Globe & Rutgers Ins. Co. of City of New York v. Prairie Oil & Gas Co.

• Decision Date: 04 December 1917
• Docket Number: 28.
• Citation: 248 F. 452
• Parties: GLOBE & RUTGERS INS. CO. OF CITY OF NEW YORK v. PRAIRIE OIL & GAS CO.
• Court: U.S. Court of Appeals — Second Circuit

248 F. 452

GLOBE & RUTGERS INS. CO. OF CITY OF NEW YORK v. PRAIRIE OIL & GAS CO.

No. 28.

United States Court of Appeals, Second Circuit.

December 4, 1917

Leo Levy, of New York City (Alex. Davis, of Brooklyn, N.Y., of counsel), for plaintiff in error.

Bruce Ellison and Andrew A. Fraser, both of New York City (William B. Ellison, of New York City of counsel), for defendant in error.

The plaintiff is a corporation existing under the laws of the state of Kansas. The defendant is a corporation existing under the laws of the state of New York. The plaintiff sues on a policy of insurance issued to defendant on February 6 1914, insuring against all direct loss or damage by fire except as in the policy provided, to the amount of $6,477,000. The property insured consisted of iron tanks (used for storing petroleum) and their contents. While the policy was current, two fires occurred: (1) On September 2 1914, destroying tanks numbered 8, 9, and 13, together with their contents, at Barney Farm, Drumwright, Okl.; and (2) on September 6, 1914, destroying tank numbered 1306, with its contents, at Shannondale, Mo. The two fires are made the subject of two separate causes of action in the same complaint.

The defendant's answer sets up a general denial as to each cause of action. As a separate and partial defense to the first cause of action it sets up the assured's refusal to permit the defendant to replace the property destroyed; and as a separate defense to the first and second causes of action the answer alleges that the plaintiff had wholly failed to serve on defendant a statement, signed and sworn to by it, stating its knowledge and belief as to the time and origin of the fires, its interest, and that of all others in the property, the cash value of the various items making up the same, the incumbrances, if any, thereon, other insurance, if any thereon, and a copy of the description and schedules in all policies, as well as any changes in the title, use, occupation, location, possession, or exposure of the property from the time the policy was issued.

As to the first cause of action it is stipulated between the attorneys that the number of barrels of fluid destroyed in tanks 8, 9, and 13 at Barney Farm, Drumwright, Okl., by fire, on September 2, 1914, was as follows: Oklahoma crude fluid, 122,778.77 barrels, less fluid saved, 2,899.59 barrels; net amount of petroleum destroyed, for which the plaintiff in error admits liability as to quantity only, was 116,282.80 barrels; that the tanks themselves were each of 55,000 barrels capacity, and were worth at the time of the fire in the aggregate $38,250 ($12,750 each), and were totally destroyed by said fire, and that the amount of the liability of the plaintiff in error is the sum of $15,000 ($5,000 each). The occurrence of the fire of September 2, 1914, the ownership of the property on that day by the assured, and that the fire was not caused by any of the causes excepted in the policy were also admitted.

As to the second cause of action it is also stipulated that the number of barrels of fluid destroyed in tank No. 1306 at Shannondale, Mo., by fire on September 6, 1914, was as follows:

'Contents of tank No. 1306:

Oklahoma crude fluid . . . 52,025.77 bbls.

Less sediment . . . 1,085.51 bbls.

50,940.26 bbls.

Less oil saved . . . 7,882.00 bbls.

Net amount of fluid destroyed . . . 43,058.26 bbls.

'In connection with the above figure, 43,058.26, representing total amount of fluid destroyed, in barrels, it will be on the trial of this action the contention by the defendant (insurance company) that there should be deducted therefrom 1,291.75 barrels which will be claimed by the defendant (insurance company) represents sand and water in the fluid destroyed, and which contention the defendant (insurance company) reserves the right to endeavor to prove at the time of the trial of this action.'

