Oshkosh Packing & Provision Co. v. Mercantile Ins. Co.

• Decision Date: 11 April 1887
• Citation: 31 F. 200
• Parties: OSHKOSH PACKING & PROVISION CO. v. MERCANTILE INS. CO. OF MOBILE, ALA.
• Court: U.S. District Court — Eastern District of Wisconsin

31 F. 200

OSHKOSH PACKING & PROVISION CO. v. MERCANTILE INS. CO. OF MOBILE, ALA.

United States Circuit Court, E.D. Wisconsin.

April 11, 1887

Finch &amp Barber and Chas. W. Felker, for plaintiff.

Gabe Bouck and John W. Hume, for defendant.

DYER J., (charging jury.)

On the fifteenth day of May, 1885, the Mercantile Insurance Company of Mobile, Alabama, the defendant in this suit, in consideration of the payment to it of a certain premium issued to the plaintiff, the Oshkosh Packing & Provision Company, a policy of insurance by which it insured the plaintiff to the amount of $1,500 against loss of certain property therein specified by fire for the period of one year, extending from May 15, 1885, to May 15, 1886. The specifications of property insured, with the several amounts of insurance on the different classes of property as contained in the policy, are as follows:

'$677.40 on the 2 and 3 story frame packing-house, including dry and chill room, and on one-story frame boiler and engine house adjoining, including steam heating and hoisting apparatus (excepting engine and boiler,) situate on the west bank of Lake Winnebago, east of Chicago and N.W.R.R. tracks, Oshkosh, Wisconsin.

'$77.43 on engine and boilers, pumps, and other connections contained in said engine and boiler house.

'$212.91 on fixed and movable machinery, shafting, bolting, tanks, coolers, piping, tubing, furniture, fixtures, tools, and all other implements used, all contained in said packing-house, and boiler and engine house.

'$483.87 on hogs, and hog and beef product, lard, and grease rendered and in process of rendering, salt, ice, cooperage, boxes, coal, syrups, and all material used in packing and curing meats, their own, or held by them in trust or on commission, or sold but not delivered, contained in above-described packing-house.

'$29.04 on one-story frame beef-house south of above-described premises.

'$1935 on beef product contained therein.'

-- Making a total insurance on these different classes of property of $1,500. The policy also contains certain clauses or conditions which have a bearing upon the defense here interposed, and which I read to you:

'First. All fraud or attempt to defraud, by false swearing or otherwise, shall cause a forfeiture of all claim on this company under this policy.

'Second. Persons sustaining loss or damage by fire shall forthwith give notice of said loss to the company, and, as soon after date as possible, render a particular account of such loss, signed and sworn to by them, stating whether any and what other insurance has been made on the same property, giving copies of the written portion of all policies thereon; also the actual cash value of the property and their interest therein; for what purpose and by whom the building insured or containing the property insured, and the several parts thereof, were used at the time of the loss; when and how the fire originated; and shall also produce a certificate under the hand and seal of a magistrate or notary public (nearest to the place of the fire, not concerned in the loss as a creditor or otherwise, not related to the assured) stating that he has examined the circumstances attending the loss, knows the character and circumstances of the assured, and verily believes that the assured has, without fraud, sustained loss on the property insured to the amount which such magistrate or notary public shall certify.

'Third. The cash value of the property destroyed or damaged by fire shall in no case exceed what would be the cost to the assured at the time of the fire of replacing the same; and, in case of the depreciation of such property by profitable use, or other causes, from use or otherwise, a suitable deduction from the cash cost of replacing the same shall be made, to ascertain the actual cash value.'

The plaintiff, claiming that there was a total loss of the insured property by fire on the thirteenth day of September, 1885, seeks to recover the amount of the insurance for which it alleges the defendant is liable under this policy.

The defendant alleges, by way of defense, that the plaintiff, in the proofs of loss furnished to the defendant under one of the provisions of the policy which I have just read, falsely and fraudulently stated and swore that it had sustained a loss by the fire to the amount of $18,210.70, when in truth it did not sustain a loss to exceed $10,000. Further, that the plaintiff falsely and fraudulently stated and swore in its proofs of loss that it had sustained by the fire loss of its stock in business to the amount of $5,965.90, when in fact its loss of stock did not exceed $1,000. This is what the defendant alleges by way of defense. In other words, the defense is that the plaintiff knowingly and fraudulently exaggerated and misrepresented its loss, for the purpose of obtaining from the insurance company more money on account of the loss than it was justly entitled to.

Under the conditions of this policy, it became the duty of the plaintiff company, after the fire, to render to the insurance company a particular account of the loss, duly signed and swore to; in short, to make what has been spoken of as 'proofs of loss,' which should fully and truthfully exhibit to the company the character, extent, and circumstances of the loss, this being very properly required as a basis of either payment of the insurance, or any other future action of the parties. In due time after the fire, proofs of loss were made in this case, which are in evidence. They appear to have been made and sworn to by Charles G. Baumann, president of the Oshkosh Packing & Provision Company, and state the losses as follows:

'On two and three story frame packing-house, including dry and chili room, and on one-story frame boiler and engine house adjoining including steam heating and hosting apparatus, (except engine and boiler,) $7,594.92; on one-story frame beef-house, $649.35; on boiler, engine, pump, and other connections, $938.34; on stock in packing-house, consisting of hams, shoulders, mess pork, mess beef, sausage, lard, tallow, etc., $5,965.90; on machinery and apparatus not part of the building, $3,062.19.'

-- Making the total loss, as claimed and sworn to in the proofs, $18,210.70.

As we have seen, the policy in suit provided that all fraud, or attempt at fraud, by false swearing or otherwise, should cause a forfeiture of all claim on the company under the policy. To maintain this defense of fraud in making the proofs of loss, it is incumbent upon the defendant to show that the insured-- that is, some one of the officers of the plaintiff company--knowingly and intentionally swore falsely in the proofs of loss in some material respect pertaining to the extent of the loss. The clause in the policy, in regard and false swearing, is to be viewed in connection with the general nature of the contract; and, so viewing it, it is plain that it was intended thereby to require the insured to give the insurer real and reliable information as to the amount of the loss; and that an honest mistake, or unintentional error, or unintentional misstatement in the proofs of loss, would not avoid liability on the part of the insurance company. If any untruthful statements were made in the proofs of loss in respect to the value or quantity of the property destroyed, it must appear, in order to defeat a recovery on that ground, that such false statements were intentionally and willfully made for the purpose of deceiving and defrauding the insurance company. The mere fact, in a case of this kind, that a party who seeks to recover insurance has even largely overstated the value of the property destroyed, will not, of itself and alone, relieve the company from liability. In order to prevail on this ground, the insurer must show that the insured knew it was worth much less than he swore it to be. There may be an honest difference of opinion as to the real value of property. Such a difference of opinion does often exist in the minds of men as to the value of property, because that question may rest largely in opinion. And if the jury find that even though a valuation is largely excessive, yet if it was made by the insured in good faith, his statement in that respect cannot...