German-American Insurance Co. v. Brown

• Decision Date: 29 April 1905
• Citation: 87 S.W. 135,75 Ark. 251
• Parties: GERMAN-AMERICAN INSURANCE COMPANY v. BROWN. AETNA INSURANCE COMPANY v. BROWN
• Court: Arkansas Supreme Court

87 S.W. 135

75 Ark. 251

GERMAN-AMERICAN INSURANCE COMPANY v. BROWN.

AETNA INSURANCE COMPANY v. BROWN

Supreme Court of Arkansas

April 29, 1905

Appeal from Crawford Circuit Court JEPTHA H. EVANS, Judge.

Affirmed.

STATEMENT BY THE COURT.

Appellee J. R. Brown, as surviving partner of the firm of McKibben & Brown, composed of appellee and F. R. McKibben, deceased brought separate suits against appellants upon policies of insurance issued by each in the sum of $ 2,000 upon a stock of merchandise situated at Duncan, Ind. Ter. The two cases were tried together, the pleadings and proof being the same in each case, and a verdict was returned in favor of the plaintiff against each of the defendants for the full amount of each policy with interest.

The defendants answered separately, denying each allegation of the complaint, but the only pleaded defenses which were insisted upon at the trial are the following:

First. That McKibben & Brown, at the time they procured the insurance, concealed or misrepresented material facts concerning the value of the property insured.

Second. That appellant Brown was guilty of false swearing in the proofs of loss rendered by him concerning the value of the property.

Third. That McKibben & Brown failed to exercise reasonable care after discovery of the fire, to preserve the property, as required by the terms of the policies.

Fourth. That the property insured was burned by McKibben or Brown or by their connivance and consent.

The last-named defense was settled by verdict of the jury upon conflicting testimony and under proper instructions of the court, and need not be further mentioned.

It appears from the proof that McKibben & Brown both resided at Van Buren, Ark., and on April 15, 1901, entered into a written partnership contract to purchase a stock of merchandise then at St. Paul, Minn., each to furnish one-half of the necessary capital, and to ship the same to Chickasha Ind. Ter., or some other point to be agreed upon, there to engage in the mercantile business. Thereafter McKibben went to St. Paul to purchase the stock, and, after repeated communication between the two, by wire and mail, bought a second-hand stock of goods, which, according to inventory was of the value of $ 7,641.87, but which they purchased for the sum of $ 3,992. One-half of the price was paid by Brown in cash, and the other half by McKibben in money and lands. The goods were shipped to Duncan, Ind. Ter., and on arrival there McKibben & Brown, before the goods were unloaded from the cars, applied for and obtained the insurance policies sued on. This was May 1, 1901, in the afternoon, and, as soon as the policies were issued, they removed the goods to the storehouse which they had rented to do business in. The goods were not unpacked, and before daybreak on the following morning the house and all the goods were destroyed by fire. McKibben slept on a cot in the room adjoining the storeroom (a part of the same building), and, soon after the alarm of fire was sounded by the night watchman of the town, he emerged from the rear door of the building, half dressed and apparently greatly distressed and suffocated. All the witnesses say that he sat upon the edge of his cot not far from the burning building in a helpless condition. Brown occupied a room at a hotel in the town that night, and appeared at the scene of the fire when it was well under way. Rumors were circulated, which came to the ears of McKibben & Brown, charges them with having set fire to the building, and the sentiment is shown to have been divided among the people of the town as to the cause of the fire, and much excitement prevailed. One Carson, who owned the building, openly charged McKibben with having set fire to it, and demanded pay for the value of the same; and McKibben agreed to pay $ 300 for the building when he collected the insurance, but later demanded the signature of Carson to a written agreement concerning the payment, reciting that McKibben promised to pay the amount to prevent blackmail.

The adjuster of appellants reached Duncan on May 6, and made an appointment with McKibben & Brown to meet the next morning to adjust the loss; but McKibben failed to meet the appointment, and was found during the day in a dying condition, having self-inflicted fatal wounds, from which he died in a few hours.

Subsequently Brown rendered proofs of loss to appellants, in which he set forth, under oath, the value of the goods to be the amount of the inventory, $ 7,641.87.

When McKibben & Brown applied for and obtained the insurance, they first stated to the agents of appellants who wrote the policies that they had a stock of goods worth about $ 8,000, and wanted $ 4,000 insurance, and later presented the inventory to the agents. They did not mention the fact that the goods were bought second-hand, nor the price they had paid. Other material facts proved are referred to in the opinion.

