Spring Garden Ins. Co. v. Amusement Syndicate Co.

• Decision Date: 14 February 1910
• Docket Number: 3,116.
• Citation: 178 F. 519
• Parties: SPRING GARDEN INS. CO. et al. v. AMUSEMENT SYNDICATE CO. et al [1]
• Court: U.S. Court of Appeals — Eighth Circuit

178 F. 519

SPRING GARDEN INS. CO. et al. v. AMUSEMENT SYNDICATE CO. et al ^[1]

No. 3,116.

United States Court of Appeals, Eighth Circuit.

February 14, 1910

The following are the memoranda of decision of Pollock, District Judge, on exceptions to report of special master:

The facts, as found in the record, which give rise to this suit may be briefly summarized as follows:

In the month of September, 1906, defendant the Amusement Syndicate Company (hereinafter called the 'Amusement Company') was the contract purchaser of a certain opera house and business property located in the city of Topeka, and furniture and fixtures therein, subject to claim for unpaid purchase money held by defendant the Bank of Topeka (hereinafter called the 'Bank '). This real and personal property was covered by policies of insurance issued and delivered to the Amusement Company by insurance companies, and in amounts, as follows: The American Fire Insurance Company, of Philadelphia, Pa., $2,500; Commercial Union Assurance Company (Limited), of London, Eng., $2,000 the Western Assurance Company, Toronto, Canada, $5,000 Milwaukee Mechanics' Insurance Company, Milwaukee, Wis $1,500; Westchester Fire Insurance Company, of New York City, $2,500; the Spring Garden Insurance Company, Philadelphia, Pa., $3,000; the Columbia Fire Insurance Company, Omaha, Neb., $2,500; the Prussian National Insurance Company, of Stettin, Germany, $1,500; Security Insurance Company, New Haven, Conn., $1,000; New Hampshire Fire Insurance, of Manchester, N.H., $1,500; the Agricultural Insurance Company, of Watertown, N.Y., $2,500. 'Each of said policies provided that the loss, if any, should be payable to the Bank as its interest might appear, and each policy further provided that: 'The company shall not be liable under this policy for a greater proportion of any loss on the described property, or for loss by any expense of removal from premises endangered by fire, than the amount hereby insured shall bear to the whole insurance, whether valid or not, or by solvent or insolvent insurers, covering such property.' Each policy also makes the usual provision found in stock policies for appraisal by arbitrators in case of disagreement as to any loss occurring under the policy.

On the morning of September 27, 1906, a fire occurred in the property, damaging both the building and furniture to a very large extent. The fire was occasioned by the ignition of natural gas, which was escaping from a leaking pipe in the building. After loss occurred, and proofs thereof made to the companies issuing the policies, and on December 18, 1906, the Westchester Fire Insurance Company paid the full amount of its policies, aggregating $2,500. Thereafter the remaining policies not having been paid, the Amusement Company and the Bank jointly brought actions at law on all of the policies in the appropriate state court of this state, and such actions as were removable into this court were by the appropriate proceedings removed herein. After issue joined in such law actions this suit was brought by complainants, the Spring Garden Insurance Company and the Columbia Fire Insurance Company against the Amusement Company, the Bank, and also against all other insurance companies having outstanding unpaid policies covering the property.

In the bill of complaint it is charged the policies of insurance, each and all, were obtained by misrepresentations and fraud on the part of the representative of the Amusement Company; that the representative of the Amusement Company willfully swore falsely in making the proofs of loss required by the terms of the policies to be made; that an explosion of natural gas preceded the fire in point of time, which damaged the property covered by the insurance to the amount of $2,500, for which damage it is claimed the insurance companies are not liable on the policies; that the insured had failed and refused to comply with the requirements of the policies providing for an appraisal of the damage sustained on a disagreement arising as to the amount of the loss; and, further, that as each policy provides, in case of loss thereunder, the maker of the policy shall be liable only in such proportion as the damage sustained bears to the full amount of insurance carried on the property, only a court of equity can estimate the damage sustained and apportion the loss among the companies. Wherefore it was prayed the policies be canceled, the actions at law, both in this court and in the state court, be stayed, and, in the event the policies be found valid and enforceable, the damage sustained by the fire alone be estimated and apportioned in accordance with the terms of the several contracts.

