WESTCHESTER FIRE INSURANCE COMPANY v. Hanley, 13931.

Decision Date29 November 1960
Docket NumberNo. 13931.,13931.
Citation284 F.2d 409
PartiesWESTCHESTER FIRE INSURANCE COMPANY, Defendant and Appellant, v. William M. HANLEY and Lily V. Hanley, Plaintiffs and Appellees.
CourtU.S. Court of Appeals — Sixth Circuit

COPYRIGHT MATERIAL OMITTED

Samuel Levin, Chicago, Ill., for appellant, J. T. Hammond, Benton Harbor, Mich., on the brief.

Harold S. Sawyer, Grand Rapids, Mich., for appellees, Warner, Norcross & Judd, Grand Rapids, Mich., and Ryan & McQuillan, St. Joseph, Mich., on the brief.

Before CECIL and O'SULLIVAN, Circuit Judges, and BOYD, District Judge.

O'SULLIVAN, Circuit Judge.

Appellant, Westchester Fire Insurance Company, defendant below, appeals from a judgment entered upon a jury's verdict in the sum of $25,589.70. Plaintiffs, appellees, had been insured by appellant under an "All Physical Loss" policy covering plaintiffs' frame dwelling located on the shores of Lake Michigan near St. Joseph, Michigan. The parties shall be referred to herein as plaintiffs and defendant, respectively. Plaintiffs claimed they were damaged by a "landslide" occurring on October 16 or 17, 1954; such damages consisting, among other things, of expenses incident to moving of their house to a new location following the landslide and placing the dwelling in the condition it was in prior to the landslide. Plaintiffs claimed that after the landslide the home could not safely be repaired on its then lot and to mitigate the damages, as required by the policy, plaintiffs moved their home to another location, upwards of a mile away.

The policy excluded from its coverage loss from "surface waters, flood waters, waves * * * high water or overflow of streams or bodies of water, all whether driven by wind or not." The policy provided, among other things, that the company's loss should not exceed:

"(b) The replacement cost of buildings or any part thereof identical with such buildings on the same premises and intended for the same occupancy and use.
"(c) The amount actually and necessarily expended in repairing or replacing said buildings or any part thereof intended for the same occupancy and use."

Another provision of the policy was as follows:

"G. Permission to Make Alterations and Repairs: In the event of loss hereunder, the insured is permitted to make reasonable repairs, temporary or permanent, provided such repairs are confined solely to the protection of the property from further damage * * * the cost of any such repairs attributable to damage by any peril insured hereunder shall be included in determining the amount of loss hereunder. Nothing herein contained is intended to modify the policy requirements applicable in case loss occurs, and in particular the requirement that in case loss occurs the Insured shall protect the property from further damage."

At a pre-trial conference, the following agreement was reached:

"Defendant admits that if damage sustained as a result of such slides were covered, and if the policy in question was issued when the company had full knowledge of the facts, and if there was actual physical damage to the premises as a result of the slide in question, then and in that event, the reasonable cost of moving the structure to another location to mitigate damages would be covered by the policy in question. Defendant does not under any circumstances admit that all of the loss claimed was covered."

The policy also provided:

"This entire policy shall be void if, whether before or after a loss the insured has wilfully concealed or misrepresented any material fact or circumstance concerning this insurance or the subject thereof, or the interest of the insured therein, or in case of any fraud or false swearing by the insured relating thereto."

On the subject of apportionment of damages, between the defendant company and any other insurance in effect on the premises at the time of the loss, the policy provided:

"This company shall not be liable for a greater proportion of any loss from any peril or perils included in this form than (1) the amount of insurance under this policy bears to the whole amount of fire insurance covering the property, or which would have covered the property except for the existence of this insurance, whether collectible or not and whether or not such other fire insurance covers against the additional peril or perils insured hereunder."

