Lee Blakemore, Inc. v. Lewelling

• Decision Date: 06 June 1922
• Docket Number: 5781.
• Citation: 281 F. 952
• Parties: LEE BLAKEMORE, Inc., et al. v. LEWELLING et al.
• Court: U.S. Court of Appeals — Eighth Circuit

281 F. 952

LEE BLAKEMORE, Inc., et al. v. LEWELLING et al.

No. 5781.

United States Court of Appeals, Eighth Circuit.

June 6, 1922

[Copyrighted Material Omitted]

This is an appeal by Lee Blakemore, Incorporated, and Herman L Hettler Lumber Company, a corporation, from a decree of the court below to the effect that P. J. Lewelling and Vernon Price-Williams, partners as Lewelling & Price-Williams recover upon a contract of insurance against loss by fire from Manufacturing Wood Workers' Underwriters and from Lee Blakemore, Incorporated, as attorney in fact for the said Underwriters, out of any moneys in his possession as such attorney in fact, $24,900, interest, and costs. This judgment is founded on an alleged contract of insurance made May 31, 1918, between Lee Blakemore, Incorporated, attorney in fact for the Underwriters, and Lewelling & Price-Williams, to the effect that the latter should be and were thenceforth insured against loss by fire to the same property on the same terms and to the same effect as the Allen Lumber & Box Company, a corporation, was stated to be insured on April 23, 1918, by a policy issued and delivered to the Box Company by the Underwriters by Blakemore, their attorney in fact, on that day.

That policy provided that Manufacturing Wood Workers' Underwriters, 'in consideration of the stipulations herein named and of the deposit of $803.75 premium does insure Allen Lumber & Box Company for the term of one year from the 23d day of April, 1918,' to an amount not exceeding $35,000, against loss or damage by fire to certain property therein described, which the Box Company was using as lessee; that the Manufacturing Wood Workers' Underwriters, also called subscribers, are 'individuals, firms, and corporations that have executed an agreement (hereby made a part hereof) which vests in Lee Blakemore, Incorporated, of Chicago, Illinois, herein called the 'attorney in fact,' the power to underwrite and issue this policy for them. It is understood and agreed that there is assumed by each subscriber, including the assured hereunder, as if a separate policy was issued therefor, a sum which is the same proportion of the aggregate liability hereunder that each subscriber's premium deposit bears to the aggregate of all the subscriber's premium deposits under all policies in effect at the time of any loss'; that the word 'policy' means this contract which is issued to the subscribers in exchange for and in consideration of indemnity extended to such subscriber by those underwriting the risk here insured; that the word 'premium' means the sum of money (in this case, $803.75) the subscriber agrees to deposit with the attorney in fact for the purpose of carrying out the plan of indemnity; that in the event of litigation no suit or other proceedings at law or in equity shall be begun or maintained against more than one of the underwriters at any time for the recovery of any claim upon and by virtue of the policy; and that a final decree in such suit or other proceedings shall be taken to be decisive of the similar claim against each of the underwriters hereon, absolutely fixing his liability on the premises so far as he individually is concerned to the same effect as if he had been sole defendant in a similar suit or proceeding as to the similar claim against him.

By the agreement referred to in and made a part of the policy, each underwriter, by a separate power of attorney contained in the agreement, constituted and appointed Lee Blakemore, Incorporated, his, their, or its attorney in fact, 'to exchange with other subscribers indemnity against loss or damage by fire or lightning, and to that end to subscribe and deliver all necessary contracts whereby we shall be bound to so exchange indemnity against loss or damage by fire or lightning; and to change, modify or cancel such contract or contracts of indemnity and to reinsure same; * * * to appear for us in any suit, action, or legal proceedings * * * that may arise out of any such contract; and to do or perform every other or different act that we ourselves could do in relation to any such contract for the interchange of indemnity against loss or damage by fire or lightning. ' Each subscriber also specified in that agreement that the underwriters should have no joint funds, capital, or stock, that business should not be conducted by them jointly, nor should they have power to bind each other, but that each should act separately, and not one for another. The agreement provided that any subscriber might cancel it including the power of attorney therein on 10 days' notice to the attorney, that the unexpired indemnity should be canceled within 10 days, that the subscriber's accounts should be speedily liquidated, and that any funds to his credit including his reserve fund should be returned to him. The policy contained a similar provision to the effect that if it should be canceled or become void or cease the balance of the premium and deposit above actual costs of the insurance at the customary rate for the short time it was in force should be returned to the insurer.

