United Firemen's Ins. Co. of Philadelphia v. Jose Rivera Soler & Co.

BINGHAM, Circuit Judge. Since handing down our opinion in this case on May 25, 1935, the defendant has filed a motion for rehearing, a rehearing has been granted as to the tenth assignment of error and the assignments relating to the refusal of the court below to direct a verdict for the defendant, and the parties have been heard. Under the tenth' assignment it is contended that the verdict and judgment are contrary to law; that the amount of the loss fixed by the verdict is so inconsistent with the proof of loss and the provisions of the policy, both of which are made a part of the pleadings, as to show that the plaintiff’s sworn, proof of loss was fraudulent as a matter of law. When the case .was previously before us, we declined to consider this question, apparently on the ground that, after the verdict, no motion, ruling, or exception relating to the matter was had or taken at the trial term. On reconsideration of the question, we are of the opinion that no motion or exception was necessary, that the error, if any, appeared upon the face of the record proper, and that a writ of error and an assignment of error relating to the matter are all that are required to preserve the question and authorize us to entertain it. Bills of exception are necessary to preserve exceptions to rulings made in the progress of the trial, but errors appearing on the face of the record proper need not be so preserved. In the court below the defendant could have made a motion in arrest of judgment, but no such motion was necessary. This question was before the court in Slacum v. Pomery, 6 Cranch, 221, 223, 3 L.Ed. 205, where defendant contended that, although such a question “might have been taken advantage of in the court below, in 'arrest of judgment, yet it was also a fatal objection upon a writ of error,” for “the record [record proper] does not show that the plaintiff was entitled to his judgment.” Counsel for the plaintiff, however, contended that a motion in arrest of judgment was necessary. But Chief Justice Marshall, in speaking for the court, said: “There can be no doubt that any thing appearing upon the record, which would have been- fatal upon a motion in arrest of judgment is equally fatal upon- a writ of error.” The order in that case reversed the judgment and remanded the cause “with direction that the judgment be arrested” —that is, that no judgment be entered on the verdict. In considering the question raised by the tenth assignment, the evidence introduced at the trial and brought here by bill of exceptions is not to be considered, for that is no part of the record proper. The inquiry is confined to such matters as appear in the record proper. That record in this case includes the complaint, proof of loss and the policy (which are included in the complaint), the verdict, and judgment. In the complaint it is alleged that, on the 9th day of February, 1932, the defendant issued to the plaintiff a policy of fire insurance, insuring its goods and property, for one year from the date [387] of the policy, against loss or damage caused by fire in the sum of $30,000; that “the description of the property insured, the location thereof and the amounts covered by the said policy of insurance” were as follows: “ ‘Thirty thousand dollars’: For the term of one year, distributed as follows: $15,000.00: On stock of merchandise, unembroidered, embroidered, and in tho process of being embroidered, or for repairs, and on cost of labor performed thereon [italics supplied], including all materials, ingredients and supplies used in the manufacturing and repairing the same, including boxes, samples and packages, the property of the assured, or held in trust or on commission, or consignment, or on joint account with others, or held on storage for which the assured may be legally liable, or sold but, not delivered all while contained in the two story concrete building with zinc roof, situated at Fumarada St. No. 4, block No. 657 of the suburb of Santurce, San Juan, Puerto Xtico. §12,000.00: On machinery of every description, motors, electrical installations, including cost of installation of machinery, motors, boilers, stoves, implements, parts, spare parts, instruments, and any other material used for repairs and/or conservation of the machinery for the manufacture of embroidered goods in the premises described above. $ 3,000.00: On furniture, fixtures including tables, shelves, stands, office furniture and fixtures, printed supplies, labels, additions and repairs made in the premises above mentioned. §30,000.00: Total.” The tenth condition of the policy provided that “on the happening of any loss or damage the Insured shall forthwith give notice thereof to the Company, and shall within fifteen days after the loss or damage, or such further time as the company may in writing allow in that behalf, deliver to the company a claim in writing for the loss and damage, etc.” And in condition 12 it provided: “If the claim be in any respect fraudulent, or if