Phcenix Ins. Co v. Sherman

• Decision Date: 18 November 1909
• Citation: 110 Va. 435,66 S.E. 81
• Parties: PHCENIX INS. CO. v. SHERMAN.
• Court: Virginia Supreme Court

(110 Va. 435)

66 S.E. 81

PHCENIX INS. CO.

v.SHERMAN.

Supreme Court of Appeals of Virginia.

Nov.18, 1909.

Error to Circuit Court, Wise County.

Action by J. B. Sherman against the Phoenix Insurance Company on an insurance policy. From a judgment entered after overruling a demurrer to the evidence for plaintiff, defendant brings error. Reversed.

Phlegar & Powell and Irvine Morison, for plaintiff in error.

Bullitt & Chalkley and Ayers & Fulton, for defendant In error.

CARDWELL, J. The defendant In error brought this action in the circuit court of Wise county against plaintiff in error to recover the amount of an insurance policy issued covering a stock of general merchandise in his store.

Upon the trial of the cause, and after the evidence had all gone to the jury, the defendant demurred thereto, in which demurrer the plaintiff joined, and the court, after taking time to consider as to its judgment, overruled the demurrer to the evidence and entered judgment for the plaintiff for the full amount of the policy, $2,000, ascertained as the damages by the verdict of the jury subject to the ruling of the court upon the demurrer to the evidence.

The policy in question was written and took effect May 12, 1907, to expire on the 12th day of May, 1908, and the fire occurred December 24, 1907, resulting in a total loss of the goods covered by the policy.

The defenses to the action relied on were, first, those arising under the iron-safe clause of the policy; and, second, fraud and false swearing touching the subject-matters involved in the suit, which were set out in the written grounds of the defendant's defenses, but, In so far as it was alleged that the plaintiff had been guilty of false swearing in regard to his losses, the removal of goods from the store prior to the fire, the entry on such books as he claimed to have kept of all goods removed from the store, and that the plaintiff caused or connived at the fire in question, the grounds of defense are waived in the argument in this court; so that the case turns upon whether or not the judgment of the circuit court upon the demurrer to the evidence should have been for the defendant, upon the grounds that the plaintiff had not taken, kept, and produced the inventories of his stock of merchandise, nor the set of books he was required to take, keep, and produce by the Iron-safe clause of the policy sued on.

The iron-safe clause is 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 thirty days after the issuance of this policy, or the policy shall be null and void from such date, and upon the demand of the assured the unearned premium from such date shall be returned.

"(2) The assured shall keep a set of books which shall clearly and plainly present a complete record of the business transacted, including all purchases, sales, and shipments, both for cash and credit, from date of inventory, as provided for In the 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 fire proof safe at night, and at all times when the building mentioned in this policy is not actually open 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."

The contention of the defendant is that the plaintiff is not entitled to recover on the policy for the reasons, first, that he failed to keep and produce certain Inventories required by the policy, viz., the Inventories said to have been made by him In April and October, 1907; second, that the inventory dated January 1, 1907, was not such an inventory as he was required to take and produce, in that a number of the articles contained therein were put down in lump sums, or the entire bills listed without being separated into their necessary component parts; and, third, that the so-called "cash book'' produced by the plaintiff is insufficient, in that it does not comply with the requirements of the Iron-safe clause of the policy.

It would be difficult to find a more unsatisfactory compliance with the Iron-safe clause of an Insurance policy covering a stock of general merchandise than is offered in evidence in this case. The inventory produced and claimed to have been made January 1. 1907, months before the policy was issued, is a mere statement of articles put down In lump sums, or entire bills are put down at a gross sum, and no statement made as tothe number of the several articles named, or their quality or cost price. To illustrate the character of this so-called inventory, we have only to mention a few of the various articles embraced therein, viz.: One case of jewelry. $250; one bill of medicine, $10; one bill of shoes, $61.50; "to bill of hats, " $22.50; "to bill of shoes, " $67.40; "one bill dishes, " $45.84; "lamps, " $6.30; glass assortment, $9.50.

There is nothing unreasonable in the requirements of the iron-safe clause found in every policy of insurance issued on a shifting stock of merchandise. Under that clause, the insurer has a right to such a compliance with its terms as will Inform him during the life of the policy, fairly and intelligently, as to the stock of merchandise carried by the insured, and, in case of loss by fire, as to the stock of merchandise burned and the fair cash value thereof; and it is no hardship upon the insured to comply with this requirement of his policy. Any other rule would open wide the doors for the perpetration of frauds and the grossest impositions upon insurers.

Lexicographers say that "an inventory is an itemized list of the various articles constituting a collection, estate, stock In trade, etc., with their values."

In Fire Ass'n of Phil. v. Calhoun, 28 Tex. Civ. App. 409, 67 S. W. 153, it is said: "The ordinary and accepted meaning of the word 'inventory' is an itemized list or enumeration of property, article by article. Where a fire...