Petition for Writ of Certiorari — Badger Mutual Insurance v. Serio

FILE COPY |

a 1a: ‘

~ SUPREME COURT OF THE UNIT ED STATES

OCTOBER TERM. 1959.

¥ . we

q ccabinameeneen gaa No xi :

” , /

BADGER MUTUAN. INSURANCE” COMPANY and °

NORTHW ESTERN MUTUAL FIRE ASSOCIATION,

Petitioners, : ae

ia Su ae .

| SAM M SERIO, d 1b a MAGNOLE NING ‘COMPANY, .

Re RpomENt.

*

.

PETITION FOR WRIT. OF CERTIORARI TO THE

UNITED STATES: COURT OF APPEALS FOR:

she THE FIFTH CIRCUIT. . |

t care THos. H. ‘WATKINS,

ELIZABETH HULEN GRAYSON, .

Selee ; 800. Plaza Building,

Jackson, Mississippi,

Counsel for Petitioners.

Watkins & EAGER,: | ie a

600 Plaza Building,

Jackson, Mississippi,

Of Couns@:

——

E. 1. MEeNDENHALL, ing 1108 Oak Street, -Kansas City 6, Mo., HArrson 1-330

nee”

; : gs ~ ra ”

“eageicnne rd :

7 | 4

INDEX a

“Opinions Below ese ee 3 essere

Jurisdiction es see f- iad : 3 -

‘Questions. Presented . ~ een Ua ane et Mimneave Ura 3.

‘Statutes Involved - Se edema eer RASS

Statément Ae a , x 8

. Reasons for Granting the Wri Es cea ie OR

\ ° . ae -: - 4

_ 1. The Gourt. of Appeals 4jelow has rendered a de-

~ cision ‘Conflict withgecisions of all other Courts — S .

of Appeals and of this Court in holding that on

- review of a denial /of a motion under Rule 60(b)-

_(2) the Court of/Appeals not reverse the find-

ings of. fact of Jack of due diligence of the District:

. Judge and vacate the exercise of discretion by the

. District Judge in denying relief because there was

ligence on the part of the movant unless

ding of the District Judge to that effect was

ar nifest abuse of his discretion Stee mas 9

Pie of: Appeals below. has rendered a de-

‘Cision in conflict with decisions of all other Courts

of Appeal if holding-that relief can be granted a |

@lovant under Rule 60(b)(2) where the Movant ce

has not proved that the newly discovered evidence .

would preduce ‘différent results on a new trial.

_ A decision here that the newly discovered evi-. .

dence would produce different results on a new.

trial would be in conflict With: the decisions of

+ + the Supreme Court of Mississippi and of this Court

in that there was a breach of the Iron Safé Clauses

even though the Records “were not destroyed by

oe ¥ oe ;

21

3. The Court. of Appeals below has so far departed

from the accepted and’ usual course of judicial

' proceedings, in a ease involving -an important mat: -

&.

ae

\

|

INDEX ;

Appendix. “A”, Opinion ot the Court of Appeals. for

the Fifth Ciscuit, Dated May 5, 1959

Appendix “B”, Oral Opinion of the Judge of the Dis-

mas

ter of federal law and ‘public. policy, as ‘fo sal

for-an exercise | of this Court's | power of werd ;

sion —

: Conclusien 7 :

Certificate A aie SRE RL ee A ae ED

+ cea

Appendix— . nae

Al

‘trict Court of the United States for the Southern S

ee Jackson Division, Directing |

Judg for Petitioners. -

“Appendix ““C’’, Letter Opinion of the Judge of the

District Court of the United States for the South-”

ern District of Mississippi, Jackson Division, Over-

- ruling Respondent’s Alternate ‘Motion ‘for a.

Judgment. “oti tlacnite the b i atect or for .a

New Trial: : ot

Appendix D”, Letter ‘Opinion Filed June 9, 1958

_ Appendix “E”, Judgment Entered May 5, 1959

Appendix ‘‘F”,: Order. mre Rehearing ‘Entered

— June 4. 1959. ~

TABLE OF Cases

Aetna one & Surety _ V. YeattséC. A. 4, 122 F. 2d

350. .

Anderson v. Pree & a + Ins: Co., Miss. 86

So.2d 303

' Atchisog, Topeka & Santa Fe RR. Co. Vv. Jackson, C.A.

