Stone v. Union Fire Ins. Co.

• Decision Date: 04 November 1940
• Docket Number: 14654.
• Citation: 107 P.2d 241,106 Colo. 522
• Parties: STONE v. UNION FIRE INS. CO.
• Court: Colorado Supreme Court

107 P.2d 241

106 Colo. 522

STONE v. UNION FIRE INS. CO.

No. 14654.

Supreme Court of Colorado, En Banc.

November 4, 1940

Error to District Court, City and County of Denver; Stanley H Johnson, Judge.

Action by Josie Stone against the Union Fire Insurance Company upon a fire policy. Verdict for defendant, and to review judgment dismissing the complaint, plaintiff brings error.

Judgment reversed and case remanded, with directions to grant a new trial.

Samuel Chutkow and Noah A. Atler, both of Denver for plaintiff in error.

Don D Bowman and Anthony F. Zarlengo, both of Denver, for defendant in error.

OTTO BOCK, Justice.

This action was brought upon an insurance policy to recover loss occasioned by fire. Trial was to a jury which returned a verdict in favor of insurer, herein designated as the company, and judgment was entered dismissing the complaint. The owner of the insured property, to whom we will herein refer as plaintiff, seeks reversal and has sued out a writ of error. The complaint, among other things, alleges the issuance of the policy in the sum of $5,000 on July 8, 1936, covering certain personal property described therein; ownership in plaintiff; total destruction of the same by fire about July 4, 1937; value of the property to be $12,000; execution of a chattel mortgage on April 20, 1937, by the plaintiff to one J. L. Brownie on the property described in the insurance policy, and notice at that time to Fred C. Jones, agent of the company, of said chattel mortgage, who agreed to excute and forward to plaintiff the necessary endorsements to be attached to the policy; knowledge of the company of this notice to Jones and of his agreement to issue the necessary endorsement concerning the chattel mortgage; and, with this full knowledge, failure of the company to cancel the policy or forfeit the same; that no part of the loss has been paid.

The answer of the company, after admitting the execution and recording of the chattel mortgage, sets up three defenses: (1) A general denial of liability; (2) failure to notify the company of the chattel mortgage under the terms of the policy; (3) fire and loss caused by willful and intentional acts of plaintiff, her agents or employees.

Counsel for plaintiff first contend that the court committed error in the admission, over objections, of hearsay and self-serving evidence. We consider the contention of sufficient importance to detail the setting in which this evidence was admitted.

Plaintiff, in support of her testimony, and to show that Jones had notice of the chattel mortgage prior to the fire in the early morning of July 5, 1937, introduced the following letter (Exhibit G), dated December 7, 1937:

'Union Fire Insurance Company

Lincoln, Nebraska

Dear Sirs:

We find in looking over our records we failed to attach a mortgage clause to policy number 263102, issued July 8, 1936 in the name of Josie Stone.

We find their [there] is a mortgage of record dated April 20, 1937 and for some reason we failed to attach the proper Endorsement.

We enclose the Endorsement which kindly attach to the old daily and oblige.

Yours truly,

Fred C. Jones.'

The evidence discloses that after the fire, and on or about September 1, 1937, one of the counsel for the company had an interview with Jones, concerning which he testified as follows:

'I went to see Mr. Jones on or about September 1, 1938 [1937], over at his office. I went in there and told him that I had come to inquire about whether or not he had been notified about a chattel mortgage being placed on the premises of the League of Nations; and he stated that he had not been notified by Mrs. Stone or by Mr. Brownie concerning any chattel mortgage whatever being placed on the fixtures. I then asked him to look thru his records to make sure that he had not been notified, and he thereupon went to a filing cabinet and pulled out a file that he had pertaining to this matter, and looked thru the file, he looked thru the file at that time, and when he got thru looking thru the file he said that he had not been notified; that if he had been notified he would have remembered it.

