Scottish Union & National Ins. Co. v. Weeks Drug Co.

• Decision Date: 14 April 1909
• Citation: 118 S.W. 1086
• Parties: SCOTTISH UNION & NATIONAL INS. CO. v. WEEKS DRUG CO.
• Court: Texas Court of Appeals

118 S.W. 1086

SCOTTISH UNION & NATIONAL INS. CO. v. WEEKS DRUG CO.

Court of Civil Appeals of Texas.

April 14, 1909.

Rehearing Denied May 12, 1909.

Appeal from District Court, Nacogdoches County; James I. Perkins, Judge.

Action by the Weeks Drug Company against the Scottish Union & National Insurance Company. From a judgment for plaintiff, defendant appeals. Reversed.

June C. Harris and Crane, Gilbert & Crane, for appellant. S. W. Blount and King & Strong, for appellee.

JAMES, C. J.

The action is one upon a fire insurance policy on goods in appellee's drug store. The court directed the jury to find for the appellee.

The contract contained the following provisions:

"Iron-Safe Clause. The following covenant and warranty is hereby made a part of this policy:

"(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 of issuance of this policy, or this policy shall be null and void from such date, and upon demand of assured the unearned premium from such date shall be returned.

"(2) The assured will 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 for credit, from date of inventory, as provided for in first section of this clause, and also from date of last preceding inventory, if such has been taken, 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, and unless such books and inventories are produced and delivered to this company for examination, this policy shall be null and void, and no suit or action shall be maintained hereon; it is further agreed that the receipt of such books and inventories and the examination of the same shall not be an admission of any liability under the policy, nor a waiver of any defense of the same."

The policy was dated July 22, 1907. Appellee had taken an inventory on May 1, 1907, within 12 months prior to the issuance of the policy. The books kept by appellee failed to show any entry in the books of the cash sales from November 23, 1907, to the date of the fire, which occurred on the night of January 3, 1908. The sales for the month of December were usually from 50 to 75 per cent. more than any other month in the year. This is the undisputed testimony.

It is contended by appellee: That an inventory of the goods on hand, which was taken and completed on January 1, 1908, two or three days before the fire, and testified to as complete and true, rendered such cash account unnecessary and immaterial in arriving at the amount of the loss; also, that the provisions of the act of 1903 (article 3096aa. Sayles' Ann. Civ. St. Supp. 1897-1904) made the keeping of such items of the cash account not material to the risk, in view of said subsequent inventory.

The first of these positions cannot be sustained. The inventory was not, in any sense, a substitute for what was stipulated should be evidenced by the books. The second is also untenable. The peculiar wording of the statute makes it apply only to the truth or falsity of answers or statements in the application or contract, and not what was agreed in the contract to be performed. The case of Insurance Co. v. Whitaker, 112 Tenn. 151, 79 S. W. 121, 64 L. R. A. 451, 105 Am. St. Rep. 916, did not involve a statute worded as this one. The contract was clearly violated by the failure to record the cash sales in the books for the period named, and the consequence of this breach is written in the contract itself, as shown in clause 3, which plaintiff must abide by, having agreed to it, unless appellant has waived, or is estopped from insisting upon, the requirement, which is a matter that will be discussed further on.

At this place we may mention another breach of the policy claimed by appellant; it being in reference to this provision: "The entire policy * * * shall be void * * * if the hazard...