178 F. 519 | 8th Cir. | 1910
Lead Opinion
The Amusement Syndicate Company obtained from ten certain insurance companies policies of insurance upon its opera house building and personal property therein. Among the various provisions in the policies was one providing that:
“This company shall not be liable under this policy for a greater proportion of any loss on the described property or for loss by any expense of removal from premises endangered by fire than the amount hereby insured shall bear to the whole insurance, whether valid or not or by solvent or insolvent insurance covering such property.”
The policies also provided that, in case of a disagreement as to the amount of loss, the insured and the insurer should each select an appraiser, the two thus chosen should'first select a competent and disinterested umpire, the loss should then be estimated and appraised, and the award in writing of any two should determine the amount of the loss. Upon all of the policies, excepting the American Eire Insurance Company of Philadelphia, there was attached a slip granting permission for the use of natural gas, but providing that the company should not be liable for the explosion of natural gas unless fire ensued, then for damage by fire only. It was also provided that the policy should be void if the insured concealed or misrepresented, in writing or ’otherwise, any material fact or circumstance concerning the insurance, or in case of fraud or false swearing by the insured, touching or in any manner relating to the insurance or the subject thereof, whether before or after loss., On September 27, 1906, a fire occurred which partially destroyed said’ opera house and the personal property therein covered by the said policies of insurance. Proofs of loss under oath, were duly made by Mr. Crawford, manager of the insured, in which he stated the total loss to be $57,373.73. Negotiations were had between the parties which resulted in each selecting an appraiser to appraise tire damages. These appraisers were unable to agree upon the third party as an umpire and finally abandoned the effort.
Appellee then commenced a suit at law against each of said insurance companies in the proper state court of Kansas. Such of the companies whose policies exceeded the sum of $3,000 removed said actions into the United States court, and thereupon two of the companies, the ■ Spring Garden Insurance Company and the Columbia Eire Insurance Company, filed a bill in equity, in the United States Circuit Court for the District of Kansas, against the insured and the other insurance companies, claiming that said policies were void for various reasons in the bill specified, and that the pro rata amount of loss which should be paid by the respective companies could not be ascertained in an action at law, and prayed in said bill that the policies be set aside and be decreed to be null and void—
“and that it be decreed that, if your orators and the insurance companies, defendants herein, or any of them, shall be held to be liable in r.ny amount to the said defendants the Amusement Syndicate Company and Lank of To-*529 poka, that the liability be decreed to be one calling for a contribution and an apportionment on the part of such company so liable in the proportion that the insurance that it may have on the property insured bears to the total insurance on said property, whether valid or not, and that an accounting be had to ascertain what the actual cash value of the property destroyed or damaged by fire may be, and the amount, if any. for which your orators and the said insurance companies may be liable to the said, the Amusement Syndicate Company and Bank of Topeaka, * * * and that a reference of this cause 'be made to a master, to take an accounting and ascertain in all things and how the liability, if any, of tito insurers of said property shall be distributed, if so ascertained and determined by the master.”
The bill also prayed that appellees’be enjoined from further prosecuting the actions at law.
A demurrer was interposed to the bill, which was overruled. Answers were then filed; those by the defendant insurance companies admitting the allegations of the bill and adopting the same in their behalf in cross-bills filed by them. The appellees filed a cross-bill, setting up such facts only as wottld be required in an action at law to entitle them to recover upon the policies. To this cross-bill each of the defendants answered, setting up as defenses practically the same matters which were alleged and set forth in the bill. The usual replication was filed and upon stipulation of the parties the case was referred to a master to take the evidence and report his findings of fact and of law.
