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MATUSEK ACADEMY OF MUSIC v. NATIONAL SURETY CORP.

February 13, 1953

MATUSEK ACADEMY OF MUSIC, INC.
v.
NATIONAL SURETY CORP. MATUSEK ACADEMY OF MUSIC, INC. V. MARYLAND CAS. CO.



The opinion of the court was delivered by: Perry, District Judge.

On or about August 16, 1949, the Chicago Mercantile Policies Alarms Systems, owned and operated by Clarence Novak, installed a burglar alarm system with an outside gong, manufactured by A.W. Fruh and Company of Chicago, Illinois, on the plaintiff's premises, which were located at 2649-53 West 63rd Street, Chicago, Illinois. Mr. Novak had secured a classification for this system by Underwriters Laboratories, Inc., of Chicago, Illinois, under Certificate No. 603,306, issued August 16, 1949, as "Class A, Installation 3," effective for a period of three years. This certificate also embodied the following proviso: "Underwriters Laboratories, Inc., reserves the right to inspect this equipment at any time, and to revoke this certificate if the entire system is not properly maintained under contract with the installing company."

The installation of this burglar alarm system was made pursuant to a written agreement, dated August 16, 1949, between the plaintiff corporation and Clarence W. Novak. Mr. Novak did not have a key to the plaintiff's premises or access thereto at times when they were closed for business purposes; he never requested a key to the plaintiff's premises. Neither of the defendants had any knowledge concerning this agreement between the plaintiff and Mr. Novak until November 20, 1950.

On November 8, 1949, the defendant, National Surety Corporation, for a premium of $240, paid by the plaintiff, executed and delivered to the plaintiff a mercantile open stock burglary policy. This policy was to be effective from November 8, 1949, to November 8, 1952. It was originally issued in the amount of $5,000; by a rider, dated May 19, 1950, the amount of insurance was increased to $7,500.

The policy recites that the defendant had made this insurance agreement "in consideration of the payment of the premium and in reliance upon the statements in the Declarations and subject to the limits of liability, exclusions, conditions and other terms of this policy."

Declaration No. 9 in this policy reads as follows:

    "Premises are equipped with a Chicago Mercantile
  Police Alarm, burglar alarm system, which will be
  maintained and kept in proper working order when
  premises are not open for business, while this
  policy is in force. Keys to the premises are not in
  possession of the alarm company. Such alarm system is
  classified by Underwriters Laboratories as follows:
  Class A installation 3, Certificate No. 603,306,
  8-16-49, expires 8-16-52, such alarm system is
  connected with an outside, central station or with an
  alarm gong on the outside of the premises — gong
  alarm."

The italicized items of this Declaration were filled in after the necessary information was obtained from the insured; the balance is a printed part of the contract of insurance.

Under exclusions, this policy provides that

  "the company shall not be liable for loss or damage;
  (d) contributed to by any change in the difference of
  the risk; (f) occurring while the protection or
  services promised in items 8 or 9 of the declarations
  is not maintained."

Paragraph 15 of the policy conditions reads as follows:

On May 27, 1950, the American Casualty Company for a premium of $322.50, paid by the plaintiff, executed and delivered a standard mercantile open stock burglary policy to the plaintiff. This policy, issued in the amount of $7,500, was to be effective from May 27, 1950, to May 27, 1953.

Item 10 of the Declarations reads as follows:

    "The A.W. Fruh and Co. burglar alarm system is
  maintained and will be kept in proper working order
  and connected at all times when the premises are not
  open for business while this policy is in force. Such
  alarm system is classified by Underwriters'
  Laboratories, Inc., as follows: Class A
  Installation 3 Certificate No. 603,306 issued
  August 16th, 1949, expiring August 16th, 1952,
  and protects:
  "(a) completely all windows, doors, transoms,
  skylights and other openings leading from the
  premises, and all ceilings, floors, and hall, party,
  partition and building walls enclosing the premises,
  except building walls which are exposed to street or
  public highway and except for that part of any
  building ...

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