The stipulation admits that tank 1306 was the property of the assured, and was totally destroyed by fire on September 6, 1914; that the value of the said tank at the time of the fire was $12,750, and that the plaintiff in error is liable in the amount of $5,000; the occurrence of the fire of September 6, 1914; the ownership of the property on that day by the assured; and that the fire was not caused by any of the excepted causes in the policy.

At the close of the trial counsel for defendant moved to dismiss, and the motion was denied. Counsel for plaintiff moved for a direction of a verdict for the plaintiff on each cause of action, and this was granted, and judgment entered for $8,451.19.

Before WARD and ROGERS, Circuit Judges, and LEARNED HAND, District judge.

ROGERS Circuit Judge (after stating the facts as above).

This is an action upon a policy of insurance, and the defendant claims that the action cannot be maintained because the proofs of loss were insufficient. The object of the clause concerning proofs of loss inserted in a policy is to give the company proper information as to the facts rendering it liable. Failure reasonably to comply with such a clause, if not waived by the company, defeats recovery. A substantial compliance is, however, all that is required. Glazer v. Home Ins. Co., 190 N.Y. 6, 82 N.E. 727; Davis v. Grand Rapids Ins. Co., 157 N.Y. 685, 51 N.E. 1090; De Raiche v. Liverpool, etc., Ins. Co., 83 Minn. 398, 86 N.W. 425.

The court below held the proofs of loss in the case at bar sufficient, and this court is of like opinion. The proofs set forth the time and origin of the fires; that no other person or party had any interest in the property destroyed or any incumbrance thereon; the cash value of the various items making up the loss is set out in detail aggregating $125,396.86; the amount of other insurance and in what companies it was placed is specifically stated; a copy of the descriptions and schedules in all the policies is annexed; and the fact is set forth that no act had been done or caused to be done by the assured in violation of the policy which would become void. The proofs also stated that the insured would produce its books of account and other proper vouchers and make replies to interrogatories propounded by authority of the company relating to the loss. This surely was all that the law required. The objections raised are technical, and were properly disregarded. The statement of loss showed that the total value of the oil in all the plaintiff's tanks at the time of the fire did not exceed $38,080,000. At the same time the number of barrels of oil at the time in each tank that was destroyed is set forth and the value is stated, as well as the amount of the loss.

Moreover, in a letter dated February 24, 1915, the adjuster acknowledged receipt of proof of loss and returned the same, stating as his reason for so doing that he had offered to replace the oil, and his offer had been declined. As it raised no objection to the proofs, it was therefore a waiver of any defects. Tayloe v. Merchants' Fire Ins. Co., 9 How. 390, 403, 13 L.Ed. 187.

As to the proof of loss in the second cause of action-- the Shannondale loss-- the objection made was in the omission to deduct the sand and water salvage and in the statement of the transportation charges at 34 cents, instead of 13 cents. These differences represented a dispute between the parties, and the insured was, of course, not bound to make the proof of claim according to the insurer's view upon that issue. As to all other defects, if any, they were waived by the specific mention of these as the only ones. Thompson v. Liverpool, etc., Co., Fed. Cas. No. 13,966; McManus v. Western Assur. Co., 43 A.D. 550, 558, 48 N.Y.Supp. 820, 60 N.Y.Supp. 1143. But, even if there were merit in the claim that the proofs of loss were insufficient, which there is not, defendant would not be entitled to raise it on its own showing. It is striving to maintain two propositions, one of which destroys the other. It insists that the plaintiff is not entitled to recover because its proofs of loss are insufficient, and it at the same time insists that plaintiff is not entitled to recover, because it (the defendant) offered to replace the property destroyed and its offer was rejected. It overlooks the fact that, if an offer to replace was made, it was made after the proofs of loss were received, and that the law is that such an offer waives all known forfeitures. Bersche v. Globe Ins. Co., 31 Mo. 546.

The defendant also relies upon the following provision contained in the policy:

'This company shall not be liable beyond the actual cash value of the property at the time any loss or damage occurs, and the loss or damage shall be ascertained or estimated according to such actual cash value, with proper deduction for depreciation, however caused, and shall in no event exceed what it would then cost the insured to repair or replace the same with material of like kind and

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