Hargrove v. American Cent. Ins. Co.

• Decision Date: 26 February 1942
• Docket Number: No. 2293.,2293.
• Citation: 125 F.2d 225
• Parties: HARGROVE v. AMERICAN CENT. INS. CO. et al.
• Court: U.S. Court of Appeals — Tenth Circuit

125 F.2d 225 (1942)

HARGROVE v. AMERICAN CENT. INS. CO. et al.

No. 2293.

Circuit Court of Appeals, Tenth Circuit.

January 16, 1942.

Rehearing Denied February 26, 1942.

John W. Porter, of Muskogee, Okl., for appellant.

Walter D. Hanson, of Oklahoma City, Okl. (F. A. Rittenhouse, John F. Webster, and A. J. Rittenhouse, all of Oklahoma City, Okl., on the brief), for appellees.

Before BRATTON, HUXMAN, and MURRAH, Circuit Judges.

MURRAH, Circuit Judge.

The appellant Hargrove, herein called insured, was the owner of a building on the outskirts of Muskogee, Oklahoma, which he operated as a road house or night club. On August 2, 1939, some time after twelve thirty a.m., the building and its contents were completely destroyed by fire.

The insurance companies, as insurors under various policies of insurance covering the building and its contents, successfully prosecuted a suit under the Federal Declaratory Judgment Act, 28 U.S.C.A. ß 400, to declare their nonliability under the policies. The appellant, as the insured, has appealed. The jurisdiction in the trial court is based on diversity of citizenship and the requisite amount in controversy, which is admitted.

The insurors, after alleging the issuance of the policies and the respective amounts thereof, alleged that the insured falsely and fraudulently procured the policies of insurance and on or about August 2, 1939, fraudulently procured or caused to be procured the destruction of the property by fire for the purpose of defrauding each of the insurors by collecting the insurance thereon. The insurors plead the pertinent portions of the policies of insurance which uniformly provided: "This entire policy shall be void if the insured has concealed or misrepresented, in writing or otherwise, any material fact or circumstance concerning this insurance or the subject thereof; * * * or in case of any fraud or false swearing by the insured touching any matter relating to this insurance or the subject thereof, whether before or after loss. * * * or if the insured procure any other contract of insurance, whether valid or not, on property covered in whole or in part by this policy; * * * or if the hazard be increased by any means within the control or knowledge of the insured; * * *"

The petition further alleged that the said insured took over the operation of the property in the Spring of 1939 with the intent to destroy the same and that in furtherance of this purpose immediately increased the amount of insurance on the building and contents from approximately $5,000 to approximately $9,500; that he operated the same for an unlawful purpose in that he dispensed beers and liquors in violation of the law; and on the date or just prior to the time of the fire in question, the insured further increased the hazard by saturating or causing the premises to be saturated, with kerosene in order to completely destroy the building by fire, all in violation of the terms of the policies, which rendered the same void. The petition further alleged that after the destruction of the premises by fire, the insured submitted a purported proof of loss under each of the said policies of insurance in which he falsely and fraudulently misrepresented the value of the building and its contents to be the sum of $17,000, well knowing that the value of the building and the contents would not exceed $6,500, and that in the same proof of loss, the insured falsely stated that the origin of the fire was unknown to him, when in fact he well knew of its origin and that such false and fraudulent misrepresentations voided each and all of the policies. The insurance companies tendered the amounts of premiums collected, prayed that the court declare their nonliability on the policies and that the policies be cancelled. In the alternative, the insurors prayed that if the court found the policies of insurance to be valid and binding and not void, that the court determine the amount of the loss and the damage, if any, suffered by the insured by reason of the fire and apportion the liability, if any, of each of the plaintiffs under the various policies of insurance according to the statutory three-fourths value clause attached to each of the said policies. The insurors further prayed for an injunction restraining the insured from instituting or prosecuting any other action in any other courts upon the policies of the insurance involved and to require the insured to set up his claims, if any, under the policies.

The insured answered admitting the issuance of the policies and alleged that they were in full force and effect on August 2, 1939, when the building and its contents were destroyed by fire. He specifically denied the allegations of fraud and false swearing in connection with the procurement of the policies, the burning of the building, the making of false and fraudulent statements in the proof of loss, or that he in any way increased the hazard; that the building and its contents were reasonably worth $17,000 in accordance with his proof of loss; and that by denial of liability on the policies and their refusal to accept the submitted proofs of loss, they had waived the alleged breaches and were estopped from asserting them in this action.

Neither party demanded a jury before trial and apparently at the time of the trial neither party considered that the cause was one triable of right by jury. But at the commencement of the trial, the court advised the parties that a jury would be impanelled in an advisory capacity. Neither party objected but acquiesced in the action of the court by agreeing that answers to interrogatories submitted to the jury might be returned by three-fourths or nine of the jurors. At the conclusion of the evidence, without objection from either party, the court submitted certain interrogatories which the jury answered. The court withheld judgment and thereafter made independent findings of fact and conclusions of law in which he found that the answers to the interrogatories submitted to the jury were contradictory and inconsistent; that the cause was not one triable as of right by jury but that the court had a right to impanel a jury for advisory purposes under Rule 39(c) Federal Rules of Civil Procedure, 28 U.S.C.A. following section 723c; and that the answers to the interrogatories submitted to the jury were advisory only and were so considered by the court.

The court specifically found that "The defendant W. M. Hargrove caused or procured to be caused the fire which destroyed the buildings and its contents," and that thereafter and on the 8th day of August, 1939, he submitted a purported proof of loss under the policies in which he stated the value of the building, and contents thereof, to be $17,000, and that he further stated that he did not know of the origin of the fire and that on or about the 7th day of December 1939, the insured submitted to a sworn examination as provided by the provisions of the policies in which he denied any knowledge of the origin of the fire or that he caused or procured to be caused the fire which destroyed the building. The court concluded that the insured was guilty of fraud and false swearing in his purported proof of loss and in his examination and on the trial of...