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the store on the night of the fire, without the aid of this incompetent documentary evidence. Under these circumstances, wherever he was unable to enumerate the articles on hand, with their respective values, if other competent proof was not available, he should have taken the testimony of those from whom he purchased the goods; in this way he could have proved his loss with reasonable precision, which is all that is required in such cases.

ment of Loss," containing certain gross items, | tiff was incapable of stating the amounts of with accompanying figures, showing a total his purchases or the values of the goods in loss of $3,324.32. Near the head of this latter paper these words appear: "As agreed in detail between assured and adjuster." February 14, 1914, a letter, signed “A. L. Hepler, Agent," was sent to the plaintiff, notifying him to produce his books, etc., for inspection. In pursuance of this notice, on February 24, 1914, a meeting was held at the office of the defendant company's attorney in Pittsburgh, at which time the plaintiff produced certain books and papers. During the course of this meeting Mr. Zieg, representing the plaintiff, stated, "Mr. Hepler and I agreed upon the measure of damages on the 19th of December, 1913, at $3,324.32, made up as follows," after which, on the stenographer's notes of the minutes of this meeting, appear several gross items, totaling the amount already stated. April 14, 1914, the secretary of the insurance company sent a letter to the plaintiff notifying him that, on investigation, it declined to pay his alleged loss, upon the grounds, inter alia: (1) That the cash values of the various items involved therein were incorrectly stated; (2) that he had not conformed to "the requirements of the policy as to keeping a set of books which would clearly and plainly present a complete record of the business transacted." August 18, 1914, the plaintiff sued and recovered a verdict for, approximately, the full amount of his claim. Judgment was entered accordingly, and the defendant has appealed.

The numerous assignments of error raise three principal questions, which appellant correctly summarizes thus: (1) "Did the court err in admittance of evidence?" (2) "Was there evidence sufficient to submit to the jury, either as to an adjustment of loss, or as to amount of loss?" (3) "Was the requirement (of the policy) as to keeping books of purchases and sales a condition of recovery?"

[1, 2] As to the alleged adjustment by Mr. Hepler, there is nothing in the testimony to prove that this man had authority to agree upon a figure the defendant would pay; nor, in fact, is there evidence sufficient to show that he undertook so to do. True, Mr. Zieg, although frequently warned that he should not, insisted upon giving his conclusion that Mr. Hepler had acquiesced in the figures as written down by the former; but nowhere in his testimony does this witness relate any facts concerning the utterances of Mr. Hepler which would justify an inference or conclusion that the latter had contracted on behalf of the defendant company for an actual adjustment of the loss. Again, neither the statement of Mr. Zieg (at the conference in relation to the loss, held February 24, 1914), to the effect that "Mr. Hepler and I agreed upon the measure of damages," etc., nor the memorandum attached to the formal proofs of loss, in these words, "as agreed in detail between assured and adjuster," was sufficiently clear, comprehensive, or specific to put the insurance company on notice, that the plaintiff claimed, as a matter of fact, that the amount of loss had been definitely adjusted or agreed to by Mr. Hepler, purporting to act on its behalf, so as to estop the defendant from denying such to be the fact (as it did at trial); nor are those items of evidence sufficient in themselves to justify or sustain a finding that the so-called adjustment had in fact taken place.

[3-5] The plaintiff, who was the only witness to the value of the property destroyed, produced what he testified were copies of Firstly, assuming that Mr. Hepler did just bills which had been rendered to him by va- what Mr. Zieg stated, i. e., "agreed upon the rious persons from whom he had purchased measure of damages," since the "measure" goods prior to the fire, and claimed that all is merely the rule by which damages are to the articles mentioned therein were in his be estimated, Mr. Zieg's statement might store at the time of its destruction, except a well be taken to mean simply that Mr. Hepler comparatively small quantity of merchandise and he had agreed between them that, in espreviously removed or sold by him. He stat-timating the plaintiff's damages, all the items ed the original bills had been lost, but that set forth in his written claim, or proofs of Mr. Zieg, the insurance adjuster, had secured duplicates for him. While admitting he could neither read nor write English, the plaintiff said he recognized the various bills by their size and color; whereupon he was permitted to refresh his recollection therefrom, as to the dates, amounts, and values of certain of his purchases. Moreover, the duplicate bills themselves were admitted in evidence. All this was harmful error. The

loss, were to be taken into account, and that they were the only ones to be considered. Next, the words on the statement attached to the proofs of loss (quoted in the previous paragraph) cannot, with any degree of certainty, be said to have conveyed any definite information to the defendant on the subject of the alleged adjustment, for they failed to state the name of the adjuster therein referred to, or that he was acting or purporting

