Penix v. American Central Ins.

Smith, C. J., delivered the opinion of the court. Appellant is the trustee in bankruptcy for the estate of A. H. Borah, a bankrupt. Among the assets of this estate was the insurance policy sued on, covering a stock of goods formerly owned by the bankrupt, and which had been destroyed by fire during the life of the policy. The insurance company having declined to pay for the loss of the goods, this suit was instituted..' At the close of the evidence a peremptory instruction Was given for the defendant, and there was a verdict and judgment accordingly. The ground of this peremptory instruction was the failure of the assured to comply with the iron-safe clause contained in the policy, which clause the reporter will set out in full. Prior to the month of June, 1911, Borah was conducting a general merchandise business at Silver City, Mississippi. About this time he decided .to open a similar business in the city of Greenwood, and thereupon shipped to Greenwood from his Silver City-store certain goods, wares, and merchandise, with which, together with some other goods purchased from various wholesale merchants, he commenced business on the 26th of June, 1911. The policy sued on was executed on August 8th, and the fire which destroyed the stock of goods-occurred on August 15th. When the goods shipped from Silver City were packed preparatory to shipment a complete inventory thereof was made by Borah, and when they were received — 162 — at G-reeirwood they were checked into the store from this inventory; they being at that time the only goods in the house. Afterwards, and before the store opened for business, other goods were purchased from various wholesale merchants; invoices thereof being by these merchants delivered to Borah and the goods checked into the house from these invoices. This inventory and these invoices were kept by Borah in an iron safe at a place other than the store, and were produced at the trial. His set of books consisted of a small ledger containing several accounts; the only one having any real tendency to show the amount and value of the goods that went into and out of the store being his merchandise account. This account contains, oh the debit side thereof,' footings of the inventory and invoices of the goods received together with the names of the parties from whom purchased, and on the credit side the following items: 1911. Cr. June 26, by cash acc. C. S.$ 3.00 “ “ S. C. goods to S. C. 129.91 27, “ cash O. S. 4.00 30, “ “ C. S. from 28 — 30 . 5.00 July 3, “ C. S', from 1 — 3 . 4.50 8, “ “ “ “ 4 — 8 . 13.00 30, “ “ “ “ . 105.00 Aug. 9, > “ “ to Aug. 9. 76.00 18, “ Carruthers Jones Shoe Co. 81.70 Borah did not stay in this store himself, but it was managed and the business conducted by a clerk by the name of Lyell, who made all of the sales and sold only for cash. Lyell kept a memorandum book on which he entered, each day, the gross amount of cash sales for the day and whatever goods he took out for his own use. He kept no memorandum of the items composing these cash sales. Borah, at intervals, as shown by the credit side of merchandise account, would post these cash sales in his ledger, transferring thereto, not each item, or rather, — 163 — the amount of each day’s sales separately, but the aggregate amount thereof, in one item, lor the time elapsing since he last posted the account., -¡This hook was last posted on August 9th. Lyell slept and cooked his meals in the rear of the store, and this memorandum book in which he Intered the amount of the daily cash sales was not kept at night in a fireproof safe,'-or in a “place not exposed to a fire which wouldídestroy the aforesaid building,” but was kept by Lyell under his pillow when he retired to sleep. The fire ocqurred just after six o’clock in the evening. A short time prior thereto, Lyell lighted an oil stove on which he cooked his meals and placed on it some food which he desired £o cook for his supper. He then closed, locked, and left the store, went to a barber shop about four blocks away ...and was there shaved. He then went to a nearby baker shop, purchased a loaf of bread, and returned to the store, being absent altogether, according to his testimony, “forty or fifty minutes; maybe longer.” Just before he arrived at the store on his return his attention was called to the fact that it was on fire; and when he arrived he says that the fire was under such headway that he could do nothing to stop it. He had left this memorandum book, in which the daily record of the business was kept, in the store,.and it was burned. There was testimony showing that the store was, open and sales made after the 9th day of August, the last day on which the merchandise account was posted, up to and including the day of the fire: Lyell stated that when he closed the store he had not closed it- for the night, but intended to reopen it on his return, and, as his custom was, to keep it open for business until ten or eleven o ’clock. ? Appellant’s contentions are: (1) That under the terms of the policy Borah was not .required to keep a set of books until he had made an, .inventory of the goods in the store; that he had made no such inventory, and under the policy had thirty days in which to do so, which thirty — 164 — days had not elapsed at the time of the