Phoenix Ins. Co. of Hartford v. Bourgeois

• Citation: 63 So. 212,105 Miss. 698
• Decision Date: 13 October 1913
• Docket Number: 16089
• Court: United States State Supreme Court of Mississippi
• Parties: PHOENIX INS. CO. OF HARTFORD v. CAMILLE BOURGEOIS

63 So. 212

105 Miss. 698

PHOENIX INS. CO. OF HARTFORD v. CAMILLE BOURGEOIS

No. 16089

Supreme Court of Mississippi

October 13, 1913

APPEAL from the circuit court of Hancock county, HON. J. I BALLENGER, Special Judge.

Suit by Camille Bourgeois against the Phoenix Insurance Company of Hartford. From a judgment for plaintiff, defendant appeals.

The facts are fully stated in the opinion of the court.

Reversed.

McLaurin Armistead & Brien, for appellant.

The iron safe clause is set forth on record, pages 20 and 21 of the policy. The supreme court of Mississippi has construed this clause directly in two cases: In Aetna Ins. Co. v Mount, 90 Miss. 642. On page 664 in that case the court said that the reasonable enforcement of the iron safe clause in insurance policies has been universally upheld by the courts. Indeed, to prevent fraud, and for the protection of the rights of the Insurance Company, some such clause seems necessary. This court has construed the iron safe clause again in the case of Phoenix Ins. Co. v. Dorsey, decided June 17, 1912, 58 So. 778, wherein the court held, that the iron safe clause was a warranty, and that the loss could not be proven by any other evidence than the books and inventories that were required to be kept by this iron safe clause; that no mere proof of there being some merchandise or a large stock of merchandise in situ at the time of the fire, can be substituted for an inventory; that the only evidence competent to prove any loss for which the company is liable even though it be conceded that the property described in the policy was destroyed by fire was the books and inventories called for in the iron safe clause. This being the settled law of Mississippi, the next question presented is, whether or not the iron safe clause has been complied with in the policy sued on. We respectfully submit that it has not, in any respect. The second paragraph in the iron safe clause required the assured, Bourgeois in this case, to 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 the date of inventory, as provided for in the first section of this clause and during the continuance of this policy. The concluding part of the iron safe clause is, that upon failure to produce such set of books and inventories for the inspection of the company, this policy shall become null and void, and such failure shall constitute a perpetual bar to any recovery thereon. The set of books offered in evidence in this case proved beyond controversy that this appellee, Bourgeois, was carrying on a cash and credit business. This record shows that he carried a general stock of merchandise including groceries, dry goods, boots, and shoes, hardware, queensware, some furniture, and those things incident to a general stock of merchandise.

He kept no cash account or record of his cash sales except the original sheets sent up to the court with this. record, which are the pages taken from his cash book, showing his cash sales, and directed to be sent up to the supreme court for the inspection of the supreme court, the court being of the opinion that it is necessary, for the ends of justice, that the supreme court shall see the original pages of said ledger kept by the appellee, Bourgeois, as part of the record in this case on appeal.

In addition to this, the books of appellee do not show what was taken out of this store for the support and maintenance of himself, wife and ten children for eight and one-half months either in cash or food and clothing. The stock, necessarily, must have been diminished to that extent and yet there is no entry made of it. This is testified to by Bourgeois. He testifies on this page that he had a family, a wife and ten children; that he got his supplies and supported his family out of his store; that he made no entry for himself and family, or for any little cash items that he may have used, and his failure to do so was another violation of the iron safe clause.