[7] On the question of the construction of the policy, we agree with the view of the court below. In reference thereto, President Judge King states:

As a matter of fact, considering the nature | deceived or unduly prejudiced by the comand office of proofs of loss (Sutton v. Amer- pany's delay in notifying him that it declinican Fire Ins. Co., 188 Pa. 380, 383, 41 Atl. ed to pay his claim. 537; Rosenberg v. Fireman's Fund Ins. Co., 209 Pa. 336, 58 Atl. 671), and the manner in which those in the present case were prepared, one might just as well assume that the memorandum in question referred to an adjuster employed by the plaintiff himself, as to one representing the insurance company.

It appears that Mr. Zieg sought out and arranged the meeting with Mr. Hepler, be cause the latter was the agent of the defendant company who "had been instrumental in placing the insurance and had countersigned the policy"; and it is more than likely that all which really occurred at their meeting, on December 19, 1913, was that Mr. Hepler assisted Mr. Zieg in preparing the information necessary to enable the plaintiff to submit his formal proofs of loss. But, however this may be, as already stated, it is clear the evidence was insufficient to sustain a finding that a binding adjustment had taken place, or to estop the defendant company from asserting the contrary. In this connection, the trial judge very correctly charged that the delay of the insurance company in sending to the plaintiff its declination to pay was a waiver of any insufficiency in the proofs of loss; but he could not properly have ruled that the amount of loss claimed therein was conclusive on the defendant, and, as before said, we see no warrant in the evidence for permitting the jury so to find.

[6] Under the circumstances of this case, in view of the unexplained origin of the fire, which occurred soon after the insurance was effected, and the evidence in the hands of the defendant indicating the removal of considerable quantities of goods just prior to the alleged loss, it can be seen that the insurance company had some apparent justification for delaying its decision, while making investigations. Particularly is this so when we look at the letter sent December 20, 1913, by Mr. Hepler to Mr. Kramer (alleged by the defendant to be its adjuster), wherein he inclosed a copy of the summary of the plaintiff's claim, as made up by Mr. Zieg on December 19th, showing the alleged loss of $3,324.32, and wherein he refers to this summary as "an estimate," and states, in effect, that he believes the figures to be exorbitant. If this statement of December 19, 1913, was a final adjustment of the loss (as said by the trial judge in his charge to the jury), "Why the meeting in Pittsburgh more than a month later?" Of course, had the plaintiff presented sufficient evidence upon the subject in hand, all these questions would have been for the jury; but, as we have endeavored to show, he failed so to do. Finally, before leaving this branch of the case, it may not be amiss to state that there was no evi

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"The insurance policy, which is the foundation of this action, contained what is known as the 'Iron-safe clause,' which is as follows: * (1) The assured will take a complete itemized inventory of stock on hand at least once in each calendar year, and, unless such months prior to the date of this policy, one shall inventory had been taken within twelve calendar be taken in detail within 30 days of issuance of * * * (2) The assured will keep this policy. a set of books, which shall clearly and plainly present a complete record of business transacted from the date of inventory, as provided for in first section of this clause, and during the continuance of this policy. (3) The assured will keep such books and inventory. securely locked in a fire proof safe at night. 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.' Because the plaintiff did not make and have such an inventory and set of books at the time of the fire, the defendant insisted that there could be no recovery. Under the peculiar facts of the case, we, in substance, instructed the jury that this clause and condition in the policy would not, in itself, prevent the plaintiff from recovering a verdict, if the facts otherwise warranted. The fire occurred upon the twentieth day after the policy became effective. No inventory had been made previous to the date of the policy, and the foregoing first paragraph of said clause in the policy provided that, in case no inventory had been taken within 12 calendar months prior to the date of this policy, one shall be taken in detail within 30 days of its issuance. At the time of the fire no such inventory had been taken, and, if the fire had not occurred, a compliance therewith would have required the taking of such inventory within the remaining 10 days. The second paragraph of said clause provides that the assured will keep a set of books, etc., from date of inventory as provided in first section of this clause. When was the assured to start to keep a set of books? As we read the language used, clearly from the date of the inventory. If we transpose the setting of the language of the paragraph so that it will read as follows, 'From date of inventory, as provided in first section of this clause, assured will keep a set of books, etc.,' the meaning seems certain and clear. We cannot understand this paragraph any other way, and it follows that the contemplated duty of the plaintiff to make the inventory and keep a set of books, pursuant to said clause, had not ripened into an obligation as yet when the fire occurred. The policy was only to be null and void in the event that no inventory was taken within 30 days from date of the policy, and, in case an inventory was made at any time within the said 30 days, there came a further requirement that, from the Idate of said inventory, the assured should keep a set of books, etc. There was no requirementno obligation-imposed upon the assured to keep a set of books until he had made an inventory, and by the terms of the contract he was given 30 days in which to make one. How can it then be held that he failed in the performance of an obligation imposed by this clause that would for a loss that occurred within said 30-day pe preclude him from recovering upon the policy riod? If from the date of the policy he had kept

