Leeds, Inc. v. Aetna Casualty & Surety Co.

• Decision Date: 23 September 1941
• Docket Number: Civil No. 1171.
• Citation: 40 F. Supp. 966
• Parties: LEEDS, Inc., v. ?TNA CASUALTY & SURETY CO.
• Court: U.S. District Court — District of Maryland

40 F. Supp. 966

LEEDS, Inc., v. ?TNA CASUALTY & SURETY CO.

Civil No. 1171.

District Court, D. Maryland.

September 23, 1941.

Lauchheimer & Frank and James Morfit Mullen, all of Baltimore, Md., for plaintiff.

William D. Macmillan, of Baltimore, Md. (Semmes, Bowen & Semmes, of Baltimore, Md., of counsel), for defendant.

CHESNUT, District Judge.

In this non-jury case, the plaintiff sues to recover a loss in the amount of $3,672.90 under the defendant's insurance policy called "a mercantile open stock policy". The coverage of the policy is stated in the first paragraph as follows:

"To indemnify the Assured for all loss by burglary, of merchandise, furniture, fixtures and equipment, from within the Assured's premises, as hereinafter defined, occasioned by any person or persons making felonious entry into such premises by actual force and violence when such premises are not open for business, of which force and violence there shall be visible marks made upon the exterior of the premises at the place of such entry by tools, explosives, electricity or chemicals;".

The amount of the loss, compliance with the formal requirements of the policy as to proof, and the payment of the premium, were all admitted by the defendant which, however, promptly denied liability for the claim because the circumstances of the loss were not within the policy coverage. The premises referred to in the coverage clause are defined in paragraph 2 of the declarations, a part of the policy, as follows:

"(a) Location of building containing the premises is 15 W. Baltimore Street, Baltimore, Maryland.

"(b) The portion of the building occupied by the Assured in conducting his business and herein called `the premises' is Grade floor and most of basement and sub-basement."

In addition to the plaintiff, Leeds, Inc., the assured as named in the policy included others "as their interest may appear", but only the plaintiff was interested in the loss involved.

Findings of Fact.

From the testimony in the case I find the following facts.

1. The business of the assured was the sale at retail of men's clothing. It had occupied the same premises for some years past.

2. The building, 15 W. Baltimore Street, is a five-story loft building with basement and sub-basement, situated on the south side of W. Baltimore Street, in the heart of the Baltimore business district, and immediately adjoining the premises of The Sun office newspaper building. 15 W. Baltimore Street fronts about 40 feet on Baltimore Street with a depth of even width of about 200 feet running south to the north side of W. Redwood Street which is the first parallel street to Baltimore Street. As stated in the policy, Leeds, Inc., occupied and used practically the whole of the first floor where its stock of men's clothing was contained, and most of the basement of the building and all of the sub-basement. The first floor fronting on Baltimore Street has a common entrance at the street level for all the floors; but there is a slight down grade to Redwood Street where the basement is on a level with that street. The front of the basement on Redwood Street is occupied for a depth of about 40 feet by another retail store used at the time of the loss involved by Schloss Bros. Adjoining this store there is a doorway entrance to a passage way running into the basement in which is situated a freight elevator and trash chute servicing the upper floors of the building, but the far end of the passage way leading into the main part of the basement is closed by a doorway.

3. The remainder of the whole basement is used by the plaintiff for tailoring work with fixtures and equipment, and the sub-basement is used for storage. In the basement there is a stairway leading to the first floor occupied by the plaintiff. This stairway comes down from the first floor into an office space which has been partitioned off in the basement for the use by the plaintiff's office force. The partition is a rather rough board structure of substantial construction running from the floor to the ceiling of the basement and completely enclosing the office and stairway. There is a door in this partition in the basement which was customarily kept locked at the close of business for the day. It was so closed and locked just prior to the loss.

4. There is a window in the basement opening on an alleyway which, in the form of an L, communicated with the north side of W. Redwood Street. This window has metal shutters on the outside and a metal lattice work on the inside of the basement. The shutters were fastened from the inside and the lattice work also locked from the inside prior to the loss.

