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The affidavits on behalf of the appellant are to the effect that no such representations were made, and, further that if made they were substantially true, the affidavit of Emerick being to the effect that while the gross profits from the sale of the brushes stamped “W. W. Adams & Co.," were as stated in his testimony before the master $4,191.65; that the net profits of the appellant during the two years and more that they were engaged in selling the brushes, from all brushes sold by it, were $466.25, which amount includes the sale of brushes of other kinds, and not stamped “W. W. Adams & Co.” The affidavits filed on behalf of the appellant also tended to show that the defendants composing the corporation called “W. W. Adams & Co.” in the negotiations leading up to the stipulation, insisted that they were not guilty of the frauds alleged against them in the bill, and had the right to sell the brushes they did sell, but represented that they were poor, and but starting in business, and could not afford to enter into costly litigation, and that those considerations induced them to enter into the stipulation in question. We do not find it necessary to determine those conflicting questions of fact; for the stipulation was, as a matter of fact, entered into, pursuant to the provisions of which the appellant failed to enter its appearance to the suit, by reason of which default a decree was passed without contest for the complainant. Nor is it denied on the part of the appellees that, pursuant to the provisions of the stipulation, the appellant procured its corporate name to be changed from "W. W. Adams & Co.” to “Emerick & Duncan Company,” not only necessarily involving the appellant in expense, but an act deemed by the appellees valuable to them, and which they could not have compelled by their suit; and, further, that the appellant removed from the brushes in their possession the name “Adams” in a manner satisfactory to the appellees, furnished the appellees with a list of its customers to whom it had sold brushes, and a list of the manufacturers from whom it bought the brushes. It is insisted on the part of the appellees that the latter list was incomplete in that it did not give the names of the manufacturers who placed the objectionable stamp on the brushes. The stipulation in that regard is this:
“The defendant corporation will furnish to the complainants a true list of the names and addresses of all the manufacturers of the brushes heretofore bought by it, and of all its customers for brushes heretofore sold by it.”
Obviously there is nothing in this language requiring the appellant to furnish the appellees with the names of the manufacturers who stamped the brushes. Assuming that it was the intention of the parties that the stipulation should have so provided, and that the appellees' counsel, who, it appears, drafted the stipulation, omitted such a provision by mistake or through inadvertence, it affords no justification to the court on this appeal, or to the court below on the motion made to it, to read into the instrument an agreement not there found. We have, then, a stipulation of the parties, pursuant to which the appellant confessed the averments of the bill by failing to enter an appearance thereto, and pursuant to which it performed other conditions of the stipulation, all of which involved more or less
cost and trouble, and some of which could not have been compelled by any decree that could have been rendered in the case, upon which stipulation alone the appellees procured their decree against the appellant. Procuring, as they did, that decree upon and by virtue of the stipulation, the appellees, without restoring or offering to restore what they had received thereunder, asked the court below to relieve them from doing the one and only thing they agreed to do as a consideration for those benefits, namely, their obligation to satisfy the judgment in so far as it awarded them damages, profits, and costs. And the court below, by its final decree here appealed from, gave them that relief.
It is a fundamental principle of equity that one party to an agreement, by whatever name called, whether contract, stipulation, or anything else, cannot be relieved of its burdens while holding on to its benefits. That is exactly what the appellees sought to do, and what they were permitted to do by the court below. They did not offer to put the appellant in statu quo, even to the extent that it was possible to do so; they did not offer to permit the appellant's default to be set aside and the interlocutory decree to be vacated, to the end that the appellant might, if it elected to do so, contest the suit on the merits; but, holding on to the substantial advantages secured by virtue of the stipulation, they asked to be, and were, by the judgment appealed from, relieved of the one and only obligation they agreed to perform as a consideration for the benefits thus received.
In this there was manifest error, for which the judgment appealed from must be, and is, reversed, with instructions to strike out that portion thereof providing “that the complainants *
* be not required to enter satisfaction of this decree, as provided by the sixth clause of the stipulation filed herein upon the 3d day of December, 1904."
KENTUCKY VERMILLION MINING & CONCENTRATING CO. V. NOR
WICH UNION FIRE INS. SOC.
(Circuit Court of Appeals, Ninth Circuit. June 19, 1906.)
1. EVIDENCE-PAROL EVIDENCE-INSURANCE POLICY-TERMS.
A policy on a concentrating plant warranted that at all times when the property should be idle a constant day and night watchman should be kept on duty, and declared that the assured was “privileged to make alterations, additions and repairs incidental to the business, to remain idle subject to the conditions of the watchman's clause." Held, that the term “watchman's clause" was neither indefinite nor uncertain, and that parol evidence was therefore inadmissible to show that such term had a well-defined and understood meaning by custom and usage in the insurance business, together with what such meaning was.
