Opinion ID: 1510876
Heading Depth: 1
Heading Rank: 2

Heading: The Defense of False Swearing.

Text: The contentions of defendants with respect to false swearing in the proofs of loss are: (1) That plaintiff claimed for nine months' interruption of business when it had an offer to reconstruct the tipple in 5½ months and did not disclose the fact; (2) that it was falsely stated that $250,000 had been expended in developing mine No. 12; (3) that it was stated that production started in seam No. 12 about September 1, 1929, whereas it was not to start until the following February; and (4) that the production as set forth in the proofs was falsely stated to be based on production that had been contracted for. We agree with the judge below that these contentions are without substantial merit. It should be remembered that, before the proofs of loss were filed, the adjusters of defendants had been on the scene, had had access to plaintiff's books and records, had discussed fully with plaintiff's representatives all of the questions involved, had endeavored to arrive at a compromise, and, failing in this, had submitted to arbitration the question of the length of the period of suspension. Under such circumstances it is hardly believable that the statements to which exception is taken could have been made with any intent to deceive or defraud. The patent futility of attempting such a thing should be, of itself, almost sufficient to satisfy a reasonable mind that no such intent existed. In addition to this, we think that the evidence shows the statements to be substantially true. The statement as to the period of suspension was, of course, an estimate. The fact that a contractor had offered to rebuild the tipple in less time is not conclusive of the time required, and plaintiff was manifestly not required to revise its estimate because of the offer. The statement as to the cost of developing No. 12 was true when consideration is given to the value of the machinery transferred as well as to cash expended. The statement that production commenced in No. 12 on September 1st was incorrect only in that it placed the date too late; for the evidence shows that substantial production began as early as July. The contention of plaintiff as to the statement that estimated production was based on production which had been contracted for is that, while its entire production during the period of suspension was not covered by contracts, it was true that its production as figured was based on contracts which it had. Plaintiff says that the production of its mine was limited by its ability to dispose of nut and slack coal, and that it had contracts covering nut and slack in an amount which justified the estimate of production contained in the schedule. While we think that the statement might easily mislead, we do not think that we would be justified in holding that it was willfully false or made with intent to deceive. There is no question, of course, but that intentional false swearing in proofs of loss in an attempt to defraud the insurance company will avoid a policy of insurance. Columbian Ins. Co. v. Modern Laundry (C. C. A. 8th) 277 F. 355, 20 A. L. R. 1159, and cases there cited. But forfeitures are not favored; and, to warrant a court of equity in decreeing forfeiture on such ground, the intentional false swearing must be established by evidence clear, unequivocal and convincing. See Missouri State Life Ins. Co. v. Guess (C. C. A. 4th) 17 F.(2d) 450. We clearly would not be justified in reversing the finding of the trial judge on this issue of false swearing, especially in view of the fact that he had the witnesses before him, and was able to observe their demeanor and expression while on the witness stand and to judge of their motives as well as their veracity better than we possibly can from reading the cold pages of the record.