Georgia Life Ins. Co. v. Friedman

• Decision Date: 13 October 1913
• Docket Number: 16075
• Citation: 105 Miss. 789,63 So. 214
• Court: Mississippi Supreme Court
• Parties: GEORGIA LIFE INS. CO. v. JOSEPH FRIEDMAN

63 So. 214

105 Miss. 789

GEORGIA LIFE INS. CO. v. JOSEPH FRIEDMAN

No. 16075

Supreme Court of Mississippi

October 13, 1913

APPEAL from the circuit court of Bolivar county, HON. SAM C. COOK Judge.

Suit by Joseph Friedman against the Georgia Life Insurance Company. From a judgment for plaintiff defendant appeals.

The facts are fully stated in the opinion of the court.

Affirmed.

Charles Scott, Sykes & Somerville, for appellant.

We respectfully submit to the court that section seven of the mercantile rider in this insurance policy, clause "A" of same which states that the company is not liable, "if the accounts of the assured are not so kept that the actual loss may be accurately determined therefrom," simply means that the books of account kept by the insured must show in detail the stock of goods he had on hand at the time of the burglary, so that an inventory taken after the burglary will show the exact amount of goods stolen. This clause is similar to what is commonly termed the "iron safe clause" in fire insurance policies, and the intent and meaning of both clauses is simply that the amount of loss must be ascertained from the books, and the reason is to cut off all temptation to the insured to swear falsely. Or, as is well stated in the case of Ins. Co. v Mount, these clauses are "to prevent fraud and for the protection of the rights of their insurance companies."

This clause, embodied in all standard fire insurance policies commonly known as the "iron safe clause" has been held valid, binding, legal and effective by the greatest possible weight of authorities, in all other states, See Home Ins. Co. v. Delta Bank, 71 Miss. 608, 15 So. 952; Etna Ins. Co. v. Mount, 44 So. 162, 15 L.R. A. (N. S.) 471; 28 Cent. Digest Ins., section 853; 11 Decen. Digest Ins., section 335.

The universal holding of these citations and all authorities is that the books of the insured must be kept in intelligible and businesslike shape. Mere typographical errors are overlooked and only a reasonable and substantial compliance with the terms of the policy is required, however, no substitute for the books nor any irregular system will be permitted to supply missing or partial book records. Monger et al. v. Deleware Ins.Co., 79 S.W. 7; Everett-Ridley-Ragan Co. v. Traders Ins. Co., 48 S.E. 918.

Section seven of the mercantile rider of the policy herein sued upon provides that the appellant company shall not be liable "if the accounts of the assured are not so kept that the accurate loss may be determined therefrom." This verbiage is simply a change to accord to a burglary policy instead of the formal "iron safe clause" which latter has been approved and inforced by our own supreme court. The case at bar presents to the court for a ruling the validity and effectiveness of that special clause seven. We are unable to find but two authorities from courts of last resort which show the results of a ruling on clause seven or a similar sentence. The appellate division of the New York supreme court in Pearlman v. Metropolitan Surety Co., 3 N.Y.S. 882, upholds and sustains the legality of a similar clause. Rosenburg v. Peoples Surety Company of N.Y., -- Sup. 257.

The original books of the appellee herein cannot possibly be understood without his explanation of the system he used, if indeed it can be called a system. A cursory reading of the cross-examination of the appellee shows numerous and innumerable instances where appellee could not find invoices for items alleged to have been stolen, where he could find no record of such items on his books at all. The books of appellee show under the name of each jobber from whom he purchased, what bills of goods he bought, and the only records of sale is merely the total cash receipts, which gives absolutely no idea whether two pairs of shoes at five dollars each of ten dozen handkerchiefs at one dollars per dozen had been sold or stolen. Appellee claims that all goods alleged to have been stolen were worth their full invoice price, though according to his testimony, some were purchased in 1909, 1910 and for months or years before the alleged burglary. Almost regardless of the questions asked appellee, he merely remembered the loss and could not show on his books where he found such loss. This we submit is not in any way a compliance with the terms of the poilcy. From an examination of the original books,made a part of the record by order of the court, we feel that your honors will see the absurdity of claiming that these irregular lists of accounts with sundry merchants, compose books from which an accurate estimate of the alleged loss of appellee can be determined.

