Sweaney & Smith Co. v. St. Paul Fire & Marine Insurance

206 P. 178 | Idaho | 1922

This action was brought by respondents to recover from appellant the sum of $4,000 upon a fire insurance policy in that amount, covering a flour-mill at Midvale, owned by respondent Sweaney Smith Company, upon which respondent The Weiser Loan and Trust Company held a mortgage.

It appears that respondents are both domestic corporations, and that appellant is a Minnesota corporation, which has complied with the requirements of the law of this state relating to foreign corporations. The mill, consisting of three buildings of the alleged value of $8,000, and of machinery, furniture and fixtures of the alleged value of $12,000, and insured in the total amount of $12,000, of which $4,000 was carried by appellant, $12,000 by the American Central Insurance Company, $1,000 by the Hartford Insurance Company, and $5,000 by the Reliance Insurance Company of Philadelphia, was destroyed by fire on the night of June 8, 1918. Several days after the fire, one Hall, adjuster for the insurance companies, arrived at Midvale, where he saw Mr. Smith, president of Sweaney Smith Company, and spent two or three days estimating the loss and going over the books showing the contents of the mill and materials used in its construction, after which he made a detailed statement and estimate of the loss. About three weeks later he returned to Midvale and offered to settle with respondents on the basis of fifty percent of the face of the policies, stating he would not pay more "because of the watchman clause," which was embraced in a "rider" attached to the policies after their issuance and delivery to respondents, providing as follows: "It being warranted by the assured that whenever the mill described by this policy is idle or not in operation for any cause whatever, competent watchmen shall be employed and due diligence used to keep a continuous watch, both day and night, in and immediately about said parts of the mill. If the above mill is idle or not in operation for more than sixty days, this policy shall be void. . . . ."

The evidence shows that Smith was in charge of a store at Midvale, situated about 600 or 700 feet from the mill; that after the watchman clause was attached to the policies, he employed an extra man at the store so that he could devote time to watching the mill during the day; that he could at all times observe the mill from the store, and visited the mill five or six times daily, spending considerable time there; that Smith employed one Nelson as night watchman, and that the latter was in the mill, performing his duties as watchman, when the fire began. The exact cause of the fire is not disclosed in the record, the only explanation being that an engine was going back and forth close to the mill just prior to the fire.

For the purposes of the trial, this action was consolidated with an action against each of the other insurance companies. The jury found in favor of respondents and rendered a separate verdict, and a separate judgment was entered, against each of the companies, all of which have appealed.

This cause was tried on March 28 and 29, 1919. Judgment was filed and entered April 7, 1919. Notice of appeal was served and filed May 9, 1919. The order for the reporter's transcript is dated May 20, 1919, and filed May 21, 1919. The praecipe filed with the clerk of the district court is dated May 21, 1919. On February 12, 1920, and after the completion of the transcript on appeal, counsel for the respective parties entered into the following stipulation, pursuant to which the court on the same day settled the reporter's transcript: "It is hereby stipulated and agreed by and between the attorneys for the respective parties in the above-entitled cause that the judge of the above-entitled court may without notice to either party make an order settling the reporter's transcript of the evidence and proceedings had in the above-entitled cause, no error appearing therein that either party cares to suggest."

The completed transcript was filed in this court on Feb. 24, 1920. Briefs for the respective parties were thereafter filed. On Dec. 31, 1921, appellant filed a motion in the district court for an order requiring the official reporter to prepare and lodge a supplemental transcript, containing the instructions given and refused. On Dec. 31, 1921, the court reporter, pursuant to an order of the court, lodged with the clerk a supplemental transcript containing the instructions given and refused. On Jan. 14, 1922, an amended praecipe was served upon the clerk, which was in substance the same as the original except that it directed the clerk to prepare as a part of his record the instructions given and refused. On Jan. 17, 1922, appellant made a motion for an order that the supplemental transcript be settled, to which respondents served and filed objections. The court refused to settle the supplemental transcript further than to identify the instructions given and refused as contained therein. On Feb. 4, 1922, said supplemental transcript was lodged with the clerk of this court.

