Court Opinion

ID: 6866655
Source: CourtListenerOpinion
Date Created: 2022-07-23 20:55:28.297892+00
Date Added: 2024-06-11T16:05:20.102087
License: Public Domain

HANEY, Circuit Judge
(concurring).
I concur in the result, but do not agree with the reasoning of the majority with respect to the records of Kern county.
The two policies issued by Maryland Casualty Company, hereinafter called the Maryland Company, and the policy issued by the Glens Falls Indemnity Company, hereinafter called the Glens Company, each contained exactly the following provision:
“The company shall not be liable * * * (2) unless the records of the assured have been so kept that the amount of the loss can be accurately determined therefrom by the company.”
This provision must be construed in the light of its purpose.
In Cooley’s Briefs on Ins. 2827, it is said that, “ * * * The purpose of the provision is, of course, to facilitate the ascertainment of the actual loss and protect the insurer against excessive and fraudulent claims.” See, also, Id. 2796.
Another rule of construction must be kept in mind. In National Union Fire Ins. Co. v. California Cotton Credit Corporation, 76 F.(2d) 279, 283, this court said:
“Provisions requiring the keeping of records and their production upon request for inspection by the insurer are promissory warranties. Substantial compliance with a promissory warranty is sufficient. [Citations.]”
See, also, Liverpool & London & Globe Ins. Co. v. Dillon (C.C.A.4) 16 F.(2d) 774; Home Ins. Co. of New York v. Williams (C.C.A.5) 237 F. 171; Wright v. Union Ins. Co. (C.C.A.5) 13 F.(2d) 612; New York Underwriters Fire Ins. Co. v. Malham & Co. (C.C.A.8) 25 F.(2d) 415; Ætna Casualty & Surety Co. v. Reliable Auto Tire Co. (C.C.A.S) 58 F.(2d) 100; Bank of Union v. Fidelity & Casualty Co. of New York (C.C.A.8) 62 F.(2d) 1040; Annotation, 39 A.L.R. 1443 et seq.
Still other rules of construction are shown by the following quotation from National Union Fire Ins. Co. v. California Cotton Credit Corporation, supra, 76 F.(2d) 279, 282:
“Where there is uncertainty or ambiguity in a provision of a policy of insurance, the court will favor the construction which will avoid a forfeiture, if it can reasonably do so. Fidelity & Casualty Co. of New York v. Phelps (C.C.A.) 64 F.(2d) 233, citing McMaster v. New York Life Ins. Co., 183 U.S. 25, 22 S.Ct. 10, 46 L. Ed. 64. If the policy is uncertain, it must be construed in favor of the insured and against the insurer. Imperial Fire Ins. Co. v. Coos County, 151 U.S. 452, 462, 14 S.Ct. 379, 38 L.Ed. 231; Mutual Life Ins. Co. v. Hurni Packing Co., 263 U.S. 167, 174, 44 S.Ct. 90, 68 L.Ed. 235, 31 A.L.R. 102.”
In Home Ins. Co. of New York v. Williams, supra, 237 F. 171, at page 176, it was said :
“There is no dispute as to the books produced and their character. If they do not enable the defendant to reasonably arrive at the amount of the loss, then it was error for the court to leave to the jury to say whether such books were sufficient. The facts being undisputed, it becomes a matter of law for the court.”
Whether or not the above quotation correctly states the law, it is unnecessary to consider, for even assuming its correctness, I am satisfied that the question was properly presented to the jury in this case. Plowever, it should be rioted that the question was left to the jury in Liverpool & London & Globe Ins. Co. v. Dillon, supra, /Etna Casualty & Surety Co. v. Reliable Auto Tire Co., supra, and Bank of Union v. Fidelity & Casualty Co. of New York, supra. In those cases, there was nothing said which might indicate that any different rule is to be applied to the fact of compliance with such “iron-safe” clauses than is applied to any other fact.
1. The policy provision quoted above refers to “records,” but makes no attempt to define that word or specify any particular kind of records. The question arises as to whether the receipt, above mentioned, can be considered as a part of the “records.”
In Webster’s Dictionary (2d Ed.) I find the following definition of the noun “record”:
“2. That which is written or transcribed to perpetuate a knowledge of acts or events; also, that on which such record is made. * * * ”
Thus the word means either (1) the inscription itself, or (2) the thing on which the inscription is made. What was meant by the use of the word in the policies? When the purpose of the provision is con*782sidered, it is apparent that it was the inscription which was intended, that is, the figures and ordinary bookkeeping entries, for it is the entries which facilitate the ascertainment of the actual loss and protect the insurers against excessive and fraudulent claims. The mere fact that the entries were made on a loose sheet of paper rather than in a book does not change the fact that they are inscriptions. The entries might just as well have been made on parchment, on rubber, on wood, or on stone, but the company would not have been interested in that fact if the entries were accurate.
