Miller v. Union Assur. Soc., Limited, of London, England
| Decision Date | 21 April 1930 |
| Docket Number | No. 8617,8618.,8617 |
| Citation | 39 F.2d 25 |
| Parties | MILLER et al. v. UNION ASSUR. SOC., LIMITED, OF LONDON, ENGLAND. |
| Court | U.S. Court of Appeals — Eighth Circuit |
Bruce Barnett, of Kansas City, Mo. (E. M. Harber, of Trenton, Mo., and Charles W. Crossan, of Kansas City, Mo., on the brief), for appellants.
Murat Boyle, of Kansas City, Mo. (William S. Hogsett, of Kansas City, Mo., on the brief), for appellee.
Before KENYON and BOOTH, Circuit Judges, and REEVES, District Judge.
Under the rule of conventional subrogation the appellee was granted a decree for the recovery of a specified sum of money against the appellant. To satisfy said decree, the court below adjudged same a lien against certain real estate which was ordered sold.
Appellee was engaged in the fire insurance business and issued its two policies of insurance in the sum of $2,000 and $8,000, respectively, to the appellant. These policies were issued for a period of one year, expiring in March, 1926. By their terms they undertook to assure the appellant against direct loss or damage by fire to a building on premises owned by him and situated in Kansas City, Mo.
On the 1st of October, 1925, and while said policies were in force, the said building was admittedly damaged by fire to an extent in excess of the amount stipulated in said policies. The real estate was incumbered with a mortgage or deed of trust, and there was attached to said policies a mortgage clause providing for the payment to the mortgagee, in the event of loss, as "such interest may appear." In accordance with this provision, the appellee paid the amount due on said mortgage. There was another provision in the mortgage clause to the effect that the interest of the mortgagee "shall not be invalidated by any act or neglect of the mortgagor or owner of the within described property * * * nor by any change in the interest, title or possession of the property, nor by any increase of hazard."
On account of the foregoing provisions in the policy, the appellee acknowledged liability to the mortgagee to the extent of the note with accumulated interest secured by said mortgage, but denied liability to the mortgagor and did so under the following provisions of said policy: "This entire policy, * * * shall be void if the hazard be increased by any means within the control or knowledge of the insured, or if any change, * * * take place in the * * * possession of the subject of insurance (except change of occupants without increase of hazard) or if * * * there be kept, used, or allowed on the above described premises, * * * gasoline * * * or other explosives * * * or petroleum or any of its products of greater inflammability than kerosene oil of the United States standard."
And there was a provision in the policy that: "On payment to such mortgagee (or trustee) of any sum for loss or damage hereunder, if this Company shall claim that as to the mortgagor or owner, no liability existed, it shall, to the extent of such payment be subrogated to the mortgagee's (or trustee) right of recovery and claim upon the collateral to the mortgage debt, * * * or it may pay the mortgage debt and require an assignment thereof and of the mortgage."
Asserting that the policies had become void as to the mortgagor, the appellee claimed the rights vouchsafed by the foregoing provisions and instituted its suit in equity for recovery against the appellant and for a decree of foreclosure against the real estate. To invoke said provisions, the appellee alleged that for a long time prior to October 1, 1925, the date of the fire,
It was further alleged:
It was further alleged "that on or about July 13th, 1925, after the issuance of said policies, there was a change in the possession of said premises, and a change of occupants with an increase in hazard."
It was further alleged:
On December 30, 1925, the appellee declared said policies void as of July 13, 1925. The trustee named in the deed of trust declined to institute proceedings in foreclosure, and upon such refusal this suit was filed.
The appellant, by his answer, admitted the issuance and delivery of the policies and the execution of the mortgage, but challenged the validity of certain portions of the mortgage clause attached to said policies. He denied other pertinent allegations of the bill.
On July 13, 1925, after the issuance and delivery of said policies, the appellant leased for immediate occupancy a portion of said premises to one Armeno. Thereafter, and until October 1, 1925, Armeno illegally operated a number of distilling apparatuses therein for the distillation of alcoholic spirits, and in connection therewith he had kept large quantities of gasoline and alcohol in said premises.
Said stills had an aggregate capacity of 1,200 gallons of alcohol for each 24 hours. The stills were located on the second and third floor. A part of the equipment was on the first floor. During the same period and for a long time previously, the appellant owned and operated in the same premises the E. L. Miller Manufacturing Company. This company was engaged in manufacturing water fillers, oil burners, ice can fillers, and some other small appliances. It occupied the first floor immediately under the rooms leased by Armeno, in addition to other space. Ingress and egress by Armeno and his employees were observable by those engaged by the E. L. Miller Manufacturing Company.
Appellant's factory employees, as well as occupants of adjacent premises, not only detected the odor of alcohol and cooking mash emanating from said premises, but according to the overwhelming evidence it was necessarily noticeable by all persons in and about those portions of the premises occupied by the E. L. Miller Manufacturing Company.
Appellant testified that he was absent from the factory plant of E. L. Miller Manufacturing Company at all times except between August 9th and August 30th preceding the fire. He disclaimed any knowledge of the use to which said premises were being put by Armeno.
Appellant's son was his agent and assistant and executed the lease to Armeno on behalf of the appellant. It was in evidence that defendant's son was in the room, where some of the stills were located, on one occasion. Moreover, an employee of his father's factory called his attention to the unlawful use being made of said premises. While this was denied by the son, yet it was evidence for the consideration of the chancellor who was able to observe the demeanor of the witnesses.
Several employees of the E. L. Miller Manufacturing Company testified for appellee as to the presence of alcoholic odors and other suspicious circumstances relative to the wrongful use of the premises. There was evidence justifying the inference that the illegal use of said premises by Armeno became a matter of common knowledge in the E. L. Miller Manufacturing Company plant.
The chancellor below properly found from the evidence that the appellant either knew of the wrongful or illegal use of his premises or that he should have known of that fact. Appellant's water bills suddenly increased from a minimum of $1 to more than $20 per month when Armeno became a tenant. The operation of five stills on the second floor immediately above the rooms occupied in part by appellant's factory, with the necessary use of equipment involving material, receptacles, boilers, and other articles, could not be done in secret. Such material and equipment, as well as the product, would have to be moved in and out and would challenge the notice and attention of any one situated as was appellant and his aid. The court properly charged him with knowledge of the unlawful use of his...
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