Case Name: LIVERPOOL & LONDON & GLOBE INS. CO. v. KEARNEY et al.
Court: United States Court of Appeals for the Eighth Circuit
Jurisdiction: United States
Decision Date: 1899-04-10
Citations: 94 F. 314
Docket Number: No. 1,127
Parties: LIVERPOOL & LONDON & GLOBE INS. CO. v. KEARNEY et al.
Judges: Before CALDWELL, SANBORN, and THAYER, Circuit Judges.
Reporter: Federal Reporter
Volume: 94
Pages: 314–320

Head Matter:
LIVERPOOL & LONDON & GLOBE INS. CO. v. KEARNEY et al.
(Circuit Court of Appeals, Eighth Circuit.
April 10, 1899.)
No. 1,127.
1. Insurance — Construction oe Policy — Iron Saee Clause.
By a clause in a policy of insurance on a stock of merchandise the insured agreed to keep the hooks containing a record of his business, together with his last inventory, “securely locked in a fireproof safe at night, * * ♦ or in some secure place not exposed to a fire which would destroy the house where such business is carried on.” Held, that such clause gave the insured an option to keep the hooks either in a safe or some other secure place, which option he might exercise at any time, and was not violated by the removal of the books in the night from the safe to a place of safety outside on the approach of a fire to the building, such removal being but an act of prudence; nor did the accidental loss of the inventory during such removal preclude a recovery on the policy.
2. Same.
A provision of an iron-safe clause in a policy of insurance on merchandise, which, in addition to requiring the insured to keep his books and inventory in a safe or other secure place at night, makes the policy void in the event that he shall fail to produce such books and inventory in ease of loss, must be given a reasonable, and not a strictly literal, construction; and, so construed, in connection with the provision for the manner in which the books and inventory shall be kept to insure their safety, it requires the insured to produce them after the fire, if within his power to do so, and casts upon him the responsibility for their loss in all cases where such loss is due to a wrongful or fraudulent act on his part, or to his culpable negligence.
Sanborn, Circuit Judge, dissenting.
In Error to the United States Court of Appeals in the Indian Territory.
This suit is founded on two insurance policies, one for $2,500 and one for $1,000, which were issued by the Liverpool & London & Globe Insurance Company, the plaintiff in error, to T. K. Kearney .and J. W. Wyse, composing the firm of Kearney & Wyse, the defendants in error. The policies covered a stock of hardware located in the town of Ardmore, in the Indian Territory, which was destroyed by fire on the morning of April 19, 1895, during the life of the policies. For a defense to the claim made under the policies the defendant company appears to have relied altogether on the following provision of the policy, termed “the iron-safe clause”: “The assured under this policy hereby covenants and agrees to keep a set of books showing a complete record of business transactions, including all purchases and sales, both for cash and credit, together with the last inventory of said business; and further covenants and agrees to keep such books and inventory securely locked in a fireproof safe at night, and at all times when the store mentioned in the within policy is not actually open for business, or in some secure place not exposed to a fire which would destroy the house where such business is carried on; and in case of loss the assured agrees. and covenants to produce such books and inventory, and, in the event of a failure to produce the samé, this policy shall be deemed null and void, and no suit or action at law shall be maintained thereon for any such loss.” Noncompliance with this clause was alleged in the defendant’s answer, in that the insured did not keep books showing a complete record of their transactions, including all purchases or sales for cash and credit, nor any inventory of said business, or memorandum, securely locked in a fireproof safe at night, or in some secure place not exposed to fire; and in that they did not furnish to the insurer, as a part of their proof of loss, a record of their transactions, — that is, of the sales for cash or credit, or purchases, — or an inventory of their business. There was a verdict and a judg ment at nisi prius in favor of the plaintiffs below, which judgment was affirmed by the court of appeals in the Indian Territory. 46 S. W. 414. The defendant below brought the case here on a writ of error.
A, B. Quinton (E. S. Quinton, W. A. Ledbetter, and S. T. Bledsoe, on brief), for plaintiff in error.
A. C. Cruce (W. B. Johnson, W. I. Cruce, and Lee Cruce, on brief), for defendant in error.
Before CALDWELL, SANBORN, and THAYER, Circuit Judges.

Opinion:
THAYER, Circuit Judge,
after stating the case as above, delivered the opinion of the court.