10, 235. F.2d 390

3 t

" Barrington V. Swanson, C. A. 10, .249 F. 2d 640

Feces Fisheries Corp. v. Coe, C.A. D.C., 114 F.2d 462,

“cer. den. 85 L. Ed. 447, 311 U.S. 690- 692 Ghee

“ridour V. Eastern Airlines, _ ee A. DC., 214 F. 2d 207

”

Al2 |

Al] ©

Alg

A20

15

a19

Ag

=

- . a

— . ms ss a = mm:

Cathedrtt Estates v. Taft Realty Corp. C.A. 2, 298 F.2d

id i

ae indians v, Anderecni. CA. 6, 58 F.2d 151° 22

— Chemical Delinting Co. vy. Jackson, C.A. 5, said F2d a

> Pee 22-

Continental Insurance Co. v. itathiidigs 74 Atl. 1073. 24

: Davis v. Yellow Cab Co. of St. Pipe CA. &, 220

F.2d 790: . _- 22

" Dolén vy. State, Neb., 27 N.W. od 264. nme ‘16

Erie’R,.Co. v. Tompkins, "304 U.S. 64, 82 L: Ed. 1188 30

on Ferrell V. Trailmobile, Inc., C.A. 5, 223 F.2d 697 18, ‘29

Fideltiy Union. Trust Co. v. Wield, 85 L- Ed. 109, 311

U.S. 169

; 30

Fisher Studio v. Loew’s, ec. CA. 2, 232, F.2d 1 199. cork ;

den. 1 L Ed; 2d 55, 352. US. 836 22)

Grant County Deposit Bank v. Gheene, 2 200 F.2d 835 £18

Greenspahy v.Seagram, C.A. 2, 186. F.2d 616 — 15,16

Haber v. <Lane, i i Ne ce er

Hamilton v. US, 31. CC a 16

Harris v. Gulf Refining Co. CA. 5, 240 F.2d 2p 15°:

Harris v. Whiteman, C.A. 5, 243 -F:2d 536. 22

Helene Curtis Industries v. Saies Affil: ites, C.A, 2, 233 .

. F.2d 148, cer. den: 1 L. Ed. 2d 80, 352 US, 879° 14

| Hobart v. O’Brien, C.A. 1, 243 F.2d om, Cer. den. 2.’ |.

L. Ed. 2d 42, 355 U.S, 830 : 14

Hill v. Pennsylvania Greyhound Lines, C. A 3, 174 F.2d -

ee | ae . ‘: 14:

.. ° Hutto.v, Kremer, Miss., 76 So.2d 204 | eae 19

Ives v. Sargent, 119 U.S. 652, 30 ly, Ed. 544 | 16

Johnson v. Masonic Bldg. Co., C.A. 5, 138. F.2d 817 —

_ Kansas City Stockyards Co. of Maine vy. Andetsont, _ a

8,199 F2d 9r = re 14:15.

Kansas City Southern ethos Co. v. Cagle, 229: F.2d

12, cer..den. 351 US. 908, 100 L. Ed. 1443. ee 18

Klapprott v: U. S.,.335 U.S. 601, 93°L. Ed. aa ee

6y ° ee)

’ . a

IV ete orp vie INDEX

Lewis’ v. Natwmal Fire, Miss. 101 So. 296° 5° 5

_ Liverpool, ‘London, etc., Ins. Co. V.: Kearney, 180: US. ed

132, 45 L. Ed. 460. Bi,

McLanahun v. Universal, 1 Peters 170, 7 L.Ed, 98 21-227)

: Miller ¢. N. Y. Gentral R. R. Co., C.A. 7, 239 F.2d 10%. -14{ |

Sy ~ Norwich. Unoin:Fire Ins. v. Glasser, C/A. 9, 224 F.2d 385 15 | =

Pekin Warehouse Co. v, Pgrnell’ Co., CA. 8, 242 F.2d.

We 34 ak ae

Phillips V. Emplea i, Mutual Liability Ins. CAS

_ 9, 239 F.2d 79 e | 22

Ramsey v. Curtis, C-A.D.C., 182 F.2d 687. , ee

Redmond v. Marshal, Miss., 137 So. 733 \ Lair: ig

Roberts v. ‘International Harvester, Missi, 179 So, 745; +3

- 180 So. 747 hb a ee 19

Rowlik v. Greenfield, DC.

Royal Insurance Co. v. Easth , |

Sloboden v..True Oil, Cal., 281\P.2d 85° =. * ees

Smith-v. Pacific Mutual Life . Co., CA. 6, 192 F.2d °

248 aa os .

