German American Ins. Co. v. Fuller

• Decision Date: 12 July 1910
• Citation: 110 P. 763,26 Okla. 722,1910 OK 215
• Parties: GERMAN AMERICAN INS. CO. v. FULLER.
• Court: Oklahoma Supreme Court

110 P. 763

26 Okla. 722, 1910 OK 215

GERMAN AMERICAN INS. CO. v. FULLER.

Supreme Court of Oklahoma

July 12, 1910

Syllabus by the Court.

Books showing "all purchases and sales, both for cash and credit," within the meaning of a covenant and agreement in a policy of fire insurance requiring the insured to keep a set of books showing a complete record of business transacted, including all such purchases or sales, need only be such as will fairly show these matters to a man of ordinary intelligence.

Evidence examined, and held not sufficient to show substantial compliance with "fireproof safe" clause in fire insurance policy.

Where the assured in a policy insuring a stock of merchandise against fire agrees to keep his books in a fireproof safe at night and at all times when his place of business is not open for business or to keep them in some secure place not exposed to a fire, which would destroy the house wherein he kept said stock for sale, he cannot recover on said policy for a loss incurred if such books, inventories, etc., as he kept were destroyed at night while kept on a counter or in drawers in said building, instead of in said safe.

Error from District Court, Pontotoc County; Joel Terrell, Judge.

Action by R. H. Fuller against the German American Insurance Company. From a judgment in favor of plaintiff, defendant brings error. Reversed and remanded.

Clinton A. Galbraith and Tom D. McKeown, for plaintiff in error.

Duke Stone, for defendant in error.

KANE J.

This was an action on a fire insurance policy, commenced by the defendant in error, plaintiff below, against the plaintiff in error, defendant below. The petition alleged a total loss of the property by fire, a compliance with the terms of the policy by the plaintiff, a demand for payment, and refusal. The answer contained a general denial of the allegations of the petition, except the facts specifically admitted, namely the incorporation of the defendant, the issuance of the policy, its amount, and the loss of the property. By way of affirmative defense, the answer alleged breaches of the contract of insurance by the plaintiff, in that he failed to keep and produce after the fire an itemized inventory of his stock and a cashbook, showing sales for cash and on credit and an inventory of the goods purchased since the last inventory, and failed to keep these books in an iron safe at night and when his store was not open for business, and that by reason of these breaches of the contract an action could not be maintained thereon. The reply was a general denial. Upon trial to a jury a verdict was returned in favor of the plaintiff, upon which judgment was entered, to reverse which this proceeding in error was commenced.

The plaintiff in error assigns a great many errors, but the principal grounds upon which they base their right to a reversal are: That the plaintiff failed (1) to preserve the last inventory of his stock and to produce it after the fire, as he agreed to do in his contract of insurance; and (2) that he failed to keep and preserve a cashbook showing sales for cash and on credit, as he agreed to do in his contract of insurance, by keeping such books and inventory and also the last preceding inventory securely locked in a fireproof safe at night, etc. The following are the covenants of the contract necessary to be noticed to pass upon the questions raised: "The following covenants and warranties on the part of the assured and conditions on the part of the -- Insurance Company, of --, are hereby made a part of the policy to which this clause is attached: 1st. The insured will take an itemized inventory of the stock hereby insured at least once in each calendar year, and, unless such inventory shall have been taken within twelve (12) calendar months prior to the date of this policy, the same shall be taken in detail within thirty (30) days after said date, or this policy shall be null and void from and after the expiration of said thirty days, and upon demand of the assured, within three months from the date of this policy the unearned premium for the unexpired time of this policy shall be returned. 2nd. The assured will keep a set of books, which shall clearly and plainly present a complete record of the business transacted, including all purchases, sales and shipments of such stock both for cash and credit, from the date of the inventory provided for in the first section of this clause and during the continuance of this policy. 3rd. The assured will keep such books and inventories, and also the last preceding inventory, securely locked in a fireproof safe at night, and at all times when the building mentioned in this policy, or the portion thereof containing the stock described therein, is not actually open for business; or, failing in this, the assured will keep such books and inventories at night, and at all such times, in some place not exposed to fire which would ignite or destroy the aforesaid building; and, in case of loss, the assured specifically warrants, agrees, and covenants to produce such books and inventories for the inspection of said company. In the event of a failure on the part of the assured to keep and produce such books and inventories for the inspection of said company, this entire policy shall become null and void, and such failure shall become a perpetual bar to any recovery thereon." The policy was executed prior to statehood and while the laws of Arkansas were in force in the Indian Territory, and is an Arkansas contract.

Counsel for defendant in error does not claim that there was a literal compliance with the foregoing clauses of the policy but contends that "there was such a substantial compliance with the 'iron-safe clause' in the case at bar to entitle the plaintiff to recover." Prior to the enactment of the act of March 29, 1899 (Kirby's Dig. § 4375a), by the Legislature of the state of Arkansas, the "iron-safe clause" in fire insurance policies was held by the Supreme Court of that state to constitute a promissory warranty, and a strict compliance with the terms thereof was declared necessary to entitle the assured to recover thereon. Pelican Insurance Company v. Wilkerson, 53 Ark. 353, 13 S.W. 1103; Western Assurance Company v. Altheimer, 58 Ark. 565, 25 S.W. 1067; Southern Insurance Company v. Parker, 61 Ark. 207, 32 S.W. 507. On the first contention of counsel for plaintiff in error, the rule to determine the duty of the insured in relation to keeping books, etc., is stated by the Supreme Court of the United States in Liverpool & London & Globe Insurance Company v. Kearney et al., 180 U.S. 132, 21 S.Ct. 326, 45 L.Ed. 460, as follows: "Books showing 'all purchases and sales, both for cash and credit,' within the meaning of a covenant and agreement in a policy of fire insurance...