Rice v. Detroit Fire & Marine Ins. Co. of Detroit, Mich.

• Decision Date: 06 July 1914
• Docket Number: No. 11029.,11029.
• Citation: 176 S.W. 1113
• Court: Missouri Court of Appeals
• Parties: RICE et al. v. DETROIT FIRE & MARINE INS. CO. OF DETROIT, MICH.

176 S.W. 1113

RICE et al. v. DETROIT FIRE & MARINE INS. CO. OF DETROIT, MICH.

No. 11029.

Kansas City Court of Appeals, Missouri.

July 6, 1914.

On Rehearing, May 31, 1915.

Appeal from Circuit Court, Jackson County; Frank G. Johnson, Judge.

Action by W. J. Rice and another against the Detroit Fire & Marine Insurance Company of Detroit, Mich. From a judgment for plaintiffs, defendant appeals. Affirmed.

Fyke & Snider and I. J. Ringolsky, all of Kansas City, for appellant. Yates & Mastin, of Kansas City, for respondents.

JOHNSON, J.

This is an action on a policy of fire insurance issued by defendant to Benjamin Weinberg upon a stock of merchandise at 927-929 Main street, in Kansas City. The property was wholly destroyed by fire March 21, 1912, at 1:30 a. m. The total insurance on the stock was $19,500, and the fixtures in the store were insured for $1,000. After the fire Weinberg assigned all of the policies to his coplaintiff, W. J. Rice, for the benefit of his creditors, to whom he was indebted in the gross sum of $11,618.82. The proofs of loss and evidence of plaintiffs estimate the loss on the stock at $21,511.08, and on the fixtures at $1,500. The petition is in the usual form, and prays for the recovery of the face of the policy, with interest, and for the assessment of the statutory penalty and damages for the alleged vexatious failure and refusal of defendant to pay the loss. The answer interposes a general denial and special defenses, viz.: First, that Benjamin Weinberg was not the sole owner of the property as stated in the policy, but was in partnership with his brother, I. J. Weinberg; second, that the loss was fraudulently overstated in the verified proof; and, third, that the assured burned the store, or caused it to be burned, for the purpose of defrauding defendant and the other insurers. The reply is a general denial. A trial by jury resulted in a verdict and judgment for plaintiff for the face of the policy with accrued interest and for the statutory penalty and attorney's fees, which were assessed on the ground of a vexatious refusal to pay. Defendant appealed and urges grounds for a reversal of the judgment which call for a detailed review of the evidence.

The business in question was started January 5, 1911, by the three Weinberg brothers, Isaac J., Ben (plaintiff), and Sam. All were very young men, plaintiff being 21 years old. There is evidence that the business was launched by a partnership composed of Isaac and Ben, and that the partnership continued until the date of the fire, but, on the other hand, there is substantial evidence that Ben was the sole proprietor and employed his brothers. The business was begun with a stock of goods purchased of Rice, the coplaintiff, on credit for $8,700. The cash capital consisted of $1,800 or $2,000, borrowed from a relative. New goods were bought and added to the stock from time to time, and a rather flourishing retail business was done in the first year. As a part of the enterprise special sales were conducted in small cities and towns, goods being sent out in trunks for that purpose. The evidence of defendant tends to show that the business made no profit but was losing ground, while the evidence of plaintiffs shows a small net profit. The expenses of doing business were almost $1,000 per month. The owner of the building was contemplating rebuilding, and plaintiff had no lease, but was renting from day to day. This situation prevented him, for a time, from obtaining all the insurance he wished to carry, and during the year 1911 his insurance on the stock did not exceed $10,000, but in the early part of 1912 he was allowed to increase the amount to $19,500. Plaintiff, his two brothers, Mr. Caskey, a clerk, and Sam Salz left the store together at 7:30 p. m. on Wednesday, March 20th, went to their respective homes, leaving the store securely locked, and the fire occurred shortly after midnight when, so far as is definitely known, no one was in the store.