It is insisted by respondents that this supplemental transcript cannot be filed in or considered by this court inasmuch as it was not served or filed within the time prescribed by the trial judge for the filing of the completed transcript, or any extension thereof made under the provisions of C.S., sec. 6886, subd. 1, which provides that:

"Any party desiring to procure a review on appeal to the supreme court of any ruling of the district court made during the trial, or the sufficiency of evidence to sustain the verdict or decision, in an action. . . . may, in lieu of preparing, serving and procuring the settlement of a bill of exceptions. . . . procure a transcript of the testimony and proceedings, including the instructions given or refused, and exceptions thereto, on the trial, or such part thereof as may be necessary, in the following manner:

"1. He shall first procure from the district judge an order directing the reporter to prepare said transcript or specified portion thereof, which order shall limit the time within which the reporter shall complete and lodge the same. . . . It shall be the duty of the reporter, upon service of said copy of order and receipt of his estimated fees, to forthwith prepare said transcript and to complete the same and lodge the original and copies with the clerk of the district court within the time allowed by said order, or within such further time as the district judge may, by order, allow. . . ."

This supplemental transcript is not subject to review, for the reason that it was not settled and allowed as provided by C.S., sec. 6886, and was not settled at all by the trial court, nor was it filed in this court within the time required by rules 26 or 28. Rule 26 provided that in all cases where an appeal was perfected or writ of error issued the transcript of the record must be served upon the adverse party and filed in this court within sixty days (now ninety days) thereafter. Rule 28 provides that this time may be extended by an order of this court or a justice thereof, upon good cause shown. Rule 29 provides that if the transcript of the record is not filed within the time prescribed by rules 26 and 28, the appeal may be dismissed, after five days' notice of the motion to dismiss, accompanied by copies of all moving papers, served upon the adverse party. While a compliance with rules 26 and 28 is not necessarily jurisdictional, there is no sufficient showing of diligence in this case which would justify this court in permitting the filing of the supplemental transcript. Moreover, there is no such thing known to the appellate practice of this court as a supplemental reporter's transcript such as is sought to be filed in this case.

Neither can this transcript be used in reference to the question of diminution of the original record, for the reason that the stipulation by the parties that the judge might settle the transcript, "no error appearing therein that either party cares to suggest," constituted a joinder in error, and an admission that the transcript when so settled should be a true and correct record for the purposes of this appeal. Neither party was thereafter in a position to suggest a diminution of the record so far as the joinder in error extended. (4 C.J., Appeal and Error, sec. 2243, p. 496.)

Appellant makes 18 assignments of error. Assignments 2 to 15, inclusive, are predicated upon the action of the court in giving and refusing to give certain instructions.

These instructions are not contained in the reporter's transcript or in a bill of exceptions settled and allowed. While certain purported instructions appear in the clerk's transcript, they are not there pursuant to the praecipe, which does not call for the instructions given and refused, nor are they certified to by the clerk as being the instructions given and refused upon the trial.

C.S., sec. 6886, provides that the instructions given or refused and the exceptions thereto taken on the trial must be included in the reporter's transcript and settled as therein provided, in order to be considered on appeal. C.S., sec. 7163, makes a part of the record on appeal "all papers, records and files designated in the praecipe filed by appellant with the clerk of the district court."

In Minneapolis Threshing Machine Co. v. Peterson,31 Idaho 745, 176 P. 99, this court held that: "Unless the alleged errors of the court in giving and refusing instructions to the jury are presented by the reporter's transcript, they can only be reviewed when saved by a bill of exceptions."

See, also, Crowley v. Croesus Gold etc. Min. Co.,12 Idaho 530, 86 P. 536.

In Stringer v. Redfield, 34 Idaho 378, 201 P. 714, decided since the amendment of sec. 7163, supra, in 1919 (Sess. Laws 1919, c. 143, p. 437), it is said: "Where the record on appeal contains no reporter's transcript, and no bill of exceptions containing the instructions to the jury given and refused, and the clerk's transcript contains what purports to be the instructions given and refused, which are not included therein in response to the praecipe filed by appellant with the clerk and are not included in the clerk's certificate of the transcript, such instructions cannot be reviewed on appeal from the judgment."

In Marnella v. Froman, ante, p. 21, 204 P. 202, construing C.S., sec. 7163, as amended, this court held that: "When instructions given and refused are filed with the clerk, and included in the clerk's transcript, in obedience to the praecipe, and duly certified by the clerk, they are subject to review on appeal."

From a consideration of secs. 6886 and 7163, supra, and the cases mentioned, it becomes apparent that instructions given and refused, which are included in the clerk's transcript not in obedience to the praecipe, and are not certified by the clerk, cannot be regarded as a part of the record on appeal and are not subject to review.

C.S., sec. 7163, provides that on appeal from a final judgment the appellant must furnish the court with a copy of the notice of appeal, judgment-roll, and of any bill of exceptions or reporter's transcript prepared and settled as prescribed in sec. 6886, upon which the appellant relies, and of all papers, records, and files designated in the praecipe filed by appellant with the clerk of the district court. C.S., sec. 7166, provides that the appellant within five days from the filing of the notice of appeal shall file with the clerk a praecipe for a transcript, designating therein the papers or files which he desires to be made a part of the clerk's transcript on appeal.