The parties presented their evidence to the master and he reported the same with his findings of fact and recommendations to the court. In finding of fact No. 4 it is shown that an explosion occurred just before or simultaneously with the fire. In his finding No. 9 he says the damage to the building caused by the fire was $17,250; that the damage to the personal property was $1,741.08; that the building before the fire was worth $50,000; that natural gas had been used in the building since 1881 (being prior to the issue of any of the policies) ; and that such fact was known to the local agents who issued the various policies when the same were issued. The master also found that neither the insured nor the insurers corruptly or fraudulently conspired to prevent an appraisement, as alleged in the bill and answers to the cross-bill. He further found that Mr. Crawford, who, under oath, made the proofs of loss, did not make any statement therein intentionally for the purpose of deceiving and defrauding the insurers or misleading them; that at the time of making the proofs Mr. Crawford was mistaken as to certain plate glass and a piano therein mentioned, which he afterwards discovered had not been destroyed, but damaged only, and mistaken as to the loss on the building, it not being total, but partial only; that lie was a competent witness touching the value and loss of the property covered by the insurance policies. The master recommended that complainants’ bill should not be dismissed for want of equity, but should be entertained on account of the proportionment clause in said policies, and, to avoid a multiplicity of suits and conflict of interest, that the entire loss be adjusted in one suit. The master found the policies of insurance to be valid, and found the amount of the loss due to appellees from each of said companies.
Exceptions were filed by the insurance companies to certain of the findings of the master, which were bjr the court overruled, and a decree
Hooven, Owens & Rentschler Co. v. John Featherstone’s Sons was an action to enforce a mechanic’s lien for the balance of the purchase price of an engine. The case was tried in the Circuit Court as if it were an action at law. On appeal to this court it was held that, the suit being one to enforce a mechanic’s lien and to compel the salé of real estate to satisfy the debt secured thereby, it was of the nature of a suit to foreclose a mortgage; that it was a suit in equity, and not an action at law, and hence that it could be reviewed in this court by appeal, and not by writ of error.
In Files v. Brown, this court, speaking by Judge Sanborn, said:
“But final decrees and orders in equity cannot be reviewed by writs of error, nor can final judgments or orders at law be successfully assailed by appeals. * .* * The difference between actions at law and suits in equity is matter of substance, not of form. It infieres in the natures of the causes of action, in the principles which control, and in the remedies which follow them, and it cannot be eradicated, either by a change of form or by the abolition of forms. A legal cause of action cannot be maintained in equity, because there is an adequate remedy for it at law, and it is only where there is no such remedy that relief in equity may be successfully sought. * * . * What, then, is the character of the cause of action set forth in the petition of the appellee, and what the nature of the relief he seeks? Are they legal or otherwise? ⅜ ⅜ * In effect, the petition was a bill in equity to cancel a decree for and an order confirming a sale, and to rescind the executed contract made upon the faith of it. It states no cause of action cognizable by a court of law, and it invokes no remedy which such a court has jurisdiction to administer. Bills, petitions, and proceedings to cancel or avoid judgments, orders, deeds, or other instruments which form muniments of title, and to rescind sales based upon them, fall within the exclusive jurisdiction of courts of chancery, and are only cognizable in equity in the courts of the United States. The petition for cancellation of the order, and the order of cancellation and rescission which followed it, were proceedings in equity, and they are reviewable by appeal only.”
The correctness of the rules of law therein announced cannot be questioned; but they do not determine the question here. The bill filed in this case stated no legal cause, of action against appellees. It attempted to state a cause of action cognizable by a court of equity. It sought equitable relief. It did not state any fact which would have entitled appellants to have maintained an independent action at law against appellees. The .facts stated did not entitle appellants to equitable relief, as those facts were available to them as a defense in the several actions at law which had been brought by appellees. Mechanics’ Ins. Co. v. Hoover Distilling Co. (C. C. A.) 173 Fed. 888. The fact, however, that the bill did not state facts sufficient to entitle complainants to equitable relief did not constitute the action one at law. The so-called “cross-bill” filed by appellees did not ask for any equi
Passing to the merits of the controversy, it is to be observed that the court, pursuant to a stipulation of the parties, referred the cause to a master, to hear the testimony and report the same, with his findings of fact and recommendations respecting the decree to be entered therein. The master heard the testimony, and made findings of fact and recommendations as to the decree pursuant to such order of reference, and the same were approved by the trial court. As said in Kimberly v. Arms, 129 U. S. 513-524, 9 Sup. Ct. 355, 359, 32 L. Ed. 764:
“A reference by consent of parties of an entire case for the determination of all its issues, though not strictly a submission of the controversy to arbitration — a proceeding which is governed by special rules — is a submission of ¡he controversy to a tribunal of the parties’ own selection, to be governed in its conduct by the ordinary rules applicable to tbe administration of justice in tribunals established by law. Its findings, like those of an independent tribunal, are to be taken as presumptively correct, subject, indeed, to be reviewed under ¡he reservation contained in the consent and order of the court, when there has been manifest error in tlie consideration given to the evidence, or in tlie application of the law, but not otherwise.”
