Thomson & Kelly Co. v. United States Merchants' & Shippers' Ins. Co.
| Decision Date | 26 March 1928 |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
| Parties | THOMSON & KELLY CO. v. UNITED STATES MERCHANTS' & SHIPPERS' INS. CO. THOMSON & KELLY CO. et al. v. UNITED STATES FIRE INS. CO. OF NEW YORK. SAME v. BRITISH AMERICA ASSUR. CO. |
OPINION TEXT STARTS HERE
Report from Superior Court, Suffolk County; Harold P. Williams, Judge.
Separate actions of contract by the Thomson & Kelly Company against the United States Merchants' & Shippers' Insurance Company and by the Thomson & Kelly Company and another against the United States Fire Insurance Company of New York and against the British America Assurance Company. Cases tried together. Verdicts were directed for the plaintiffs, and cases were reported. Judgment for the plaintiffs.W. H. Hitchcock and H. C. Attwill, both of Boston, for plaintiffs.
B. A. Brickley, of Boston, for defendants.
These three actions to recover on three policies of fire insurance for damage done by fire on or about July 18, 1923, were tried together in the superior court. The policies were in the Massachusetts form. The policy of the United States Merchants' & Shippers' Insurance Company insured Thomson & Kelly Company in the sum of $5,000. The policy of the United States Fire Insurance Company insured Thomson & Kelly Company and the International Trust Company as their interests might appear in the sum of $10,000. The policy of the British America Assurance Company insured the Thomson & Kelly Company and the International Trust Company as their interests might appear in the sum of $15,000. After the issuance of the policies the International Trust Company, named in two of the policies, consolidated with the First National Bank of Boston. Each of the policies contained the clause:
‘This policy shall be void * * * if, without such assent, the situation or circumstances affecting the risk shall, by or with the knowledge, advice, agency or consent of the insured, be so altered as to cause an increase of such risk.’
The total amount of insurance on the property in question was $1,137,500. The referees decided that the amount of the loss was $1,195,069.55 and the actual value of the merchandise before the fire was $1,320.089.55. The total amount of insurance in which the bank was interested was $650,000. There was additional insurance in which the Thomson & Kelly Company alone were interested. After the fire the bank received from various insurance companies the sum of $556,250, and in addition the sum of $222,500 was received from insurance payable to Thomson & Kelly Company to be applied on the indebtedness of Thomson & Kelly Company to the bank. It is not disputed that the preliminary conditions required by the policies were complied with.
Several questions were submitted to the jury, one being:
‘Prior to the date of the writ, has the plaintiff, the First National Bank * * * from moneys or drafts received from other insurance companies not parties to these suits, or from Thomson Kelly Company, been paid in full the amount of all indebtedness due from Thomson Kelly Company at the time of the fire which indebtedness was then secured by trust receipts?’
The jury answered, ‘Yes.’ After the jury had answered this question and other questions submitted to them, the trial judge directed a verdict for the plaintiffs and reported the cases.
The answer of the jury to the question referred to had no bearing on the first of these three cases, which was on a policy payable to the Thomson & Kelly Company alone; the bank was not interested. The finding of the jury was disregarded properly in directing a verdict for the plaintiff in that case.
There was no error of law in disregarding the answer of the jury to the question in connection with the other two cases, where the bank was a party. This defense relied on by the defendants is an affirmative one, which must be pleaded by the defendants; it is based on events arising after the loss-after the cause of action arose, and assuming, but not deciding, that it was open to the defendants under their answers (see Forbes v. American Mutual Life Ins. Co., 15 Gray, 249, 77 Am. Dec. 360;Shea v. Massachusetts Benefit Association, 160 Mass. 289, 291, 35 N. E. 855,39 Am. St. Rep. 475), the burden was upon the defendants to establish this defense, even if the defendants were concerned with the division between the plaintiffs of the amounts received, which question we do not think it necessary to consider.
In our opinion, the finding of the jury in answer to this question was not warranted by the evidence, and the judge was justified in ruling as he did. Apparently it was not disputed that the First National Bank had an insurable interest of about $750,000. When the money was lent to the Thomson & Kelly Company by the bank, trust receipts were given by which the company undertook to hold the merchandise until the sum advanced was paid. There was some evidence that over $800,000 had been received by the bank from insurance companies, many of which companies had insured Thomson & Kelly Company alone. And it further appeared that there was an unsecured indebtedness of the Thomson & Kelly Company to the bank of $125,000. We do not understand that this is controverted.
As the drafts from the insurance companies came to the bank, they were in part applied to this unsecured indebtedness, so as to leave a balance due the bank of $33,083 on the secured account. It was incumbent on the defendants to show not only the receipt of the moneys but their application to the respective debts in such a manner that the $750,000 account was fully paid. This the defendants did not do. Reliance is placed by the defendants on the testimony of a witness for the plaintiffs. Theis question was put to him:
‘Now, when these drafts were received from the insurance companies, they were applied, as I understand it, towards reducing the indebtedness of the $750,000?’
He answered, ‘True.’ He did not testify that the secured indebtedness was fully paid, nor is his testimony to be interpreted as meaning that none of the drafts were applied to the unsecured indebtedness. The witness had previously testified that Thomson & Kelly Company owed the bank about $750,000 on letters of credit, and on open...
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