State Farm Fire & Casualty Co v. Quirt

Orth, C. J., delivered the opinion of the Court. ⁶⁰⁴ This appeal requires the construction of a contract of insurance issued by State Farm Fire and Casualty Company to Thomas C. Quirt. The appeal is from a judgment absolute in the amount of $1,000 in favor of Quirt against State Farm entered upon the verdict of a jury in the Superior Court of Baltimore City. 1 State Farm attacks the judgment, claiming that the trial judge, Levin, J:, was wrong in denying its motion for a directed verdict, and that even if the case were properly submitted to the jury, he committed reversible error in his charge to the jury. We find that the judge was correct in refusing to direct a verdict, albeit for the wrong reason. We agree that he erred in instructing the jury, but we believe that the error does not call for reversal.

The challenged instructions gave State Farm more than that to which it was entitled, and, therefore, did not prejudice it. We affirm the judgment. I Certain facts established by the evidence adduced at the trial are undisputed. Quirt was the owner of two pieces of jewelry, a ring valued at $1200 and a brooch valued at $1150, which he kept for a time at home and later in a bank safe deposit box for several years.

He had his business partner, a Mr. Shae, take them to Jack Cheslock, a retail jeweler, dealing as Cheslock’s, Inc. 2 They remained in Cheslock’s ⁶⁰⁵ possession until August of 1968 when they were stolen in an armed robbery. Cheslock, believing that the loss was covered by his insurance, did not tell Quirt that the jewelry had been stolen until January 1969, when his insurer disclaimed liability. At the time of the robbery, a contract of insurance, issued by State Farm to Quirt, was in effect. On 31 May 1969 Quirt filed a claim of loss with State Farm and on 9 June 1969 made a recorded statement about the matter to Robert Schwartz, State Farm’s Claim Representative.

The contract of insurance was a Homeowners Policy. It contained a standard clause, apparently common to such policies, concerning coverage of unscheduled personal property. Among the perils insured against was the theft of such property subject to certain provisions under “Coverage B” of the policy. We set them out in full as they are the crux of the controversy. “COVERAGE B — UNSCHEDULED PERSONAL PROPERTY. 1.

On Premises: This policy covers unscheduled personal property usual or incidental to the occupancy of the premises as a dwelling, owned, worn or used by an insured, while on the premises, or at the option of the Named Insured, owned by others while on the portion of the premises occupied exclusively by the Insured. THIS COVERAGE DOES NOT INCLUDE: ANIMALS, BIRDS, AUTOMOBILES INCLUDING MIDGET AUTOMOBILES, VEHICLES LICENSED FOR ROAD USE AND AIRCRAFT; THE PROPERTY OF ROOMER’S OR BOARDERS NOT RELATED TO TPIE INSURED; ARTICLES CARRIED OR HELD AS SAMPLES OR FOR SALE OR FOR DELIVERY AFTER SALE OR FOR RENTAL TO OTHERS; AND PROPERTY WHICH IS SEPARATELY DESCRIBED AND ⁶⁰⁶ SPECIFICALLY INSURED IN WHOLE OR IN PART BY THIS OR ANY OTHER INSURANCE. 2. Away from premises: This policy also covers unscheduled personal property as described and limited, while elsewhere than on the premises, anywhere in the world, owned, worn or used by an Insured or at the option of the Named Insured, owned by a guest while in a temporary residence of, and occupied by an Insured or owned by a residence employee while actually engaged in the service of an Insured and while such property is in the physical custody of such residence employee or in a residence temporarily occupied by an Insured. PROPERTY PERTAINING TO A BUSINESS IS NOT COVERED.

THE LIMIT OF THIS COMPANY’S LIABILITY FOR SUCH PROPERTY WHILE AWAY FROM PREMISES SHALL BE AN ADDITIONAL AMOUNT OF INSURANCE EQUAL TO 10% OF THE AMOUNT SPECIFIED FOR COVERAGE B BUT IN NO EVENT LESS THAN $1,000.” 3 By letter dated 12 June 1969 State Farm notified Quirt that it would not pay the loss. It gave as the reason: “This coverage does not include: animals, birds, etc.; articles carried or held as samples or for sale or for delivery after sale etc.” On 16 October 1969 Quirt instituted an action ex contractu by filing a declaration against State Farm in the Superior Court of Baltimore City. State Farm pleaded the general ⁶⁰⁷ issue and a special plea that the policy sued on “does not cover, or provide payment for, articles carried or held as samples [or] for sale or for delivery after sale and the Plaintiff deposited the articles alleged to have been stolen with the owner of Cheslock’s, Inc., where said articles were to be sold on a commission basis by the owner of Cheslock’s, Inc.” In due course, trial was had and judgment obtained. See note 1, supra.