Standard: Ins. Co. v. . Anderton, ‘Mis: |, 86 So.2d 298 26 .

_. Stockhausen v. Oehler, Wis., 211 W. 297 “ ae

Stovall v. Sterling’ Fire, La., ‘1H Sd. 707) paces

Toledo Scale Co. v. Computing Scale Co., 261,U. se 309,° -.

67 L. Ed: 719° al as, 18, 27

Turner v. U. S., C.A. 6,229 F.2d 944 be ae ae ae

.. Union Bleachery v..U.S., C.A. 4, 176 F.2d 517, cer. den,

_ + 339 U.S. 964, 94 L. Ed.’ 1373 eae a Sn 22°

jo OD, Sy. Bronsen, 142 F.2d 3320. ,.g Oe

U.S. YN. Johnson, C.A. 7, 142 F.2d 588; 149, F.2d 31: 327 :

U.S. 106, 90 L. Ed. 562 — “ “16, 17

Van Ostrum v. Staté, Cal., 306 P.2d 44. - : 16> ~

Washington Times Co. vy. Bonner, C.A. D.C.,. 86 Fd

836 ; 15

. * World Fire & Marine Ins. Co. v. a Miss, 191. So.

s cade a : oe 5 +94; 28

: -

ae ‘ ¢

Foes 2.

o hbomx . - Vv

; ne * Texts ans STATUTES. oo Gk ae

Appleton on Insurance, Sec... 3026 ea 24

- Barron & Hol!tzoff’s Federal Practice and Procedure. ;

_ See. 1393 / a 23

Couch “on Insurance, Sec 1036 ,; 24

_ New Title 28, US. Code, Sec. 8072 | PRO

"+ Rule 60 (by. gs eee «5, ¥4, 21,27

. * 4 x * ,

, “ > a é P

"% dae s

s u

. K

: s * ¢

én . Ss @

. |

“. 4

¢

na §

| SUPREME COURT OF THE-UNITED STATES;

H]

eo. . OCTOBER TERM, ’ 1959.

" 7 ee No. . sane ae

2g Dak é. | : _ 3 —_

BADGER MUTUAL INSURANCE COMPANY and

NORTHWESTERN MUTUAL FIRE ASSOCIATION, hg

Me Petitioners, i eee

| _ SAM SERIO, d/b/a MAGNOLIA CANNING COMPANY,

<— ees Respondent. . ape k

: ae : s + é 5 iene

_—

=

co

PETITION. FOR WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR

- ‘THE FIFTH CIRCUIT.

os

Petitioners, Badger Mutual Insurance Company and.

- Northwestern Mutual Fire Association, pray that a Writ.

of Certiorari issue to the United States Court of Appeals

‘for the Fifth Circuit tqaxeview the judgment of that Court

in the above. entitled cause vacating the judgment of the

| -. District Court of the United States for thé Southern District

) of. Mississippi, Jackson Division. ae

: OPINIONS BELOW.

The opinion of the Cotirt of Appeals for the Fifth Cér-

cuit dated May 0, 1959, has now been reported. in 266 F.2d

_ 418..°A copy thereof is attached as Appendix ‘A’. No

opinion was rendered by the Court of Appeals for the Fifth °

Circuit on entering judgment denying Petition for Rehear-

-ing. ,

An oral opinion was rendered by the Judge of the Dis-

trict Court of the United States for the Southern District

of Mississippi, Jackson Division, directing the jury to enter

a verdict fér the, petitioners here.. The opinion was not:

reported, but is incorporated in ‘the certified’ transcript of

the record being filed herewith (R: 565), and a copy is

attached to this Petition as Appendix = Saas

A letter opinian of the Judge of the District Court of

the United States for the Southern Disttict of Mississippi, *

Jackson Division, averruling Respondent’s ‘Alternate Mo-

tion for°a Judgment Notwithstanding the Verdict: or for

a New: Trial was rendered, and was not reported. ®ow-

ever, the same is incorporated ° in the certified transcript

‘of the record heing fileg herewith (R. 583) and a copy is,

; attached to this Petition as Appendix a |

A letter opinion by the Judge of the Distrj Court of

the United States for the ‘Southern District of ississippi,

Jackson Division, overruling the Motion of Respondent here

- to reopen the case under Rule 60(b) (2) was rendered a

_ was not reported. However, the same is incorporated in

certified transcript of the record being filed herewith R

f 632) and a éopy -is attached to this Petition as"Appentix ix

4s ‘1D’. ; FP

-

JURISDICTION.

t

-Thé judgment of the Court of Appeals of the Fi:th

_ Circuit, vacating judgments of the District Court af the

United States for the Southern District. of Mississippi, .

