J. W. Gillum & Co. v. Fire Ass'n

BROADDUS, J. This is an action on a policy of fire insurance issued by defendant to plaintiff on September 20, 1901, covering a retail stock of merchandise in the sum of six hundred dollars with an additional one hundred dollars on store fixtures and furniture. The policy in suit contained what is known as the “Inventory and Iron-Safe Clause.” The plaintiffs admit that they did not keep the safe required by the terms of the policy and relied on an alleged agreement with the agent of the insurance company made before the policy was issued and delivered that, it was not nec [676] essary to keep books or to keep a safe, it was shown that plaintiffs were fully aware of said conditions in their policy and that they made no objections to it for that reason. The evidence showed that plaintiffs kept á ledger containing their purchases of goods and of their- credit sales and had a bank pass book containing a -deposit of goods sold for cash with other deposits of money borrowed, but the classes of deposits were not separated and one of the plaintiffs in his testimony arrived at the amount of cash sales by approximation. An inventory taken the day before the date of the policy was produced together with said ledgers containing purchases and credit sales, and the said pass book; all having been kept in a building separate from that of the storeroom. Two other inventories, one taken January 1 and the other June 1, 1902, were destroyed by the fire which occurred June 9 of said year. The plaintiffs, over the objection of defendant were allowed to,- prove the amount of goods on hand as shown by said inventories. Said “inventory and iron-safe clause”'reads as follows: “In case this policy covers stock of merchandise, it is expressly warranted by the insured as follows, to-wit: First. That the insured will take a complete itemized inventory of stock on hand at least once in each calendar year, and unless such inventory had been taken within twelve calendar months prior to the date of this policy, one shall be taken in detail within thirty days or this policy shall-then be null and void, and on demand of the insured the unearned premium from that date shall be returned. Second. That the insured will keep a set of books, which shall clearly and plainly present a complete record of business transacted, including all purchases, sales and shipments, both for cash and credit, from the date of such inventory, and during the continuance of this policy. Third. That the insured will keep such books and inventory, and also the last preceding inventory, if such had been taken, securely locked in a fire [677] proof safe at night, and at all times when the building mentioned in the policy is not actually open for business, or failing in this, the insured! will keep such books and inventories in some place not exposed to a fire which would destroy the aforesaid building; and, in case of loss, the insured specifically warrants, agrees and covenants to producé such set of books for the inspection of this company. In the event of failure to produce such set of books and inventories for the inspection of this company, this policy shall become null and-void, and such failure shall constitute a perpetual bar to any recovery thereon. No agent of this company shall have authority to waive, alter, change, or in any way modify, any of the above-specified conditions. Attaching to and forming part of policy No. 2322991 of the Fire Association of Philadelphia, Pa., . . . The court at the instance of plaintiffs instructed the jury as follows: “If the jury believe from the evidence that at the time of and prior to creating (issuing) the policy of insurance in suit, defendant’s agent talked the terms of the policy over with plaintiffs and then gave plaintiffs to understand that the iron-safe clause, requiring a full set of books to be kept would be omitted from said policy, or waived the terms of said clauses, and that upon the faith of such understanding with defendant’s agent, plaintiffs accepted' said policy, then such understanding and agreement amounted to a waiver by defendant, to demand that plaintiffs keep an iron safe in their store for keeping books and invoices, and also a waiver of the clause requiring plaintiffs to keep a full set of books. ’ ’ This instruction is a clear violation of one of the plainest and most beneficial rules óf the law, viz: That all prior and contemporaneous agreements are included in the written agreement. The plaintiffs seek to uphold said instruction on the authority of the following cases: Mining & Smelting Co. v. Ins. Co., 62 Mo. App. 293; Parsons v. Fire Ins. Co., 132 Mo. 583. The former [678] holds: “Though a policy of insurance contains stipulations avoiding the contract if the property he vacant, etc., without permission therefor indorsed thereon, yet if the company has a,t the time notice of the true .situation and knows that the policy does not state it truly, but still issues it and collects the premium, then it will not he allowed to defeat the policy on account of the violation of such stipulation. ’ ’ In the latter case. (Parsons v. Ins. Co.) the insured did not own the land on which the house was situated, which fact was communicated to the company’s agent; notwithstanding such knowledge, the agent issued a policy containing a provision that if the assured did not own the land on which the insured building was located the policy should he void, unless such fact appeared in writing on such policy. The court held that defendant could not claim a forfeiture under such circumstances. Neither of these cases support the contention of the plaintiffs. They merely apply the rule that an insurance company is hound hy the knowledge of its agent of the existence of certain conditions of the property insured at the time of the issuance of the policy, although hy the terms of the policy such conditions would render it void. The plaintiffs by accepting the policy agreed to keep a complete set of books and the last preceding inventory taken and lock them in an iron safe, or keep them in some other place not exposed to a fire which would destroy the storeroom. They seek to avoid the contract in that particular on the ground that they notified the defendant’s agent beforehand that they would not keep an iron safe and a complete set of hooks and that the agent agreed that they might not do so. The law is otherwise. Ins. Co. v. Neiberger, 74 Mo. 167; Helm v. Railway, 98 Mo. App. 419. Plaintiffs seek to further sustain said judgment on the ground that they substantially complied with the terms of the policy. That is to say, that the two ledgers, the hank pass hook, the first inventory and proof of the [679] footings of the two destroyed inventories answered in every material respect the object aimed to be obtained, viz.: satisfactory proof of their loss. The evidence being undisputed the question was therefore one of law, but the court in instruction number one, given at the instance of plaintiffs, left it as a question for the jury. But of this action of the court defendant does not complain. But plaintiffs 'raise the question by their insistence that the evidence shows that they substantially complied with the terms of the policy. But we decline to so hold for the reason that the said bank pass book was not such evidence of their sales of goods as the policy required. Rives v. Ins. Co., 77 S. W. 424. And for the further reason that said book did not by inspection show the amount of cash sales of goods. This book was objected to as incompetent and the objection should have been sustained. The court also committed error in permitting plaintiffs to prove the footings of the destroyed inventories and in admitting such footings as evidence, as the contract required that the inventories should be kept in an iron safe in the building or a,t some other place where they would not be destroyed by fire in case the storehouse should be burned. The clause in question was for the purpose of enabling defendant to properly adjust plaintiffs’ loss in case of fire and was therefore a reasonable precaution, beneficial alike to both the insured and the insurer. The necessity for preservation of the inventories was therefore of the first importance. The defendant had the right under the terms of the policy to the production of the inventories and not secondary evidence of their contents. To prove the contents of such a paper aliunde would in most instances be impossible. The plaintiffs having failed to keep the books and preserve their inventories, as required by the terms of the policy, they are not entitled to recover. Cause reversed. All concur.