To the bringing and maintaining of this suit in equity defendants the Amusement Company and the Bank interposed a demurrer for want of equity, but did not urge such objection on the court, but, on the contrary, expressed a willingness that the suit in equity should proceed to a full determination of the rights of the parties, and the actions at law be stayed. Therefore the right to bring and maintain this suit or the cross-bills filed herein is not raised at this time, but is waived by the parties.

Defendants the Amusement Company and the Bank answered the bill, and also filed a cross-bill, praying an enforcement of the policies according to their terms. The defendant insurance companies filed answers admitting the charges made in the bill, and also filed cross-bills raising the same contentions with the assured made by complainants in the bill. Thereafter, on issues joined and on stipulation of parties filed, a special master was appointed. The order of his appointment reads as follows: 'To hear the testimony offered by the parties herein as hereinafter provided, and to report the same, together with his findings of fact and recommendations respecting the decree or decrees to be entered herein,' etc. The proofs were taken by the master, who heard arguments of solicitors thereon, and who reported the facts found by him and his recommendations as to the decree which should be entered in the suit.

From the facts as found by the master there was neither misrepresentation nor fraud practiced by the assured in obtaining the policies. It is further found there was no willful false swearing in making the proofs of loss by the assured. Again, it is found the provisions of the policies requiring an appraisement by arbitrators of the damages sustained by reason of the fire was entered upon, but abandoned by mutual consent of the parties; that the explosion of the gas and fire occurred simultaneously, was one and the same, and therefore there should be no deduction from the loss sustained for damages by explosion; that the aggregate amount of insurance carried at the time of the fire was $25,500, of this amount $20,100 on the real estate and $5,400 on the personal property. The value of the property was found by the master to be $50,000. Damage done to the real property, $17,250; to the personal property, $4,741.08. It was therefore recommended by the master, as the aggregate amount of loss sustained was found to be $21,991.08 and the aggregate amount of insurance carried $25,500, that a decree enter proportioning the amounts to be paid by the insurance companies in accordance with the terms of the policies; that the costs of suit be taxed against the insurance companies and paid in like manner, including the sum of $3,500 to solicitors, as counsel fees, under the statutes of this state; further, that the law actions brought by the Amusement Company and the Bank shall be dismissed, and costs therein taxed against the same parties.

To this report certain exceptions have been taken, briefly stated as follows: (1) That the master should have found a portion of the damage accruing to the insured was occasioned by reason of the explosion, and not from fire, and such damage should have been estimated by the master in at least the sum of $2,500 averred in the bill, and this amount should have been deducted from the aggregate amount of loss found; (2) that the master should have found from the proofs the assured failed and refused to comply with the provisions of the policies requiring an appraisal of damage sustained by arbitrators, and therefore neither the actions at law commenced by the assured nor this suit can be maintained on the policies; (3) the master should have found the representative of the Amusement Company in making the proofs of loss willfully swore falsely therein as to the value of the property damaged, and therefore no recovery can be had on the policies under the provisions thereof; (4) that no allowance in this case for solicitor's fees may be made under the statute of this state, because the loss was not total, but partial only; (5) the complainants and cross-complainant insurance companies should not be taxed with the cost of the actions at law brought by the assured on the policies on the dismissal of such actions.

To the findings of fact made by the master that the policies were not obtained by fraud or misrepresentation, and as to the amount of the loss sustained by the assured from fire, or the manner of its apportionment among the insurance companies, no exceptions are taken. Therefore I shall consider the exceptions taken in the order as stated above, and in so doing, under the form of the consent order of reference above quoted, it is clear, where the facts found by the master are supported by conflicting proofs, such findings should not be disturbed by this court, following the rule announced by the Supreme Court in Kimberly v. Arms, 129 U.S. 512, 9 Sup.Ct. 355, 32 L.Ed. 764, Crawford v. Neal, 144 U.S. 585, 12 Sup.Ct. 759, 36 L.Ed. 552, Furrer v Ferris, 145 U.S. 132, 12 Sup.Ct. 821, 36...