Home Ins. Co. of New York v. Williams

• Decision Date: 13 November 1916
• Docket Number: 2935.
• Citation: 237 F. 171
• Parties: HOME INS. CO. OF NEW YORK v. WILLIAMS.
• Court: U.S. Court of Appeals — Fifth Circuit

237 F. 171

HOME INS. CO. OF NEW YORK v. WILLIAMS.

No. 2935.

United States Court of Appeals, Fifth Circuit.

November 13, 1916

B. P Crum, of Montgomery, Ala., and W. W. Callahan and A. J Harris, both of Decatur, Ala., for plaintiff in error.

Alexander C. Birch, of Birmingham, Ala., for defendant in error.

Before PARDEE and WALKER, Circuit Judges, and CALL, District Judge.

CALL District Judge.

In April, 1915, P. W. Williams brought suit in the Morgan county law and equity court against the Home Insurance Company on a policy of insurance theretofore issued to him for $5,000 covering the fixtures, etc., in his store and the stock of merchandise usually kept in a general retail store. By appropriate proceedings the case was removed to the United States District Court for the Northeastern Division of the Northern District of Alabama.

The defendant thereupon filed its answer to the complaint setting up defenses as follows: (1) That it was not indebted, to that part of the complaint seeking to recover $3,500 for the loss of the stock of merchandise. (2) That the policy was void if additional insurance was taken out, unless indorsed in the blank spaces of the policy by the agent, and that the agent had indorsed in said blank space a permit for $8,500 additional insurance on the stock of merchandise; that the plaintiff had taken out additional insurance on said stock for $9,000, and permission for said additional insurance was not by the defendant or any one authorized to bind it, indorsed on or attached to the policy sued on. (3) That the policy contained the iron safe clause, which contained the warranty to keep such books, which will clearly and plainly present a complete record of business transacted, including all purchases, sales, and shipments, both for cash and credit, from the date of inventory provided for and during the continuance of this policy; and that the assured would keep such books and inventory securely locked in a fireproof safe at night, and at all times when the building was not open for business, or, failing in this, the assured will keep said books and inventory in some place not exposed to a fire which would destroy the aforesaid building. In the event of failure to produce such books and inventories for inspection of the company, this policy shall be null and void, and constitute a perpetual bar to any recovery thereon. That the warranty was breached, in that plaintiff did not keep locked in his safe at night, or other secure place, as required by said warranty, a set of books as required, but the book containing the cash sales from January 1, 1914, to October 16, 1914, was left out of said safe and was burned. (4) That the iron safe clause was breached, in that plaintiff did not keep in his safe or other place as required in said warranty, any book or books which presented a complete record of his cash sales from the date of his inventory up to the time of the fire. (5) That after the fire the defendant demanded of the plaintiff the books kept by him in his business, as required in the warranty, and the plaintiff failed to produce any books showing his cash sales from January 1 to October 14, 1914. (6) That the plaintiff breached the warranty, in that the plaintiff failed to produce any book or books which showed a complete record of purchases of goods made by him between the issuance of the policy and the date of the fire.

The plaintiff demurred to the second plea as to overinsurance, and filed nine replications to the pleas separately and severally; the first that the matters set up in said pleas were untrue, and the other eight setting up substantial compliance and waiver by the defendant.

The defendant demurred to all of said replications, except the first, and the plaintiff amended its fifth replication, the substance of which it is not necessary to set out. Thereupon the defendant filed rejoinders to replications 5, 7, and 8, and also an amended rejoinder. The plaintiff demurred to these rejoinders. Plaintiff's demurrer to defendant's second plea was sustained.

Issues were joined on the complaint, the general issue and special pleas 3, 4, 5, and 6, plaintiff's general replication and special replications 7, 8, and 9 to defendant's special pleas 3, 4, 5, and 6, and defendant's rejoinders 4 and 5 to plaintiff's special replications 7, 8, and fendant's rejoinders 4 and 5 to plaintiff's special replications 7, 8, and 9. The fifth rejoinder set up a nonwaiver agreement.

Upon these issues the case went to trial, and a verdict and judgment in favor of the plaintiff in the sum of $4,932.95 resulted. From this judgment the defendant prosecutes this writ of error.

There are 22 assignments of error, but it will not be necessary for this court to examine all of them. Those necessary to be examined will be noticed as the opinion proceeds.

The first assignment discussed in plaintiff in error's brief is the second in the assignments filed. It is:

(2) The said court erred in sustaining plaintiff's demurrer to the defendant's plea numbered 2.

This plea set up that the insured, by indorsement in the blank spaces left in the policy for that purpose, obtained permission to take out $8,500 additional insurance on stock, and the insured had taken out $9,000 additional insurance, setting out the different policies and in what companies.

The plaintiff demurred to this plea on four grounds: (1) Because said plea does not present a defense in law. (2) Because it appears in said plea that the condition and warranty was not breached. (3) Because it appears from said plea concurrent insurance was authorized under the terms of the policy, and that no penalty attaches when concurrent insurance is authorized. (4) Because there is no inhibition against excessive insurance when any insurance is concurrently authorized.

The third and fourth grounds are especially relied upon by the defendant in error to sustain the court's ruling, and we suppose those two grounds were stressed in the argument before the trial court. The policy of insurance in this case contained the following provision in the body of the policy:

'This entire policy, unless otherwise provided by agreement indorsed hereon or added hereto, shall be void if the insured now has or shall hereafter make or procure any other contracts of insurance, whether valid or not, on property covered in whole or in part by this policy.'

To this policy before delivery was attached what is designated as a rider, in which was contained the iron safe clause and the following:

'No additional insurance permitted unless amounts were inserted by agent of this company in the blank spaces noted below, viz.: $8,500 on stock.'

The contention of counsel for plaintiff below is that the rider supersedes the contract of forfeiture in the body of the policy, and, the rider containing no provision to make the policy void, overinsurance cannot be visited with forfeiture. Ordinarily provisions for forfeitures are not favored. Justice Shiras, in Northern Assurance Co. v. Building Association, 183 U.S.at page 317, 22 Sup.Ct.at page 136, 46 L.Ed. 213, in speaking of a similar provision in a policy, says:

'Overinsurance by concurrent policies on the same property tends to cause carelessness and fraud, and hence a clause in the policies, rendering them void in case other insurance had been or should be made upon the property

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