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National Union Fire Ins. Co. v. Kaplan

June 13, 1930

NATIONAL UNION FIRE INS. CO.
v.
KAPLAN ET AL.



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

Author: Alschuler

Before ALSCHULER and EVANS, Circuit Judges, and LINDLEY, District Judge.

ALSCHULER, Circuit Judge.

Appellant company complains of a judgment of $30,000 rendered against it on a policy of fire insurance issued to appellees, copartners, whereunder appellees were insured against loss on automobiles not exceeding $100,000 at 3152-58 Ogden avenue, and not exceeding $50,000 at 2946-50 West Grand avenue, Chicago.

For about ten years appellees had carried on an agency for new Nash cars at their Ogden avenue place. They gave but little of their time to the automobile business, being also in the trucking, moving, and ice business. One Greenman, at and before the times in question, was the manager of their automobile business, which primarily was an agency for dealing in new Nash cars, in the sale of which it was often necessary to take in exchange used cars of various makes. Their used car business consisted entirely in the handling of cars so taken in exchange. These were usually reconditioned for sale.They employed seven or eight salesmen, and had seven mechanics in their service station, which was maintained for service on new Nash cars sold, and for old cars taken in exchange, but not as a public garage. Ordinarily the cars were kept at the Ogden avenue place, and when in the fall and winter new Nash cars were arriving in considerable numbers, those that could not be accommodated there were stored in warehouses.

In the late fall of 1926 one Beers, who had formerly been one of their salesmen, and who ran a garage on Grand avenue, proposed storage of secondhand cars in his garage, where he would keep them in condition for driving and showing, and where customers might be brought to inspect and try them. Greenman, on behalf of appellees, agreed with him on a price of $8 a car per month for such storage, and used cars were from time to time brought there, and were there shown and sold.

On the night of January 8, 1927, while the policy was in force, the Grand avenue place burned, and forty-seven of appellees' used cars became a total loss. Proofs of loss were supplied showing the loss to be about $27,000.

Upon appellant's denial of liability, suit was brought, and to the declaration therein appellant, on August 9, 1927, filed a plea of general issue, with its affidavit, stating:

"That the defense of the defendant to said suit is as follows:

"1 -- That the policy upon which said suit is brought contains, among other things, the following provision:

"'6. Monthly Statements. On or before the fifteenth day of each month the Assured shall render to the Company a statement showing the actual cash value of all property at risk hereunder at the close of business on the last day of the preceding month. This Company, through its duly authorized agent and at all reasonable times, shall have access to the Assured's books and records for the purpose of determining any facts relating to this insurance. Any evasion or attempted evasion by the Assured in connection with monthly statements or payments of premium hereunder shall void this policy and shall be an absolute defense to any suit or action brought under this policy.'

"2 -- Affiant further states that the plaintiffs did not comply with the above and forgoing provision of said policy in that it did not render statements showing the actual cash value of all property at risk as provided for, but, on the contrary, rendered false and fictitious statements particularly for the months of September, October, November and December in the year 1926. That said statements so rendered greatly minimized the value of the property at risk and were so made for the purpose of evasion and to defraud the defendant out of the premiums due under said contract of insurance."

On October 2, 1929, a short time before the case was called for trial, appellant, by leave of court, filed an amended affidavit of the merits of its defense, wherein it stated its defense to be (1) and (2) the same as in the original statement of defense, and the following:

"3 -- Affiant further states that the policy upon which said suit is brought contains among other ...


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