In Bohannon Dredging Co. v. England, 30 Idaho 721,168 P. 12, and Clear Lake P. I. Co. v. Chriswell, 31 Idaho 339,173 P. 326, this court held that this direction of the statute requiring the filing of a praecipe is directory and not mandatory. It would seem to follow that if no praecipe be filed and the clerk below without a praecipe prepares and certifies to this court the record to be used on appeal from a final judgment, the same is subject to review. However, the statute does not make papers, records and files in the office of the clerk below a part of the official record on appeal unless specified by the praecipe of appellant. If the praecipe actually filed fails to designate such papers, records and files, or if no praecipe be filed, then the official record in this court consists only of the judgment-roll and any bill of exceptions filed in the case. Therefore the appellant, if he fails by his praecipe to require papers, records and files sent up for review, it is his error and he cannot thereafter by suggestion of diminution of the record, bring up to this court such papers, files and records. In such a case a suggestion of the diminution of the record would only justify bringing up to this court omitted portions of the judgment-roll or a bill of exceptions filed in the case. It is also clear that after the record has been filed in this court, appellant cannot be permitted to file an amended praecipe, designating therein certain papers, records or files which it failed to include in the original praecipe, for the reason that it cannot complain of its own error.

While this court has held that the instructions given and refused may be reviewed if contained in the clerk's transcript in pursuance to a praecipe, and are properly certified to by the clerk in his certificate settling his transcript, the proper place for the court's instructions is in the reporter's transcript or in a bill of exceptions, settled and allowed.

Appellant's first assignment seeks to predicate error upon the action of the court in admitting in evidence, over its objection, the testimony of Smith regarding a conversation with Hinkey, local agent for the insurance companies except the Reliance Insurance Company, as to what should be regarded as a compliance with the watchman clause. It appears that Smith advised Hinkey as to the manner in which respondents were complying with the watchman clause, and was assured by the latter that this was a sufficient compliance.

It is urged that this evidence was inadmissible for the reason that each of the policies provided that: "No officer, agent or other representative of this company shall have power to waive any provision or condition of this policy, except such as by the terms of this policy may be the subject of agreement indorsed hereon or added hereto, and as to such provisions and conditions no officer, agent or representative shall have such power, or be deemed or held to have waived such provisions or conditions unless such waiver, if any, shall be written upon or attached hereto, nor shall any privilege or permission affecting the insurance under this policy be claimed by the insured unless so written or attached."

The testimony complained of was not offered for the purpose of varying the terms of the policy, nor does it tend to have that effect, but rather to show what should be regarded as a compliance with the terms of the watchman clause and that the system adopted by respondents constituted the employment of competent watchmen and the use of due diligence to keep a continuous watch, both day and night, in and immediately about said parts of the mill. There is no claim here that the agent waived any conditions of the policy, but only that he construed certain words contained in it in a certain way, and it is obvious that the provision that no agent should have authority to waive any provision or condition of the policy is not involved in the determination of this case. (Hotchkiss v. Phoenix Ins. Co.,76 Wis. 269, 20 Am. St. 69, 44 N.W. 1106; 2 Joyce on Insurance, 2d ed., sec. 439.)

Moreover, the admission of evidence of a construction placed upon the clause by the companies' agent, even though erroneous, could not constitute prejudicial error under the facts of this case.

It has been almost universally held that insurance policies will be strictly construed against the insurer, and liberally construed in favor of the insured. (Stebbins v. Westchester FireIns. Co., 115 Wash. 623, 197 P. 913.)

The use of the word "warranted" in the watchman clause adds nothing to the force of the stipulation. The expression of the word "warranty" does not necessarily constitute a warranty, and it must be used in its ordinary signification. (Port BlakelyMill Co. v. Springfield Fire Marine Ins. Co., 59 Wash. 501, 140 Am. St. 863, 110 P. 36.) Furthermore, it will be observed that the rider upon which the watchman clause appears also provides that "if the above mill is idle or not in operation for more than sixty days, this policy shall be void." It is not provided that the policy shall be void if competent watchmen are not employed and due diligence used to keep a continuous watch, both day and night, and, under the rule of "expressio unius estexclusio alterius," the policy could not be held void for failure to comply strictly with this latter provision. If such had been the intention, appropriate words would have been used to that effect.