The defendant below, against whom the judgment was rendered, assigns several errors in the proceedings of the trial court, but each assignment presents only some special phase of the same general question, namely, whether the trial court properly construed and gave due effect to the "iron-safe clause" of the policy, above quoted in the statement. Concerning the facts of the case there is practically no dispute. On the night of April 18, 1895, between the hours of 1 and 3 a. m., a ñre accidentally broke out in a livery stable in the town of Ardmore, which was about 300 yards distant from the plaintiffs' place of business. Efforts to arrest the progress of the conflagration failed, and when it had approached so near to the plaintiffs' place of business that the windows of their store were cracking from the heat, and the building was about to take fire, one of the plaintiffs entered the building for the purpose of removing the books of the firm to a safer place, thinking that it would be better to remove them than to take the chances of their being destroyed by fire. He opened an iron safe in the store, in which they had been deposited for the night, which was called a fireproof safe, and took them therefrom, and to his residence, some distance away. The books consisted of a ledger, a cash book, a day book or blotter, and a small paper-covered book containing an inventory that the firm had taken of their stock on or about January 1, 1895. In the hurry and confusion incident to the removal of the books, the inventory was either left: in the safe, and was destroyed, or was otherwise lost, and could uot be produced after the fire. The other books, however, were saved, and were exhibited to the insurer after the fire, and were subsequently produced as exhibits on the trial. There was neither plea nor proof that the loss of the inventory was due to fraud or bad faith on the part of the plaintiffs, or either of them. The trial judge charged the jury that the set of books which had been kept, and which were produced on the trial, "were substantially in compliance with the terms of the policy upon that subject," and no exception was taken by the defendant to this part of the charge. The books, though used at the trial as exhibits, do not form a part of the record. 'For these reasons no question arises as to the sufficiency of the set of books that was kept which we are called upou to consider. It must be taken for granted that it was a proper set of books, as the trial court held. The only substantial ground for complaint seems to be that the inventory was not produced. Does the fact that the inventory was lost under the circumstances afore said, and was not produced, vitiate the policies? It will be observed, from reading the "iron-safe clause," that the plaintiffs below did not bind themselves unconditionally to keep their books in a fireproof safe at night, and at all times when the store was not actually ppen for business. Their engagemént was to so keep them, "or in some secure place not exposed to a fire which would destroy the house where such business is carried on." They had an option, therefore, either to keep them in a fireproof safe, or in some other secure place, where they would not be liable to be destroyed by a fire which might destroy their place of business. We perceive no reason why the plaintiffs were not entitled to exercise this option of removing their books to some other safe place at any time, and to exercise it, especially when a conflagration was sweeping towards their place of business, which bid fair to destroy it, and possibly to destroy their books as well, though contained in a safe. It cannot be said, we think, that, having placed the books in the safe on the night of April 18, 1895, at the close of business, they were bound to let them remain there until morning, no matter what might occur, and that in the meantime they lost the right given by the policy to remove and keep them elsewhere. The option was a continuing one, and it was eminently proper, we think, for the plaintiff's to exercise it during the night of the fire, when it became obvious to them that their place of business was about to be destroyed. They acted prudently, doing what any other man of ordinary caution would have done if he entertained lurking doubts as to the fireproof quality of his safe, or was unwilling to have his books buried perhaps for days under a mass of débris.
Counsel for the defendant company direct our attention, however, to the last paragraph of the "iron-safe clause," and urge, in substance, that the stipulation therein contained bound the plaintiffs, in any event, to produce the inventory after the fire; and that, even though, it was lost, and cannot be produced, they are not entitled to recover. This argument proceeds upon the theory that the last paragraph of the "iron-safe clause" must be read literally, that it admits of no exceptions or qualifications, and that the failure to produce the books or inventory for any reason vitiates the policies. We cannot assent to this view of the case. Like all contracts made between private parties, and like all statutes, for that matter, they must receive a reasonable interpretation which will not work injustice or lead to absurd consequences. U. S. v. Kirby, 7 Wall. 482; Heydenfeldt v. Mining Co., 93 U. S. 634; Church of Holy Trinity v. U. S., 143 U. S. 457, 460, 461, 12 Sup. Ct. 511; Scott v. Latimer, 33 C. C. A. 1, 89 Fed. 843; Thurber v. Miller, 14 C. C. A. 432, 67 Fed. 371, and 32 U. S. App. 209; Davis v. Bohle, 92 Fed. 325. If it had been the intention of the defendant company that the final paragraph of the "iron-safe clause" should be construed as it now claims, then we perceive no motive for inserting the preceding clause, which required the insured to keep his books in a'fireproof safe, or other secure place; and that clause might as well have been omitted, giving him the power to keep his books where he pleased, and making his right to recover dependent upon the actual production of his books, and throwing upon him in
all cases line responsibility for their production. Again, ihe construc-lion contended for by the insurer might at times require the insured to produce his books when, without any fault on his part, it would be physically impossible to do so. For example, if a burglar should blow open a safe containing books, and start a fire which should destroy the insured's books as well as his stock in trade, then he could not recover on a policy containing the "iron-safe clause" construed as we are asked to construe it. Nor could a person insured under. such1 a policy recover against the insurer if he kej)t his books in a safe which he had every reason to believe was invulnerable against heat, provided it turned out not to be so, and his books were destroyed by an accidental Are. These considerations lead us to conclude that the last paragraph of the "iron-safe clause" should not be read literally, and that neither party to the contract intended that it would be so read. It should be construed, we think, as requiring the insured to produce his books and inventory after a Are, if it is within his power to do so, and as throwing upon the insured the responsibility for the loss of his books and inability to produce them in all of those cases where their loss is due to a wrongful or fraudulent act on his part, or to his culpable negligence. In the case at bar we cannot say that there was any evidence tending to show that: the inventory was lost., and not produced for either of the aforesaid reasons. The plaintiffs appear to have exercised their right under the policy to remove the books to a more secure place, under circumstances which fully justiAed (heir conduct, and we do not And any evidence which tends to convict them of culpable negligence in the maimer of exercising that right. In conclusion we shall only add that the clause of the policy now under consideration has been construed by other courts in cases where the facts were only slightly variant from those disclosed by the present record, and the conclusions reached touching the proper interpretation of the clause are in substantial conformity with those which we have announced, and with the instructions which were given by the trial judge. Jones v. Insurance Co., 38 Fed. 19, 21; Brown v. Insurance Co., 89 Tex. 590, 35 S. W. 1060; McNutt v. Insurance Co. (Tenn. Ch. App.) 45 S. W. 61; Insurance Co. v. Parker, 61 Ark. 207, 213, 32 S. W. 507. The judgment of the United States court of appeals in the Indian Territory and of the United States court for the Southern district of the Indian Territory are therefore affinned.