To the same effect are Crawford v. Neal, 144 U. S. 585. 12 Sup. Ct. 759. 36 L. Ed. 552; Furrer v. Ferris, 145 U. S. 132, 12 Sup. Ct. 821, 36 L. Ed. 649; Davis v. Schwartz. 155 U. S. 632, 15 Sup. Ct. 237, 39 L. Ed. 289; Moline Plow Co. v. Carson. 72 Fed. 387. 18 C. C. A. 606. Were this not the rule, we are satisfied that the evidence supports the findings of the master.
It is claimed that the policies were vitiated because Air. Crawford, manager of the insured, in the proofs of loss, stated the total loss to he fifty-seven thousand and some odd dollars, whereas the total loss found by the master was approximately $22,000. The master, however. finds in effect that the statement by Air. Crawford was made in good faith, and not with any view to deceive the insurance company. Crawford claimed the loss to he total. There was a conflict of evidence in this regard, and an honest difference of opinion is not false swearing, within the meaning of the policy so as to avoid its provisions. Insurance Co. v. Weide, 14 Wall. 382, 20 L. Ed. 894; U. S. v. Ninety-Nine Diamonds, 139 Fed. 961, 72 C. C. A. 9, 2 L. R. A. (N. S.) 185.
It appears that each of the parties selected an appraiser; that the appraisers were unable to agree upon an umpire. The master has found that the failure to agree upon the umpire was not because of any fraudulent conduct on die part of either the insured or the insurers. The case, therefore, falls directly within the rule stated by this court in Western Assurance Co. v. Decker, 98 Fed. 381, 39 C. C. A. 383, and
Complaint is also made that the master did not separate the damages caused by fire from the damages caused by the explosion. The master, in his finding, says:
“The damage to the said building caused by the fire was $17,250, and the damage caused by said fire to the personal property covered by the policies sued on by the insured was $4,741.08”
—clearly showing that he did estimate the damage by fire separate and distinct from the damage by explosion. That this was so intended by jthe master is apparent, for he points out the provision in the policies in this respect, also makes a finding as to the explosion, and then he is specific to say that his finding of loss is such as was caused by the fire. Hence this objection is not well taken.
It is claimed on the part of the American Fire Insurance Company that its policy was avoided because of the introduction of natural gas into the building, which increased the risk; ,but the master finds that the natural gas was introduced in the building prior to the issue of the policies, and hence the risk was not increased thereby.
Complaint is made of the allowance to insured of an attorney’s fee. It is claimed on the part of appellant that the Kansas statute, providing for attorney’s fees in cases against insurance companies, is applicable only to policies issued upon improvements upon real estate, and then only when the loss is a total one. The construction of the statute in this respect does not seem to have been directly passed upon by the Supreme Court of the state; but, in Insurance Co. v. Corbett, 69 Kan. 564, 77 Pac. 108 (the opinion modified somewhat in 105 Pac. 7), and Insurance Co. v. Washington, 71 Kan. 777, 81 Pac. 461, attorney’s fees were held proper in actions upon insurance policies to recover loss upon real and personal property. It does not appear in those cases whether the loss to the real property was total or partial, and the particular question before us was not discussed.
Under a similar statute the Supreme Court of Nebraska, in Hanover Fire Ins. Co. v. Gustin, 40 Neb. 828, 839, 59 N. W. 375, considered the identical question, and held that the provision relative to attorney’s fees was applicable to any policy upon real estate, even though the loss was but partial. The statute of Kansas, adopted in 1893, was identical in its language with the statute of Nebraska. The Nebraska decision referred to, however, was not, rendered until after the adoption of the statute by the state of Kansas; and hence it cannot be said that the Legislature of Kansas, in adopting the Nebraska statute, adopted the construction subsequently placed thereon by the Supreme Court of Nebraska.
