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Fidelity Phoenix Fire Insurance Co. v. Cohn-Hall-Marx Co.

Decided: February 1, 1932.

FIDELITY PHOENIX FIRE INSURANCE COMPANY, A CORPORATION, RESPONDENT,
v.
COHN-HALL-MARX COMPANY, A CORPORATION, APPELLANT



On appeal from the Passaic County Circuit Court.

For the appellant, Stein, McGlynn & Hannoch (Edward R. McGlynn, of counsel).

For the respondent, William B. Gourley.

Daly

The opinion of the court was delivered by

DALY, J. On July 29th, 1925, the plaintiff issued to the defendant, a corporation engaged in the textile business, an open policy of insurance, insuring the goods of the defendant against loss by fire from August 1st, 1925, to August 1st, 1926. The policy provided, among other things, that liability should be limited to loss or damage to the goods while located or stored in certain expressed locations. Among the locations enumerated in a rider attached to the policy, was The Consolidated Piece Dye Works, at Hazel street and Montclair avenue, Paterson, New Jersey, and the coverage on goods at this location was $150,000.

On January 13th, 1926, goods owned by the defendant, such as were covered by the policy, to the value of $49,454.45, were destroyed by fire while at a warehouse of The Consolidated Piece Dye Works, but located at 205-207 Paterson street, Paterson, New Jersey. It was agreed that the loss to defendant was $35,923.54, after deducting the value of goods salvaged. The plaintiff disputed liability on the policy, but, after conferences between them, paid to defendant on March 24th, 1926, the sum of $21,000, and on May 1st, 1926, the sum of $14,923.53. Defendant gave plaintiff "loan receipts" for these amounts, a "loan receipt" being used in case of payments by an insurance company when a bailee or other third party may be responsible for the loss. On May 13th, 1926, defendant gave its check to plaintiff for $850.60, the difference between the insurance rate at the actual location of the fire and the rate at the location given in the rider.

Plaintiff sued for the return of the amounts paid defendant. The complaint is based on fraud. The basis for the charge of fraud is that defendant, prior to the aforesaid payments, represented to plaintiff that the goods destroyed were stored by The Consolidated Piece Dye Works at the Paterson street address instead of the Hazel street and Montclair

avenue address without defendant's knowledge and without its authority; that this alleged false statement, and plaintiff's belief in reliance thereon that defendant had a good and sufficient cause of action against The Consolidated Piece Dye Works for breach of its contract for the care and custody of said goods, was the inducement for the payment of the aforesaid amounts by plaintiff to defendant.

As part of the terms upon which plaintiff had paid the moneys to defendant, it was agreed that defendant, or plaintiff in its behalf, should institute suit against The Consolidated Piece Dye works for the value of the goods destroyed. This suit was instituted by Fidelity Phoenix Fire Insurance Company, in the United States District Court for the district of New Jersey, against The Consolidated Piece Dye Works and resulted in a verdict for the defendant therein. The issue involved was whether the goods destroyed had been stored in the Paterson street warehouse without the knowledge and authority of Cohn-Hall-Marx.

The instant suit was tried before Judge Mackay and a struck jury in the Passaic County Circuit Court, resulting in a judgment for plaintiff against defendant for $43,620.07. The grounds of defendant's appeal are (1) the denial of defendant's motion for a nonsuit; (2) the denial of defendant's motion for a directed verdict; (3) the court's refusal to charge three of defendant's requests to charge, and (4) that the court erroneously charged as to the dates when interest began to accrue on plaintiff's claim.

The testimony showed that, when the defendant took up with plaintiff the question of the settlement of its loss after the fire, it represented that it did not know, prior to the fire, that the goods destroyed were stored at the Paterson street warehouse (which was proved to be a poor fire risk because not equipped with a sprinkler system and because of the neighborhood). A representative of plaintiff then said that, if this were so, defendant had a right to recover for the loss against The Consolidated Piece Dye Works and ...


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