-JacKsqn Division, was entered on May 5, 1959 (R. 649)..

A.Copy of said judgment is attached hereto as Appendix

ae wae i

The judgmentsof the United States Court of’ Appeals :

for the Fifth Circuit denying a Petition for Rehearing was

entered on June 4, 1959 (R: 684). A copy chereof is at- . -

tached hereto as Appendix or The mandate was stayed

on June 17, 1959, and the order thereon is included in the

certified transcript of the record filed herewith (R. 689).

The jurisdiction of this Court is’ invoked under New

Title 28, United States Code, Sec. 1254( 1).

. . mY rg \

QUESTIONS PRESENTED -

The District -Court. granted - Petitioners, insurers -of|

' the contents of a canning factory, a peremptory Linstruc-

‘tion on the ground. thag insured had breached the Iron .

Safe CfMuses in the policies by failing to produce his

Records, which insured alleged had been destroyed by the

fire.” “pproximately two and one-half years after the fire

and four months afer judgment was entered for Petj-

tioners, Respondent filed a motion. for relief under Rule

60(b) (2) alleging that the Records had been found and

Constituted- newly discovered evidence.

, There is here involved the error of the Court of Ap-

| peals below in vacating the denial by the District Judge

’ -0f this Motion for a New Trial under Rule 60(6) (2). Ques-

tions presented are: | aCe i

9

a

_ Can A Court of Appeals ier —

1. vacate a finding by the.trial juag that proper r dili-

gence was not used, such finding being supported by ade-

quate facts and circumstances, and determine the’ issue

_ Of due diligence de novo and merely substitute its own.

conclusion or opinion for that of the trial judge;

3 ‘vacate the exercise of discretion. of the trial. judge

_ in denying- such relief when there” has been ’no- “abuse: of

discretion”;

3. vacaté a District Judge's denial -of relief under

Rule 60(b) (2), where -in* the exercise of his discretion

the ‘trial judge had found that the newly discovered evi-

“dence would not produce a different result on a new, trial

because there was a breach of the Iron Safe Clauses even

though the Records were not destroyed by fire;

an, 8 vacwsa a denial of relief 1nder Rule 60(b) (2), par-

ticularly in a Diversity of Citizenship case, where under’

the substantive law of the applicable state, which can be

ascertained by a Court of Appeals without. difficulty, the

newly discovered evidence would produce the same re-

_ sult, although on a different ground, on anew trial;

D. itself grant relief under Rule 60(b) 12). on the

ground of accomplishing justice, where the evidence was

not available at the time of the trial because of the negli-

gence of Movant.and Mo:ant did not use due diligence in -

discovering the new evidence; w here Mc vant was under no

disability, had a fair trial represented by counse], and

where neither opposing litigants nor the Court were at

’ fault; where there was’ finding of: the trial judge, in the

exercise of his discretion, that there had been no injustive

and where the applicable state. law is to the effect that

apparent hardship cannot justify a, court in /not enforci ing

a solemn, contractual’ agreement. :

;, STATUTES INVOLVED. -

New Title 28, United States Code, Sec. 2072:

3 : “The Supreme Court shall have the power to pre-

scribe, by general rules,. the forms of process, writs,

. pleadings, and motions, and the—practice and pro-

cedure of the District Courts of the United States and

of the District Court for the Territory of Alaska: in -

‘civil actions * * * .- ; et, © aes

se. we & ,

. “All laws in conflict with such rules shall be of

no further force or effect after such rules have taken.