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tory, or had taken an inventory and had not kept books, and a fire had occurred, as it did, within the 30-day period, under the strict letter of the agreement he could not have recovered. If he had complied as to both requirements, this condition in the policy could not have been held to bar his right of recovery. He was not bound, however, to make an inventory before the last of the 30 days and from that time keep a set of books, and the provisions aforesaid cannot be asserted to bar his right of recovery for a loss by fire which occurred at a time when he was under no obligation to do so."

We have endeavored to state our views on the principles governing the present case, but do not deem it necessary specifically to pass upon each of the 24 assignments of erIt is sufficient to say that all those which show rulings in conflict with the views here expressed are sustained.

ror.

The judgment is reversed, with a venire facias de novo.

(255 Pa. 322)
PENNSYLVANIA CO. FOR INSURANCES
ON LIVES AND GRANTING ANNUI-
TIES et al. v. CENTRAL TRUST
& SAVINGS CO.

(Supreme Court of Pennsylvania. Jan. 8, 1917.)
1. INSURANCE_646(8)-TITLE INSURANCE—

RECOVERY-Burden of Proof.

An ordinary title insurance policy issued to a mortgagee, with provisions covering loss or damages sustained by reason of noncompletion of buildings upon the premises, is a contract of indemnity, and the insured is bound to show actual loss sustained before there can be a re

covery.

[Ed. Note.-For other cases, see Insurance, Cent. Dig. § 1665.]

2. INSURANCE 146(2)-TITLE INSURANCE CONSTRUCTION.

Clauses in a policy of title insurance must be construed in view of the subject-matter insured; and if the general language does not apply or becomes meaningless or inoperative, it will be ignored in determining the liability of the parties.

[Ed. Note.-For other cases, see Insurance, Cent. Dig. § 294.]

against loss on the mortgage by its noncompletion.

[Ed. Note.-For other cases, see Insurance, Cent. Dig. § 1295.]

4. INSURANCE ~328(2)—TITLE INSURANCE— LIABILITY ON POLICY.

of the properties from the lien of his mortgage In such case, the mortgagee's release of two did not render the policy void, but reduced the insurer's liability, if they had any value over and above the mortgage.

[Ed. Note.-For other cases, see Insurance, Cent. Dig. §§ 795, 798.]

Appeal from Superior Court.

Action by the Pennsylvania Company for Insurances on Lives and Granting Annuities, William H. Henderson, and another, executors and trustees under will of Adelaide C. Henderson, deceased, and George Henderson, individually, against the Central Trust & Savings Company. Judgment for plaintiffs, and defendant appeals. Affirmed.

Argued before MESTREZAT, POTTER, MOSCHZISKER, FRAZER, and WALLING,

JJ.

Edward Hopkinson, Jr., and Abraham M. Beitler, both of Philadelphia, for appellant. S. G. Birnie, of Philadelphia, for appellees.

