113 Va. 353 | Va. | 1912
delivered the opinion of the court.
The defendant in error (who will be spoken of hereafter in this opinion as the plaintiff) brought this action against plaintiff in error (spoken of hereafter as the defendant) to recover the amount of an insurance policy upon the plaintiff’s stock of goods and materials, consisting chiefly of cotton fabric goods known as denim, in entire bales, part bales, cut into parts or made into garments, also thread, buttons, and trimmings, and such other goods and materials, not more hazardous, usual to the shirt and overall manufacturing business, while contained in their one-story store, tin roof, brick building, situated * * * in Fredericksburg, Va. * * * ”
This policy of insurance was for $2,500, and there was $32,500 of other and concurrent insurance on said property. The factory and insured personal property were destroyed by fire about 5 o’clock A. M., December 9, 1909, the origin of the fire being mysterious, it having originated in a room remote from any fire, and when no one was in the building. The plaintiff made claim that its loss by the fire was as follows:
Piece goods of the value of.................... $52,605 45
616 dozen overalls and coats, selling value....... 3,853 46
Total................................... $56,458 91
Subsequently deducted for goods returned....... 350 00
Net amount of loss as claimed............. $56,108 91
Upon the trial of this cause, and after the evidence had gone to the jury, the defendant company demurred thereto, in which demurrer the plaintiff joined, and the court overruled the demurrer to the evidence, and entered judgment for the demurree for the amount ($1,740.99) ascertained as the damages by the verdict of the jury, subject to the ruling of the court upon the demurrer, to which judgment this writ of error was awarded.
The defenses relied on were, first, those arising under the iron safe clause of the policy; and, second, because there was false swearing as to the amount of goods or stock on hand December 26, 1908, when the last inventory was taken, and at the time of the fire, and as to what the inventory of December 26, 1908, included, and how it was taken.
Omitting, as unnecessary, a discussion of the evidence relied on as supporting the defense of false swearing as to amount of goods or stock on hand when the inventory of December 26, 1908, was taken, etc., we are brought to the question whether or not the judgment of the trial court upon the demurrer to the evidence on the first-named ground of defense was erroneous?
The policy sued on is the second annual renewal of the original policy, which was taken out in 1907, and the iron safe clause it contains is the standard iron safe clause, and the same in all respects as that construed by this court in Phoenix Ins. Co. v. Sherman, 110 Va. 435, 66 S. E. 81. Among other things, it required the insured (1) to take a complete itemized inventory of stock on hand at least once in each year; (2) to keep a set of books, which shall clearly and plainly present a complete record of the business transacted, including all purchases, sales, and shipments, both for cash and credit, from date of inventory; (3) to keep such books ■secure from fire which would destroy the insured property; and (4) to produce them in case of a loss by fire. By its terms, the failure to perform said conditions made the policy null and void, and no action could be maintained thereon. It appears, therefore, that the plaintiff was under contract obligations to the defendant, from the date of the first policy in 1907, to take, preserve, and produce complete itemized inventories, and such a set of books as would clearly and plainly present a complete record of the business transacted.
It further appears that the first inventory, taken on January 1, 1907, did not show the quantity or kind of piece goods on hand, or itemize the different kinds of garments on hand; that a new
With respect to the ten items of “piece goods” contained in the inventory, and aggregating 337,965 yards, Brown testified that he could not tell where any of these goods came from, nor when received at the factory, nor which were denims and which drills; that there were both denims and drills, which statement was only qualified by the witness saying he hardly thought there were any drills—if any, a very few.
At an interview between Brown and a representative of the
To follow further in detail the evidence given by Brown, relied on to explain the inventory of December, 1908, would serve but to disclose the unsatisfactory character of the interpretation he attempted to give to the inventory, and that thousands of dollars’ worth of goods claimed to have been in the factory at and shortly prior to the time of the fire were not included in the inventory, while others were lumped in without discrimination between the character or value of the goods embraced in the several items, such as “overalls and coats,” different garments not sold as suits, costing different prices, requiring different qualities of goods, some most probably made of a certain kind or quality of goods and some of another; “piece goods, ” aggregating hundreds of thousands of yards, in a factory using denims, drills, and khaki, cottons and shorting, without a line to indicate the kinds of “piece goods” embraced in the several items, “11 Job, $3.25, $35.75,” and “6,681 yards cottons, 4J^, $500.64.”
