Stewart v. American Home Fire Ins. Co., 37938

• Decision Date: 23 April 1951
• Docket Number: No. 37938,37938
• Parties: STEWART et al. v. AMERICAN HOME FIRE INS. CO.
• Court: Mississippi Supreme Court

Page 30

52 So.2d 30

211 Miss. 523

STEWART et al. v. AMERICAN HOME FIRE INS. CO.

No. 37938.

Supreme Court of Mississippi, Division B.

April 23, 1951.

Morse & Morse, Poplarville, for appellants.

Wallace, Greaves & Wallace, Gulfport, for appellee.

ETHRIDGE, Commissioner.

Appellants, H. V. Stewart and Roy Boone, were the insured under a fire insurance policy issued by appellee, American Home Fire Insurance Company, covering their dry cleaning and pressing shop in Poplarville, Mississippi, known as Modern Cleaners. The policy was issued on January 6, 1948, and on the night of December 24th of that year the shop was totally destroyed by fire at a time when it was closed. The policy was a standard fire insurance contract and covered under one item, furniture, fixtures, equipment, and supplies, and under another item, 'clothing cleaned, being cleaned, and not delivered while contained in above described building.' Appellee paid appellants' claim for the first item on March 1, 1949, but denied liability for the latter, on the grounds that appellants had failed to comply with a provision in the policy to keep records of the clothing in their possession, and that appellants had executed a release or accord and satisfaction.

The policy contained a standard iron-safe clause which applied 'only to merchandise on storage or for sale.' This clause does not apply to the losses in question, as appellee virtually concedes in failing to base its argument upon it. It does not cover a bailment relationship such as the present one, where the owners of the clothes placed them in the hands of appellants as bailees to clean them. 6 Am.Jur., Bailments, Secs. 13, 14. Further, a rider attached to the policy covered expressly this type of insured property, and it conflicted in several respects with the merchandise iron-safe clause. Where there is a conflict between a clause in a standard printed policy and a rider attached to it, the rider controls. Camden Fire Insurance Association v. New Buena Vista Hotel Company, 1946, 199 Miss. 585, 24 So.2d 848, 26 So.2d 174; 29 Am.Jur., Insurance, Sec. 162. The controlling provision is as follows:

'Record Warranty Clause Customer's Goods, Laundry and Dry Cleaning Plants

'It is warranted by the insured that they will keep such records as will show at all times such goods and articles as they are liable for and held by them in trust at the time of the loss, if any, and will keep such records securely locked in a fireproof safe at night and at all times--when the building mentioned in this policy is not actually opened for business--and failing in this the insured will keep such books and records in some place not exposed to fire which would destroy the above said building. In event of failure to produce such books and records for the inspection for the Company--this policy shall become Null and Void.'

At the trial in the Circuit Court of Pearl River County, both of the appellants testified, and the trial court then sustained appellee's motion to exclude appellants' evidence and direct a verdict for appellee, from which this appeal is taken. Accordingly, for purposes of this appeal, we must accept as true the believable evidence of appellants and reasonable inferences from it.

With reference to the sufficiency of the records, appellants had the following bookkeeping system: They had pads of small daily sales slips for each of the 26 letters of the alphabet. As the clothes were brought in by the owners, appellants would write upon a slip in the proper alphabetical pad the type of garment and the kind of service to be rendered. A carbon copy was made and the original was pinned to the garment. Each night the carbon copies of these daily sales slips from the alphabetical pads were posted by the same being written in long hand and in pencil in a general ledger. As the clothes were redelivered to the customer, the sales slip would be removed from the clothing and appellants would mark that entry off in the general ledger by drawing a line through it. These pads of daily sales slips and the general ledger were kept in a wooden box on the front counter in the shop. Six or seven weeks after the fire appellants, who had thought that the general ledger and all of the sales pads had been destroyed, found the general ledger and ten of the daily sales pads in the bottom of a box which someone had removed from the shop when the fire had begun. The clothes that came in on December 24th, the day of the fire, are not reflected in this general ledger because they had not been posted, but appellants testified that all clothing which had been removed from the shop before the fire had been struck off the general ledger. Sixteen of the 26 daily sales slips were destroyed, but appellants said that all the remaining ones would reflect would be additional clothing brought into the shop on December 24th. The general ledger contains only the dates of October 1, November 1, and December 1, 1948. Following each of these dates, placed in the top of the ledger sheet, are several pages of listings of the owners and identity of clothing brought into the shop. Many of these entries have lines drawn through them, which appellants testified show that the cancelled items had been redelivered to the owners. Following those pages in the general ledger is a list of what purports to be a list of 'clothes lost in fire', but that was prepared after the fire and is incompetent as a record for the purposes of this suit. The trial court excluded testimony of the owners of the clothes destroyed for the purpose of showing their value, because 'the books must show the value of the property destroyed, and * * * this value can not be proved orally.'

We think that the trial court erred in excluding the offered testimony of the owners of the clothing for the purpose of establishing its value. It is true that in the construction of the merchandise iron-safe clause the courts have held that the books must themselves furnish with reasonable certainty, the information required by the policy, both the amount and value, unaided by oral testimony except to explain the method of keeping the books. Note, 39 A.L.R. 1443, 1457 (1925); Note, 62 A.L.R. 630 (1929); Note, 125 A.L.R. 350, 358 (1940). The present record warranty clause must be interpreted in the light of its own peculiar terms and of the facts. It does not require the keeping of records by a dry cleaner to show the value of clothing in his possession. The insured agreed to keep 'such records as will show at all times such goods and articles as they are liable for * * *.' This provision, which is considerably different from the merchandise iron-safe clause, refers to the identity and amount of the clothing as distinguished from its value. This is in accord with the nature of the insured transaction. As a practical matter, it would be most difficult for the books of a dry cleaner to show the value of the clothes which he is processing. It could be done only by an estimate of either the owner or the bailee when the clothes are brought in. The inaccuracy and inconvenience of such a method is apparent. The danger of fraud is not present in a bailment relationship in the degree it is where the insured is the owner of the clothing. The motivation for misrepresentation is reduced to a minimum. Moreover, the standard merchandise iron-safe clause applies to an entirely different type of situation, merchandise on storage or for sale, from the record warranty clause for a dry cleaning shop, which covers clothing bailed to the processor. Under the former situation the insured can obtain the value easily by ascertaining what he paid for it through invoices or from other purchase records. We see no basis for implying from this record warranty clause a requirement that a dry cleaner's books must reflect the value as well as the identity and quantity of the clothing in its possession. With no such requirement existing, the best method of proving the value of the clothing would be by oral testimony of the owners. It also follows that the general ledger book should have been admitted into evidence. The daily sales pads are relevant on the method of keeping the ledger.

Merchants' Union Insurance Company v. Johnson, 1924, 135 Miss. 311, 99 So. 899, does not preclude the use of such testimony. The terminology of the record warranty clause in that case, which was in a policy insuring a cotton gin, was entirely different from the present one and more detailed in its requirements. The records there offered were a ledger made after the fire, the stubs of gin tickets containing no entry of the amount of cotton or cotton-seed sold or shipped, and bills of lading and weighers' tickets covering cars of seed shipped, which were loose...