FRAZER, J. In March, 1912, plaintiffs purchased a blanket mortgage of $21,000 on a number of houses embracing a building operation in the city of Philadelphia. The buildings were at the time unfinished, and defendant issued a policy in the sum of $21,000, insuring plaintiffs against, inter alia, "actual loss or damage not exceeding $21,000, which the said insured shall sustain by reason of noncompletion of premises." In April, 1912, three of the houses covered by the mortgage were released from its lien by mutual agreement between the parties and a stipulated amount paid in reduction of the principal debt, defendant agreeing its policy should remain in force as to the balance. The mortgagors defaulted in the payment of interest, and the premises were conveyed to a person named by plaintiffs, who received title on their behalf pursuant to agreement made by the owner at the time the mortA policy issued by a title company insuring gage was executed. Following the default a mortgagee of realty upon which buildings were plaintiffs released from the lien of the into be erected against actual loss or damage by reason of the noncompletion of the premises, cumbrance two of the properties without seprovided that if the insurer should settle a claim curing the consent of defendant. Subsequentunder the policy it would be subrogated to the ly discovery was made of defects in the heatright of the insured, and that all interest under the policy, except for damages accrued, should ing plants which rendered them insufficient cease upon the transfer of the title insured, un- to properly heat the buildings, thereupon less transferred with the insurer's approval, and plaintiffs called attention of defendant to that partial transfers should reduce the insur- the fact that the houses were for this reaer's liability in proportion of the value of the estate transferred to that retained. The mort- son not completed, and proceeded to put them gagor defaulted, and thereafter two of the prop-in tenantable condition by installing new erties were released from mortgage lien without heaters, of which action defendant was adthe insurer's consent, and the remaining prop vised as well as the cost of the work, and erties conveyed to the mortgagee's nominee, and, on the insurer's failure, after notice, to complete that such cost would mean an actual loss to the buildings, the mortgagee completed them, them. On failure of defendant to make setand sued it for the loss. Held, that as be- tlement of the amount claimed, suit was tween the mortgagee and the insurer, the contract was not one guaranteeing completion of brought upon the policy, alleging damages the buildings, but a contract of indemnity to the extent of $2,695. At the trial the vari

3. INSURANCE 509-TITLE INSURANCE CONSTRUCTION OF POLICY-COMPLETION OF BUILDINGS.

Pa.)

PENNSYLVANIA CO. FOR INSURANCES, ETC. v. CENTRAL T. & S. CO. 911

ous questions of fact raised, including the ex- | defendant entirely from liability. The clause tent of the damages, were submitted to the apparently was drawn to cover the usual case jury, resulting in a verdict in plaintiffs' favor of insurance of title of a single property, and of $1,000. Motion for judgment for defend- must be construed in view of the subject-matant non obstante veredicto was refused, and ter insured, and if its general language does judgment entered on the verdict, and on ap- not apply, or becomes meaningless, or inoper. peal to the Superior Court, the judgment of ative, it will be ignored in determining the the lower court was affirmed. Upon petition liability of the parties. Haws v. Fire Asso to this court, alleging the question raised ciation of Philadelphia, 114 Pa. 431, 7 Atl was one of general importance to trust com- 159; Grandin v. Rochester German Ins. Co., panies insuring against loss by reason of non- 107 Pa. 26. completion of houses, an appeal was allowed. The single question before this court, under the facts of the case, is the proper construction of the subrogation clause in the policy.

[3, 4] If the policy covered title to a single property, a transfer of title would necessarily be a transfer of all the interests of the insured, and the subject-matter of the contract The clause in question provides that: as between the parties would cease to exist. "Whenever the company shall have settled Likewise, considering the mortgage as the a claim under this policy, it shall be entitled subject-matter of the contract, transfers by to all the rights and remedies which the insured would have had against any other person assignment, or otherwise, of the entire mort or property, had this policy not been issued; gage, without more, would necessarily termi and the insured undertakes to transfer to the nate the contract. But a conveyance of the company such right, or permit it to use his premises covered by the mortgage does not name for the recovery thereof. If the payment made by the company does not cover the necessarily relieve defendant from liability loss of the insured, it shall be interested in on its agreement to indemnify plaintiffs such rights with the insured, in the proportion of the amount paid to the amount of the loss not hereby covered. And the insured warrants that such right of subrogation shall vest in the company, unaffected by any act of the insured." The contention of defendant is that the act of plaintiffs in releasing two of the properties from the lien of the blanket mortgage, after default, put it beyond plaintiffs' power to comply with the provision that the right of subrogation should vest in the insurer "unaffected by any act of the insured."

[1] The policy issued in this case is in the form of an ordinary title insurance policy with appropriate provisions to cover loss or damages sustained by reason of noncompletion of the premises. The contract is one of indemnity, and plaintiff is bound to show actual loss sustained before there can be a re

against loss or damage sustained, by reason of noncompletion of the buildings. On failure of the contractor to complete, two courses were open to plaintiff; he could either notify defendant of the situation and do nothing further, relying on his insurance policy to protect him against ultimate loss when the period of payment of the mortgage arrived, or, if his contract with the owner permitted, minimize his loss and call upon defendant to he might complete the premises in order to reimburse him for damages suffered, if any. If sale had been made under foreclosure proceedings, and, because of the unfinished condition of the buildings, the properties were purchased by a third person at a sum insufficient to meet plaintiffs' claim, the measure of damage would be fixed. Having obtained actual title to the property in lieu of foreclosure proceedings, any equities remaining in them, over and above the first mortgage lien, became his for what they were worth as additional security for the amount due him. Whether these properties were sold at private sale or public sale under foreclosure proceedings, in absence of allegation of fraud or inadequacy of price, the result would be the "All interest in this policy (saving for dam- same, and defendant would be responsible ages accrued) shall cease upon the transfer of for the amount of plaintiffs' loss, if any, the title insured, except where this policy is which could be traced to the noncompletion transferred with the approval of the company. of the buildings. The sale of part only, as in Partial transfers of title shall reduce the lia