-effect.”’ os s we 3 -

Rule 60(b): . eet

“Mistakes; Inadvertence; Excusable Neglect;

Newly Discovered Evidence; Fraud, Etc. On motion

and upon such terms*as art just, the court may re-

lieve a party or his legal representative from.a final

judgment, order, or proceeding for the following rea-

sons: (1) mistake, inadvertence, Surprise, or excus-

able neglect; (2) newly ‘discovered evidence. which

' by due diligence could not have been discovered in

time to.move for a new trial under Rule 99(b); (3)

fraud (whether heretofore denominated intrinsic or

extrinsic}, misrepresentation, or other misconduct of

an adverse party; (4) the judgment is void; (5) the

: judgment has been Satisfied, released, or discharged,

or’a prior judgment upon which it is based has been

reversed or otherwise vacated, or it is no longer equi-

table that the judgment should have prospective ap-

Plication; or (6) any other reason justifying relief.

from the operation of the judgment. The motion shall -

be made within a reasonable time, and for reasons (1),

(2), and (3) not more than one year after thé judg-_

ment, order, or proceeding was entered or taken. A

', Motion, under this subdivision ‘(b) does not affect the

~

ting eer,

6

°

° 4

finality of a judgment: or suspend its operation - This

rule does not limit the power of a court to entertain

an independent action to relieve a party from a judg:.

ment, order, or prqceeding, or to grant relief ta a de- --

> fendant-not actually personally notified: as, provided in

Title 28; USC, § 1655, or tq set aside a judgment for

‘fraud. upon the court. Writs of coram nobis, ¢oram *

vobis, audita querela, and bills of: review and bills in

the nature of a’ bill of review, are*abolished; and the

procedure for obtaining any relief from a judgment

shall:be by motion as prescribed in these rules or by-

“an independent action. ‘a xe

‘STATEMENT OF CASE.

Petitioners were insurers of the contents of the Mag-

nolia Canning Company operated by respondent Serio. A.

fire occurred on September 24, 1955.

. On November 30, 1955,. Petitioners filed a ‘guaainiae

seeking a declaratory judgment in the District Court of the

United States for the Southern, Distric: of Mississippi, Jack-

son Division. asking the Court to declare that they were

not indebted to the Respondent in any amount under the

“policies of insurance as a result of the fire loss i Septem-

ber 24, 1955.

The basis for federal jtitisdiction in the court of first -

instance ‘vas-that Said court had original jurisdiction of

this civ action, ‘the matter in controversy exceeding. the _-

sum or value of $3,000.00 exclusive of interest and: cos's.

between citizens of different states pursuant to New Title

g8, United States Code, Sec. 1332, and. pursuant to New

‘Title 28, United States Code, Sec. 2201, creating the remedy

of a judgments..

The complaint of Petitioners for a declaratory judg-

ment (R. 2) denied any liability fer the loss on three

a

« é _—, ny

=

| =

«

grounds: (1) that Respondent had violated the Iron Safe

Clause in the policy and had failed to produce the required

. * ae ve ° .

records .and inventories for the Inspection ‘of the com-

. pany, such failure making the policies null. and void and

constituting a perpetual ‘bar ‘to. sny recovery .thereon: (3) ,

"Respondent had made fatse statements under oath during

"the Examination Under Oath taken pursuant to the policy

agreement therefor; (3) the policy was void at the time of -

the fire because the hazard was at that time increased by

_ means within the control and knowledge of the insured

"In that the prernises were being used in connection with

legal shipments of liquor into the State of Mississippj and

an inflammable Substance believed to be diesel oil was

present in the building during the fire.

‘Respondent filéd an Answer and a Cross-Claim seek-

‘ing recovery of the full face of the policies or.$60,000.00.

The ‘case was tried béfore a jury and at’the conclusion —

of the testimony the District Judge granted Petitioners a

peremptory instruction on the ground that Respondent

had breached the Iron. Safe Clause in the policies (see

Appendix “B” heréto ) and a judgment was entered on

September 13, 1957, adjudging that Petitioners were not

indebted in-any amount to Respondent (R. 574). An Al-

_ ternative Motion for a Judgment Notwithstanding the

Verdict or for a New Trial was filed by Respondent and

an Order overruling the same was entered (Letter opinion

of District Judge is Appendix “Cc” hereto),

- - ie . = ia 7

-—Pertinent facts as reflected by. the record include:

1954

Dec. 30 Physical inventory taken (but' not produced ). ;

Sep. 17-23: -

Nov. 3

Nov. 30

1958:

Jan. 23

‘Jun. 1

at Po -,

Physical inventory taken. 3 j .

Miss Lederer, bookkeeper for Respondent, left

town, leaving the Books of Accouat and Rec-

—ords on top of a cabinet in the office.

Serio indicted on a liquor charge in Lousiana.

Notice of cancellation mailed Serio by both

Petitioners, to be effective September. 26, $955,

cancellation “notices being sent on account: of

the liquor indictment.