[Ed. Note.-For cases in point, see vol. 20, Cent. Dig. Evidence, $ 2104.] 2. INSURANCE-VACANCY PROVISION_REASONABLENESS.
A provision of a fire policy that if the property be idle or shut down for more than 30 days at any one time notice must be given to the company, and permission to remain idle for such time must be indorsed on
the policy or it should immediately cease and determine, was not objec tionable for unreasonableness.
[Ed. Note.-For cases in point, see vol. 28, Cent. Dig. Insurance, § 759.] 3. SAME-WAIVER—EVIDENCE.
Where a policy on a concentrating plant provided that it should be void if the property was permitted to remain vacant for more than 30 days at a time without the consent of the insurer indorsed thereon, parol evidence that the insurer had knowledge that the property insured was idle during the life of an immediately preceding policy, and that insurer had made inquiries as to the status of the property, was inadmissible to
show a waiver of such clause. 4. EVIDENCE-PAROL EVIDENCE-PAROL NEGOTIATIONS.
Where a policy was delivered and accepted, all parol negotiations, understandings, and agreements were merged in the written contract, and could not be controlled, modified, or changed by parol.
[Ed. Note.-For cases in point, see vol. 20, Cent. Dig. Evidence,
88 1818-1824.] 5. INSURANCE_CONDITIONS-BREACH-FORFEITURE.
Where insured, the owner of a concentrating plant, permitted the same to remain idle for more than 30 days at one time without obtaining the consent of the insurer, the policy thereby terminated by its express provisions.
[Ed. Note.—For cases in point, see vol. 28, Cent. Dig. Insurance, & 759.] 6. SAME-PREMIUM-RETURN.
Where the premium on a fire policy was paid by insured on delivery of the policy, insurer's failure to return such premium before action brought did not amount to a waiver of its right to forfeit the policy for noncompliance of the insured with the positive terms of the policy.
[Ed. Note.-For cases in point, see vol. 28, Cent. Dig. Insurance,
88 1041-1055.] 7. APPEAL-THEORY OF CAUSE-BURDEN OF PROOF.
A party who with the acquiescence of his adversary assumes the burden of proof of an issue will be held to that position on appeal.
[Ed. Note.—For cases in point, see vol. 2, Cent. Dig. Appeal and Error,
8 1064.] 8. INSURANCE_WARRANTIES-COMPLIANCE BURDEN OF PROOF.
Where insured warranted that, if the property described in the policy should be idle or inoperative, a constant day and night watchman should be kept on duty, the burden of proof, in an action on the policy, that
insured had complied with such provision, was on it. 9. SAME—EVIDENCE.
Where insureñ warranted to keep a night and day watchman on duty whenever the plant should be idle or inoperative, proof of the presence of the watchman for 30 days prior to the date of the fire was insuf
ficient to show a compliance with the warranty. In Error to the Circuit Court of the United States for the Eastern Division of the Eastern District of Washington.
This is an action upon a fire insurance policy to recover for a loss alleged to have been sustained thereunder. The amended complaint, upon which the case was tried, shows that plaintiff, a corporation of the state of Washington, owned certain buildings and machinery situated therein (a concentrating plant) within the state of Montana; that upon May 1, 1902, defendant issued a policy of insurance in the sum of $5,000 against loss by fire thereon, which policy it is alleged was renewed by the issuance of an identical policy, except as to date of commencement and termination of insurance, upon May 1, 1903; that on August 15, 1903, during the life of the latter policy, the buildings and machinery insured were destroyed by fire, causing a loss within
the terms of the policy in the full amount covered thereby. A copy of the policy sued upon was attached to the complaint as an exhibit. Attached to and made a part of the policy was a typewritten slip, which contained the following material provisions : "Privileged to make alteration, additions and repairs incidental to the business, to remain idle subject to the conditions of the watchman's clause, and to use coal oil and electricity for lights. Warranted by assured that the plant will not be operated during the life of this policy except upon notice to this company and the payment of additional premium. Warranted at all times when the property herein described shall be idle or inoperative, a constant day and night watchman shall be kept on duty; and provided that if such property be idle or shut down for more than thirty days at any one time, notice must be given this company and permission to remain idle for such time must be indorsed hereon or this policy shall immediately cease and determine."
