Woods v. INSURANCE COMPANY OF TEXAS

• Decision Date: 30 November 1956
• Docket Number: Civ. No. A-10903.
• Citation: 146 F. Supp. 82
• Parties: Alexander WOODS, aka Alex Woods, dba Truck Service Center, Plaintiff, v. INSURANCE COMPANY OF TEXAS, Inland Empire Insurance Company, and Houston American Insurance Company, and Coffey-Simpson Agency, Inc., Defendants.
• Court: U.S. District Court — District of Alaska

146 F. Supp. 82

Alexander WOODS, aka Alex Woods, dba Truck Service Center, Plaintiff, v. INSURANCE COMPANY OF TEXAS, Inland Empire Insurance Company, and Houston American Insurance Company, and Coffey-Simpson Agency, Inc., Defendants.

Civ. No. A-10903.

District Court, Alaska, Third Division, Anchorage.

November 30, 1956.

Buell A. Nesbett, Anchorage, Alaska, for plaintiff.

David H. Thorsness, of Davis, Renfrew & Hughes, Anchorage, Alaska, and John E. Manders, Anchorage, Alaska, for defendants.

McCARREY, District Judge.

This case was tried before the court without a jury. The plaintiff owned and operated a truck and car repair service and sued the above-named defendant insurance companies for their failure to pay him for the fire loss he sustained on the following policies:

Insurance Company of Texas, policy number 6Y0913, fire, lightning and extended coverage of $15,000 on building, equipment, tools and property of every description "in premises under course of construction;"

Insurance Company of Texas, policy number OP-14, fire, lightning and extended coverage of $10,000 on stock of parts;

Houston American Insurance Company, policy number SF 18-01546, fire, lightning and extended coverage of $5,000 on stock of parts; and

Inland Empire Insurance Company, policy number 13251, fire, lightning and extended coverage of $10,000 for stock of parts.

The plaintiff carried $15,000 on the building and garage equipment and $25,000 on parts.

The insured property was located on the west one-half of a lot located two miles east of the City of Anchorage on the Glenn Highway, northeast of the Alaska National Guard building. It was totally destroyed by a fire which occurred at 2:50 a. m. on the 6th day of December 1954.

Judgment on the pleadings was granted to the defendant Coffey-Simpson Agency, Inc.

The insurance companies predicated their defense on the grounds of the concealment of fraud, conspiracy for the purpose of endeavoring to procure exorbitant insurance coverage and fraudulently collect from the underwriters, and stated that the defendant with "* * * fraudulent intent to wrongfully collect the insurance proceeds, caused the fire to be set, and thereafter orally, in writing, and in sworn statements in his purported proofs of loss and in his examination under oath, was guilty of fraud and false swearing in connection with the facts surrounding the fire and in making false claims as to exorbitant amounts of stock which he claimed had been destroyed by the fire in question and in making false and fraudulent statements as to the type of stock purportedly destroyed by the fire, where he purportedly obtained the same, and the amount he purportedly paid for the same", in violation of the provisions contained in the contracts of insurance.

The plaintiff Alex Woods, age 34, was born in Scotland and came to Canada with his parents. He is now married and has one child. Prior to coming to Alaska he was engaged in the automotive business with his brother in the northwestern part of Canada. In October 1950, plaintiff came to Alaska, and sometime later his wife and child followed. They resided in Fairbanks until they moved to Anchorage.

In May of 1954, plaintiff opened the Woods Auto Body Shop at Anchorage, and on or about the first of September 1954, he subleased a garage and some land from one James Burke, and at the time of the fire, plaintiff was in the process of enlarging these premises some 40 × 100 feet. The original garage of Burke's and the addition were both completely destroyed in the fire. Plaintiff testified he had spent some $12,000 on this new construction which was almost completed at the time of the fire except for the installation of insulation and a few other minor things. An expert witness called by the plaintiff testified that, given the size and type of construction, the building was worth $11,650 based upon costs of construction in 1954. This figure did not include the concrete slab or the bracing. The plaintiff admitted that he had used dunnage and "used" lumber in the construction of the premises in order to keep down the costs. In a statement conflicting with defendants' evidence, plaintiff testified that the agents of the defendant Coffey-Simpson Agency, Inc., came to him and sold him the insurance without his solicitation. A representative of the defendant Coffey-Simpson Agency, Inc., testified that the insurance was issued upon the condition that the plaintiff would install what is commonly known in the construction business as a "Van-Packer" chimney (used for safety factors). The plaintiff denies this but he admits that it was discussed and that he did try to obtain such a chimney from one of the local plumbing firms. The insurance policies do not contain such a "rider" or any qualification reflecting this to be the condition upon which the insurance policies were issued, although some of the policies do contain certain other "riders".

On the day of the fire, the plaintiff was on his way to, or had arrived at, Whitehorse, Yukon Territory, in Canada, which is some 725 miles from Anchorage by highway.

On the 30th day of December, he submitted his proof of loss to the defendants, which is marked plaintiff's exhibit number 9, after notice of the loss had been given to the Coffey-Simpson Agency, Inc. The proof of loss shows that he claimed to have lost $6,656.07 on the equipment inventory, $12,000 on the frame shop, and $25,647.32 on the stock inventory, as reflected in detail by such proof of loss. (See plaintiff's exhibit number 9.)

The plaintiff testified that all of the records were destroyed except such as he had in the glove compartment of one of his cars, and such as he was able to obtain from some of the local automotive businesses. It is to be noted that the proof of loss of both equipment and stock inventory is, nevertheless, in detail. The plaintiff explains this by the fact that he was extremely familiar with the inventory as he had recently purchased it all himself and that he had virtually complete custody and control of the stock room.

Examination of the plaintiff by the defendants was extensive and detailed as to the plaintiff's finances from the year 1950 up to the time of the fire, and as to the inventory in the stock room and from whom it was purchased.

Income tax returns of the plaintiff and his wife disclosed that their gross income was $2,744.10 in 1950, $7,824.16 in 1951, $12,177.08 in 1952, $15,134.13 in 1953, a gross of $40,000 in 1954, with a net loss of $11,871.33 for that year. Plaintiff testified that he had some $28,000 in cash located in a trailer wherein he and his family had resided at Anchorage, which money he had used to go into business and which represented savings from their earnings, $5,000 which he had borrowed from his mother in Canada, and his half interest in the Canadian partnership business with his brother. He testified the money had been kept in the trailer as his father had taught him not to use the banks, although the record stands uncontradicted that he had a small banking account at the same time and that on other occasions he and his wife had used the bank facilities. Further, in a domestic relations proceeding, he made an affidavit in civil case number A-9382, in December 1953, to the effect that his net worth was $337, and stated "affiant has no additional moneys". The plaintiff testified he used this money to go into business in 1954 and after the fire he owed some $16,000. He also testified that he lost approximately $4,000 in accounts receivable which were due and owing at the time of the fire because the work sheets, parts...