Serio. contacted agent for Petitioners several

times about reinstatement, which was refused. .

He contacted an agent for another company in

an effort to-get insurance but was unsuccessful.

Plant of Magnolia —— as sm ‘burned

that night. |

_ Serio submitted to Examination Under path,

on the demand of the insurers as provided ‘for

in the policy, and-on demand for inspection of

all books and records testified that they had

been destroyed by the nai except. for an in-

ventory of June 30, 1955; a folder containing

a few loose invoices and ‘<see. sheet of .°

paper with pencil figures thereon, markéd

“rough” alleged to be a trial balance as of

June 30, 1955, which were -submitted to _in-

surers; that-he had made a “careful search,

for any other Records.

Complaint filed herein by Petitioners.

| Respondents filed an Answer alleging affirma-.

tively that all other books and records were

destroyed by fire, together With a Cross-Bill.

Deposition of Miss Lederer taken under Fed-.

eral Rules. She testified that the day before

she left town on a trip she left.all of the other

books of account and original records. includ-

re se See

‘ing all bank sti tements, returned checks, etc.,

‘on top of a file. in the office in the plant and

that they were desiroyed by fire. |

pei” i aes Sad

& Sep. 1] Trial of this case was begun in ‘the District -

; _ * Court of the United States for the Southern .

ere District ot Mississippi, Jackson Division. aes

During the trial no additional books or records: were

‘produced. or sténdered. Both Serio and Miss Lederer again

testified that the ordginal records and books ef account..alT

bank statements, returned checks, etc.; were destroyed in

_ the fire. The position thatthe few records theretofore

- Submitted constituted a compliance with the Iron Safe

|: Clause was urged. However, an expert. actuary, witness

for Respondent, admitted that the amount of the loss could

not “be established’ except by and through oral evidence

(R. 544). The claim of Respondent as to the amount and —

- Value of contents lost clearly illustrated the reasons for and ~

. the necessity for the requirement of production of previous

Inventories and permanent books of account to substan-

, —_tiate quantities and ‘value of contents in order ‘to protect.

the insurers against fraud.*: Moreover, a jury issue was

made. as to increase of hazard by means-within the knowl-

edge and control of the insured and the présence of inflam-

mable substances in the building during the fire: :

As stated, at the conclusion of the. trial the District

Judge directed a verdict for the Petitioners here because _

@ °f the failure of Respondent to comply with the Iron-Safe

Clause in the policies. -Events,thereafter were as follows: i

| *For exar. ple: _ out of $60,000 loss claimed Respondent was ,

aiming loss of a future 23 year supply of: Paper labels for cans. °

‘alucd’ at $13,022.62 and a future 10° year. supply of cardboard

rartons valucé at _$22,605:39; such labels and cartons being ss’

IE abteet te te | consumption by fire leaving no identifiable

: Ivade

2

—

Jun. 11°

"Jun. 14°

1959

May 5

100°

I wihimened ‘intend for Petitioners here,

Alternate Motion ‘for “Judgment N.OV. and

new 7 trial filed by ——

?

Alternate Motion for J sina N: O. V. or New

Trial overruled. by District Judge:

“Notice of Appeal and Bond, etc.

Two years and five months after the fire and

over 6 months after’ Judgment Respondent

filed Motion for Relief from Judgment on the

basis ‘that certain Books of Account and Rec-

ords had been fo ind and constituted r new ly dis-

covered evidence.

Motion for Relief, from Judgment ov erruled by

the District Judge on the grounds:

re (a) the alleged rewly discovered evidence |

‘could ky due diligence have been discovered

in time for a new trial under Rule 59(b) and -

~ movant had been negligent in. failing to ‘find

_ such records and therefore movant was not

entitled to any relief under Rule 60(b) (2).

(b) The records were’ negligently lost and -

the failure to produce the same for two and |

one-half years after the fire;constituted a-

_ breach: of thie contractual provisions of: the

policies and therefore the allegedly newly

‘discovered evidence would not alter the re-

sults of the case after remand and new trial.

Second appeal pérfected to the Court of =

— of the Fifth Circuit.

Judgment of the District Court vacated by.

Court of Appeals of Fifth Circuit.

‘ecole in his Motion for Relief From Final J a

ment filed on April 2, 1958, alleged — certain of his books.