covery. Weightman v. Union Trust Co., 208 Pa. 449, 57 Atl. 879; Wheeler v. Equitable Trust Co., 206 Pa. 428, 55 Atl. 1065. This question was one of fact, and was submitted to the jury, who found in plaintiff's favor, and fixed their damages at the sum of $1,000. [2] The policy contained, in addition to the subrogation clause recited above, a provision

that:

bility of the company upon this insurance in the proportion of the value of the estate transferred to that retained."

Under this clause the parties mutually agreed to the release of three of the premises covered by the mortgage in consideration of a reduction of the mortgage debt to $17,800. Had the mortgage been transferred or released without damage for which claim could be made, such action would have rendered the policy void. It does not follow, however, that

this case, would affect the rights of the parties merely in so far as the value of the premises sold tends to reduce defendant's liability under its policy. Viewing the policy as a whole and construing it in the light of the purpose for which it was made (Foehrenbach v. German-American Title & Trust Co., 217 Pa. 331, 66 Atl. 561, 12 L. R. A. [N. S.J 465, 118 Am. St. Rep. 916), we conclude the release of the two properties from the lien of the mortgage, did not in itself amount to a total re

The testimony is conflicting as to whether purpose and be subrogated to the rights of or not there was actual loss or depreciation plaintiffs against the contractor. Plaintiffs in the value of the mortgage, owing to fail- alleged a part of the work was improperly ure to complete the houses. Defendant con- done, and for that reason the mortgage held tends sufficient equity remained in the prop- by them was jeopardized. Defendant denied erties released from the mortgage to cover the insufficiency of the work, and plaintiffs the actual loss sustained and witnesses for instituted foreclosure proceedings, and bought plaintiff valued the properties at $2,200 and in the properties, and after doing some work $4,000, the first mortgages thereon being re- on the houses conveyed them to the holder spectively $1,400 and $2,500. The properties, of an earlier mortgage. This court there however, were duly taken into consideration held plaintiffs could not recover for the loss by the experts who testified to the amount sustained, for the reason they had voluntaof depreciation in value of the mortgage, so rily put it out of their power to comply with that defendant really obtained whatever ben- the agreement to subrogate defendant to efit was to be derived from them. In submit- their rights, unaffected by any act of the latting the case to the jury the trial judge ter. Plaintiffs thus deprived defendant of clearly stated there could be no recovery if its right to satisfy itself as to the need for no actual loss or damage was sustained by additional work, do such work as was necesthe holder of the mortgage, and affirmed de- sary, and secure to itself whatever benefit fendant's seventh point, to the effect that de- might be derived therefrom. In the present fendant did not undertake that the houses case, as suggested in the opinion of the court would be actually completed, and if the mort- below (62 Pa. Super. Ct. 433, 437), there is gage was worth par, even though the build- no privity of contract between plaintiffs and ings were not completed, there could be no the contractors; the former were merely purrecovery, by saying that if the ground alone chasers of the mortgage and without means was equal in value to the face of the mort- of enforcing completion of the buildings, and gage, the verdict must be for defendant. De- had no rights in this respect to which defendant's ninth point to the same effect was fendant could be subrogated. The contract also affirmed. The evidence on the various of the latter was not to insure completion, matters in dispute being conflicting, the case was for the jury, and the refusal to enter but to indemnify the former against loss under the mortgage by reason of noncomplejudgment for defendant non obstante veretion. If the mortgage, notwithstanding such dicto was proper. noncompletion, was worth its face value, no loss was sustained. The value of two of the properties entitled defendant to a reduction of liability if they had any value over and above the earlier incumbrance, and this matter was submitted to the jury. This reduction was as much as defendant was legally entitled to receive.

Appellant relies on the case of Seymour v. Tradesmen's Trust & Savings Fund Co., 203 Pa. 151, 52 Atl. 125, as a previous determination by this court of the question here involved contrary to the decision of the Superior Court. In that case the policy contained a clause by which defendant insured the completion of the houses and reserved the right to take possession of the premises for that

The judgment is affirmed.

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