Counsel for appellee from his last few questions evidently will argue that the invoices should be allowed to substitute and supply any missing items on the books. However, in Monger et al. v. Deleware Ins. Co., supra,the court held that "cash slips" could not be submitted in place of the books. Invoices are not mentioned in the insurance policy, under the terms of which this insurance was written, and cannot be substituted for books.The iron safe clause of the standard insurance fire policies has repeatedly been upheld by our supreme court as valid and binding. Ergo, we submit, that the holdings of the New York courts cited supra that section seven of the policy herein contested was a reasonable agreement and should bind the appellee, who voluntarily made and entered into this insurance contract; as a condition precedent to a recovery thereupon he must keep his books and accounts in such condition that an accurate estimate of the loss can be determined therefrom, and when the insured keeps such books as are here shown we submit that the appellant is relieved. We respectfully submit that these books are not so kept, therefore the nisi prius trial court committed reversible error in overruling motion of appellant to exclude the testimony of appellee and instruct the jury to find for the appellant (defendant).

Whitfield & McNeil, for appellee.

The sole contention of appellant in this case is that the plaintiff, the appellee, violated section 7 of the Mercantile Rider in the policy, which is in the following words: "If the accounts of the assured are not so kept that the actual loss may be accurately determined therefrom," etc. Appellant insists that the court should have given a peremptory instruction for appellant because appellant insists that this clause was violated. A result of all the cases on the iron safe clause, and they are legion, is this, that the purpose of that clause and of section 7, supra, is that such books or accounts shall be so kept as to, enable a man of average intelligence by their use, as explained by testimony, to reasonably reach with certainty an approximate estimate of the actual loss. All the cases taken together state this as their uniform result.

We ask the court to read, first, as containing the very best statement we have anywhere found of the law on this subject. 2 Cooley's Briefs on Insurance, pages 1823, et seq. The whole law is there condemned very briefly and very accurately. Malin v. Ins. Co., 105 Mo.App. 642; Meyer v. Ins. Co., 73 Mo.App. 173; Western Assurance Co. v. Redding, 68 F. 708; Liverpool Ins. Co. v. Kearney, 180 U.S. 136-8; 88 Ill.App. 574; Aetna v. Fitze,78 S.W. 371; Merchants v. Dunbar, 88 Ill. 582; Brown v. Ins. Co., 89 Texas, 594; Western Assurance Co. v. Redding, 68 F. 708; American Central Insurance Co. v. Ware, 65 Ark. 340; 2 Cooley's Briefs, p. 1823; Security Ins. Co.v. Woodson & Co., 116 Am. St. 75; Burnett v. American Ins. Co., 68 Mo.App. 343; First Nat. Bank v. Cleveland,82 S.W. 337; Prudential Ins. Co. v. Alley, 104 Va. 356; Peoples v. Dully Gorham Co., 95 S.W. 152; Virginia Fire Ins. Co. v. Cummings, 78 S.W. 716; Con. Fire Ins. Co. v. Clark, 24 Ohio Cir. Ct. 33; Western Assurance Co. v. Altheimer, 58 Ark. 565; Western Assurance Co. v. McGlatherly, 68 Am. St. 38; Liverpool, etc., Ins. Co.v. Ellington, 94 Ga. 785; McNutt v. Va., etc., Ins. Co., 45 S.W. 61; Liverpool, London & Globe Ins. Co. v. Sheffy, 16 So. 307; Mitchell v. Miss. Home Ins. Co., 18 So. 86; Aetna Ins. Co. v. Mount, 44 So. 162.

These authorities establish the following propositions: 1. That no literal compliance whatever with the iron safe clause is required, but only substantial compliance; 2. That no particular kind of bookkeeping is required. That a country merchant need only keep his...