In the complaint it is alleged that: “On the 1st day of May, 1902, the property insured by the policy in suit was idle and not in operation, and so continued during all of the time from May 1, 1902, to May 1, 1903, with the knowledge and consent of the defendant, but plaintiff kept a constant day and night watchman on duty in the premises with the knowledge and consent of the defendant. At the time of the issuance of the policy sued upon, and at all time, until the destruction of the property by fire, the property continued idle and inoperative, with the knowledge and consent of the defendant, but plaintiff kept a constant night and day watchman on duty in said premises. It was understood and agreed between plaintiff and defendant, at the time of issuing the policy, that the property might remain idle and inoperative, but in charge of a constant night and day watchman, and that the policy should continue in force and effect .notwithstanding. Both parties to the contract understood, at the time of the issuance of said policy, that to be the true intent and meaning of the policy. Both parties had that understanding throughout the life of the policy, and after the destruction of the property by fire, and until this suit was brought. The provisions of the policy in suit means in insurance circles and amongst insurance men, and is understood to mean, that the insured property may remain idle and inoperative during the life of the policy, if a constant night and day watchman be kept on duty by the insured.” The defendant admitted the issuance of the policy, the loss, and that it was notified thereof; that proper proofs of loss were made out and forwarded it; that the property insured was idle and inoperative when the policy sued on was issued and remained so until the time of the loss. All other allegations save those merely formal were denied. It set up as an affirmative defense that the property insured was, at the time of the fire which caused the loss, and continuously for more than 90 days prior thereto had been, idle and inoperative, and that no notice thereof was given defendant, and no permission to remain idle indorsed upon the policy; that the policy was therefore void, and on May 4, 1904, it had tendered back the premium paid. With the exception of the making of the tender on May 4, .1904, and the remaining idle, the allegations of the affirmative defense were denied by plaintiff's reply. The cause was at issue upon: (1) The meaning in insurance circles and among insurance men of the term "watchman's clause,” as used in the policy sued upon; and (2) if its meaning was other than plaintiff contended, the waiver of that clause by the defendant.
In order to sustain the issue upon its part the plaintiff offered to read in evidence the deposition of John W. Luke, defendant's agent who issued the policies of 1902 and 1903. A question relating to the negotiations regarding the policy of 1902 was objected to, upon the ground that anything connected with the issuance of the policy of 1902 was immaterial in the present action, a suit upon the policy issued in 1903. The objection presented the questions whether evidence was receivable to show the trade meaning of the clause in the policy above quoted, and whether a waiver of the clause could be shown by parol. The objection was sustained. The plaintiff then made sundry offers of proof, which are set out in the assignments of error, which were rejected. The plaintiff then introduced evidence tending to prove that it had kept a constant day and night watchman upon the premises insured during
the life of the policy, and that defendant had not kept its tender good to return the premium, and rested. The defendant declined to offer any evidence, whereupon the plaintiff moved that the jury be instructed to render a verdict in its favor, on the ground that defendant had not kept its tender good. The motion was denied, and the court then directed the jury to return a verdict in favor of the defendant,
Graves & Graves and E. H. Belden, for plaintiff in error. Goodfellow & Eells and Happy & Hindman, for defendant in error. Before GILBERT and ROSS, Circuit Judges, and HAWLEY, District Judge.
HAWLEY, District Judge, after making the foregoing statement, delivered the opinion of the court.
Did the court err in refusing to allow parol evidence to be admitted to explain the meaning of the term "watchman's clause” ?
Plaintiff in error does not claim that evidence of a usage or custom may be received to control or vary the positive stipulations of a written contract, or to contradict them, but its contention is that the phrase "watchman's clause” is a trade term, which has a well-defined and understood meaning by custom and usage in the insurance business, and that the courts in construing the policy must ascertain the meaning of that term in the insurance business in order to arrive at the intention of the contracting parties. It is further claimed by the plaintiff in error, independent of the "question of trade, custom and usage” that the court erred in rejecting plaintiff's offer to prove by parol that the clause "warranted at all times” and concluding with the words “this policy shall immediately cease and determine” is a stock clause placed on all insurance policies issued on the Pacific Coast, while the permission “to remain idle,” subject to the conditions of the “watchman's clause,” was one peculiar to this risk, and only intended to be applied to manufacturing plants which were in operation at the time the policy was issued, and provided for a contingency that might thereafter arise. It further claims that the policy was ambiguous, not only from the language used in the policy, but also from the condition of the parties.
We are of opinion that the court did not err in excluding parol testimony as to the meaning of the term "watchman's clause.” There were no words or phrases used therein which required any parol evidence in order to explain their meaning. The contract was in writing, and was, in its entirety, susceptible of a reasonable construction by the court. The rule is well settled that:
“Where a written contract is susceptible on its face of a plain and unequivocal interpretation, resort cannot be had to evidence of custom or usage to explain its language or qualify its meaning.” Hunt v. Fidelity & C. Co., 99 Fed. 242, 245, 39 C. C. A. 496.
Having "satisfied ourselves that the policy is susceptible of a reasonble construction on its face, without the necessity of resorting to extrinsic aid, we have at the same time established that usage or custom cannot be resorted to for that purpose.” The Insurance Companies v. Wright, 1 Wall. 456, 470, 17 L. Ed. 505.