German Ins. v. Downman

McCORMICK, Circuit Judge, after stating the case as above, delivered the opinion of the court. The appellant applied to the circuit court for equitable relief against the enforcement of one of its outstanding policies of insurance in the hands of William Cameron. Cameron applied to the state court for the reformation and enforcement of the policy. His suit was removed into the circuit court, where he repleaded by bill seeking equitable relief. These suits were duly answered by the respective respondents. Cameron having died, the appellees brought, in the same circuit court, their action at law on the policy. Thereupon the appellant exhibited its second bill in equity for the purpose of enjoining the action at law and of having the whole controversy between the parties settled in the equity proceedings. The court ordered a consolidation of these equity suits and that the parties replead. The parties did replead in the consolidated cause, in which the appellees appear as complainants and the appellant as respondent, and in which the whole controversy was embraced and sought to be settled. The proof taken covered every feature of the controversy.. The final hearing was full and exhaustive of all the issues, and the final decree passed disposed of the whole case. The right of a court of equity in such a case as this to proceed to a final determination of all the matters in issue is now fully established. Therefore the assignments of error which raise the question of the jurisdiction of the court in equity to make full and final disposition of the whole cause are not well taken. Had the parties contracted before the fire occurred ? The manager, Reddy, testifies: “On April 12, 1898, in our office at Bowie, I placed an order with Mr. Oraig for insurance amounting to $70,000, of which amount $15,000 was to cover on the dry shed and contents. Mr. Graig said he would like for us — 486 — to grant him a few days so he could consult with some of his companies and be able to place the full line to our best mutual advantage. At that time we had no insurance at Bowie. I agreed to the delay, and it was then understood and agreed that the insurance should be written to become effective, beginning Hay 1st” He testified further: “I requested the agents not to place more than five thousand dollars in any one company, but they assured me that if I would leave the matter to them they would fully, protect our interest” The witness Craig says: “I had a conversation with T. Gordon Reddy, Jr., Cameron’s manager, on April 12, 1898, about insurance, and agreed on that day to place $70,000 of insurance on property of Wm. Cameron. We agreed as to the premium rate, but there was nothing said, either by Reddy or myself, as to what company or companies would be the insurers, except that there was an understanding that if the companies were not satisfactory he would not accept the insurance. Nothing was said about the German Insurance Company of Freeport, 111., or any other particular company. I represented fifteen or sixteen companies, and Reddy knew this, but I did not at that time represent the German insurance Company of Freeport, 111. Reddy’s instructions to me were to write the insurance on May 1, 1898. The property to be insured was designated. The term the insurance was to run was not agreed on. I told him what the annual rate was, and it seemed to be satisfactory to him. The time for which he wanted the insurance was not discussed, though I supposed he wanted it for a year from 12 o’clock noon, May 1, 1898, as that was the date he designated, and as it is the universal custom •of fire insurance companies to have all policies begin at 12 o’clock noon. "There was no understanding between Reddy and myself as to how much insurance should be placed in any one company, nor on what particular •property any certain company was to be placed.” In another deposition, on cross-examination, Craig testified, in substance : “It is a fact that in my agreement with Reddy about insurance, before the policy was issued, the amount of insurance on various properties was agreed on, the rate of premium was agreed on, the time was agreed on, and it was further agreed that I [Graig] was to select the companies in which the insurance was to be written, except that the policies and companies, when the policies were written, were to be written subject to the approval of Mr. Reddy.” On April 12, 1898, neither Craig nor his firm had authority to represent the appellant, but he was expecting soon to obtain that authority, and did obtain it on the 26th of that month, on which day he sent a wire message to Reddy (the exact contents of which the record does not disclose), which Reddy answered the next day by letter, as follows: “New Orleans, La., April 27th, 1898. “Messrs. Craig, Cage & Suberbielle, New Iberia, La — Gentlemen: Your wire message of the 26th instant, addressed to me at Bowie, has been forwarded here for my reply. As you know, this war matter come up since we discussed the matter of insurance. It seems to be the common impression that this war business is going to make money matters very tight. In the event of any mishaps to our navy, "I am afraid there will be a money panic. The premium covering the insurance which we contemplated placing on the Bowie plant will amount, as you know, to considerable money, and it seems to me if you could make some arrangements by which the insurance could be effected, say May 1st, and premium paid Aug. 1st, without interest, it would make us feel easy in the matter. Please — 487 — let me