Hanover Fire Ins. Co. of N.Y. v. Furkas

• Decision Date: 04 June 1934
• Docket Number: No. 74,January Term, 1934.,74
• Citation: 267 Mich. 14,255 N.W. 381
• Parties: HANOVER FIRE INS. CO. OF NEW YORK v. FURKAS et al.
• Court: Michigan Supreme Court

267 Mich. 14

255 N.W. 381

HANOVER FIRE INS. CO. OF NEW YORK

v.FURKAS et al.

No. 74, January Term, 1934.

Supreme Court of Michigan.

June 4, 1934.

Appeal from Circuit Court, Ionia County; Royal A. Hawley, Judge.

Action by the Hanover Fire Insurance Company of New York against Eugene L. Furkas and others. From an adverse judgment, defendants Maurice L. Hurwich and another appeal.

Affirmed.

Argued before the Entire Bench.

Rosenburg & Painter, of Jackson, for appellants Maurice L. Hurwich and Claude E. Nicely.

Smith, Searl & Strawhecker, of Grand Rapids, for appellee.

NELSON SHARPE, Chief Justice.

In the declaration filed in this case it was alleged, in substance, that the defendant Hurwich was the president and treasurer of the St. Joseph Board & Paper Company, the defendant Nicely the vice president and general manager, and the defendant Furkas an employee thereof; that on July 13, 1927, plaintiff, at the request of said company, issued a policy in the sum of $5,000 insuring the company against loss and damage by fire to certain buildings constituting its plant at the city of St. Joseph; that the buildings insured were situate upon lands owned by one Frank S. Bicking and under lease with option to purchase, in which said Hurwich and Nicely were lessees and who had assigned their interest therein to the company. The concluding paragraphs read as follows:

‘8. Thereafter and on the 29th day of January, 1928, the said defendants, unlawfully conspiring together to defraud the plaintiff, caused the buildings so insured to be set afire, from which fire a loss resulted, the plaintiff's portion of which was the sum of Four Thousand Three Hundred Ten Dollars and Thirty-four Cents ($4,310.34).

‘9. The said defendants individually and as officers and employees of St. Joseph Board and Paper Company thereafter presented to the plaintiff proofs of loss, and the plaintiff paid to the St. Joseph Board and Paper Company, as a result of said fire and in settlement of its proportion thereof, the sum of Four Thousand Three Hundred Ten Dollars and Thirty-four Cents ($4,310.34) for which amount with interest from date of payment, the plaintiff now claims judgment.’

The answer of the defendants Hurwich and Nicely contained a denial of liability. The default of the defendant Furkas was duly entered. The order therefore provided: ‘That the assessment of damages herein shall be by the Court or jury upon the trial of the principal issue.’

After the proofs had been submitted, the trial court directed the jury to find a verdict against the defendant Furkas for the amount of plaintiff's claim. He instructed them that, to entitle the plaintiff to recover against the other defendants, they must find that they entered into a conspiracy with Furkas to burn the buildings, and that, pursuant thereto, the fire was set and the buildings destroyed by it. The jury returned a verdict against all of the defendants for the amount of plaintiff's claim. Defendants Hurwich and Nicely, hereafter called the defendants, have appealed.

As its first witness, the plaintiff's attorney called the defendant Furkas for cross-examination under the statute. He denied that he entered into a conspiracy with the other defendants to burn the buildings. He also denied that he had personally set the fire which destroyed them. He admitted that he was at that time an employee of the paper company.

Victor V. Troyer, the superintendent of the company at the time of the fire, was then called. He testified that on Saturday, the 28th day of July, 1928, he and Furkas were in the office of the defendant Nicely in South Bend, Ind.; that ‘Mr. Nicely said the affairs of the mill were in pretty bad shape financially and told me about the only way out would be to have a fire and proposed that Mr. Furkas and I being the logical ones and being over there all the while should set the fire’; that he (Troyer) asked that the defendant Hurwich be brought in, and that Hurwich came and he asked him if the proposition of burning the mill was his (Hurwich's) idea, and that Hurwich replied, ‘Whatever Claude says is all right with me’; that the question came up as to when the fire should be set, and Furkas said ‘he thought at night would be a bad time to do it because somebody might get hurt and he preferred to do it the next day on Sunday’; that he then went with Furkas to St. Joseph and then on to his home in Constantine; that the buildings were burned on the next day (Sunday), and he was called on the telephone and so informed.