Further, the most that can be said is that the word “records” is ambiguous, and, under the rules stated above, we would necessarily have to give the meaning to that word which is most favorable to the insured.
2. The majority seem to place its decision on two grounds. The first is shown by the following quotation from their opinion, after quoting certain statutes of California :
“Without further citation, it is clear that the California law requires two accounts to be kept of all funds in the county treasury. * * * Certainly a private receipt or passbook in the hands of the Treasurer is in no sense a book kept by the county.”
It is true that the statutes require certain books to be kept, but the majority has pointed out no statute which' prohibits the keeping of other books or records than those specified, nor any statute or judicial decision which says that any books or records kept which are not required to be kept by law shall not be considered as records of the county. No doubt much data is kept, entered, and preserved by the various county officers which is not required to be so kept by law, but if they are true and relate to the business of the county, whether they are or are not required to be kept by statutes, such data is none the less “records” of the county within the language of the policies in question.
The holding of the majority is equivalent to reading into the policy provision as shown by the italics following:
“The company shall not be liable * * * (2) unless the records of the assured have been so kept that the amount of the loss can be accurately determined therefrom by the company, and unless such determination may be made from such records as are required by lazv to be kept, without consideration to any other memo- ■ randa or records relating thereto
Such a construction is not only unjustified, but is unnecessary.
3. The other ground on which the majority rests its decision is that since the deposits were made in violation of law, the “ * * * memoranda of such transactions are not and cannot be account books or records of the county. They are at best equivocal memoranda of the Treasurer.”
The quotation under 2 above also speaks of “private receipt * * * in the hands of the Treasurer.”
The assumption is thus made that the receipt in the hands of the treasurer is in fact a “private” memorandum. No authority is cited and my examination discloses none which supports that assumption. The funds deposited were, as pointed out in the majority opinion, county funds. The receipt was a record of a transaction relating to those funds, and the fact that the transaction may or may not have been lawful, does not change that relationship.
The fact that the record on the receipt was kept by the deputy is unimportant, because some one of necessity must keep records. The county itself cannot, but it can be done only by some one acting for the county.
But assuming that the receipt was such a “private” memoranda, does that prevent its use? The policy provision says “records of the assured,” only and does not exclude expressly records, for instance made by private accountants, or any particular form of records, but the sole requirement is that the records “of the assured” shall be so kept that the company may accurately determine the loss therefrom.
The dictionary defines the word “of” as follows:
“In the most general sense; proceeding from; belonging to; relating to; connected with; concerning. * * * ”
The majority seem to adopt the meaning given, that the records must “belong to the county.” Such a construction is construing the provision in favor of the companies and not in favor of the assured, contrary to the rules of construction outlined above.
When the provision is read in the light of its purpose, which js to facilitate the ascertainment of the actual loss and to prevent fraud, it is apparent that the receipt *783must be used to accomplish those purposes. The record on the receipt is the only record which shows the accurate amount which must be deducted from the balance as shown by the cash book, in order to accurately determine the loss. Thus if we prevent the use of the receipt, we at the same time prevent the use of a record which facilitates the ascertainment of the loss. The other purpose, which is the prevention of fraud, is not defeated, because the accuracy of the figures on the receipt is not questioned.
I have no doubt that if the companies admitted the loss, and only the amount were in question, they would gladly and gratefully accept the receipt as a “record of the assured” in order to determine accurately the exact loss, rather than disregard the receipt, accept only the cash book as a “record of the assured,” and pay some $8,000 additional — an amount for which they would not in fact be liable.
On this reasoning I am impelled to the, conclusion that what the policies required was “records” from which the companies could accurately determine the loss. If the figures in such records are accurate, that fulfills their requirement, whether the records were made by or on behalf of the assured, or by a private person. The analogy of the following quotation from National Union Fire Ins. Co. v. California Cotton Credit Corporation, supra, 76 F.(2d) 279, 282, decided by this court, is apparent :
“The above-quoted provision of the application does not specify that the grading or classing shall be done by the insured. If the insurance company desired a grading or classing of the cotton by the insured, it should have so provided in the application.”