5. The loss occurred between 7 and 10 P.M., March 12, 1941. The manager of the store, after learning, as he supposed, that all persons were out of the premises, saw that the exterior doors of the premises occupied, both on Baltimore Street and Redwood Street, and the window and the partition door in the basement to the first floor, were all securely closed and locked before leaving the store about 5:30 P.M. on the night of March 12, 1941. The policeman in making his usual rounds on his beat at 7 o'clock found all the exterior doors securely closed and locked, but on his next round about 10 P.M. found the window in the basement open. The plaintiff's manager was promptly notified, came to the premises, and on inspection found that merchandise consisting of men's clothing of the value of over $4,000 was missing from the first floor; that the lock had been broken on the partition door in the basement on the outside of the door, that is on the basement side and not on the office side. There were visible marks of force on the door showing where the lock had been broken or the door forced open. There were also visible signs of force which had been used to break the hasp holding the lock on the window on the inside and the shutters of the window had been opened from the inside but apparently without force.

6. A day or two later a portion of the stolen merchandise was recovered in an abandoned truck on a Philadelphia street. Police investigation reported that the truck owner asserted the truck had recently been stolen from him. A truck of this nature had been observed in the alleyway near Redwood Street on the night of the loss by some persons employed in a nearby restaurant. After crediting the recovered merchandise less expense, the net loss was $3,672.90.

7. The reasonable inference and conclusion of fact is that the theft or burglary was perpetrated by some person or persons who had concealed themselves in the basement or sub-basement of the premises occupied by the assured before the premises were closed by the manager, and that this person or these persons broke open the partition door into the office and ascended the stairway to the first floor, removed the clothing, carried it down the stairway to the basement and then broke open the basement window from the inside, pushed the shutters outward, and passed out the stolen merchandise to some one who placed it in the truck and drove away with it.

8. There was no evidence in the case sufficient to show that the premises occupied by the assured as defined in the policy were entered by force or violence from the outside, that is, from any exterior entrance to the building either from Baltimore or Redwood Street, or the window facing the alleyway, or from any portion of the first floor or basement or sub-basement not occupied by the plaintiff. In police parlance, it appeared that the theft was an "inside job". There were no visible marks on the exterior of the premises of a forceful and violent entry.

Conclusion of Law.

The conclusion of law is that the plaintiff's claim for loss is not within the coverage of the policy and that the defendant is entitled to judgment with taxable court costs.

Under the facts found, the only question is one of law, whether the loss is covered by the policy. This question must be determined in accordance with the statutory and case law of the State of Maryland, as the policy is a Maryland contract, and the jurisdiction of this court depends on diversity of citizenship alone. As there is no applicable statute the decision must be that which, in my opinion, would be rendered by the Court of Appeals of Maryland if it were deciding the case. See Ruhlin v. New York Life Ins. Co., 304 U.S. 202, 58 S.Ct. 860, 82 L.Ed. 1290; Erie R. R. Co. v. Tompkins, 304 U. S. 64, 58 S.Ct. 817, 82 L.Ed. 1188, 114 A.L. R. 1487; Klaxon v. Stentor Electric Mfg. Co., 61 S.Ct. 1020, 85 L.Ed. 1477; Griffin v. McCoach, June 2, 1941, 61 S.Ct. 1023, 85 L. Ed. 1481, 134 A.L.R. 1462. It is agreed by counsel for both parties that there is no decision of the Court of Appeals of Maryland interpreting and applying under similar facts the coverage provision of the insurance policy in this case. There are, however, numerous Maryland insurance cases which have announced the principles of construction of similar policies and have applied them in particular cases. Aetna Casualty & Surety Co. v. Gerber, 140 Md. 441, 447, 117 A. 856; Fidelity & Deposit Co. v. Panitz, 142 Md. 300, 120 A. 713; First National Bank v. Maryland Casualty Co., 142 Md. 454, 459, 121 A. 379, 380, 30 A.L. R. 618 (all three burglary insurance cases). In the last cited case the court stated as a well settled rule: "`Contracts of insurance, like other contracts, are to be construed according to the sense and meaning of the terms which the parties have used, and if they are clear and unambiguous, their terms are to be taken and understood in their plain, ordinary, and popular sense.' They `like other contracts, must receive a reasonable interpretation consonant with the apparent object and plain intent of the parties.'" In Westchester Fire Ins. Co. v. Weaver, 70 Md. 536, 17 A. 401, 18 A. 1034, 5 L.R.A. 478, it was said: "The Court also repudiates the principle of interpretation adopted in some cases, that such contracts are to...