Salz was not regularly employed by Weinberg, but had been employed occasionally, and had been on somewhat intimate terms with the Weinberg family for a number of years. He had also established some sort of relationship with the Western Adjustment & Inspection Company, a concern maintained by the general agents of a number of fire insurance companies to adjust losses and to discover and contest fraudulent insurance claims. The main Western office of this institution was in Chicago, and there was a branch office in Kansas City in charge of Charles L. Whittemore. Salz was well known to the officers of the company at Chicago and had become acquainted with Whittemore a year or more before when, at the request of the Chicago office, Whittemore had given him transportation and money to go to Chicago to testify for the Insurance Companies in a suit pending there. Salz was also acquainted, and in some mysterious way connected with Louis Lapiner, a professional adjuster of fire losses for the assured, who was doing business in Chicago and who, as will appear, was on the most cordial terms with the officers of the Adjustment Company. In short, Salz had ceased to be an ordinary dry goods clerk, in which capacity he had been employed by Weinberg's father during his business career in Kansas City, and had become a professional appraiser and witness in "shady" fire insurance cases.

Two or three days after the Weinberg fire Salz called on Whittemore to ascertain, so he testified; if Whittemore had "any appraising losses for me." Whittemore mentioned another loss, but when Salz called again, told him that it had been settled, and then asked him if he knew Weinberg. On being answered in the affirmative, Whittemore, who at that time represented only three of the interested companies, said the companies thought the loss was fraudulent, and proposed to give Salz $4,000, or 20 per cent. of the face of all the insurance if he could get Weinberg to abandon his claims and surrender the policies. Salz thought it would be necessary to Procure expert assistance, and suggested the employment of Lapiner in a plan to entrap Weinberg into visiting Whittemore's office, where they would scare him into the abandonment of his claims and policies. Whittemore agreeing, communications were opened with Lapiner, who demanded $1,000 for his services. This was granted, and the final agreement was that Salz, who was to play the part of decoy and false friend of Weinberg, was to receive $1,500 for his services, if the plan worked out successfully. Salz testified that he learned from Whittemore the nature of the evidence on which the latter grounded his charge of fraud against the Weinbergs, and that his part in the proposed plan Was to induce Weinberg to choose him as his appraiser in an appraisement to which Whittemore would pretend to agree, and to procure the presence of Weinberg at a meeting of the appraisers in Whittemore's office, where Whittemore would denounce Weinberg as an incendiary, confront him with the proofs he had gathered and, by threatening a criminal proceeding, intimidate him into surrendering the policies and relinquishing his claims. If Weinberg refused, the appraisers were to proceed and appraise his loss at $1,000. Strange as it is, this story, coming as it does from a witness so thoroughly discredited by his own admissions, is corroborated by the evidence of defendant in most of its vital parts.

Whittemore admits promising, and afterwards paying, Salz $1,500 to betray his friend into surrendering the policies; and, though he attempts to soften and even to justify what he did, his own testimony convicts him of conduct so corrupt as to warrant the inference that, however strong the proof of Weinberg's guilt may appear to be, it is the cunning and false fabrication of his conscienceless accusers. Whittemore states that Salz came to his office, told him that Weinberg had caused the store to be burned, and offered to disclose the evidence for a consideration. At first Whittemore declined to promise anything more definite than that the companies "would tote fair with him," but later agreed "that if it was true that Weinberg caused the fire to be set out and his confession could be secured and the surrender of the policies secured, we would pay him $1,500." This was satisfactory to Salz, who disclosed the means by which the store had been burned. With the information thus obtained Whittemore proceeded to an investigation, which resulted in the production at the trial of evidence tending to show the following state of facts:

Saturday night, March 9, 1912, I. J. Weinberg went to St. Louis where he arrived early the next morning. Edwin Horn, a broker in ladies' garments, testified that in response to a telephone message he met Weinberg and took him to his office, where he sold him a bill of goods amounting to $600 or $700; that he took Weinberg out to his home to dinner, and at 8:30 or 9 o'clock p. m., returned with him to the Planters Hotel and went with him into a telephone booth. Weinberg called up the residence of Sam Menz, a notorious criminal whose specialty was scientific arson. Menz was not at home, and Weinberg remarked to Horn that he would wait over until the following day to see him. Horn asked Weinberg why he called up Sam Menz. Weinberg retorted, "Do you know him?" Horn said, "I do." Weinberg asked, "Why do you know him?" and Horn answered: "Why do I know him? I know him for what he is, a firebug and a criminal and a crook." Then Weinberg said, "I'll tell you why I called him up. We are in a bad way, and we can't get out, and we want to have a `dhafang' or `hottler'"—an expression—the witness explained—descriptive of a wedding or a "hot time."

At dinner that evening, which was Sunday, March 10th, Weinberg borrowed $5 from another guest of Horn, and gave his check dated the next day. The check was introduced in evidence, as was also another cheek for the same amount borrowed of Horn on the following...