The court, of its own motion, instructed the jury, over the objections of the defendants, as follows:

"A. If Brown or McKibben, or either of them, knowingly made to the agents of the insurance companies a false and fraudulent statement of the value of the property to be insured, in order to procure the insurance, then the plaintiff cannot recover, and you should find for the defendants; but a misstatement of such value made in good faith, believing the same to be true, would not avoid the insurance.

"B. If Brown in the proofs of loss knowingly made a false and fraudulent statement of the value of the property destroyed by fire, then he cannot recover; but a misstatement of such value made in good faith, believing the same to be true, will not avoid the policy.

"C. If Brown and McKibben, or either of them, set fire to and burned the property insured, or intentionally caused the same to be done, the plaintiff cannot recover.

"D. If Brown and McKibben, or either of them, made any false and fraudulent statement as to matters of fact material to the risk to the agents of the insurance companies, or fraudulently suppressed any matter of fact material to the risk, in order to procure the insurance, then in such case the plaintiff cannot recover; but the mere omission to state that the stock was second-hand, or that they had bought it at a discount of forty-eight per cent., would not be sufficient to avoid the insurance, unless the same was done with intent to defraud.

"E. By 'cash value' is meant the cash market value at the time and place where the property was situated, and where the fire occurred, if there was such a market value. If there was no such market value there, then the cash value in the nearest adjacent market; or, if that is not shown, then the intrinsic value of the property. In determining the cash market value at the time and place where the fire occurred, you may consider the intrinsic value of the property; what value, if any, it had in other adjacent markets; the ease or difficulty of transporting it from place to place; the demand or lack of it for such property; that it was second-hand, if it was such; the deterioration, if any, from value at first hand; the price paid for it by plaintiff and McKibben; the opinion of witnesses who knew the market or other value, if such are in evidence; and all other facts and circumstances in evidence tending to show the value. Prospective and unrealized profits are not to be taken into consideration, but realized profits may be taken into consideration.

"F. If you find for the plaintiff, you will ascertain the actual cash value of the stock destroyed, take three-fourths of it, and divide that equally between the two policies; but in no event can you find against the defendants more than $ 2,000 each, exclusive of interest, no matter what the value of the property."

The defendant asked sixteen instructions, all of which were refused.

Judgment affirmed.

Winchester & Martin, for appellants.

The letters and telegrams from McKibben to Brown were improperly admitted. 42 Ark. 355; 51 Ark. 511. The statement of the court that a misstatement as to value of goods in good faith would not avoid the policy was error. 69 Ark. 137; 50 Ark. 545; 67 Ark. 594; 16 Ark. 329; 68 Ark. 106. The instruction as to concealing or misrepresenting material facts was error. Ost. Ins. 254; 10 F. 232; 79 Tex. 23; 7 Ark. 166. This court will uphold the conditions in the policy. 57 Ark. 279; 123 N.Y. 6; 69 Vt. 116.

Oscar L. Miles and Lovick P. Miles, for appellee.

The evidence wholly fails to establish the claim made by appellants that either McKibben or Brown burned the insured property. The suicide of McKibben is not an evidence of his guilt of that charge. Wh. Cr. Ev. § 750; Best's Ev. (5th Ed.), 578. Appellants having gone into the question first, it was competent for the plaintiff to put in evidence all the attendant facts and circumstances. 43 Ark. 99; 1 Greenleaf, Ev. §§ 108-111; Wharton, Cr. Ev. §§ 262-270; 1 Bish. Cr. Pro. §§ 1083-1087; 20 Ark. 216; 1 Wall. 637; 8 Wall. 637; 22 Ark. 254; 12 Ark. 782; 8 Watts, 355; 8 N.H. 40; 4 Colo. 161; 1 Greenleaf, Ev. 144; 6 Car. & P. 325; 3 Cush. 181; 55 Pa.St. 402; 57 Mo. 93; 5 W.Va. 510; 30 La.Ann. 600; 4 Tex.App. 202; 35 Cal. 49; 1 How. 219; 47 Mo. 239; 34 Vt. 410; 25 Gratt. 921; 32 Ga. 672; 18 Ga. 635; 1 Taylor, Ev. § 588. In case of an open policy, over-valuation in obtaining it is immaterial. 38 Oh. St. 128; 1 So. 863; 46 Ind. 315; 1 Wood, Ins. § 235. The good faith of Brown being in issue, the information upon which he acted was competent evidence. 1 Wharton, Ev. § 35; Gillett. Ind. and Col. Ev. § 223a. 1 Conn. 387; 63 Vt. 667. The proper measure of recovery. 53 Ark. 27; 4 Dall. 430; 1 Wood, Fire Ins. § 471; 1 La.Ann. 216; 5 Pa.St. 183; 37 Pa.St. 205; 36 N.Y. 655; 1 Wood, Fire Ins. 1172.

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