Northern Assur. Co. v. Del Moral

• Decision Date: 18 July 1924
• Docket Number: 1654.
• Citation: 300 F. 513
• Parties: NORTHERN ASSUR. CO. Limited, v. DEL MORAL.
• Court: U.S. Court of Appeals — First Circuit

300 F. 513

NORTHERN ASSUR. CO. Limited, v. DEL MORAL.

No. 1654.

United States Court of Appeals, First Circuit.

July 18, 1924

Carroll G. Walter, of New York City (Edward J. Patterson, of New York City, and J. Henri Brown, of San Juan, Porto Rico on the brief), for plaintiff in error.

Hugh R Francis, of San Juan, Porto Rico, for defendant in error.

Before BINGHAM, JOHNSON, and ANDERSON, Circuit Judges.

ANDERSON Circuit Judge.

This was a suit on a fire insurance policy to recover for a loss caused by a fire on January 25, 1921. The policy, dated December 18, 1920, ran for three months and was for $35,000. The plaintiff had a verdict and judgment for $30,000.

The chief defenses were:

(1) That the plaintiff actually owned and had stored in the warehouse where the fire occurred sugar of a value less than $8,000.

(2) That the claim was fraudulent, in that the fire was set by the procurement or with the connivance of the plaintiff.

(3) Fraudulent, in that the plaintiff presented a false and padded claim as to the amount of sugar burned or damaged by fire and water.

The case comes here on 43 assignments of error.

A vital, although not on the merits a finally conclusive, point calls for preliminary consideration. In the plaintiff's declaration it is set out that the policy provided, 'Loss, if any, payable to the American Colonial Bank of Porto Rico, as interest may appear,' and that at the time of the fire the sugar was pledged to said bank to secure an indebtedness of the plaintiff amounting to $7,000. That the policy was so payable is admitted in the answer. There was undisputed evidence that at the time of the trial the bank's interest under the policy was $8,000. It is therefore manifest that the bank was a necessary party. McDowell v. St. Paul F. & M. Ins. Co., 207 N.Y. 482, 485, 101 N.E. 457; North British & Mercantile Ins. Co. v. Rose, 228 F. 290, 292, 142 C.C.A. 582; Lewis v. Guardian Fire & Life Ins. Co., 181 N.Y. 392, 397, 398, 74 N.E. 224, 106 Am.St.Rep. 557.

Defendant argues that this error is covered by the forty-third assignment, 'that the verdict and judgment are contrary to law. ' Whether so covered or not, this court should, under the eleventh rule (150 F. xxvii), notice so plain an error, even though not assigned. Proper proceedings to avoid this fatal defect as to parties should be taken before another trial on the merits.

The policy covers property described as:

'1,000 bags San Francisco 1st of 110 lbs. per bag,

1,000 bags San Francisco 1st of 150 lbs. per bag,

2,000 bags Constancia 1st of 125 lbs. per bag,

400 bags Constancia 2d of 250 lbs. per bag,

which the insured has in a warehouse, constructed of masonry, with brick roofing and iron doors, situated on Union street, * * * Mayaguez, Porto Rico.'

Under section 11 of the conditions is the usual provision that, in case of fire, notice shall be given and proofs of loss with requisite vouchers duly submitted within 15 days after the fire. Section 13 provides, in effect, that if a fraudulent claim be presented, or if fraudulent means or documents be used by the insured for the purpose of making any kind of profit through the policy, or if the fire has been caused voluntarily by the insured or with his complicity, the insured shall be deprived of any rights arising out of the policy.

The exceptions and assignments of error largely pertain to the evidence offered in support of the plaintiff's claim as to the amount of sugar in the warehouse and his ownership thereof.

The warehouse belonged to Angel Martinez, brother-in-law of the plaintiff. It was a building 108 feet long, 58 feet wide, and 17 feet high, made of brick, with concrete floor, divided into three aisles by brick columns. The building was not burned, or substantially, if at all, injured, by the fire.

The fire broke out at about 9 o'clock at night, amongst the stacked bags of sugar. There was evidence, uncontradicted, that paper was found thrust in between the bags; that there was a pail of gasoline found in the warehouse; that the bags were stacked horseshoe shape, or in a hollow square, so as to give a deceptive appearance as to the amount of sugar there, and that in the hollows were found barrels with burned paper and other combustibles.

