Joffe v. Niagara Fire Insurance

Boyd, C. J., delivered the opinion of the Court. The appellants sued the appellee on a policy of insurance which included what is known as the “iron safe clause.” At the conclusion of the case the Court refused two prayers offered by the plaintiff and granted two instructing the jury to render a verdict for the defendant. The rulings on those prayers present the only questions for our consideration. The appellants were engaged in the millinery business, trimming hats and selling them.

They had been on High street, in Baltimore City, put on the 23rd of January, 1909, moved to Baltimore street, where they still were at the time of the fire at which the loss occurred, November 26th, 1909. ¹⁵⁷ The policy of insurance was for the term of one year from the 22nd of September, 1909, being for $1,000.00 on the stock of merchandise and $200.00 on the furniture and fixtures. The business was run by Mrs. Mankowitz, the wife of one, and Miss Joffe, the daughter of the other appellant. Miss Joffe was absent the day of the .fire by reason of illness, and Mrs. Mankowitz and a Miss Rosen, who was employed to trim hats, were at the store on that day. Mr. Mankowitz was a tailor, but he kept the books, paid the bills, etc., for the millinery business, going to the store every night and .at other times when he was not engaged in his regular occupation.

He was not working the day of the fire, but sometí me before it started he had left the millinery store to pay a bill which was due. When Miss Joffe was there it was her custom to go to dinner at 12 o’clock and return at half-past twelve, and then Mrs. Mankowitz would go, but as Miss Joffe was not there on November 26th, 1909, Mrs. Mankowitz and Miss Rosen left for dinner at the same time — 12 o’clock. Mrs. Mankowitz went to her brother-in-law’s, which was near the store, and only intended to be away twenty minutes or half an hour. She locked the store door, and while she was at luncheon heard an alarm of fire, and upon going out on the street found it was at their store.

After the fire was discovered a neighbor broke the door open, but the stock of goods was practically ruined by fire and water and the fixtures were very much injured. By the first prayer granted the jury was instructed “that it appears from the plaintiffs’ own evidence that they failed to comply with the provisions of the policy sued on, known as the Iron Safe Clause,” and by the second, “that it appears from the plaintiffs’ own evidence that the plaintiffs did not keep the books required by the condition of the policy.” Each of them concluded with an instruction that the verdict must be for the defendant. The claxxse in this policy relied on was as follows: ¹⁵⁸ “Ibou Safe Olatj.se. Warranty to Keef Boohs and Inventories and to Produce Them in Qase of Loss.

The following covenant and warranty is hereby made a part of this policy: 1st. The assured will take a complete itemized inventory of stock on hand at least once in each calendar year, and unless such inventory has been taken within twelve calendar months prior to the date of this policy, one shall be taken in detail within 30 days of issuance of this policy, or this policy shall be null and void from such date, and upon demand of the assured the unearned premium from such date shall be returned. 2nd. The assured 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 date of inventory as j)rovided for in the first section of this clause and during the continuance of this policy. 3rd. The assured will keep such books and inventory and also the last preceding inventory, if such has been taken, securely locked in a fireproof safe at night, and at all times when the building mentioned in this policy is not actually open for business, or, failing in this, the assured will keep such books and inventories in some place not exposed to a fire which would destroy the aforesaid building.

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.” Mr. Mankowitz admitted that they did not have a safe, but testified that every night he carried such books as they had to his brother’s store, which according to his evidence was about six or seven houses away, and according to that of his brother, was about ten houses from the one in which the fire occurred. lie arranged with his brother that the boobs were to be taken to the latter’s store every night, when the plaintiff’s store was closed and then taken back in the morning. They were kept in a drawer in the brother’s store, as the latter’s safe was already full. On the morn ¹⁵⁹ ing of the fire Air. Mankowitz got the books and took them to the store.

We do not understand the appellee to claim that the plaintiffs could not keep the books at the brother’s, as they were kept there, but the important question is whether the store was actually open for business at the time of the fire within the meaning of the policy.' As the hooks and inventory were not kept in a safe, it was undoubtedly the duty of the plaintiffs to keep them in some place not exposed to a fire which would destroy the building, at night and at all times when the building was not actually open for business. It cannot he doubted that in a literal sense the building was not actually open for business when the fire occurred, and it would seem to be equally clear that if it had been open, the probabilities are that the fire would not have been so disastrous (if it had occurred at all), and at any rate the books could have been easily saved. They are thus described in the testimony: “Three of them were small books of the size of the one produced, and one was a two hundred page ledger; the hook produced was a hook about twelve inches long by four inches wide by three-quarters of an inch thick, weighing about six ounces. The ledger was a little wider and a little thicker.” An inventory made just before they moved to Baltimore street was in one of the books.

All but one of them totally destroyed hv the fire, and that was what Mr. Mankowitz called “the sales book.” They could by reason of their size very easily have been taken to his brother’s when Mrs. Alankowitz went there to dinner. It is true that she only expected to be absent about half an hour1, but she was gone long enough for the fire to make such headway that according to the plaintiff’s claim, the stock was practically destroyed and the fixtures very much damaged. If it be conceded that the plaintiff's had such books and inventory as this clause required, the very object of the requirement was defeated by reason of the plaintiff’s 'representative leaving them where they were, unprotected in case of fire in her absence. If an insured can relieve ¹⁶⁰ himself of the obligation, of his warranty to produce the books and inventory in ease of fire by shutting up his store for half an hour with no one in it, and claiming the books, etc., were kept but were destroyed, there is but little protection to the insurer by such a clause, and it might as well be abandoned.

If it can he done for half an hour, then why not for an hour or more? Such a clause in an insurance policy should undoubtedly receive “a fair and reasonable interpretation,” as the authorities have frequently said of it, hut it will he observed that in considering such a question as the one now before us, tho Courts have been largely governed by the circumstances of each particular case, rather than attempting to lay down general rules. When there is no question about which cause the loss having been without the fault or negligence of the owner, Courts naturally shrink from placing such a interpretation on a clause of this kind as will deprive the owner of a right to recover, by reason of a purely technical defence, if that can he properly avoided, but even then when the terms of the contract are clear and unambiguous, Courts have no' right to make new contracts for the parties, or ignore those already made by them simply to avoid seeming hardships. A review of the many decisions on this Iron Safe Clause will show a tendency in some instances to do more for the protection of the insured than they seemed ready to do for themselves, although the clause has been very generally recognied as valid and ’ reasonable, and has been declared to be useful and desirable, not simply for the insurer but for the honest insured.

It may be that it might he well to require by legislation insurance companies making use of it, to make it so prominent in the policies or to give such notice of it as will leave no question about the insured having notice of it, when it is inserted in or attached to a policy, as we do not understand that ali standard policies on stocks of merchandise contain it, hut in this case the plaintiffs knew of. it, and hence do not even have the excuse of their ignorance of such ¡orovisio-n. ¹⁶¹ They knew of