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COMMONWEALTH INS. CO. OF N.Y. v. O. HENRY TENT

May 27, 1960

COMMONWEALTH INSURANCE COMPANY OF NEW YORK, A CORPORATION, THE CONTINENTAL INSURANCE COMPANY, A CORPORATION, MILWAUKEE INSURANCE COMPANY OF MILWAUKEE, WISCONSIN, A CORPORATION, UNITED STATES FIRE INSURANCE COMPANY, A CORPORATION, PLAINTIFFS,
v.
O. HENRY TENT & AWNING COMPANY, A CORPORATION, DEFENDANT.



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

In this proceeding for a declaratory judgment, plaintiff insurance companies ask for a determination as to the extent of their liability to defendant on a fire loss under certain policies of insurance. Plaintiffs contended that defendant had not complied with the provisions of a "Value Reporting Clause" contained in each of the policies, and that their liability should not exceed the sum of $14,360.76. Defendant, however, counterclaimed for a larger sum.

Having heard and considered the evidence herein, the court finds the facts and states the conclusions of law as follows:

Findings of Fact

1.  This is a proceeding for a declaratory judgment brought
by plaintiff insurance companies, praying that this Court
adjudge and decree that:

A. That the liability of The Commonwealth Insurance Company of New York under its policy of insurance No. 720562 to the defendant, O. Henry Tent & Awning Company, is limited to and cannot exceed the sum of $2,154.11, that is 15% of the sum of $14,360.76;

C. That the liability of the Milwaukee Insurance Company of Milwaukee, Wisconsin under its policy of insurance No. 98633 to the defendant, O. Henry Tent & Awning Company, is limited to and cannot exceed the sum of $5,026.27, that is 35% of the sum of $14,360.76;

D. That the liability of the United States Fire Insurance Company under its policy of insurance No. 793365 to the defendant, O. Henry Tent & Awning Company, is limited to and cannot exceed the sum of $5,026.27, that is 35% of the sum of $14,360.76, and for such other and further relief as the Court may deem proper, and that plaintiffs may recover their costs.

2.  That defendant, O. Henry Tent & Awning Company, a
corporation of Illinois, has filed its counter-claim herein
against the plaintiffs, praying judgment against the several
plaintiffs in the amounts as follows:
A. The Commonwealth Insurance Company    - $4,828.24;
B. The Continental Insurance Company     -   4,828.24;
C. Milwaukee Insurance Company           -  11,265.90;
D. United States Fire Insurance Company  -  11,265.91;
                                           -----------
                                  Total  - $32,188.29,

and in addition thereto, interest on such sums of money for plaintiffs' vexatious failure and refusal to pay defendant's loss without reasonable cause, and costs and reasonable attorney's fees as provided by statute.

3.  Each of the plaintiffs is, and has been continuously
since prior to the date of filing of this suit, a citizen of
and incorporated in the State hereinafter set out after the
name of each corporation, namely:
Citizen of and State
Plaintiff                               of Incorporation
---------                             --------------------
The Commonwealth Insurance Company
of New York                                 New York
The Continental Insurance Company           New York
Milwaukee Insurance Company of
Milwaukee, Wisconsin                        Wisconsin
United States Fire Insurance Company        New York
4.  O. Henry Tent & Awning Company, a corporation, the
defendant, is and has been continuously since prior to the
date of filing of this suit, an Illinois corporation and
citizen of Illinois.
5.  The amount in controversy between each of the plaintiffs
and the defendant herein is in excess of the sum of $3,000,
exclusive of costs and interest.
6.  From 1940 to the present date, defendant has been
insured under policies of insurance containing a "Value
Reporting Clause". From 1940 through 1949 plaintiff, The
Continental Insurance Company, carried defendant's entire risk
at various locations under the foregoing type of fire
insurance coverage; from 1949 through 1953 The Continental
Insurance Company carried 50% of the risk; Milwaukee Insurance
Company of Milwaukee, Wisconsin (formerly Milwaukee Mechanics
Insurance Company), carried 25% of the risk; and plaintiff
United States Fire Insurance Company

carried 25% of the risk. From 1953 through March 31, 1956
plaintiffs were the sole carriers on this particular type of
fire insurance policy, the Value Reporting Policies, affording
coverage to defendant at various locations.
7.  On March 31, 1955, each of the plaintiffs issued to the
defendant Illinois Standard Policy of Fire Insurance with Form
No. 111 Ed. (June, 1953), "Multiple Location Reporting Form A,
Monthly Average, With Premium Adjustment" attached thereto for
a period of one year covering stock, materials and supplies
owned by the defendant while located at 3222-24 North Halsted
Street, Chicago, Illinois, with a total limit of liability in
the sum of $50,000 as follows:
% of Limit of
Policy No.  Company                                Liability
----------  -------                              -------------
720562      Commonwealth Insurance Company              15%
42328       Continental Insurance Company               15%
98633       Milwaukee Insurance Company                 35%
793365      United States Fire Insurance Company        35%
8.  That the policies of insurance involved herein and in
effect on March 28, 1956 (the date on which defendant and
counter-plaintiff suffered its fire loss), insured the
following locations, the limits of liability under such
policies being to wit:
Nos. 4862-4864 North Clark Street    $120,000.00
Nos. 4852-4856 North Clark Street      20,000.00
Nos. 3222-3226 North Halsted Street    50,000.00
                                     ------------
Chicago, Illinois - Total Insurance  $190,000.00.
                                     ============
9.  Each policy of insurance issued to defendant contained
the following provision:
    "Value Reporting Clause — It is a condition of
  this policy that the Insured shall report in
  writing to this Company not later than thirty (30)
  days after the last day of each calendar month, the
  exact location of all property covered hereunder,
  the total actual cash value of such property at
  each location and all specific insurance in force
  at each of such locations on the last day of each
  calendar month. At the time of any loss, if the
  Insured has failed to file with this Company
  reports of values as above required, this policy,
  subject otherwise to all its terms and conditions,
  shall cover only at the locations and for not more
  than the amounts included in the last report of
  values less the amount of specific insurance
  reported, if any, filed prior to the loss, and
  further, if such delinquent report is the first
  report of values herein required to be filed, this
  policy shall cover only at the respective locations
  specifically named herein and for not exceeding 75%
  of the applicable limit of liability of this
  Company specified in the Limit of Liabilities
  Clause."

The policies of insurance issued by the plaintiff companies for the policy period, insuring the defendant against the perils therein set forth, also contained a "Full Reporting Clause", or sometimes known as the "Honesty Clause". This cause is not concerned with such provision of the policy, in that the plaintiffs for their cause of action rely solely upon the defendant's alleged failure to comply with the "Value Reporting Clause".

11. All "Value Reports" required to be submitted by defendant to the plaintiff companies were signed by Albert Swanson & Son. Albert Swanson & Son from time to time inquired of defendant the value of goods stored at the various locations covered by the insurance policies; that such inquiries were sometimes made each month or sometimes each second or third month; that upon receipt of such information, it made and filed Value Reports with H. Dalmar & Company of Chicago, Illinois, agent of The Commonwealth Insurance Company of New York, and The Continental Insurance Company, and directly with the Milwaukee Insurance Company of Milwaukee, Wisconsin, and United States Fire Insurance ...


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