The proper interpretation of the statute may best be had by reviewing the legislation of the.state in respect to this subject-matter. In 1893 the Legislature of the state of Kansas passed an act, the title of which was “An act defining the liability of fire insurance companies in certain cases.” Chapter 102, Laws Kan. 1893. In 1897 the Legislature repealed said act, and adopted a new one, under the following-title : “An act fixing the liabilities of fire msurance companies in cer
“Section 1. Whenever any policy of insurance shall be written to insure any improvements upon real property in this state against loss by fire, tornado or lightning, and the property insured shall be wholly destroyed, without criminal'fault on the part of the insured or his assigns, the amount of insurance written in such policy shall be taken conclusively to be the true value of the property insured, and the true amount of loss and measure of damages, mil the payment of money <as a premium for insurance shall be prima facie evidence that the party paying such insurance is the owner of the properly insured: Provided, that any insurance company ma,y set up fraud in obtaining the policy as a defense to a suit (hereon.
“Sec. 2. It shall he the duly of every person, corporation, association, partnership, company or individual issuing any policy insuring real property of any description against loss by fire or any of the risks usually insured against in their ‘insurance policies, by itself, or its agents, to make careful examination of the premises insured, and to place in such policy a full, complete ai%d correct description of the property or premises insured thereby; and no failure to properly m-d fully describe such property or premises, nor any erroneous statement in the description of such property or premises shall be a defense in any action to collect for loss thereon or thereunder when such description shall be sufficient to enable a person of ordinary intelligence to find and fully identify the property or premises upon which said insurance was written, and upon which premiums have been paid, and this notwithstanding any provisions in said insurance policy contained.
“Sec. 3. This act shall apply to all policies of insurance hereafter [made pr] written [upon real property] in this state, and also to the renewals which shall hereafter bo made of all policies [heretofore] written in this state, and the contracts made by such policies and renewals shall be construed to be contracts made under the laws of this state.
“See. 4. The court [upon] in rendering judgment against [an] any insurance company [upon] on any such policy of insurance shall allow the plaintiff a reasonable sum as an attorney’s fee to be [taxed] recovered as a part of the costs.
“Sec. 5. Original chapter 102, of the Session Lanas of 1893, and all acts and parts of .acts in conflict hereuAth are hereby repealed.
"Sac. 6. This act shall take effect and be in force from and after its pub-lica! ion in the [official state paper] statute book.”
The act of 189.3 contained four sections; their provisions being embraced in sections 1, 3, 4, and 6, of the act of 1897. The act of 3 893 related to the liability of .insurance companies in cases only where the loss was total. The act of 1897 modified in some respects the provisions of the act of 1893, and in section 2 introduced a new subject-matter, imposing additional duties upon insurance companies, thus clearly indicating the intention of the Legislature that the act should not be limited to cases in which the loss was total. Section 2 of the act, as above quoted, it will be seen, is not limited in terms to cases in which the loss should be total and we can perceive of no sound reason why it should be so limited. The section treats upon a subject-matter not contained in the act of 1893. By section 2 companies issuing policies of insurance upon real property are required to make a preliminary survey of the premises and to describe the same fully in the policy. The section prescribes the effect which failure in that
Section 3 of the act of 1897 in effect modifies or amends section 2 of the act of 1893 by striking out the words “real property.” So that the act, instead of applying, as formerly, to policies of insurance written upon real property only, is made to r.ead that the act should apply to all policies of insurance thereafter written. The change in this respect is significant, and, if the section be construed according to its literal reading, it shows the intention of the Legislature to be that the next section, providing for the allowance of attorney’s fees in actions upon such policies of insurance, should apply by such modification to actions upon policies of insurance issued upon personal as well as real property. Whether it should be so construed we need not and do not here determine. We are, however, clearly of the opinion that section 1 of the act of 1897 fixes the liability of insurance companies in case of total loss under policies issued insuring improvements upon real property; that section 2 imposes a duty upon insurance companies as to all policies thereafter written upon real property and fixes a liability though the premises insured be inaccurately described, and this without reference to whether the loss be total or partial; that the provision relative to attorney’s fees applies at least to all policies which are governed by sections 1 and 2 of the act. As the policies in these cases were written upon improvements upon real estate, and the major portion of the loss being such improvements, we think the attorney’s fees were properly allowed. The amount of the attorney’s fees not being questioned, the objection going to any allowance, we are not called upon to consider the reasonableness of the sum allowed as applied to the loss upon the building insured.