Proof was then submitted of the issuance of the policy by plaintiff in the sum of $5,000 and those of other insurance companies, making a total of $72,500. It seems to be undisputed that the insurance had been increased from $32,500 to that amount about ten days before the fire. Proofs of loss were also submitted, and it is conceded that the loss was adjusted at $62,500 and paid to the paper company, of which sum plaintiff paid $4,310.34.

Furkas was then again called to the witness stand, and, over the objection of defendants' counsel, cross-examined relative to the testimony he gave on the criminal trial in which he and the other defendants were convicted, and to the statements made by him in an affidavit used on a motion for a new trial thereof. See, People v. Furkas, 255 Mich. 533, 238 N. W. 173;Pepople v. Hurwich, 259 Mich. 361, 243 N. W. 230. In admitting this testimony the trial court stated that for the time being it would be received in its bearing upon the liability of Furkas alone, and ‘with the instruction unless other circumstances arise that the jury shall not consider it as bearing upon the liability or nonliability of the other defendants in the case.’

Counsel for the defendants at that time argued that, as Furkas had been defaulted, it was unnecessary to impeach him, and that its only purpose was to create prejudice against the defendants. The court answered this contention by saying that: ‘The jury will be directed that they are not to be controlled by their prejudices but by the testimony that is admitted and which they have a right to consider and base their verdict upon that testimony.’

Furkas then admitted that he had testified before a justice of the peace and upon the criminal trial that he was present at the meeting in South Bend at which he and Troyer were requested to burn the buildings and that he set the fire on the following day, but he insisted that the testimony so given was untrue. He stated that his reason for thus perjuring himself was due to his desire to secure a reward which he had heard the insurance companies would pay for ‘information leading to the fire’ and an assurance on the part of one of their agents that ‘there would't be any question about absolute immunity, and also a nice reward for me.’

The defendants were called as witnesses in their own behalf. They denied that they had entered into a conspiracy to burn the buildings, but admitted that they had been convicted on the criminal trial and were then serving time in the state prison at Jackson.

Error is assigned upon an instruction to the jury reading as follows: ‘The defendant Furkas having permitted a default to be entered against him, you are instructed to return a verdict against the defendant for the amount of the plaintiff's claim, with interest to date.’

In ordinary actions founded on contract or tort the rule seems well established that a default in appearing or pleading admits the right to recover, but not the amount of the damages.

‘On the assessment of damages in assumpsit on a contract of sale, after the default of defendant, the amount of the damages alone is in issue; the liability of defendant on the contract being fixed by the default.’ Grinnell v. Bebb, 126 Mich. 157, 85 N. W. 467 (syllabus).

‘A default in appearing or pleading where the action is in tort or upon an unliquidated claim, while it admits the right to recover, does not admit the amount, and further proceedings are required to determine the amount of the judgment.’ 17 C. J. p. 1042.

See, also, Green's Mich. Practice, Vol. 1, p. 684; 15 R. C. L. p. 663, et seq.; Deane v. Willamette Bridge Co., 22 Or. 167, 29 P. 440,15 L. R. A. 614, 618;Cromwell v. County of Sac. 94 U. S. 351, 24 L. Ed. 195.

Defendants' counsel admit that the general rule is as stated and applies alike to actions ex contractu and in tort, but insist that it cannot be applied in this case for the reason that under plaintiff's proof ‘if one defendant is liable all defendants are liable,’ and that the instruction ‘in effect directed the jury that they must find the conspiracy and the burning established,’ and as a result of such finding impose liability on the other two defendants.

We are not in accord with the claim of counsel that under plaintiff's proofs ‘if one defendants is liable all defendants are liable.’ Immediately following the instruction complained of, the court gave one of plaintiff's requests, reading as follows: ...