The total coverage provided by the policy in question was $45,000.00. It was issued by defendant on May 26, 1954, following cancellation of a policy covering plaintiffs' premises which had been issued by Fireman's Fund Insurance Company. The Fireman's Fund policy as well as the policy in suit, as originally written, provided fire and extended coverage. On or about September 9, 1954, the "All Physical Loss" coverage was added by an endorsement to the policy in suit. The defendant asserted in its defense, among other things, the following:

(a) That plaintiffs' loss was not insured by the defendant's policy, in that it was caused by the undercutting of the bluff upon which plaintiffs' house was located by waves and waters of Lake Michigan, (specifically excluded from the coverage of the policy).

(b) That plaintiffs were guilty of false swearing in the proofs of loss submitted and in statements made by plaintiff William Hanley when examined under oath following the loss.

(c) That plaintiffs had fraudulently concealed, at the time of purchasing the insurance, their own knowledge of conditions that would have affected the insurance company's acceptance of the risks covered.

(d) That the damages claimed were excessive, unreasonable, and were not covered by the policy, even though the casualty was a covered risk.

The defendant company made a motion for directed verdict, claiming that its above defenses (a), (b) and (c) were established as a matter of law. For the same reasons, defendant moved for judgment notwithstanding the verdict. It moved for a new trial on the additional grounds of claimed error of the trial court in the rejection of evidence offered by defendant for failure of the trial court to declare a mistrial because of a prejudicial remark made by plaintiff William M. Hanley in the presence of the jury, because of the Court's charge, and its refusal to give certain instructions requested by defendant. These motions were denied.

Plaintiffs' home, an eighty year old frame dwelling, was located upon the high bluffs along the eastern shore of Lake Michigan in Berrien County, Michigan. For some years prior to the casualty in question, the protection of these bluffs was a matter of considerable concern to house owners, as well as to public officials of Michigan and the Federal Government. High water and action of waves upon them had resulted in a rather continuous falling and sloughing off of these high bluffs. By private and public action, studies were intermittently being conducted to find ways to prevent the continued erosion of the beach and the undermining of the bluffs upon which dwellings were located. Over a period of years there were numerous slides and crumblings, sometimes causing dwellings and other buildings to fall over the slope of the bluff. Evidence showed that the eroding and falling of the bluffs in the area of plaintiffs' property began in 1950 and continued through 1954. During this period, Lake Michigan experienced high water levels which, with the wave action, attacked the base of the bluffs along the shore.

Sometime during the night of October 16, or the morning of October 17, most of the ground in the rear of plaintiffs' home broke away, leaving the house on the new edge of the bluff.

The issue as to whether the loss was one within the coverage of the policy was made between the contention of the defendant that the fall of the bluff was the result of the cutting into the bluff by the high water and waves of Lake Michigan, and the contention of plaintiffs that it was a landslide caused by water seepage following unusually heavy rains that fell for a period of several days prior to the night of the fall. The defense produced as witnesses to sustain its position, the persons who had been studying the shore problems over a period of years — Dr. Ernest F. Brater of the University of Michigan, Norman F. Billings, head of the Hydrology Division of the Michigan State Water Resources Commission, Sidney Drew of the U. S. Army Corps of Engineers, and George Foster, Chief Deputy Commissioner of the Michigan State Highway Department. Each of these gave his opinion that the cause of the fall of the bluff on October 16th or 17th, 1954, was the action of the waves of Lake Michigan striking against and undercutting the foot of the bluff.

To sustain its burden of proving that the proximate cause of the fall was one insured against, plaintiffs produced one witness. He was Dr. Elmar Walter, a twenty-eight year old professor from St. Joseph's College of Rensselear, Indiana. He was called to make an inspection of the scene of the casualty following its occurrence. This witness had studied at the University of Graz in Austria and in the United States under a Fulbright grant and research fellowship at Case Institute of Technology in Cleveland, Ohio. He had received degrees in geology and mineralogy. He had done some consulting work for some State Highway Department, and for some other governmental agencies. His first view of the premises in question was in November, 1954. He came to Michigan in 1954. He had no previous experience with lake levels or the problems of the erosion and destruction of the bluffs along the shore of Lake Michigan. In his research, he consulted none of the reports or studies that had been made by Michigan and federal agencies as to the history and causes of the falling away of the bluffs along the shore in question. The only record consulted by him was the Climatological Data of the United States Department of Commerce for the month of October, 1954. He gave his expert opinion that the cause of...

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