II Although it was not disputed that Quirt owned the two pieces of jewelry, that he turned them over to Cheslock, and that they were stolen while in Cheslock’s possession, there was conflict as to why Quirt had delivered the ring and brooch to Cheslock. The conflict emanated primarily from Quirt. In the claim of loss filed by him and in the statement shortly thereafter given Schwartz, State Farm’s Claim Representative, Quirt said that Cheslock was to sell the jewelry for him. 4 At the trial, however, the substance of Quirt’s testimony was that he delivered the jewelry to Cheslock for remodeling and not for sale. Cheslock’s testimony did not clarify the matter.

His recollection was that when the jewelry was left with him he said it would be “a shame to break the two pieces up since they were such ⁶⁰⁸ nice pieces. There was some talk into remodeling into cuff links. I don’t know how far we went into that. There was some talk of me possibly trying to get rid of the pieces for him, and that was about it.

We actually didn’t go too far in it, but there was some talk into remodeling, into cuff links, as I recall.” Quirt would have had the option to accept or reject any offer to buy. Cheslock did not believe he ever showed the jewelry to anyone specifically. It was elicited that it would have taken about four weeks to complete a “total remodeling job”, and the jewelry had been in Chesloek’s possession about eighteen months before the robbery. Ill In the context of State Farm’s liability, the significance of whether Quirt left his jewelry with Cheslock for sale or for remodeling depends upon the meaning of the provision that coverage does not include articles held for sale.

We find it clear that the ring and brooch were within the ambit of “Coverage R”, whether on or away from the premises, as unscheduled personal property owned, worn, or used by the insured, Quirt. The jewelry was patently, as far as Quirt was concerned, not property pertaining to a business. Quirt’s unrefuted testimony was that he had purchased the ring in the early 1960’s, “1960, ’61, ’62”, from the Stall Company in New York. “I had originally intended to give [it] to someone and I had decided against it after purchasing that. So 1 actually just kept it at home for some period of time.. .

Until a time I had a safe deposit box to put it into”, which was about 1965. The brooch was purchased in 1964 or 1965 from Cheslock. Quirt put it in the safe deposit box also. “Because I had decided that the original intent in purchasing them I had decided against that intent so I put them in the safe deposit box for safe keeping.” And the loss was occasioned by a peril specifically insured against, that is “Theft, meaning any act of stealing or attempt thereat. ...” 5 The sole question is whether the jewelry was held for sale within the contemplation of the exclusion. ⁶⁰⁹ State Farm’s view is that if unscheduled personal property is to be sold, it is excluded from Coverage B. It looks to American Motorist Insurance Company v. Vermont, 155 S.E.2d 675 (Ga. 1967) and urges us to accept the law expounded in that case. Albert Vermont brought the action upon a homeowner’s policy issued to him to recover for the loss by theft of a large diamond which he owned and left with a jeweler for sale under a brokerage agreement.

As in the policy before us there was an exclusionary clause in Vermont’s policy concerning “articles carried or held as samples or for sale.” The court held, at 676, that as Vermont “was trying to sell the article and maintained no other purpose for it, it came within the exclusionary provision of the policy as a matter of law, irrespective of whether it was in any way related to [Vermont’s] usual occupation or business.” 6 In so concluding, the court expressly rejected the contention that the phrase “articles carried or held as samples or for sale” refers only to property owned or used by the insured of a commercial nature in the conduct of his trade, occupation, or business. We, of course, are not bound by the decision of the Court of Appeals of Georgia, and we are not persuaded by it. The Georgia court thought that the exclusionary clause was unambiguous when considered literally. It observed that a similar exclusionary clause was enforced literally in Gross v. Globe & Rutgers Fire Ins.

Co., 142 Misc. 918 , 256 N.Y.S. 570 (1932). In Gross the Supreme Court of New York, Appellate Term, First Department, reversed a judgment rendered on an action to recover loss under a “tourist floater” policy and dismissed the complaint on the merits in a three sentence per curiam opinion, without citation of authority or statement of reason, in which two judges of the three judge panel concurred on the ⁶¹⁰ merits and the third judge dissented without filing an opinion. We quote the opinion in its entirety: “The ring involved herein was a ladies’ ring which the assured, a male person, had bought some time previously for presentation as an engagement ring. It was being carried at the time of its loss because the assured intended to sell it — the engagement having been broken.

Under such circumstances it was not ‘a personal effect usually carried by a tourist or a traveller,’ nor was it ‘personal jewelry belonging to and used or worn by the assured or a member of his family.’ In any event it comes within the exception in the policy excluding ‘merchandise for sale.’ ” As further authority, the opinion in Vermont urged, “See Orren v. Iowa Mut. Liability Ins. Co., 230 N. C. 618 , 54 S.E.2d 927 ; Ann. 80 A.L.R.2d 1289 .” Orren concerned an action to recover on a residence and outside theft policy. It was decided by the Supreme Court of North Carolina in 1949 by a per curiam opinion as follows: “The determinate question at issue herein is as to whether the diamond