is indemnity for the loss actually sustained.

The evidence at the trial of an action upon a policy of fire insurance not showing that the plaintiff knew that the policy did not make payment of premium a condition to the attaching of the risk evidence was admissible that, after a fire which occurred before payment of premium, he had inquired of the broker who had procured the insurance whether he was insured.

No error appeared in permitting the district chief of the fire department of the municipality where a fire causing a loss under a fire insurance policy had occurred to testify at the trial of an action upon the policy that in his opinion the fire was caused by spontaneous combustion, or in permitting a fire inspector to testify that he saw no evidence of incendiarism.

No error nor abuse of discretion appeared in the allowance of a motion by the plaintiff for a jury at a second trial of an action, where the first trial had begun with a jury and was completed without jury under a stipulation of the parties in which the plaintiff waived his jury claim.

TEN ACTIONS OF CONTRACT. Writs in the Superior Court dated October 17, 1931.

The actions were tried together before Walsh, J.

G. B. Rowell, (A.

R. Berge with him,) for the defendants.

W. J. Killion, (F.

J. Good & K.

P. Hern with him,) for the plaintiff.

RONAN, J. These ten actions of contract are brought against the defendants, who issued fourteen policies insuring the plaintiff against loss by fire to furniture, fixtures, photographic supplies and negatives, which were located in a studio owned and maintained by him in Boston and were damaged by fire on the evening of December 23, 1930. The jury returned a verdict for the plaintiff in each case and the cases are here upon the exceptions of the defendants. There is a second bill of exceptions to the action of a judge other than the trial judge in granting the plaintiff a jury claim under the circumstances hereinafter stated.

There was evidence that the plaintiff had occupied this studio, which was located upon the top floor of a four-story building, for ten years prior to the fire. A tenant on the second floor had moved out, and another tenant, the plaintiff's lessor which occupied the first and third floors, intended to vacate in January, 1931, and had requested the plaintiff to remove from its premises a considerable quantity of photographic mounts or folders contained in wooden boxes which this tenant had permitted the plaintiff to store in the cellar of its premises. This material was placed in the plaintiff's studio within a week before the fire. The plaintiff had received a one-year lease of the top floor about seven days before the fire, but the lease had not been executed at the time of the fire. On account of the fact that he might be the only tenant in the building, the plaintiff deemed it advisable to secure fire insurance and sent for one A. D. Harry, an insurance broker, and told him that he wanted $12,000 insurance on the furnishings and equipment and $3,000 upon the negatives. Harry told the plaintiff to give him "something" that Harry could show to his companies. The plaintiff picked up a piece of paper from the waste basket and wrote a list showing certain furnishings, equipment, materials and negatives, amounting to $14,500. Later Harry told him that he could not insure the negatives but could give him $12,000 on the merchandise. Policies in this amount were delivered to the plaintiff. When informed by Harry that he was unable to procure insurance on the negatives, the plaintiff called in another broker and requested him to place insurance upon the negatives. He informed this broker of the insurance that he had secured from Harry. This broker requested the plaintiff to give him some more insurance on his merchandise. The plaintiff agreed to take additional insurance and policies for $6,000 on the furnishings, equipment and materials and $3,000 on the negatives were issued. Soon after the fire the plaintiff hired one Culbert, an experienced adjuster, to assist him in settling and collecting the amount of the loss. Culbert gave him a blank form and told him to make out a list of the articles that he had in the studio at the time of the fire and to put down the estimated values in the column marked "Value" "what he would have to take and pay to replace them." Culbert said the column headed "Loss" could be left vacant and that, when he and the adjusters inspected the various articles, they "would determine whether there was a total loss on that or only a partial or none at all." The plaintiff put down figures in the value column for each article. Culbert added a few items as partitions, doors and wiring. The total of the figures appearing in the value column of this list was not given but the sum amounted to $27,081. The list contained the statement that "As considerable of the stock, etc. has been burned out of sight, this list is presented as being to the best of the owner's memory." At the trial the plaintiff testified that the fair value of the goods contained in the list was $20,000 to $21,000; that he did not put down any figures as to the loss; that he did not expect the insurance company to pay the amount set forth in the value column; that he did not understand that he was making any claim against the companies for that amount but he understood that the adjusters would meet, decide what his merchandise was worth and determine his loss. This list was given to a representative of the insurance companies on January 7, 1931. Various conferences between the adjusters were held and, on March 7, 1931, a value and loss memorandum setting forth the sound value of stock, fixtures and negatives as $15,000 and the total loss as $13,000 was executed by the adjusters of the plaintiff and the defendants. An adjuster for one of the companies requested the plaintiff's signature. The plaintiff demurred to signing the memorandum until he was informed by his adjuster that the adjuster for this company had said in substance that the statement of the sound value would make no difference so long as the plaintiff was paid $13,000. Later, the plaintiff executed and delivered to the defendants proof of loss with figures corresponding to those in the memorandum. The plaintiff recovered on a count in his declaration seeking recovery from each defendant of its pro rata of this total settlement of $13,000.

The principal contention of the defendants is that the submission of this list with the values thereon by the insured to the insurers constituted, as matter of law, an attempt to defraud the insurers, and that, as the policies were in the standard form, containing the provision that they would be void "if the insured shall make any attempt to defraud the company, either before or after the loss," the insurers were thereby relieved from any liability and consequently the judge should have granted the motions for directed verdicts.

The law of this Commonwealth is settled that the furnishing to the insurers by the insured of a statement of values that he knows to be false, for the purpose of securing an advantageous position in the settlement of the loss, is a fraudulent design which constitutes an attempt to defraud within the provisions of the standard policies and vitiates such contracts of insurance even though the insured may not have intended to secure more than his actual loss. That was decided when this case was here before. Gechijian v. Richmond Ins. Co. 298 Mass. 487 . That decision rested upon the finding of the trial judge that the plaintiff "knowingly exaggerated the sound value of the property in order to be in a more advantageous position to be paid for the real loss suffered but not with the intent to defraud the insurers" (page 488). This established principle of law is decisive if the evidence presented at the second trial is incompatible with any reasonable conclusion other than that the plaintiff made an attempt to defraud the defendants. And this is so, although the burden of proof rested upon the defendants to show the existence of such an attempt. Pigeon v. Massachusetts Northeastern Street Railway, 230 Mass. 392 . Hurd v. Eastern Massachusetts Street Railway, 254 Mass. 204 . Mailhot v. New York, New Haven & Hartford Railroad, 273 Mass. 277 . Daignault v. Berkshire Street Railway, 277 Mass. 227 . Brennan v. Schuster, 288 Mass. 311 . We must take that view of the evidence most favorable to the plaintiff in deciding if there was...

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