have your views on this matter, for Mr. Cameron has written from Texas on the lines mentioned above. “Tours truly, T. Gordon Reddy, Jr., Manager. ‘T will return to Bowie to-night. Address me there.” Mr. Craig, having previously arranged with the Hibernia National Bank of New Orleans to discount Cameron’s note so that the proceeds could be turned into his several companies, consented that the premium for the insurance to be written by Craig, Cage & Suberbielle should be paid by a promissory note given by William Cameron, in their favor, to be dated May ist, and payable August 1st, amounting to $2,327.50, in which amount was included $600, covering premium on the policy of the German Insurance Company, which policy covered the dry shed. The appellees now insist that the agreement had between Reddy and Craig, as shown by the evidence just recited, embraced all the elements of a completed insurance contract, to which a written policy would add nothing save better evidence of the terms on which the minds of the contracting parties had met. This insistence does not take account of the fact that on April 12th Craig had no authority to represent the appellant, nor of the pregnant language of the letter of April 27th addressed by Reddy to Craig’s firm, nor of Craig’s testimony that the policies and companies when the policies were written were to be written subject to the approval of Mr. Reddy, nor of the testimony of Mr. Reddy that he had requested the agents not to place more than $5,000 in any one company. At some time before 10 a. m., May 1, 1898, the policies, eighteen in number (including the one in controversy here), were written up, duly authenticated by Craig, who was authorized to issue the same, done up in a package, addressed to Wm. Cameron, Bowie, La., and placed with the agent of the express company at New Iberia for shipment. Besides the 18 policies the package contained the following letter: “Oraig, Cage & Suberbielle, General Insurance. “New Iberia, La., April 30th, 1898. “Mr. William Cameron, Bowie, La. — Dear Sir: Herewith we beg to hand you policies covering your saw and planing mills, lumber shed and contents, commissary and boarding house, amounting to $70,000, which we trust will meet with your approval. The civil engineer will be down either Tuesday or Wednesday. Thanking you for your kind favor, we are, “Tours respectfully, Craig, Cage & Suberbielle, “Per Craig.” About 1 o’clock on that day Craig learned that a fire was burning in the Cameron properties at Bowie, and he immediately went to the express office, and reclaimed the package of policies and letter of advice -Much he had delivered for shipment, as above stated. During these midday hours manager Reddy was strenuously engaged on the fire-line at Bowie. When the fire alarm whistle blew a few minutes after 11 o’clock he answered the call promptly, and had the trained corps of men who were on duty under him, with not less than 200 other men, at work in 15 minutes after the fire broke out. His facilities for fighting it consisted of a Fred M. Prescott force pump, size 14x7x12, 7" suction, 5" discharge, upon which was carried from 80 pounds to 120 pounds pressure upon water mains. There were — 488 — three main pipes, all leading to or in close proximity to the fire; also three double hydrants convenient to the fire, upon which were coupled two lines of hose from each one, and from other hydrants more remote were fetched three more lines of hose, and at one time there were nine streams of water bearing on or around the fire. To help the pressure, later four of ’these were taken off, but five streams played continually upon the points most available, under the direction of the manager of the plant. The hose was 2^" hose, previously-tested at 100 pounds pressure, opening of nozzles All connections in and around plant used for fire purposes were and are 2^2". W. E. Fall, an employé in the wholesale department of William Cameron & Co., at Waco, Tex., was in Bowie on that day. He, too, did his utmost until he became overheated, and at 12.30 p. m. had to get into the planer shed to cool off. Every man and boy in Bowie who was able to do any work was pressed into service, besides a good many laborers who were sent over to assist by neighboring planters. The town of Thibodeaux, on request, promptly sent by special train all the hose in that town that could be spared. All connections were cut away between the dry shed and planer and between the mill and kilns. Besides, several hundred feet of dolley ways were tom up and carried off a safe distance or used as shields or fenders for the nozzle men to stand behind. Mr. Reddy, the manager of the plant, organized a fire crew, and, after the fire had communicated with the yard, decided that it would be better to draw the forces back to a certain intersection of dolley ways, and make a stand at that particular point. The fire was arrested just as he intended. About 6 o’clock Mr. Reddy was able to telegraph Mr. Cameron: “Fire originated in dry kilns at noon to-day. Kilns, lumber shed, and about seventy-five piles of lumber on yard destroyed. Fire still burning, but apparently under control.” In his deposition filed September 12, 1898, Mr. Reddy testifies in reference to the policies mentioned above: “These policies were delivered to me by Mr. Craig in the presence of W. E. Fall. The circumstances attending the delivery of these policies-are these: On the evening of May 1, 1898, after the fire which originated in our dry kilns, a risk which was uninsured, and worth to us about $16,000, had spread to