McNutt v. Virginia Fire & Marine Ins. Co.

• Decision Date: 31 October 1897
• Citation: 45 S.W. 61
• Court: Tennessee Supreme Court
• Parties: McNUTT v. VIRGINIA FIRE & MARINE INS. CO.

Page 61

45 S.W. 61

McNUTT v. VIRGINIA FIRE & MARINE INS. CO.

Court of Chancery Appeals of Tennessee.

October 31, 1897.

Appeal from chancery court, Knox county; H. B. Lindsay, Chancellor.

Bill by S. A. McNutt against the Virginia Fire & Marine Insurance Company. From a decree in favor of complainant, defendant appeals. Affirmed.

Webb & McClung, for appellant. Green & Shields, for appellee.

BARTON, J.

This is a suit upon an insurance policy for $2,000 which was issued by the defendant company to the complainant on a stock of general merchandise located in the complainant's store, at Concord, Tenn. The policy ran from December 6, 1895, to December 6, 1896. The fire occurred August 5, 1896, and destroyed the store and most of its contents, there being a salvage of $450. The complainant alleged his stock at the date of the fire to be of the value of $2,455.80, and that the salvage did not exceed $450, leaving as his loss $2,005.86; and he therefore sued for the full amount of the policy, — $2,000. The chancellor heard the cause, and rendered a decree against the defendant and in favor of the complainant for $1,998.24. The defendant appealed, and assigns errors.

One of the errors assigned and defenses relied on is purely a question of fact, and goes alone to the amount of the recovery to which the complainant is entitled, if anything; the defendant alleging that the value of the goods — covered by the policy — destroyed was not more than about $1,100. Upon this question, we have carefully studied and analyzed all the testimony in the record; and, while want of time and pressure of other duties prevent our setting out this analysis at length, we deem it sufficient to state that after a most careful consideration we find as a fact that the value of the goods destroyed, which were covered by the policy, amounted to at least the sum fixed by the chancellor, by whose decree we are content to abide, viz. the sum of $1,998.24. The proof is entirely clear and satisfactory upon this point, and we have no doubt whatever about it.

The fire which destroyed this stock of goods occurred about 3 o'clock in the morning of August 6, 1896. It is not known how it originated, but it started in the store of J. A. Duncan, whose place of business adjoined complainant's. Complainant was at home in bed at the time the fire broke out, and when he got to the store the walls were falling in. There is no intimation in the record, in any way, nor in the argument of counsel, that the complainant was in the least to blame, by negligence or otherwise, for the fire. We deem it proper to state this, to entirely clear the atmosphere of the case, in view of the next defense to be considered, which goes to the whole case, and, if sustained, defeats recovery on the part of complainant for any amount whatever. The defense arises on what are known as the "iron-safe clauses," which clauses were incorporated in a slip of paper attached to the policy, and which, by their terms, are made a part of the policy. These clauses are as follows: "(1) The assured will take a complete, itemized inventory of stock on hand at least once in each calendar year; and, unless such inventory has been taken within twelve calendar months prior to the date of this policy, one shall be taken in detail within 30 days of issuance of this policy, or the policy shall be null and void from such date, and upon demand of the assured the unearned premium from such date shall be returned. (2) The assured will keep a set of books, which shall clearly and plainly present a complete record of business transacted, including all purchases, sales, and shipments, both for cash and credit, from date of inventory, as provided for in first section of this clause, and during the continuance of this policy. (3) The assured will keep such books and inventory, and also the last preceding inventory, if such has been taken, securely locked in a fireproof safe at night, and at all times when the building mentioned in this policy is not actually opened for business; or, failing in this, the assured will keep such books and inventories in some place not exposed to a fire which would destroy the aforesaid building. In the event of failure to produce such set of books and inventories for the inspection of this company, this policy shall become null and void, and such failure shall constitute a perpetual bar to any recovery thereon." Relying on these clauses, two points are made: (1) In reference to the books which were produced, it is said that they do not clearly and plainly present a complete record of business, as contracted for in the second clause. (2) That there was a failure to keep and produce the inventory contracted for in these clauses.

The facts in reference to the books and inventory we find to be substantially as follows: The complainant kept a ledger, which he produced. He had also a blotter, on which entries were made during the day; but according to his testimony, which is uncontradicted on this point, these entries were duly transferred to the ledger, so that the ledger contained everything that was on the blotter. The complainant also had an inventory book, in which was contained an inventory made shortly after the issuance of this policy, in January, 1896. In this inventory book there was also, at the date of the fire, an unfinished inventory; the complainant and his clerk having been engaged in making out this inventory the day before the fire. It appears that this inventory was inadvertently and accidentally left out of the safe the night of the fire, and was destroyed. It further appears that it had been the constant habit of the complainant to keep this inventory book and his ledger and blotter in the iron safe, as provided in the policy; but having been engaged in making out the new inventory, with a view to a sale of the stock, and having only partially completed it, the book, as stated, was on the night of the fire unintentionally left upon the desk, and was destroyed. The complainant was therefore only able to produce, except in a manner hereinafter to be stated, his ledger, and was not able to produce the inventory, for the causes stated, and did not produce the blotter, though, as we say, the proof shows that the ledger contains all that was upon the blotter. Now, as above stated, it is insisted that the book produced was not satisfactory, in that it did not correctly show the state of the complainant's business; and it is said that from it the exact value and condition of the stock of goods on hand could not be ascertained, and that, therefore, the clause upon this subject was violated and hence the complainant would not be entitled to recover. According to the proof, this ledger shows all accounts that the complainant had, sales for credit, and cash sales, or, rather, cash receipts. It is clear that the book was not kept with scientific correctness, nor was it up to the highest measure and rule of scientific bookkeeping; but it was such a book as would ordinarily be kept by a country merchant, and from it he would be able to ascertain his condition, and the status of accounts between him and others. The defect in the book as a source from which to ascertain the stock of goods on hand was mainly this: In the account of cash received or cash sales, the complainant had entered, mixing up with other items, the cash received for goods sold in previous years, or cash on old accounts; and, among others, he had one or two items of cash deposited with him by other parties for the purpose of purchasing wheat. Taking the cash account, as it actually stood upon the books, as a correct basis for calculating the amount of goods that had been sold for cash after the issuance of the policy, and up to the time of the fire, would result in an error against the complainant of something like $1,000, because there was included in these items of cash, as we have stated, these items for goods sold previously, and for money deposited by other parties. We neglected to state that the complainant's book of invoice of goods bought and received after the issuance of the policy was also unintentionally left out of the safe on the night of the fire, and destroyed. This book the complainant was able to reproduce, by getting, as he did, duplicate invoices from the merchants from whom he had bought his goods during the time this policy was in force, and this he produced. So, as a matter of fact, he produced, in effect, every inventory that he had, except that upon the inventory book. Now, as to the manner in which the accounts were kept: They were not kept, as we have stated, with scientific correctness, and, taken upon their face and unexplained, they would contain an error, if relied upon as showing the cash sales for the period in question, of something like $1,000 against the complainant. We do not understand that this clause of the policy was an undertaking to keep...