Wells Whip Co. v. Tanners Mutual Fire Insurance

Opinion by

Mb. Justice Thompson,

The main element in determining the value of the property destroyed by the fire for which appellant Under its policy became liable to pay appellee, in consequence of a-total loss, was the percentage representing what is known as gross profits to be deducted from the book or sales valuation of the manufactured goods taken from the factory during the year just previous to the fire. Appellee’s factory was destroyed by fire on November 15, 1901, and the result of the fire was the total destruction of it and its contents. Appellee on November 30, 1900, made an inventory containing the value of the goods that were then in the factory and its aggregate was $47,848.17. Between such date and that of the fire there went into the factory for materials and other charges the sum of $95,524.33. Thus in the factory the total valuation of the property represented as being there within the period specified was an aggregate of $140,373.93. But during such period the product manufactured there, after deducting discounts, returns and allowances, represented a book or sales valuation of $136,350.55. In such valuation however was included what is designated “ gross profits,” gross profits being the difference between the sum named and certain costs and expenses of production, the actual net profits being such profits as finally remain after deducting all costs and incidental charges and expenses of every kind and description. Therefore in order to ascertain the value of the goods taken from the factory during the year of the fire and represented in such manufactured product it became necessary to deduct the percentage that represented the gross profits from the book valuation of sales, and so deducting, the residue left, together with the aggregate represented by the inventory as being there at the commencement of the year, would indicate the value of the property destroyed by the fire.

The appellee contended that such percentage was thirty-three and one third per cent and amounted to the sum of $45,450.18. That with this deduction from the book or sales valuation, to wit: $136,350.55, there was thus shown that $90,900.37 was the actual amount of material, etc., taken out of the factory during the year of the fire and represented by the manufactured product. That deducting this latter sum from the aggregate of $140,373.93 which represented valuation which had gone into the factory up to the date of the fire, the residue represented the actual valuation there at the time of the fire, to wit: $49,472.13, and allowing a deduction from this of three per cent for depreciation, etc., the actual value became $47,988.55, and therefore the property destroyed by fire was $47,988.55, The aggregate of appellee’s insurance in different companies was $44,238.18, a sum somewhat less than the above loss and consequently appellee’s claim for loss was the sum above indicated, and such being the case it was entitled to recover in this action the full amount of its policy.

Appellant’s contention was that appellee’s proofs in support of such claim were not sufficient to establish it and was directed especially to the quality of the proofs relating to the inventory and to the percentage of gross profits. The evidence does not warrant the conclusion that there was any bad faith shown or any misrepresentation made by the appellee. Soon after the fire an expert accountant representing the insurance companies, including appellant’s representative met the officers of the appellee, and made a careful examination with them for the purpose of ascertaining the extent of the loss occasioned by the fire. He states that appellee furnished him with such books, papers and accounts as had not been destroyed and that he examined them and they were sufficient for him to make up a statement of the loss. His figures representing the amount of the loss were substantially the same as those of appellee except the amount to be deducted for percentage to represent gross profits. If he had made the deduction of thirty-three and one third per cent as claimed by appellee they would have been substantially the same. The extent of the loss by fire therefore practically turned upon such percentage. If the same was a smaller percentage, that would indicate a larger amount of materials taken out during the year, but if the percentage was larger that would represent a smaller amount of goods taken out as represented in the manufactured product, and therefore a larger amount on hand at the time of the fire. Appellant claimed that such percentage should not exceed twenty-six per cent while appellee contended that it was in fact not less than thirty-three and one third per cent. The secretary of the company testified that he had been twenty-two years in the business and that he knew that' the value of the goods in the factory in November, 1901, was $47,988.55. He testified that he had personal knowledge of it derived from the books of the appellee and from an inventory made by the company at that date. That he had such knowledge from his bookkeepers and clerks who assisted him in keeping the books that were entirely under his control. That when the inventory was made that he and the treasurer and manager of the company verified the figures and were satisfied they were correct and he positively testified that the amount of goods were in the factory as represented by the inventory. It is evident from his own knowledge and from that based upon the books under his control and from that possessed at the time the inventory was made, he was competent to testify to the value of the property destroyed. Certainly while testifying he would have been warranted in refreshing his memory by a reference to the inventory made up under his supervision and by his direction, as to the accuracy of which there was not the slightest question and so demonstrated upon cross-examination. Appellant’s objection that this proof was secondary, because the men who actually counted the articles and weighed the materials were not called lacked substance, for the reason that the inventory was made under the directions of the witness and was duly verified by him. It accordingly represented the value of the goods on hand at the date in question and it was clearly made for that distinctive purpose only. With the inventory before him to refresh his memory, with his personal knowledge that the figures therein contained were true, his evidence as to the value of the property was competent aiid the accuracy and truthfulness of it were for the determination of the jury.

With goods to the value as testified by him as being there at that time and with the subsequent value added during the year, there was a total representing a sum of $140,373.10, but there was represented in the manufactured product as taken out of the factory during the year, a book or sales valuation amounting to $136,350 55, but in order to reach the exact amount of materials, etc., so taken out of the factory, and represented in the manufactured product, the percentage < f gross profits must necessarily be deducted. Because in the year previous to the fire the percentage was twenty-six and a fraction per cent, such percentage was relied upon by the appellant as the proper basis for the year of the fire, but appellee’s witnesses testified that the percentage of gross profits was larger during the year in which the fire occurred, because during the year previous the prices were cut the greater part of the year, and during the year of the fire, there was a fixed basis for them, and salesmen were not allowed to sell below that price and orders were not accepted below a certain price; that there was an organization known as the Whip Manufacturers’ Association which fixed the prices and appellee was not allowed to sell for less; that it made a minimum selling price and appellee made its own maximum selling price; that this minimum selling price was in excess of the price of the year before; that the year preceding the fire there was quite a portion of the year where orders were filled at low prices, owing to the fact that customers had placed their orders in anticipation of. this advance.

Accordingly appellee’s witnesses testified that the percentage to be deducted was thirty-three and one third per cent. The question therefore upon the proofs was one of fact for the jury and the learned trial judge so left it. The evidence warranted its submission to them and a refusal to do so would clearly have been error. The jury having found that the percentage established by the proofs was thirty-three and one third per cent, the appellee was entitled to a verdict for the full amount of its policy.

The policy contained the usual covenant in regard to an examination under oath, production of books of account, bills, vouchers, invoices and certified copies at a place designated by the insurers. Prior to the trial appellant made no request for the performance of these conditions and hence it follows that no question could have been successfully raised as to the right to bring the present suit in consequence of the neglect or refusal of appellee to comply with a request to perform these conditions when made by appellant. When there has been a neglect or refusal to compty with such conditions, they being made an essential to the right to sue, such refusal or neglect has operated to defeat recovery, but in the present case no such question of right to sue can be raised. After suit was brought and before trial the usual notice was served upon appellee to produce upon such trial stock books and sales books, also bills for goods purchased by the appellee during 1900 and 1901. The original bills and invoices were destroyed. • Appellee entered in its merchandise account simply the amounts of purchases without the names of the vendors and such duplicates as they had were submitted to the accountant. The learned trial judge very properly ruled that the call had been complied with and that it did not apply to duplicates. There was no refusal or neglect in the first instance such as would operate to defeat the right of recovery and there was none in the second instance that could in any manner affect the same.

In view of the conclusion that there was no substantial error in the ruling of the learned trial judge in regard to the main questions involved it becomes unnecessary to discuss the subordinate assignments of error.

The assignments of error are not sustained and the judgment is affirmed.