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Great American Ins. Co. v. Roney & Berger Co.

June 3, 1930

GREAT AMERICAN INS. CO. OF NEW YORK
v.
RONEY & BERGER CO. ; NATIONAL FIRE INS. CO. OF HARTFORD, CONN., V. RONEY & BERGER CO., AND SIX OTHER CASES



Appeal from the District Court of the United States for the Eastern District of Pennsylvania; Oliver B. Dickinson, Judge.

Author: Woolley

Before BUFFINGTON and WOOLLEY, Circuit Judges, and SCHOONMAKER, District Judge.

WOOLLEY, Circuit Judge.

The Roney & Berger Company owned and operated a shoe factory in Allentown, Pa. It had placed insurance on buildings, equipment, tools, and stock with nine insurance companies for different sums, which together amounted to $205,000. A fire occurred, resulting in a total loss of all property insured. When the companies refused to pay the insurance money, the Roney & Berger Company sued them in the state court in Lehigh county. For lack of diversity of citizenship one suit was tried there. The remaining eight were removed to the District Court of the United States for the Eastern District of Pennsylvania where, by stipulation, they were tried as one case. The plaintiff had a verdict for a total sum, which was divided by counsel between the several defendant companies, and judgments were entered against them for their allocated amounts respectively. The eight companies appealed and, as the cases were heard together and treated as one case, of which we shall continueto speak in the singular number.

The factory consisted of a central building -- an old structure -- with a wing, relatively new, at each end. The entire factory was equipped, as required by the policies, with a sprinkler system, which was operated through the medium of a main supply valve, and at the highest point in the building had a test valve which, when open, permitted the circulation of water in an apparatus on the front of the building, causing a fire alarm bell to ring when the system was in operation. In addition, there was a drain valve.

The story of the fire is, briefly, that on Saturday, January 15, 1927, the factory had, as customary, closed at noon, and every one had left. Early in the evening the engineer returned and banked the fires for the night. He then departed, locking the door behind him and leaving no one in the building. Early in the morning of January 16, a person not connected with the plant saw that the door of the boiler room in the basement was open and observed a small flame not larger than a candle flame. Seeing that it was spreading, he hastened to send in a fire alarm. Although the fire department responded promptly, the fire grew so rapidly that within thirty minutes the roof had fallen in and some of the walls were down. It appears that when the fire was discovered it was burning in the two separate wings of the building, and after it had been extinguished, the main supply valve of the sprinkler system was found closed and the drain valve open, which condition not only prevented the sounding of the alarm bell at the front of the building, but drained the sprinkler system of water and prevented an inflow through the supply valve. The questions involved, as stated by the defendants do not relate to any assignments of error, in respect to failure by the plaintiff to maintain the sprinkler system in working order, as required by the sprinkler clause, and in respect generally to the cause of the fire. We shall therefore assume that, under the court's charge on those issues, which we have voluntarily examined, yet, without discovering error, the jury found that the plaintiff had kept the system in operative condition and that the fire was of incendiary origin.

There are three questions in the case. The first is:

"Was the charge of the court with reference to fraud and false swearing as to the values of the property intended to be insured legally adequate in this regard?"

This question is based on the fraud and misrepresentation clause, identical in all policies, which provides that a policy "shall be void if the insured has concealed or misrepresented any material fact or circumstance concerning this insurance or the subject thereof; or in case of any fraud or false swearing by the insured touching any matter relating to this insurance or the subject thereof. * * * "

At the trial the defendants introduced evidence to prove that the plaintiff had concealed or attempted to conceal the sound values of the property by misrepresenting them, and had committed fraud by swearing falsely in regard to them. They did not question the accuracy of the plaintiff's list of insured properties destroyed. Thereupon they presented to the court, as its fifth point for charge, the following:

"If the jury believe that the plaintiff through its duly authorized officers and representatives concealed or attempted to conceal from the defendant material information as to the cause or origin of the fire or as to the value of the insured property upon which claim is made, then your verdict must be for the defendant."

The court, feeling that it had covered the matter in the general charge, refused the point. The defendants assign error in the court's refusal to charge as prayed, and as to the adequacy of the charge as made.

As all the plaintiff's current books had been burned in the fire, the extent of the properties destroyed and their value as shown by the books were impossible of ascertainment. Therefore both parties were driven to other sources for information with which, the plaintiff, to make a schedule for its statement of claim and to prove loss at the trial and, the defendants, to resist the plaintiff's proofs. Each party had a plan of its own. The plaintiff relied on testimony of its officers, supposedly familiar with the values, and re-enforced and checked their knowledge by duplicate invoices obtained from supply houses; also, on experts and witnesses from machinery manufacturers, manufacturers of lasts, and makers of other supplies, who testified to the sound value of various types of equipment and of the inventory at the date of the fire.

The defendants relied generally on crossexamination of the plaintiff's witnesses, and particularly on a constructive inventory built up by a public accountant on data obtained from various sources, which included, in some instances, the plaintiff's figures of values at earlier dates. There was, in consequence, a running fight on the value of the plant, machinery, lasts, and stock on hand. All this resulted in a mass of evidence greatly confused and sharply conflicting, which disclosed a spread between the plaintiff's total value claim of $239,585.04 and the defendants' proofs of $108,302.39, through which ...


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