Whether or not the plaintiff has shown a compliance with its obligation to keep and produce such a set of books as would “ clearly and plainly present a complete record of the business it transacted,” the facts appearing are that there were kept, until the fire, (1) a receiving book, on which were entered the numbers of bales and cases, and the bale, case, and invoice numbers and kind of every article of merchandise, from which the consignors could be ascertained, and from which the invoices were checked and marked “O. K.,” which book was not kept in the iron safe
It further appears from the evidence that not only were the books kept by the plaintiff of a loose and unbusinesslike character, but they and all other data which would have served to give an intelligent understanding of the amount, quality, value, etc., of the insured goods on hand at the time of the fire, were not kept in the iron safe, but laid around loosely, and in such a way that those in charge of these books and other data were bound to know that their destruction in case of fire was inevitable. In the circumstances existing after the fire, the chief, if not the only, source of information as to what goods were on hand and lost by the fire is through the witness Brown, who has to testify from memory
A. D. Tapscott, a witness for the plaintiff, and who was its bookkeeper, testified to the effect that the books he kept and statements made by him were from memoranda or statements furnished him by Brown, the general manager; that he had nothing to do with orders for the goods; that he knew nothing of goods coming in, and had nothing to do with them until the bills were turned over to him by Mr. Brown, when he entered them on the books the same day. Brown says that usually he did not turn the bills over until he had cut the goods into garments. Tapscott further says there was nothing by which to verify Brown’s statements; that there was no cash account, no account of any purchases until the bills were delivered to him as stated. Brown testified that he had purchased in one bill $40,000 worth of goods, in the spring of 1909, which were being delivered up to the time of the fire; but no information was furnished as to whether or not those goods, or any of them, or which of them, were in the building at the time of the fire.
J. A. McKenna, an expert book-keeper and accountant, was employed by the defendant after the fire to examine and report on the books of the plaintiff which were not destroyed by the fire, and, testifying in this case for the defendant, says, in effect, that there was nothing on the books in the way of accounts or memoranda which would enable him to verify the quantity of goods as to yardage or pieces, which were taken in the inventory, and that there were no data on the inventory which would enable him to verify whether the goods were on that instrument, because, the
Without going further in detail into what was testified by this witness, it is sufficient to say that, upon a careful examination of the books, inventories, and invoices, for the purpose of getting information as to what was in the factory at the time of the fire, it was impossible for him to ascertain from them the information desired, nor could he verify the quantity of goods manufactured in 1907, 1908, or 1909; and with respect to Brown’s statements as to the value of the piece goods and material manufactured, he says that they were not drawn from the books, but were nevertheless made the basis of book entries by Tapscott, the bookkeeper, and that there were not book entries corresponding with the items on Brown’s statements of “made and shipped” goods or garments. It is very true that the plaintiff showed by duplicate invoices the amount of goods purchased from January 1, 1907, to the date of the fire, and showed from its books how many dozen overalls and coats together, not separately, had been sold, but it did not show the number of yards and costs of goods used, or even the number of yards and value of goods in the house. The books which would have given this and other valuable information were destroyed, while those preserved gave no information in this respect. It is true that whatever defects were found in the books preserved and examined by McKenna were not due to the book-keeper’s fault, but to statements furnished by Brown, or the lack of such statements. The effect of all this is that no means were provided by the plaintiff by which it could be intelligently ascertained what business the plaintiff had transacted, or, with any degree of accuracy, what goods it had on hand at the time of the fire.
