Maier Brewing Co. v. Pacific National Fire Insurance

Defendant appeals from a final judgment decreeing reformation of a fire insurance policy issued to plaintiff, and further decreeing that plaintiff recover from defendant certain sums representing the loss sustained by the subject fire plus interest from July 26, 1957 (the date on which defendant formally denied liability under the policy). The amount of loss was determined by the trial court at a hearing subsequent to the entry of the interlocutory judgment, which ordered reformation of the policy, and upon remand by this court following dismissal of defendant's attempted appeal from such interlocutory judgment. ( 194 Cal.App.2d 494 [ 15 Cal.Rptr. 177 ].) Despite the dismissal of the prior appeal, and the parties having so stipulated, we have also undertaken to consider the several points therein briefed and argued which are adopted in the present proceeding by reference; they relate, of course, to the issue whether the evidence justified a reformation of the policy in the first instance.

The background facts are summarized in the opinion on the prior appeal. ( 194 Cal.App.2d 494 , 495 [ 15 Cal.Rptr. 177 ]); “Maier owned and operated a brewery in Los Angeles. The buildings and equipment were insured against loss by fire by two policies issued by Home Fire and Marine Insurance Company, one effective December 8, 1952, to December 8, 1955, and the other effective January 22, 1953, to January 22, 1956, and a third policy issued by Union Insurance Society effective January 13, 1953, to January 13, 1956. Maier's property included a large lot known as the Gas Company property on which it stored equipment of the value of $318,000. The Home policies covered the equipment on the Gas Company property.

“About October 19, 1955, Pacific National, through Behrendt-Levy Insurance Agency, issued to Maier a fire insurance policy effective for a term of five years from December 8, 1955, to replace the Home and Union Policies. As the coverage under the Home and Union Policies did not expire on the same date, endorsements were included on the Pacific National policy increasing the coverage afforded to replace the coverage of the old policies as they expired. The Pacific National policy, as written, did not cover the equipment on the Gas Company property.

Notwithstanding defendant’s extensive critique, we are of the view that plaintiff has brought itself within the principle of law codified by section 3399, Civil Code, that under specified conditions a written contract which does not truly express “the intention of the parties” may be revised so as to set forth “that intention.” As pointed out in Bailard v. Marden, 36 Cal.2d 703 , 708 [ 227 P.2d 10 ], this language refers to “a single intention which is entertained by both parties.” Measured by the objective standard mentioned earlier, the basic question at bar is whether there is any substantial evidence to support the determination below that both parties mutually intended that the Gas Company property be covered by defendant’s policy. Defendant, unquestionably, is arguing that the Alef-De La Soto meetings were

Then there is Alef’s testimony that the prior endorsements (covering the Gas Company property) were in the envelopes handed to De La Soto. Despite asserted contradictions, it was the trial court’s province to consider them in such manner as it deemed proper; the testimony in question, unless obviously false or inherently improbable (which it is not), is accordingly not subject to review on appeal. The prior endorsements contained the following language: “It is understood and agreed that this policy is extended to cover' equipment while located under tarpaulins at the stable yard located at Commercial and Daly Streets and that other equipment is located on the Gas Company property now owned by the Maier Brewing Company near Macy Street, Los Angeles, Calif.” (Italics added.) Of interest is the fact that when defendant’s policy was issued, reference was therein made to the “stable yard” location but not to the Gas Company property. Plaintiff properly contends that the latter area was omitted by in» advertence, and the trial court expressly so. found,

As a further ground for the proposition that the judgment is lacking in evidentiary support, defendant contends that plaintiff was guilty of negligence as a matter of law. Reference is made to testimony that Maier failed to show or mention the Gas Company property to Behrendt-Levy at the time the premises were physically inspected prior to the issuance of the new policy; that Maier signed and verified an “application for average rate and statement of values” for rating purposes wherein no mention was made of the Gas Company property; that Maier failed to physically attach the prior endorsements (covering the property in question) to the existing policies and failed to read or examine the new policy until some time after the fire which occurred 18 months later. Defendant cites Taff v. Atlas Assur. Co., 58 Cal.App.2d 696 [ 137 P.2d 483 ], which declares that the policy holder must offer some explanation or excuse for his failure to read his policy and further declares that the greater plaintiff’s experience and intelligence, the more convincing must be his excuse or explanation. But the cited case also holds, as defendant itself has noted, that the trial court must determine under all circumstances whether the policy holder has exercised the ordinary care which the law requires. This is the situation at bar, and the trial court made a determination adverse to defendant’s contentions. Without going into a detailed discussion thereof, there was testimony tending to negative the several claims of negligence on plaintiff’s part; indeed, if the endorsements (as we must assume) were turned over to defendant’s agent, the latter might have exercised a greater degree of care in cheeking the full extent of Maier’s holdings. As for the point that plaintiff failed to read its policy, “The rule is settled in this state ‘that the mere failure to read an insurance policy does not militate against its reformation upon the. ground of mutual mistake.’ [Citation.]” (National Auto. & Cas. Ins. Co. v. Industrial Acc. Com., 34 Cal. 2d 20 , 26 [ 206 P.2d 841 ].)

