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Milwaukee Mechanics' Ins. Co. v. Ciaccio

February 25, 1930

MILWAUKEE MECHANICS' INS. CO.
v.
CIACCIO ET AL.



Appeal from the District Court of the United States for the Southern Division of the Southern District of Illinois.

Author: Evans

Before ALSCHULER, EVANS, and SPARKS, Circuit Judges.

EVANS, Circuit Judge.

Appellees brought this suit to recover upon a fire insurance policy issued by appellant. At the same time and in the same suit they sought other money decrees against other insurance companies with outstanding policies covering the property destroyed. From that part of the decree which awarded appellees $10,000 against it, appellant appeals. As grounds for reversal, it assails the jurisdiction of a court of equity to entertain the suit, contending that its constitutional right to a jury trial, etc., has been violated. It further argues that the amount of the award is larger than the evidence warrants.

Equity Jurisdiction. -- To avoid a multiplicity of suits is one, and perhaps the chief, ground upon which appellee relies to invoke the jurisdiction of a court of equity. There were five insurance companies joined as defendants whose liabilities, arising out of policies issued on the property destroyed by the fire, were similarly involved. Additional reasons for invoking the jurisdiction of a court of equity in this suit appear. The total amount of insurance exceeded the loss. In addition to the question of contribution, there was a question involving the total amount of insurance in force. Shortly before the fire, one of the companies sought to cancel its policy. The agent representing this company wrote out a policy in another company but controversy existed as to its delivery. Whether the first policy had been canceled or the new one dehvered were questions which bore upon the total amount of insurance and therefore upon the liability of each of the other companies. Then, too, one of the policies contained a misdescription of the property and, as against such company, equitable relief was sought in the nature of a reformation of the contract. Unless the modification took place, the total amount of insurance would be less, and again the contribution of each of the other companies was involved.

But a still greater obstacle to the presentation of this question arises out of the action of appellant in waiving a jury trial.

Appellees originally instituted five separate actions at law, and later they brought this suit in equity against all five insurance companies who were the five defendants in the actions at law. In the actions at law the defendants appeared and, with the plaintiff, filed a stipulation in writing waiving a jury trial. On the trial, the court consolidated all law actions and in one trial heard the evidence in the equity suit and, presumably, in the consolidated law actions. It refused to compel appellees to elect whether they would proceed with the law actions or with their suit in equity. In view of these proceedings, we are unable to see wherein appellant has been prejudiced.

True, a money decree was entered against it in a suit in equity rather than in an action at law. The court, however, could have transferred the cause from equity to law and have entered the judgment. In the consolidation of the law actions, the court would, upon the same evidence, have entered the same money judgments.

Moreover, upon the facts of this case we are satisfied that the court of equity had jurisdiction on several grounds: (a) To avoid a multiplicity of suits; (b) to reform an instrument whose liability or nonliability bore upon the extent of the liability of the other defendants; and (c) to ascertain the extent of the liability of each one of the defendants, which liability was contingent in nature and amount. See Pomeroy's Equity Jurisprudence (4th Ed.) ยง 245; Smith v. Fire Ins. Co., 219 Ill. App. 506, Id., 226 Ill. App. 626; Fegelson v. Niagara Fire Ins. Co., 94 Minn. 486, 103 N.W. 495.

False and Fraudulent Statements in Proof of Losses. -- Appellant contends that its liability was defeated by the false statements in the proof of loss which appellee made. A careful examination of all of the evidence fails to support this assignment of error. The court heard these witnesses and found against appellant on this issue. This finding is well supported by the evidence.

Cause of Fire. -- Appellant contends that an explosion, rather than the fire, caused the damage and that it was not liable for the losses through the explosion. Appellees' contention is that the fire alone caused their damages. The evidence was somewhat conflicting but well supports the finding that the fire and not the explosion caused the damage for which the award was made.

Amount of Damages. -- Appellant's position is that the amount of the recovery must be limited to $7,162.66 with interest. To support this contention, it relies on two agreements executed by the parties after the loss, one called a "Nonwaiver Agreement" and the other a "Sound Value and Loss and Damage Agreement."

One of the paragraphs of the nonwaiver agreement reads:

"The intent of this agreement is to preserve the rights of the parties hereto and provide only for an investigation of the loss and claims, and the determination of the amount of the sound value and loss or damage without ...


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