In this case the defendant’s proportion of the loss sustained by the plaintiff was one-fourteenth, the policy containing the usual three-fourths value clause and a permit to have additional concurrent insurance, and the verdict of the jury indicates very .strongly that they were of opinion that the whole amount the plaintiff wras entitled to recover of all the companies whose policies it held was $24,373.86, and that the value of the goods destroyed was but $32,498.48, instead of $56,108.61, as claimed by the plaintiff.
To vitiate the policy by a non-compliance with the terms of the iron safe clause, it is not essential, as it seems to be contended for the plaintiff, that the non-compliance was with the intent to perpetrate a fraud, for to say that the iron safe clause shall operate only where there is other proof of fraud would be to deny the force of the clause, as the fraud would of itself vitiate the contract. The true rule deducible from the authorities is that which this court has adopted, and which requires, not a strict or literal, but a reasonable, compliance with the terms of the contract.
The iron safe clause required the preservation of the books which were kept; the object of this requirement being, as we have observed, to provide a means for ascertaining with reasonable certainty what goods were destroyed, and in this case two books, which, with a proper account of purchases, would have given this information, were left exposed to the fire and destroyed ■along with the insured property. The plaintiff was conducting .a large shirt and overall manufacturing business, and without
The inventory is no more satisfactory as “a complete itemized inventory of the stock of goods ” than that relied on by the insured in Phœnix Insurance Co. v. Sherman, supra, which was held to’ be insufficient; nor are the books kept and produced more satisfactory than those relied on in that case.
Among the authorities cited by the learned counsel for the. plaintiff are the cases of Prudential Fire Ins. Co. v. Alley, 104 Va. 366, 51 S. E. 812, and N. B. Ins. Co. v. Edmundson, 104 Va. 487, 52 S. E. 350. With respect to those cases it need only be said, as was said in Prudential Fire Ins. Co. v. Sherman, supraf that they do not apply to the facts of the case under consideration. In this case, as in the last named case, the insured has not, as required by the terms of its policy, provided the means by which the insurer could know, with reasonable certainty, the character and value of the insured goods destroyed by the fire.
The case of Conn. Fire Ins. Co. v. Jeary, 60 Neb. 338, 83 N. W. 78, 51 L. R. A. 698, is also cited for the plaintiff. In that case a recovery upon the policy was sustained upon the ground (not in accordance with the weight of authority) that to work a forfeiture all the conditions of the policy must be broken, and not a particular one of them.
In McNutt v. Va. Fire Ins. Co., (Tenn.) 45 S. W. 61, the insured, supplied all deficiencies in the books he honestly endeavored to keep, and this was held, and rightly, to be a substantial compliance with the iron safe clause of the policy.
To the same effect only is Ætna Ins. Co. v. Fitze, 34 Tex. Cir. App. 214, 78 S. W. 370, also cjted for the plaintiff in this case.
Nor do the cases of Mer. Nat’l Ins. Co. v. Dunbar, 38 Ill. App. 582, and Nalin v. Mer. Tenn. Mu. Ins. Co., 105 Mo. App. 625, 80 S. W. 56, sustain the plaintiff’s contentions in this case. In the first-named of those cases the insured forgot to put a small book in the safe, containing part of an invoice, but as the stock of goods insured and destroyed by the fire had been seen only eighteen days before the fire by an agent of the insurer, it was held that the neglect to put the “small book” in the safe, so that it could be produced, did not forfeit the insured’s right to recover on the-policy.
The syllabus of the second-named case is as follows: “A failure to comply literally with a requirement in a fire insurance policy,, that insured shall keep a set of books, presenting a complete record of business transactions, does not work a forfeiture of the policy, but its purpose is accomplished when insured produces data from which the amount and value of the goods in stock at the time of the fire can be reasonably estimated.” That is not the-case we have upon the record before us.
The case of Phœnix Ins. Co. v. Angel, (Ky.) 38 S. W. 1067, also
We are of opinion that, upon the demurrer to the evidence in this case, the judgment should have been for the demurrant, the defendant; therefore the judgment of the trial court is reversed, and this court will enter the judgment that it should have entered.
Reversed.