Appellants further urge that no judgment should have been rendered against the respective insurance companies for their proportionate share of the loss; that/when appellants failed to establish the equities of their bill in other respects, the entire case should have been dismissed. One of the grounds, however, upon which appellants invoked the equitable jurisdiction of the court was that, as the policies each contained the provision that each company should only be liable for the proportion of any loss which the amount of its insurance bore to the whole insurance, such provision rendered an equitable accounting proper, and complainants in their bill prayed that, if the policies should be found valid, such accounting should be had. Under these circumstances, the insurance companies will not be permitted to question the decree in this regard.
Lastly, it is said that the court erred in decreeing that the insurance companies should pay the costs in the actions at law brought by insured and that such actions at law should then be dismissed. The insurance companies invoked the aid of a court of equity and in courts of equity the payment of costs by the respective parties is a proper matter of equitable distribution. The actions at law were properly brought.
The decree of the Circuit Court is affirmed.
Concurrence Opinion
(concurring). Ten actions at law were brought by the appellees in the state court against ten insurance companies, of which nine are appellants in this court, to recover upon certain policies of fire insurance issued to the Amusement Syndicate Company upon its opera house and property in the city of Topeka, Kan. Five of the cases were removed to the Circuit Court for the District of Kansas and there docketed on the law side of the court as actions at law. Afterwards the Spring Garden Insurance Company and one of the other companies, a defendant in one of the actions commenced in the state court and removed to the federal court, filed a hill in equity in the Circuit Court in which an injunction was prayed against the ap-pellees to restrain them from proceeding in the, five actions removed to the Circuit Court and the five actions still pending in the state court.
In this bill the complainants set out the issuance of the ten policies sued on, that the policies were similar in terms and provisions, except as to dates and amounts, and that each of the policies contained a provision by which each insurer should be liable for such a proportion of the amount of any loss as the amount of its policy bore to the total amount of the insurance at the time of the loss. It ivas further alleged that by reason of such clause a common interest existed among the insurers relative to the amount of the loss, and that, to avoid a multiplicity of suits, equity had jurisdiction to determine the amount of such loss, and to apportion the same among the several insurers. The-other insurance companies were made parties defendant to the bill. It was also alleged in the hill that the policies were obtained by fraudulent concealment on the part of the appellees relative to the value of the property which was the subject of the insurance, and prayed that at the final hearing it might he decreed that all of the contracts o f insurance were void because of the frauds practiced upon the insurers by the appellees.
To this hill of complaint the appellees filed a demurrer, which was overruled. The insurance companies made defendants in the bill answered in such form as to admit the allegations of the bill, and join in the prayer for relief. A temporary injunction was granted by the Circuit Court, restraining the appellees from prosecuting the ten actions at law commenced by them against the several insurance companies. Thereupon the appellees filed what is denominated in the record a “cross-bill,” in which they set out the issuance of the ten insurance policies, the occurrence of the fire, the destruction of the property in
To this cross-bill each of the insurance companies answered, alleging, by way of defense, breaches of the policies as set out in the original bill of complaint.. To these answers replications were filed, and, the issues having been thus joined, by consent of all the parties the issues of fact were referred to a master for his findings and recommendations for judgment. The master’s findings of fact were confirmed by the court, and a decree or judgment was rendered in favor of the appellees for the amount of the loss as found by the master. The Western Assurance Company, one of the defendants in the cross-bill, paid the amount which the judgment provided it should pay, and the other nine insurance companies joined in this appeal.