Still more suspicious was the fact that on the day before the fire rumors were so rife in Mayaguez that there was to be a fire in that warehouse that Mr. Todd, representing the American Colonial Bank, which, as above noted, had an interest as pledgee in the sugar and in the policy now sued upon, saw the plaintiff and told him that there was a rumor that there was to be a fire, and that he (Todd) thought Moral ought to take steps to protect himself as well as the bank's interest; that to this the plaintiff replied that he did not believe the story, and thought it was merely propaganda by the enemies of his brother-in-law, Martinez. He assured Mr. Todd that he would take proper steps to look into the matter. While his testimony is that he visited the warehouse between 5 and 6 o'clock that afternoon, it does not appear that he took any precautions to prevent the fire; he went to his house, about a mile away. Martinez was out of town.

One Rodriguez, a member of the firm of agents representing the Yorkshire Insurance Company, which was then carrying policies for Martinez aggregating $35,000 on goods in this warehouse, heard, on January 24, these prophecies, and with one Gomez, representing the Commercial Insurance Company, called on the plaintiff and informed him of them, and that they were disposed to cancel the policies which their companies were then carrying. The plaintiff assured them that they could 'go away in peace, that he would be the first one to look out if anything were going to take place, for as far as he knew nothing was going to take place,' and 'there was not going to be a fire. ' But the rumors were so persistent that the agent of the Yorkshire Insurance Company canceled $30,000 of the $35,000 insurance which it was then carrying for Martinez, overlooking a $5,000 policy which it was carrying in the name of the plaintiff, although indorsed over to Martinez. As a result of these rumors, the defendant's agent caused a watchman to be stationed at this warehouse. This watchman arrived about 8 o'clock in the evening, and at that time saw no signs of fire. The warehouse doors were closed; it had no windows, but there were air spaces above the doors. About 9 o'clock the prophesied fire broke out, and was disclosed by smoke pouring out of these air spaces. The watchman went for a policeman; on his return he found one of the doors, which was locked from within, open. The fire department was summoned and the contents of the warehouse were drenched for two or three hours. The fire seemed to have broken out in three places in the contents of the warehouse, mostly sugar and coffee. The water was the main cause of damage. The fire was supposed to be extinguished at about midnight, but it broke out again two or three hours later; this necessitated another drenching.

There was also evidence that on the day before the fire several cartmen were carrying sugar from the warehouse to the station, and that shortly after 6 o'clock on the evening of the fire, when most of the other business establishments were closed, a metal drum, of the kind generally used for gasoline, was taken from a cart into the warehouse through one of the rear doors.

At the time of the fire, on plaintiff's own evidence, the sugar was worth only about one-third of its cost.

Manifestly, the extent of loss arising from a fire originating under such suspicious circumstances should be proved by plain and clearly competent evidence; little, if anything, should be left to the ordinary presumptions. It was not so proved. But the evidence on this vital issue was complicated, confused, and confusing. About 30 of the errors assigned are grounded on exceptions taken to the admission of documents and parol evidence, alleged to bear upon the plaintiff's ownership of sugar in the warehouse at the time of the fire. This evidence took an extraordinarily wide range. Plaintiff was permitted to offer evidence tending (at any rate as was claimed) to show that at the time of the fire he owned in this warehouse 9,455 quintals of sugar, then worth about $61,875, and nearly all destroyed by fire and water.

On what theory of the case it was thought proper to show the plaintiff's purchases and ownership of sugar, outside the sugar covered by the policy, we do not discover. The course of the trial was one calculated to lead the jury away from the real questions before them, which (apart from the plaintiff's alleged connection with the origin of the fire) were:

(1) What amount of sugar, of the kinds and description covered by the policy, did the plaintiff own and have in that warehouse at the time of the fire?

(2) What part of such sugar so owned and located was then destroyed or damaged?

But the plaintiff, instead of attempting to show by direct, clean-cut evidence the purchase, continued ownership, and destruction of the sugar covered by the policy, was permitted to go into the general course of his speculative sugar dealings over a period of about eight months. Plaintiff testified to the effect that, as he was a member of a firm under the articles of copartnership of which he was prohibited from engaging in outside business, he had carried on his sugar transactions through his brother-in-law Martinez. Plaintiff and Martinez were then permitted to offer evidence of large purchases of sugar, mostly in April and May, 1920, all made by Martinez aggregating nearly $200,000, at prices ranging from about 18 to about 22 1/2 cents per pound. Some of the sugar was, as Martinez...