any false declaration be made or used in support thereof, or if any fraudulent means or devices are used by the Insured or anyone acting on his behalf to obtain any benefit under this policy; or, if the loss or damage be occasioned by the wilful act, or with the connivance of the Insured; or, if the claim be made and rejected and an action or suit be not commenced within three months after such rejection, or (in case of an arbitration taking place in pursuance of the 17th Condition of this policy) within three months after the Arbitrator or Arbitrators or Umpire shall have made their award, all benefit under this policy shall be forfeited.” (Italics supplied.) Under the first item of the- policy covering the property there, specified in the sum of $15,000 the plaintiff claimed in its proof of loss the destruction of property valued at $17,345.21; under the second item of the policy covering the property there specified in the sum of $12,-000, it claimed in its proof of loss the destruction of property valued at $14,835.-10; and, under the third item insuring property for $3,000, it claimed in its proof of loss $3,745.75 — making a total valuation of property claimed to have been destroyed of $35,926.06, the total insurance being $30,000. The verdict of the jury was for $17,-000, and the judgment entered was for that amount. It thus appears in the record proper that the total amount of insurance on the property was $30,000, that the total value of the property insured, as claimed and sworn to in the proof of loss, was $35,926.06, and that the verdict and judgment were for $17,000, or something less than half the total value of the property sworn to in the proof of loss upon which the plaintiff sought to have' the company pay it $30,000. The defendant contends that the great disparity between what the jury awarded ($17,000) and what the plaintiff would have been entitled to ($30,000) had it had property on hand at the time of the fire of the value of $35,926.06, as claimed and sworn to in the proof of loss, necessarily shows that the proof of loss contained fraudulent statements as to the value and character of the property on hand and insured. It is perfectly plain that the verdict of the jury is entirely inconsistent with the allegations of the complaint and the proof of loss, and we think this disparity of nearly $19,000 shows on its face and as a matter of law that the sworn proof of loss was fraudulent and, if so, then under the twelfth condition of the policy, all benefit thereunder was forfeited. The verdict should have been either for nothing or in the neighborhood of $30,000. A similar q-uestion arises under the motion for a directed verdict based upon the evidence as to the cost of labor. The cost of labor was one of the elements insured under the policy. It was [388] set down in the proof of loss as $2,-524.50. Under the motion for a directed verdict the evidence introduced at the trial and included in the • bill "of exceptions is open for consideration. There is no evidence in the case, and counsel for the plaintiff has pointed out none, though requested to do so, showing that the cost of labor “on goods in process” was $2,-524.50, as stated in the sworn proof of loss. The only evidence in the record relating to that subject is that given by Soler himself (president of the plaintiff company), where he states that the sum of $2,524.50 was the contract price which the company was to receive for manufacturing the goods of others. If the statement in the proof of loss, to which Soler made oath, did not represent the cost of labor, but was the contract price which the plaintiff was to receive from others for whom goods were being manufactured, no other conclusion can reasonably be drawn than that the statement in the proof of loss was knowingly made for the purpose of getting money from the insurance company that the plaintiff was not entitled to and was fraudulent, and, under condition 12 of the policy, deprived the plaintiff of its benefits. Soler was the president of the plaintiff company and made oath to the proof of loss. We had a similar question before us in Cuetara Hermanos v. Royal Exchange Assurance Co., 23 F.(2d) 270, certiorari denied 277 U.S. 590, 48 S.Ct. 437, 72 L.Ed. 1002. Article 13 of the policy in that case read the same as condition _ 12 of this one. There the value of the property destroyed was largely overstated in the proof of loss, and we sustained a directed verdict for the defendant on the ground that the claim made either in the proof of loss or in evidence at the trial wa.s false and so excessive from the standpoint of the value and amount of property actually destroyed that the District Court did not err in directing a verdict for the defendant. Our order of May 25, 1935, affirming the judgment of the District Court of Puerto Rico, is vacated, the judgment of the District Court of Puerto Rico of May 31, 1934, is vacated,' and the case is remanded to that court, with directions to enter an order in arrest of judgment, with costs to the appellant in both courts.