the large lumber shed and to piles of lumber on the yard, I asked my bookkeeper if the policies from Craig, Cage & Suberbielle had reached our office. I had a telegram sent to them at New Iberia asking them if the policies covering insurance as per our order had been forwarded, and, if not, would they send them to us by the next train, which was due to pass Bowie on Monday morning. Receiving no reply to this message, I grew apprehensive, and went that night at 10 o’clock to Raceland Station, one mile distant fi-om Bowie, where there was a night telegraph office, and from which place I made inquiry by wire of the agent at New'Iberia in telegraph office whether any package addressed either to Mr. Cameron or myself was there to be forwarded to us on the morning train. Being informed there was no such package there, I boarded the train at Raceland about 10:20 p. m., and, in company with Mr. W. E. Fall, who is connected with the office of William Cameron & Co., at Waco, Texas, and who was on that day on a visit to me at Bowie, and we together went to New Iberia for the purpose of finding out why these policies had not been sent by Craig, Cage & Suberbielle, and why I did not receive any answer to my telegram of that evening. Mr. Fall and myself set out to find some member of that insurance firm, when about one o’clock Monday morning — 489 — we located Mr. Craig in a saloon. Mr. Craig informed us that he was sitting up to catch the early morning train for Bowie to bring our policies to us. He stated that the policies had been made out on Saturday, April 30, 1898, but by an oversight they had not gone forward until Sunday, when he discovered them in the office. He then took the package to the express office at New Iberia, and placed it there to be forwarded to us. While at the depot he learned that there was a fire then burning * * * at our-place at Bowie, * * * and he concluded to withdraw the package from the express office, which he did. He then informed us that he had the package in his pocket at that time, and he produced it. The package was all intact, done up, sealed, and addressed to William Cameron, Bowie, La. I explained to Craig that my business there was to get the policies, because we had had a fire that day, and desired to get the policies, and had grown apprehensive for the reasons above stated. I broke open the package, and found it to contain about eighteen policies, aggregating $70,000, together with a bill for the premiums on said policies, together with a letter addressed to William Cameron, date April 30th, 1898. The premiums for this insurance, as per special agreement had and entered into between myself and Mr. Craig, was to be paid by promissory note to be signed by Mr. William Cameron, dated May 1, 1898, and payable August 1, 1898, without interest Mr. Craig had previously arranged with the Hibernia National Bank of New Orleans to discount this note, so the proceeds could be turned into his several companies. I explained to Mr. Craig that in view of this fire I did not want any hitch, if there could be any hitch, to arise on the question of premium, and I told him I would waive my previous agreement, and tendered him payment This Mr. Craig said made no difference, and: this ended the matter.” In his deposition filed November 18, 1899, Mr. Reddy says: “When Fall and myself left Bowie for New Iberia, 1 wrote out an order-on Craig, Cage & Suberbielle, directing that they deliver to Fall our policies. I did so because we intended to go in different directions when we got to New Iberia, looking up one of the firm of Craig, Cage &' Suberbielle, and: Fall had an order so he could explain himself when he met either of them. I did not intend remaining in New Iberia except between trains, as I had to return to Bowie, and, if we failed that morning to find Craig or his partners, Fall was to remain and get our policies, but it so happened that we found Craig shortly after our arrival at New Iberia. Craig had the-policies, and offered no protest at all. He stated he was waiting up them to catch the train for Bowie, and that he intended to bring the policies in. person to us.” Craig in his deposition filed December 15, 1899, being asked to attach to the interrogatories and mark “Exhibit B” a communication addressed to “Craig, Cage & Suberbielle, Agents,” dated May 1, 1898, signed “T. Gordon Reddy, Jr., Manager,” and being further asked: “Was said paper delivered to you? If so, by whom, and whose signature is to the same? Explain said paper fully. If it relates to insurance, then state in what companies and in what amounts, and by. whom issued,” — answered: “Yes; delivered to W. E. Fall, and signed by T. Gordon Reddy, Jr., and. the original is hereto attached. It relates to the insurance ordered by T. Gordon Reddy, Jr., of me in various companies, of which the policy sued on is one. * * * Said paper was presented to me by W. E. Fall. I inquired of Fall what he wished to do with the policies. He replied that he was on his way to the Waco office, and desired to take the insurance policies issued by me, together with those issued through the Peseud agency, to the Waco office. I inquired of him whether he had had a fire at Bowie or not, and whether he had any claim under my policies or not. He replied' that they had had a small blaze, but there was no claim under my policies. After some questions, I concluded to deliver him the package of policies» — 490 — It was In the saloon owned by C. P. Moss, in New Iberia, La., about the hour of 1:30 a. in., on May 2, 1898. * * * I saw T. Gordon Eeddy, Jr., immediately after the delivery of the package to Fall. It was in the saloon of O. P. Moss. Clarence Colgin was present. Eeddy said, ‘Well, Craig, you just owe us about $14,000;’ and I replied, ‘Well, the jig is up; it is a pretty slick trick on your part.’ ” The appellees took the deposition of W. E. Fall, but did not ques-' tion him as to this transaction, and the appellant did not cross the interrogatories. The appellant took the deposition of Clarence Col-gin, the only person present at the interview between Fall, Reddy, and Craig, who, in answer to pertinent interrogatories, said; “The conversation between Fall and Craig was in the Moss restaurant, adjoining the Moss saloon, separated by a wall with opening in same building. Their conversation was after midnight. The conversation between Craig and Fall was in reference to insurance papers. Fall wanted Craig to deliver him some insurance policies. * * * It related to insurance on a dry kiln shed. * * * At the time of the conversation between Fall and Craig, as stated, I saw Eeddy on the outside of the Moss saloon building.” In answer to a part of the interrogatory requesting the witness to “state whether or not Reddy said anything about the delivery of certain insurance policies by Craig to Fall, and what he said,” Colgin testifies, “Reddy told Julian J. Craig that he wanted the policies, and must have them.” In answer to cross interrogatory 4, by the appellees, “State whether the said Craig appeared to be frightened or terrified by the words or manner of Reddy and Fall,” he answered: “Yes; Craig did appear to me to be frightened, which is one reason why my attention was attracted so closely. It appeared they insisted strongly on having the policies from Craig.” The order to which the witnesses Reddy and Craig refer is in the following words: “Bowie, La., May 1st, 1898. “Craig, Cage & Suberbielle, Agents, New Iberia, La. — Dear Sirs: If you have not already mailed or expressed us the insurance policies covering on our risk here at Bowie, will you then please hand same to the bearer, Mr. W. E. Fall, of our Waco office. Mr. Fall will give you necessary receipt for same. Yours truly, T. Gordon Eeddy, Jr., “Manager.” It was in the possession of Craig at the time he testified, and he attached the original to his deposition. It appears from Reddy’s testimony that it was written at the time he and Fall left Bowie on the night of May 1st. He says that he left Bowie and went to Raceland at 10 o’clock p. m. At that time the long shed and its contents had been utterly consumed, and was a vast mass of superheated ashes and burning coals. Reddy’s' mind was then supremely intent on getting possession of the insurance policies. He was just about to start to New Iberia, 83 miles away, to hunt up some one of the members of the firm of insurance agents in the middle of the night to obtain the policies. To aid him in this extraordinary effort, he was taking with him a member of the Waco home office then present in Bowie, and gave the above written order to that companion of his quest to enable him to explain matters to whichever member of the firm he might find. It contains not the slightest reference to the fire that — 491 — had so intensely engaged Reddy’s attention for so many hours on that day. We refrain from making those further suggestions which this testimony must excite in the minds of all intelligent readers, certainly of all readers who are lawyers. It seems to us to be too clear for controversy that the position of Mr. Cameron was not bettered by this acquisition of the manual possession of the policies, and that the method of acquisition pursued and effected by Mr. Cameron’s manager, with whom the negotiations for the insurance had been conducted, casts a white light along the whole track of those negotiations. But we proceed. In one of his depositions Craig was asked: “State whether or not yon had any conversation with William Cameron after the fire with respect to Ms surrender of the policy of insurance attacked to complainant’s bill. State whether or not you demanded of said Cameron said policy of insurance. State whether he acceded to or refused this demand, if any, and state what he said, if anything, with respect thereto.” Answer: “Mr. Cameron and Mr. Shumard, In my presence, had such a conversation on or about May 5, 1898, and during the progress of this conversation Mr. Cameron, turning to me, criticised me fot placing so much insurance in one company, and said he would not take the policies I had written up for him, and returned them to me, with the exception of the policy herein sued upon, which he claimed the German Insurance Company was liable under. Mr. Shumard demanded this policy, and Mr. Cameron refused to turn it over to him.” It appears from the bill rendered to Cameron, which was inclosed in' the package with the policies, and Craig’s letter of April 30, 1898, that of the 18 policies written up by Craig the one in suit was for the largest amount, and that of all the other 17, amounting in the aggregate to $55,000, only one exceeded in amount the sum of $5,000. That one was for $10,000, in the appellant company, on the sawmill. It is to be observed that in Reddy’s letter of April 27, 1898, the previous communications between'him and Craig were referred to as the matter of insurance “we discussed,” and, again, as “the insurance which we contemplated placing on the Bowie plant.” It made mention also of the changed and changing condition of general affairs, and expressed-the apprehension that, “in the event of any mishaps to our navy, * * * there