fire; (2) if mistaken in this, that Borah substantially complied with that requirement of the policy by keeping the book containing his merchandise account, which account contains a conn píete record of the goods bought and sold except for the last several days before the fire, which was too short a time in proportion to the full time Borah had been in business, to be material; (3) if mistaken in this, that the book just referred to, together with the memorandum book kept by Lyell, did constitute a substantial compliance with this requirement, and that the policy was not violated by the last-named book being in the store and not in a fireproof safe, or some place not exposed to a fire which would destroy the building at the time of the fire, for the reason that when the fire occurred, the store was actually open for business within the meaning of the policy. In support of his first proposition appellant’s counsel say that the inventory made by Borah of the goods shipped from Silver City to Greenwood was simply an invoice, and not an inventory within the meaning of the policy; and in support thereof we are referred to the case of Insurance Co. v. Bank, 71 Miss. 612, 15 So. 932. In that case the paper claimed to be an inventory was an invoice of the goods sold which had been checked with the goods by the purchaser prior to, or at the time, of his purchase, and before they were put into the store where the business was conducted. • The paper here in question is not an invoice furnished by a seller to a purchaser, but is a list of the goods, together with their values, which first went into the,store, and therefore a list of all them on hand, made by the assured himself, treated by him as - an inventory, and preserved and introduced on the trial as such. It complies with all of the requirements of, and must be held to be, an inventory. Phoenix Insurance Co. v. Dorsey, 58 So. 778. — 165 — In order that this iron-safe clause may he complied with-it is only necessary that the assured,.keep such a set of books as will enable an accountant' to ascertain from them, together with the inventory, with reasonable accuracy, the value of the goods on hand at the time of the fire. The requirement to “keep a set of books,” etc., however, ex vi termini, implies that; the entries therein shall be at or near the time the transactions entered occurred. The requirement is that a record of-the business be kept complete; not made complete for the time being at stated or irregular intervals by the recording of transactions long past. . ■ It was, of course, not necessary for the assured to have posted his ledger each day, and, if he- desired, he had the right to post only the gross amount 'of the cash sales for the interval between the dates of posting; but if he desired to pursue this plan, he should'have preserved the book containing the items which were posted to the ledger in gross. The preservation of the book kept by Lyell was therefore necessary in order that this clause of the policy might be complied with, conceding, for the purpose of the argument, that the book introduced complied therewith in all other respects. If the keeping of this ledger alone in the manner in which it was kept should be held to constitute a compliance with the iron-safe clause, it would logically follow that the clause could be complied with by a merchandise account containing only two entries — one a debit of the gross amount of merchandise put into the store, and the other a credit of the gross amount taken out of it. There is no merit in the contention of counsel for appellant that at the time the store .was burned it was actually open for business within the meaning of the policy.’ The physical fact is that it was closed, the doors locked, and Lyell had gone.to another portion of the city, so that it was physically impossible for any business to have been transacted within the store while he was away. — 166 — •It may be that a temporary absence from the store of all persons in charge thereof may be of such a character as not to violate this clause of the policy, as was held in Jones v. Southern Insurance Co. (C. C.), 38 Fed. 19, as to which we express no opinion; but such is not the case here. Joffe et al. v. Niagara Fire Insurance Co., 116 Md. 155, 81 Atl. 281, Ann. Cas. 1913C, 1217. Lyell not only closed and locked the store, but deliberately left the immediate vicinity thereof, and was so situated for the time being that it. was impossible for him to preserve the books when the store burned; and, moreover, neither he nor Borah had in the past, so far as this memorandum book is concerned, complied with the third paragraph of this clause; and there is no indication in the evidence that they had any intention of doing so at the time of the fire or thereafter. It had never been kept, when the store was closed, “in a place not exposed to a fire which would destroy the . . . building, ’ ’ but had always been placed at night when the store was closed, not in a fireproof safe, but under Lyell — a place, of course, exposed to a fire which would destroy the building; that Lyell was nearby, and might have been able to save the. book in the event of a fire, is immaterial, for that is not the protection intended to be secured to the insurance company by the clause in question. Affirmed.