From the provisions of the policies and the power of attorney which have been recited, the fact clearly appears that they constituted contracts of interinsurance whereby each of the underwriters agreed to indemnify each of his, their, or its associate underwriters against loss by fire or lightning, and each of his, their, or its associate underwriters agreed to indemnify him to the respective amounts specified in the policies against loss by fire or lightning, and that Lee Blakemore, Incorporated, was authorized by each of them to make for each of them contracts of insurance or indemnity, to issue policies of insurance, to modify such contracts or policies, and that this attorney in fact was also authorized by each of them to bring and defend suits and legal proceedings of all kinds, and to compromise and settle claims arising out of such contracts of insurance.

When, on April 23, 1918, Lee Blakemore, Incorporated, issued to the Box Company for the underwriters their policy of insurance of that date, it received from that company one of the agreements containing the power of attorney which has been described, but the $803.75 premium deposit specified therein was not then or ever paid until the alleged contract of insurance with Lewelling & Price-Williams was made on May 31, 1918. The policy to the Box Company described the property insured and stated that it was 'owned or leased by the assured, the Box Company, while situate on premises of the Graysonia-Nashville Lumber Company and the loss if any was made payable to the Graysonia-Nashville Lumber Company, Alvin D. Goldman, trustee, as their interests may appear. ' In a suit by the mortgagee against the lessor of the Box Company, to which the Box Company was a party, a decree of sale and foreclosure had been rendered in March, 1917. On April 29, 1918, 6 days after the Box Company policy was issued, there was a sale of the insured property under this foreclosure decree to Lewelling & Price-Williams. That sale was confirmed by order of the court on May 21, 1918. The policy provided that it should be void if the interest of the assured was other than the sole ownership of the insured property, if that interest was not truly stated, if, with the knowledge of the insured, foreclosure proceedings were commenced or notice given of sale of any of the insured property, and if any change other than by the death of the insured should take place in the interest, title, or possession the subject of the insurance. The Box Company gave no notice to the underwriters or to Lee Blakemore, Incorporated, of the foreclosure proceedings, sale, and confirmation of the sale, until after May 21, 1918, and appellants' counsel claim that the policy to the Box Company became void by reason of the provisions which have just been recited as early as May 22, 1918.

This policy was No. 7431. On May 28, 1918, 7 days after the confirmation of the sale, the Box Company and Lewelling &amp Price-Williams, who were the purchasers at the foreclosure sale, met and agreed with each other that the indemnity insurance held by the Box Company under the policy, should be assigned and transferred to Lewelling & Price-Williams, and thereupon the Box Company by agreement and authority of Lewelling & Price-Williams, sent this telegram addressed to the underwriters: 'Lewelling & Price-Williams of Little Rock have acquired the Graysonia-Nashville Lumber Company property. Please make our insurance policies over to them with the standard mortgage clause to Alvin D. Goldman, trustee, for Lesser-Goldman Cotton Company. Please confirm. Allen Lumber & Box Company. ' On May 31, 1918, the following answer was sent to this telegram by a clerk in the office of Blakemore, Incorporated, and was received by the Box Company: 'Allen Lumber & Box Company, Nashville, Arkansas. Assigning our Policy 7431 to Lewelling & Price-Williams with mortgage clause as per your wire. Manufacturing Wood Workers' Underwriters.' This was followed by a letter to the Box Company, signed 'Lee Blakemore, Incorporated, T. E. Larsen. ' This Larsen was the business manager or superintendent of Blakemore, Incorporated, in its office in Chicago. So far as material, this letter reads in this way: 'Gentlemen: Upon receipt of your telegraphic advice of the 29th ult., we wired you on May 31 as follows: ' Assigning our policy 7431 to Lewelling & Price-Williams with mortgage clause as per your wire.' We are assuming that you will continue to operate the property and accordingly will effect assignment as per your instructions. If our understanding is incorrect we would very much appreciate your advising us. ' On June 4, 1918, the Box Company replied by a...