will be a money panic.” He suggested that the premiums covering the insurance “will amount to a considerable sum of money,” and that if Craig ’could make some arrangements by which the insurance could be effected, say May 1st, and premium paid August 1st, without interest, “it would make us [Cameron & Co.] feel easy in the matter.” On this matter he desired to have Craig’s views, “for Mr. Cameron has written from Texas on the lines mentioned above.” This letter was written at New Orleans, four days before the fire occurred, and addressed to Craig’s firm at New Iberia, where it could hardly have arrived before some hour on the next day, or three days before the fire. Craig, having first arranged with a New Orleans bank to discount Mr. Cameron’s note for the amount of the premiums, consented to the arrangement suggested in the letter. On the day before the fire Craig was at Bowie, for in his deposition he says, “I returned from Bowie on April 30, 1898;” — 492 — but it does not appear that while at Bowie on that visit he saw either Reddy or Cameron, or any one authorized to act for them. And Reddy deposes: “The last conversation prior to the fire we had with Craig was on April 12, 1898.” It does not appear that Reddy had authority to make Mr. Cameron’s note in favor of Craig’s firm for the amount of the premium. It is not claimed that such a note was ever made by Cameron himself or by Reddy for him. In the letter addressed to Mr. Cameron accompanying the policies Mr. Craig, referring to them, says, “which we trust will meet with your approval.” In one of his depositions Craig says: “There was nothing said either by Reddy or myself as to what company or companies would be the insurers, except that there was an understanding that if the companies were not satisfactory he would not accept the insurance.” And in his other deposition he says: “The policies, and companies when the policies were written, were to be written subject to the approval of Mr. Reddy.” It is seen that these negotiations were pending for nearly 20 days, during the whole of which time there was no insurance on any of the large properties held by Cameron at Bowie. There is no proof that any part of it had ever been insured. It is manifest that Cameron was not anxiously solicitous to effect insurance on the property there. The nature of the property, and the hazard on account of its situation and respective exposures, were such that, of necessity, the owner was compelled to carry a large, if not the larger, part of the risk, and, to get it covered to any extent, would be compelled to pay a high rate of premium; and the length of the line of insurance necessary to relieve him to any desirable extent was such as required that he should insist on having it distributed among a large number of the safest insurance companies, with lines in each to such a limited extent as to afford the least temptation to the companies to litigate in case of a loss. His property and business and employes practically consti tuted the town of Bowie. His best insurance against fire was the care he was able to exercise in preventing its occurrence, and in arresting it should it occur, for both of which purposes he had made most ample provision. He was a man of large and successful experience, — a masterful man in all matters affecting his own business. It seems to us to be clear from the proof that it was never in the mind of either Craig or Reddy or Cameron that a contract for insurance between Craig’s companies and Cameron should become complete until the policies, showing by what companies written and on what terms, had been submitted either to Cameron, or to Reddy and Cameron, and approved and accepted by them. We cannot doubt that if the fire had not occurred on May 1st, and before Cameron had after that date received and examined the policies, he would have disapproved and rejected the one here involved, not because it was written to cover the risk from 12 o’clock noon instead of from the previous midnight (because then that provision would have become immaterial or would be 12 hours in his favor), but because it was for an amount three times as large as he was willing to have written by any one company on the property covered. From a thorough examination of the proof, and due deliberation thereon, we are con — 493 — vinced that the negotiations between the appellant and the testator of the appellees never matured into a contract for insurance. It follows that the decree of the circuit court must be reversed, and we will here render the decree which that court should have rendered. Exercising the discretion inherent in a court of equity in awarding costs, in view of the numerous suits filed and the unnecessary issues presented, we conclude that it will be most consonant with justice in this case to require that each party shall pay the costs by them respectively incurred in this cause in this court and in the circuit court, including the enjoined action at law in the circuit court. It is therefore adjudged and decreed that the appellees are perpetually enjoined against prosecuting any action at law on the purported policy of insurance in question; that the appellant never became liable to the testator of the appellees under that instrument, is not now liable to the appellees in any amount on account thereof, and is now fully acquitted and discharged from all claim of the appellees thereunder: and that the parties hereto pay the costs by them respectively incurred in this cause in this court and in the circuit court, including the costs in the action at law.