While it may be, and doubtless is, true that the insurance company would have a right to make a contract avoiding the policy for failure to comply strictly with the watchman clause, and, if such contract were made, that it would be the duty of the court to enforce it, yet it must clearly appear from the whole contract, considering both the language and its arrangement, that such was the intention. (Hart v. Niagara Fire Ins. Co.,9 Wash. 620, 38 P. 213, 27 L.R.A. 86.) Forfeitures are not favored by the law (Leaf v. Reynolds, 34 Idaho 643, 203 P. 458, at 460), and a clause in an insurance policy being susceptible of more than one construction, the one most favorable to the insured will be adopted. (National Mut. Fire Ins. Co. v. Duncan, 44 Colo. 472,98 P. 634, 20 L.R.A., N.S., 340.) Contracts of insurance should be considered in view of their general objects and the conditions prescribed by the insurers, rather than on the basis of a strict technical interpretation. (Raulet v. Northwestern Nat. Ins. Co.of Milwaukee, 157 Cal. 213, 107 P. 292.)

Conceding, however, for the purposes of this case that the watchman clause here involved is a warranty and not a representation, nevertheless a breach of its provisions would not avoid the policy nor prevent a recovery upon the policy in the absence of a showing that such breach was a contributing cause of the loss.

The evidence in this case shows a substantial compliance with the provisions of the watchman clause, and this is all that the law requires. The tendency of the more recent cases is to require that the watchman clause in a fire insurance policy shall be substantially rather than strictly complied with. (McGannon v.Michigan Millers' Mut. F. Ins. Co., 127 Mich. 636, 89 Am. St. 501, 87 N.W. 61, 54 L.R.A. 739; Hanover F. Ins. Co., v. Gustin,40 Neb. 828, 59 N.W. 375.)

In Sierra Milling etc. Co. v. Hartford F. Ins. Co.,76 Cal. 235, 18 P. 267, it was held that a watchman clause which requires that a watchman shall be employed to be in and upon the premises insured, day and night, is complied with where at the time of the fire a watchman is on duty, although he is not actually in the insured buildings, but is standing a short distance therefrom. It is not necessary for the watchman to be actually on or in the property insured; it is sufficient if he is near to the insured property. (Andes Ins. Co. v. Shipman,77 Ill. 189.) The case of Shoshone Concentrating Co. v.Hamburg-Bremen F. Ins. Co., 64 Wash. 638, 117 P. 500, holds that the watchman clause is not complied with where watchmen are employed to watch intermittently and at some distance from the insured property, but in that case it appeared that if the watchmen "had been employed to keep `a continuous watch. . . . in and immediately around' the premises, the property would not havebeen destroyed." As was said in Kansas Mill Owners Manufacturers' Mut. Fire Ins. Co. v. Metcalf, 59 Kan. 383,53 P. 68: "It [the watchman clause] does not require that the sole duty of the watchman shall be to watch, and that he shall always be present. He may perform other duties, if they do not materially impair his usefulness as a watchman, and he may be temporarily or casually absent, whenever a man of reasonable skill and prudence, exercising reasonable and ordinary diligence would do the same. The functions and duties of a watchman vary in different places and circumstances, according to the danger to which the property is exposed, and the nature and value of the property. The court cannot, in the nature of things, precisely define what particular care a watchman should exercise. The jury must determine that in the particular case."

That respondents exercised reasonable care and diligence to comply with the watchman clause is fully apparent from the evidence, and in the absence of proof that their failure to comply strictly with the provisions thereof occasioned the loss, they are entitled to the protection of the policy. (Hanover FireIns. Co. v. Gustin, supra; Theriault v. California Ins. Co.,27 Idaho 476, Ann. Cas. 1917D, 818, and note at p. 821, 149 P. 719; note, 21 Ann. Cas. 845, at 848; Hart v. Niagara Fire Ins. Co.,supra.)

There is no merit in appellant's contention that the right of respondents to recover upon their policies was barred by their failure to make proof of loss within the time limited in the policies. The adjuster for the insurance companies made a thorough investigation of the loss and offered to settle upon the basis of fifty per cent of the face of the policies. This was a waiver of proof of loss by a duly authorized agent of the companies, and an acknowledgment of their liability, so as to lead the insured to believe that no formal proof of loss would be necessary. (Tomuschat v. North British etc. Ins. Co., 77 N. II. 388, Ann. Cas. 1915D, 1155, 92 A. 329; Teasdale v. City of NewYork Ins. Co., 163 Iowa, 596, Ann. Cas. 1916A, 591, and note at p. 594, 145 N.W. 284.)

We have examined the numerous errors assigned by appellant but find no reversible error. The judgment is therefore affirmed. Costs are awarded to respondents.

Rice, C.J., and McCarthy, Dunn and Lee, JJ., concur.