As its next ground' of appeal, defendant contends that statements made by Behrendt-Levy personnel after the fire were erroneously received because (1) they were not within the scope of the agents’ authority and (2) they were merely con

Subsequently, in Bank of America v. Granger, 115 Cal.App. 210 , 220 [ 1 P.2d 479 ], it was held that the trial court improperly excluded evidence of one party’s intention at the time of the contract’s execution: “While the witness Granger was being examined by the plaintiff he was asked: ‘ What was your intention with respect to the name of the bank to which

Although defendant has endeavored to distinguish the above cases, there is this further authority for the admission of the agents’ statements, at least those of De La Soto. Section 289, Restatement Second of Agency, declares: “Evidence of statements of agents, whether or not such statements are authorized, is admissible in favor of and against the principal, if admissible under the general rules of evidence as to the admissibility of such statements by persons not agents.” Comment c to section 289 reads: “Statements of state of mind. Evidence of statements by an agent introduced in order to show the purpose for which he did an act or to show his knowledge or state of mind is admissible in favor of and against the principal under the rules relating to the introduction of evidence for this purpose. Statements by an agent are not excluded because made by an agent. If his knowledge or condition of mind or purpose is relevant to the cause of action which is being brought, either party can introduce evidence relevant to show this. ...”

Defendant’s final contention challenges the award of interest. The following facts are pertinent to a determination of this question: By letter dated July 26, 1957, defendant denied any liability under its policy; this letter followed plaintiff’s notice to defendant of the fire loss and a subsequent investigation conducted by defendant. Defendant having denied liability for the loss, the trial court found (at the time reformation was decreed) that the actual cash value or am mint, of the loss had not been agreed to pursuant to the provisions of the policy. At the further hearing on the issue of damages, following defendant’s attempted appeal from the interlocutory judgment, plaintiff introduced into evidence a report prepared by Mr. Mat Graham, a qualified appraiser, dealing with the amount of loss sustained. Dated September 19, 1957, this report was received without objection on the

Shortly prior to the hearing, it further appears, defendant’s counsel asked that plaintiff file a proof of loss as part of the procedure for ascertaining the amount thereof; the requested instrument was duly executed, returned to counsel and later received in evidence. Therein reference is made to the Graham report, and the amount claimed is Graham’s determination of the loss plus interest. At the time the proof of loss was offered in evidence, defendant’s counsel stated: “I will make this statement, as I told Mr. Loomis, we are not making any claim that either failure to file proof of loss or late filing of proof of loss bars plaintiff’s right to recover in this case. The only purpose of my offer: we feel it may bear on the question of interest.”

Finally, there was evidence that in 1957 plaintiff caused a proof of loss to be filled out. When given to an adjuster from defendant company, he refused to accept it; he stated at the time that he did not recognize that plaintiff was insured against the loss sustained.

The governing law, as both parties point out, is found in section 3287 of the Civil Code: “Every person who is entitled to recover damages certain, or capable of being made certain by calculation, and the right to recover which is vested in him upon a particular day, is entitled also to recover interest thereon from that day, except during such time as the debtor is prevented by law, or by the act of the creditor from paying the debt.” It is first contended by defendant that since the loss under the subject policy was not payable until at least 60 days after filing of proof of loss and since such proof of loss was not filed by the plaintiff until 60 days before entry of the final judgment, said judgment should not have included an allowance of interest. But this contention ignores the well-recognized rule that “the insurer may not repudiate the policy, deny all liability, and at the same time be permitted to stand on a provision inserted in the policy for its benefit.” (Grant v. Sun Indemnity Co., 11 Cal.2d 438 , 440 [ 80 P.2d 996 ].) In a ease not inapposite factually from that at bar, this court quoted the above statement in Grant and concluded that “Under these facts, Chase was entitled to interest at the legal rate to be calculated from the date when the companies should have made payment under their policies, which

Defendant also contends that plaintiff’s claim was unliquidated and accordingly any interest prior to judgment is not allowable. It argues that “Interest has relation to an ascertained principal sum” ( Morris v. Standard Oil Co., 192 Cal. 343 , 356 [ 219 P. 998 , 30 A.L.R. 103 ]); therefore, if the person liable does not know the sum he owes and therefore can be in no default in not paying, interest should not be allowed. (Curtin v. State, 61 Cal.App. 377 [ 214 P. 1030 ].) But section 3287, supra, plainly provides that interest runs not only on claims “certain” but “capable of being made certain by calculation." In Koyer v. Detroit F. & M. Ins. Co., 9 Cal.2d 336 , 345 [ 70 P.2d 927 ], the court declared: “ ‘It would seem to admit of no doubt that an ordinary fire or earthquake loss is adjusted by calculation, whether it be a total or a partial loss. Preliminary proofs of loss are calculations of the loss, as are also the estimates of appraisers, and these are the methods of adjustment contemplated by the parties and stipulated in the policies. Resort may be had to court action only in the event the calculations of the parties or those of their appraisers are not in agreement. ’ ” In the present case the report of Mr. Graham, whose qualifications as an appraiser were stipulated to by defendant, was dated less than 90 days after the fire; it was received in evidence without objection and without any apparent question as to the determination therein reached. We are satisfied that the procedures suggested in Koyer were followed in the case at bar and that plaintiff’s claim was made certain by the appraiser who undertook to make the necessary calculations.

The judgment appealed from, denominated “Final judgment for payment of money, ’ ’ is affirmed.

Wood, P. J., and Fourt, J., concurred.

A petition for a rehearing was denied August 29, 1963, and appellant’s petition for a hearing by the Supreme Court was denied October 1, 1963.