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American Nat. B. & T. Co. v. Reserve Ins. Co.

OCTOBER 23, 1962.




Appeal from the Municipal Court of Chicago; the Hon. BENJAMIN NELSON, Judge, presiding. Judgment reversed and cause remanded with directions.


Rehearing denied November 20, 1962.

On August 26, 1960 a fire totally destroyed the frame and brick building located at 4028-30 West Taylor Street in Chicago. Plaintiff, American National Bank and Trust Company of Chicago, brought this action as trustee and holder of legal title to the property in question, seeking recovery from defendant of $15,000, the maximum liability on its policy of fire insurance issued to plaintiff. As an affirmative defense to its liability on the policy, defendant alleged that plaintiff had breached a provision in the policy relieving defendant of liability if the insured premises were vacant or unoccupied for a period of sixty consecutive days prior to a fire.

Pursuant to rule 65 of the Practice Act (Ill Rev Stats 1961, c 110), the jury was instructed to render a general verdict accompanied by a special interrogatory on the question of occupancy. After return of a sealed verdict, the jury was apparently discharged, and thereafter it was discovered that the jury had not answered the special interrogatory. Instead, the jury rendered a general verdict for plaintiff of $6000, notwithstanding the agreement of the parties, placed in evidence, that the loss was $15,000, the policy limit. The trial court denied defendant's post-trial motions, and granted plaintiff's motion for a directed verdict in the amount of $15,000, the amount of the loss under the policy limits, as agreed to by the parties. Defendant appeals.

The property was purchased in November 1959 from the Bonner family who had used it for operation of the Bonner Marshall Brick Company. Title was taken in trust by the American National Bank and Trust Company, with the four Zechman brothers and their sister as beneficiaries of the trust. The purchase was made with a view to use of the building as a warehouse for storage of the building supplies of the Garfield Lumber Company, a corporation owned by the Zechmans.

Bernard Zechman, a beneficiary of the land trust and proprietor of the Garfield Lumber Company, testified that although the building contained an office and some office furniture from the time of its ownership by the Bonners, this part of the building was never used by the lumber company which was located only half a block away; that at the time of purchase of the building, the wiring was disconnected and all heating oil removed; that the windows and rear entrance of the building were boarded up to prevent vandalism of which neighbors had complained; and that lumber company employees entered the building through doors at the front of the building which were kept locked when not in use.

The building was insured against fire by defendant in November of 1959, the same month in which the property was purchased from the Bonners. A routine inspection of the risk was made by a representative of defendant one month after the policy was issued.

The only controverted issue of fact presented to the jury was the question of occupancy as posed in the special interrogatory. On this issue, the testimony of the witnesses was conflicting in almost all respects.

Bernard Zechman testified that on the date of the fire the building contained some common brick, about four or five thousand face brick, and about twelve or fifteen bags of mortar, all located in several piles throughout the building, and that this brick remained in the building all day on the day of the fire. Glen Trester, an employee of the Garfield Lumber Company, testified that there was some brick in the building, piled in low piles; he was, however, uncertain as to the quantity of brick, but stated that there was no common brick left in the building on the date of the fire.

Zechman's estimate of the quantity of brick in the building at the time of the fire was strongly controverted by a number of witnesses produced by the defendant. Three fire department employees, two near neighbors of the building, and two representatives of the defendant, all present at or after the fire, testified that they had gone through the building and found no brick or mortar, with the exception of a few scattered, broken brick, and that the only contents of the building were some remnants of office equipment and a few scattered invoices on the letterhead of the Bonner Marshall concern.

There was also conflict in the testimony as to the extent to which the lumber company had used the premises during the sixty-day period prior to the fire. Bernard Zechman testified that he visited the premises several times a week, and that Glen Trester made deliveries to and from the warehouse by truck or handcart. Glen Trester, called as plaintiff's witness, testified that the building was in use as a warehouse, and estimated that he had hauled brick into and out of the building about twelve times during regular working hours in the sixty-day period prior to the fire.

Two neighbors who testified that there was no brick in the building after the fire, stated also that they had seen no movement of goods into or out of the building during this period. One of these neighbors, Patrick Lynch, admitted, however, that his work took him away from the neighborhood during the working hours of the day, and that he wouldn't know what happened while he was away. The other close neighbor of the building, Francis J. Hesser, an ornamental iron contractor whose business and home were within sight of the building, indicated that he was continually at his place of business and had seen nothing moved into or out of the building during the relevant period. He admitted that there were times when he was not present and did not know everything that may have been moved into or out of the building. He also admitted that from March to September of 1960 he had been working on a contracting project in Arlington Heights and during that time had been in Arlington Heights on about twenty occasions for a number of hours of the working day each time.

Shortly after the fire, Ritter and Company, insurance adjusters, were employed by Mr. Zechman to represent the insured in its negotiations with the defendant insurer. Ritter and Company prepared an exhaustive tabulation of the loss, no less than sixteen pages in length which, accompanied by a summary of its contents, was received by the insurer within the sixty-day period after the fire, this being the time in which the insured was required under the policy to submit proofs of loss.

Also within this sixty-day period, Mr. John Hagensick, fire loss manager and general adjuster for the defendant insurer, having inspected the damage on the day of the fire, agreed with a representative of Ritter and Company that the loss equaled or exceeded the policy limits of $15,000. On October 27th, at the time of making an examination under oath of Mr. Bernard Zechman, Mr. Hagensick placed in written form his previous agreement with Mr. Ritter that the loss was $15,000, the limit of the policy. This agreement was written out on the bottom of a non-waiver agreement dated October 5, 1960, which provided that any action taken by the insurer in investigating the claim would not invalidate any ...

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