It will be seen from the foregoing statement that the issues tried arose upon the so-called cross-bill, which is in legal effect & petition at law, the answers of the insurance companies thereto, and the replications to the answers.' A motion was filed by the appellees to dismiss the 'appeal on the ground that the cause of action tried in the Circuit Court was at law, and not in equity, and therefore that this court had no jurisdiction to review a judgment on such cause of action, except by a-writ of error.
That an action such as this is an action at law, without any equitable features whatever, was decided by this court in Mechanics’ Insurance Company et al. v. C. A. Hoover Distilling Company et al. (C. C. A.) 173 Fed. 888. It is to be noticed that the case was tried as an equity cause by the consent of all parties, and therefore neither party can be heard in this court to object to the method of trial. Hooven v. Featherstone, 111 Fed. 81, 49 C. C. A. 229. Judge Sanborn, in delivering the opinion of the court in the case just cited, said:
“It is earnestly argued, that appellant, by consenting to try its case below at law, has waived its right to a review by appeal. Its waiver, however,, does not extend to that length. One who consents to the hearing in equity of a legal cause of action, or to the trial of an equitable cause of action at law, is thereby estopped from successfully objecting for the first time in an appellate, court to the method of trial which he has adopted. But this is the extent of the estoppel against him. He does not waive his right to a review of the .judgment or decree of the trial court by the only method which can be effectual to obtain such a review; that is to say, by writ of error if the cause of action was legal, and by appeal if it -was equitable.”
In Files v. Brown, 124 Fed. 133, 59. C. C. A. 403, this court again, speaking through Judge Sanborn, said:
“The appellant has taken an appeal, and has also sued out a writ of error to reverse the same order. This is a permissible practice where counsel are in doubt W'kich course to pursue, and the appellate court will judge the proceedings below in accordance with the rules of that method of review applicable to the nature of the case presented. ⅜ * * . But final decrees and orders in equity .cannot be reviewed by writs of error, nor can final judgments or orders at law be successfully assailed by appeal. * * * Hence it becomes necessary before entering upon the merits of the questions at issue to*537 delermine whether this is a proceeding at law oran equity, and whether it may be reviewed by a writ of error or by appeal. The difference between actions at law and suits in equity is matter of substance, not of form. It inheres in the nature of ¡he causes of action, in the principles which control, and in the remedies which follow them, and it cannot be eradicated, either by a change of form, or by the abolition of forms. A legal cause of action cannot be maintained in equity, because there is an adequate remedy for it at: law, and it is only where there is no such remedy that relief in equity may be successfully sought. Equitable causes of action are not available at law, because they invoke the judgment and appeal to the conscience of the chancellor, and the free exercise of that judgment and conscience is prohibited in actions at law by the rule which entitles every party to a trial of all the issues of fact by a jury.” Hooven v. Featherstone, 111 Fed. 81, 49 C. C. A. 229; McFadden v. Milling Company, 97 Fed. 670, 38 C. C. A. 351; Hurt v. Hollingsworth. 100 U. S. 100, 25 L. Ed. 569; Highland Boy Gold Mining Co. v. Strickley, 116 Fed. 852, 54 C. C. A. 186.
No writ of error was sued out in this case, and to hold that the court has jurisdiction is to overrule, it seems to me, the former decisions of this court above referred to, and for that reason I am unable to assent to the views expressed by a majority of the court. 1 think the motion to dismiss for want of jurisdiction should have been sustained. The original bill, as I view it, stated no cause of action, either at law or in equity, and, as is well suggested by counsel in their brief, “is nothing but an application addressed to the Circuit Court to try ten cases at law according to the procedure and rules applicable to suits in equity.” This operates as an estoppel in so far as the method of trial is concerned: but, as suggested by Judge Sanborn in Hooven v. Feather-stone, this is the extent of the estoppel against them.
But if, as the majority hold, the court has jurisdiction, the judgment or decree in the Circuit Court was for the right parties, and, being affirmed by a majority of the court, I concur in the result on the merits.