'I asked him whether or not he would be willing to make some kind of a written memorandum to that effect, and he stated that he would be willing to write a letter to Mr. Don Bowman, representing the company, stating what the result of this interview was. I got up and started to leave, and he said, 'Wait a minute; I will dictate a letter right now.' So I waited and he called in his stenographer, and she came to the desk there and he dictated a letter, addressed to Mr. Bowman, which letter stated in substance what the interview was. After dictating the letter, the stenographer typed it, brought it back into the room, and Mr. Jones signed the letter.'

This letter, Exhibit 5, is as follows:

'Mr. Don Bowman

Westside Court

Denver, Colorado

Dear Mr. Bowman:

This is to advise you of the visit of A. F. Zarlengo to whom we explained that never to our knowledge has our office been advised of any Chattle [chattel] Mortgage in case of Josie Stone or the League of Nations Cafe.

Yours truly,

Fred C. Jones.'

This oral testimony and letter were admitted in evidence over the objections of counsel for plaintiff, on the theory that it was an exception to the hearsay rule, in that it disclosed the state of mind and intention of Jones on September 1, 1937, as related to the chattel mortgage in question. In support of this theory is cited Wigmore on Evidence, 3d Ed., vol. VI, sections 1715, 1789 and 1790. Jones died some time prior to the trial. There can be no question that the statements were made, and the letter written and delivered to an attorney of the company by its agent.

To a better understanding of the application of the hearsay rule to this testimony, a discussion of first principles will be helpful. Historically, the development of the rule is fully covered by section 1364, Wigmore on Evidence 3d Ed., vol. V, where it is defined as 'that rule which prohibits the use of a person's assertion, as equivalent to testimony to the fact asserted, unless the assertor is brought to testify in court on the stand, where he may be probed and cross-examined as to the grounds of his assertion and of his qualifications to make it.' Text-writers generally agree on the existence of some confusion in the reported cases as to the application of the rule, and that assertions, sometimes referred to as verbal acts, are not subject thereto. Section 1715 of Wigmore relates to the topic of 'Statements of a Mental or Physical Condition,' as an exception to the hearsay rule. It has no bearing on the question Before us because the mental and physical condition of Jones were not in issue. Sections 1789 and 1790 relate to verbal acts, in part, cojoined with the principle of res gestae, to which the hearsay rule is not applicable. The illustrations given in the notes to these sections clearly indicate and circumscribe the text. There is no contention here that the assertions Before us were a part of the res gestae. The purpose of the evidence concerning them was to show that the agent did not receive any notice of the chattel mortgage from plaintiff prior to the fire. Counsel for the company, to support their contention of admissibility, cite one of the leading cases on this subject, Mutual Life Insurance Co. v. Hillmon, 145 U.S. 285, 12 S.Ct. 909, 913, 36 L.Ed. 706. In that case Sally Hillmon, the beneficiary named in a life insurance policy issued to her husband, brought suit against the company to recover under its terms. One of the defenses interposed was a denial of the death of the insured, with the further allegation that the body represented to be that of the husband was not such in fact, but was that of one Walters; that Hillmon still was alive and in hiding. This question of identity was the issue presented for determination. Letters written by Walters to his sister and to his sweet-heart immediately prior to his disappearance, stating that he intended to go with the insured to another section of the country, were held by the trial court to be inadmissible to show his intention in that respect at that time. Mr. Justice Gray, speaking for the United States Supreme Court, which reversed the judgment, quoted from Travellers' Insurance Co. v. Mosley, 8 Wall. 397, 19 L.Ed. 437, the following rule as applicable to the facts: 'Wherever the bodily or mental feelings of an individual are material to be proved, the usual expressions of such feelings are original and competent evidence. Those expressions are the natural reflexes of what it might be impossible to show by other testimony. If there be such other testimony, this may be necessary to set the facts thus developed in their true light, and to give them their proper effect. As independent, explanatory, or corroborative evidence it is often indispensable to the due administration of justice. Such declarations are regarded as verbal acts, and are as competent as any other testimony, when relevant to the issue. Their truth or falsity is an inquiry for the jury.' The court refers to these letters as 'written by him at the very time and under circumstances precluding a suspicion of...