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Gregory's Continental Coiffures & Boutique Inc. v. St. Paul Fire & Marine Insurance Co.

decided: June 25, 1976.

GREGORY'S CONTINENTAL COIFFURES & BOUTIQUE, INC., PLAINTIFF-APPELLEE,
v.
ST. PAUL FIRE & MARINE INSURANCE COMPANY, DEFENDANT-APPELLANT



Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 72-C-2891 ALFRED Y. KIRKLAND, Judge

Sprecher, Circuit Judge, Hastings, Senior Circuit Judge, and Markey, Court of Customs and Patent Appeals.*fn*

Author: Markey

MARKEY, Chief Judge, Court of Customs and Patent Appeals.

BACKGROUND

Gregory's Continental Coiffures & Boutique, Inc. (the Insured) brought this diversity action in the district court to recover, on a policy of insurance issued by the St. Paul Fire & Marine Insurance Company (the Company), for damage to its business premises. The damage occurred on April 11, 1972, from a fire of incendiary origin.

As separate and alternative defenses, the Company sought to prove, inter alia, that the Insured, through its officers and agents, caused the fire, and that the Insured fraudulently over-valued the amount of the loss under oath executed by Mr. George Xilas, owner and president of the Insured. Both defenses were withdrawn from the jury; a verdict was directed in favor of the Insured, and the case was submitted to the jury on the sole issue of damages, which the jury assessed in the amount of $83,000.00. The Company appeals. We reverse.

The Arson Defense The Drums

There was testimony by several officers of the Chicago Fire Department that upon their arrival at the business premises, a beauty salon and boutique, after the fire and during the early morning hours of April 11, 1972, they found the remains of five plastic drums in the shampoo room. The liquid residue within those drums established that they had contained gasoline.

Mr. John Morgan, the police bomb and arson investigator, testified that he examined the drums and found the name of the manufacturer printed on the bottom. The manufacturer, the Kirkle Company located in Hastings, Nebraska, was contacted, and the local distributor was identified as the American Plastics Container Company. Mr. Mario Tanzi, an employee of the distributing company, was identified, and the drums were further traced to the Home Freight Lines Company where a Mr. Larry Riley was interviewed.

Tanzi testified that his company had purchased some fifteen-gallon drums from Kirkle to service an order placed by an individual who had come into Tanzi's office and who had identified himself as "Mr. Mavros." The invoice for the eight drums that were sold was identified. The shape of the drums was identified.

Tanzi identified Xilas as the "Mr. Mavros" who purchased the drums and who also appeared on a second occasion to pick up the drums. Tanzi said he directed Xilas to to the trucking firm where the drums could be picked up. Riley testified that two individuals picked up the drums and that one of those individuals was Xilas, whom he identified.

Xilas testified that he knew a Mr. Mavros, that they had first met sometime before New Year's Eve of the year 1972. He also testified that he and Mavros had purchased some plastic drums sometime before April of 1972, for the purpose of use in a Xilas-Mavros business venture involving the shipping of shampoo to Greece.

Mavros, however, was never produced at the trial. Despite an alleged close personal and professional relationship between the two men, Xilas testified that he never saw Mavros again after they picked up the drums. The Company alleged that it had made unsuccessful efforts to locate Mavros.

On cross-examination, Xilas was unable to deny that the drums he had purchased were the same drums that were ...


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