The court will see from this testimony of Bourgeois, when the second time on the witness stand, after he had heard the testimony of his accountant, Fowler, that he was undertaking to escape a violation of the iron safe clause, in that he kept no separate record of his credit sales or cash collections on credit sales, which the iron safe clause required him to keep in paragraph two of the clause, where he was obligated to 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; and in his effort to escape a violation of this provision of the iron safe clause he undertakes to hide his mischief in the cash register by saying that he would ring up the cash register and put in his register the cash collections on credit sales, which would include his cash sales and his cash collections on credit sales. That when he took money out of the cash register he always put a slip for money taken out of the register. This behavior has been expressly condemned by the courts as not being a compliance with the iron safe clause. In 2 Cooley's Briefs on Insurance, page 1824 the court will see that it has been held, that the requirement of the iron safe clause is not complied with by the preservation of slips from a cash register. Citing Mounger & Henry v. Delaware Ins. Co. (Tex. Sup. Ct.), 79 S.W. 7, affirming Tex. Civ. App., 74 S.W. 792.

The clause is not complied with where the only record of cash sales kept is a cashbook in which no detailed transactions are recorded, and only the aggregate amount of cash derived from "all" sources is set down at the end of the day. Everett-Ridley-Ragan Company v. Traders Ins. Co. (Ga.), 48 S.E. 918.

From these authorities the court will see that if Bourgeois did the very things that he testifies he did, and that was that the amount of cash sales, appearing on the original sheets before the court, include not only the cash sales but the cash collections on credit sales which he rang up in his register, it was a clear violation of the iron safe clause, in that he kept no complete record of his business transacted, including purchases, sales and shipments, for cash and credit, as provided by paragraph two of the iron safe clause. This, necessarily, must be the law because the insurance company have no way in the world by which they could verify the correctness of any man's books if by his testimony he could account for what he had personally taken out of the stock. Suppose, if the court please, that Mr. Bourgeois had pocketed the cash collections on the credit sales, as shown by this record, and made no entry of it whatever on his books; this would be a clear fraud and unquestionably a violation of his policy, which would prevent him from recovering.

The supreme court of Mississippi, in Phoenix v. Dorsey, 58 So. 778, has expressly held, that the books are the only evidence competent to prove the loss. Now, if the books do not show what became of the cash collections on credit sales, when the books do show that two thousand one hundred and eighty-four dollars and seven cents had been collected, his policy necessarily is avoided, under the iron safe clause.

We respectfully submit that it is not competent to put the plaintiff on the stand when this fact is developed by his own accountant, and have him testify (to save his case) that he put the cash collections on credit sales in his cash register and rang it up as cash, because if this contention could be entertained for a moment, it is in express violation of the holding in Phoenix Ins. Co. v. Dorsey, supra. It would be a dangerous rule, we respectfully submit, to say that when a man's set of books do not show what sales have been made out of his stock, that the whole case can rest in the mouth of the plaintiff, the assured, and let him swear the insurance company into a liability, when the evidence agreed on, to wit, the books, do not show it, a most monstrous fraud could be committed at any time, because it would then lie in the mouth of the assured, the policyholder, to swear to a state of facts to create liability against the insurance company, and this the courts have uniformly held, is not the law.

By reference to 2 Cooley's Briefs on Insurance, page 1825 the court will see the rule laid down as follows: "The books must show, with reasonable certainty, a complete record of the assured's business transactions, including purchases and sales for cash and credit." Citing Phoenix Ins. Co. v. Padgitt, 42 S.W. 800.

"If they do not show these facts so as to furnish the data necessary to enable the insurers to test the accuracy of the accounts delivered to them or afford any satisfactory idea of the amount of goods on hand and destroyed by the fire, the insured cannot recover." Pelican Ins. Co. v. Wilkerson, 53 Ark. 353, 13 S.W. 1103.

Cash transactions must be distinguished from credit," says a writer. Here the effort to escape a violation of the iron safe clause is to say that the cash and credit transactions were commingled, and there is no power on the part of the insurance company to test the accuracy of it. It lies solely in the mouth of the assured, by which he undertakes to establish his own case.

We therefore respectfully submit, that there was a clear violation of the iron safe clause by the testimony of Bourgeois himself, and by the testimony of his hired accountant, Mr. Fowler.

Bowers & Griffith and W. J. Gex, for appellee.

We submit that it is apparent that Fowler had everything that was necessary from the books in which to make a proper account. In the first place, he had the inventory of the goods that formed the...