“Pf

i an é

. eed | — Thi ;

_ and records “have_been found and discovered .and con-

stitute and are newly discovered evidence within the mean-

| ing.of Rule 60(b) (2).” (R. 604). These records allegedly

consisted of a general ledger, a typewritten copy of an in- -

ventory of December .31, 1954, a cash journal, check stubs, —

and bank statements (R. 609). The books themselves were

-- not submitted to the Court or to opposing counsel and’ are

identified b the accountant for the movant in an unsworn .

letter to the effect that such records were in his” possession

but that he had not yet examined the same and could not

- determine whether or not they. were original records,

The motion and'affidavits attached thereto, upon which |

movant based his right to set.aside the judgment, reflect the. .

following facts: rc,

1. These books and records “were lost due to the neg-

ligence of Ri spondent and his employees.

, On or about-‘September 12, 1955, Miss Lederer, movant’s

bookkéeper, negligently left: the bulky Books and Records

‘ out of the safe and on top of a cabinet in the affice. Be-

tween September 12th and September 24th Respondent, al-

_ though in and out of the plant and the office did not notice

these books of account on top of the cabinet. A few days

__ before the fire Respondent instructed an employee Varnado_

who could neither’ read nor write to ‘go to the office and...

clean up and move’ “old hard back books, ledgers, etc.”

from the office into a storage room, which was back of the «.

boiler room. Varnado was not supervised during this opera-

tion. The original books and records now allegedly found

Were moved by Varnado into the storage-room. =~

“*#

12

2. These ‘books sat suchas were not janid in tivo

and one-half years after the fire but at all times werg@f

the pessession ‘of Respondent | and could, a been found \

with due dilixence. ;

": The storage room was not burned during the fire. Al-

though Respondent ‘had testified under, oath that he had~

after the fire made a vareful search. for ‘the records, no al- ©

legat’ons were madé as. to why he did. not question Varnado

* about the records moved by him or check to determine what °

he had moved;|and no ‘explanation was offered as to’: why®

_he had never been in this storage room ‘from the date of the ~

fire in September, 1955, until March 14, 1958. The allega-

_ tions were that they merely “assumed” that the Records

"were destroyed by fire. The books and records were readily

discovered when he went into the storage room on March

14, 1958. Z R

Petitioners here filed af Motion to > Strike Respondent’ si

. Motion, (R. 630) and an affidavit in opposition thereto (R.

619), which contained in part the following language: P

: Serio had furnished his complete records with- .

in a reasonable time after the fire, the companies would

have had an.opportunity to check those records with the

‘people with whom Serio claimed to have done business

at a time wheh. the transactions were reasonably fresh «

in. the minds. of all concerned. . To. tender such records

two and one-half years after the fire destroys the abil-

ity of the insurance companies to make that type -of

a cheek of the’records to which they were erititled, and

the.contract between the parties agreed that the fail-

_uré of Serio to ‘produce’ the records ‘shall se a

“perpetual-bar to any recovery, thereon {” \

—4p ° aes :

~ No additional affidavits were filed by Respondent\

~The, Motion +was heard by, the ae is Judge without a

“1 ee oy

R

oie

nt

ae

jury on the affidavits, and he made the following finding

Of fact: Ba et vieye es

ECE RS - a iy

“Assuming, Re the purpose of this opinion, ;that .

the documents now: tendered are original yecords, in

-my judgment their Production at this late date would

‘not be sufficient to avoid forfeiture. of the policy. It :

was the duty of Serio to present these records within

_ a ‘reasonable. time, which he failed to do. His excuse

for the failure is not sufficient -in law to comply with —

*: the terms of the policy. The documents were in the

possession of Serio and his.failure to produce theff

within a reasonable’ time was his‘own fault. It was his ~

-~ employee who misplaced the records and the negligence ~

of this agent of his would be imputable to Serio,. He. -

failed to show. due diligence in tinding them. . Under

his own affidavit it should have occurred ‘to him. im-

~ » Mediately, as a. reasonably prudent. person, that this -

employee of his had misplaced them and he should have.

Searched the place at hat time where he subsequently

located them. I am Sbretgae of the opinion that the

Showing for newly discovered eyidence is insufficient.”

(See Appendix ae, * ef

’ This finding of fact and the judgment of the District —

Judge overruling the Motion for Relief under Rule 60(6 a ,

was vacated by the Court of Appeals oy,

PY 7 ° etd ° i * .

‘REASONS FOR ‘GRANTING THE ‘WRIT. >

This Petition for Writ of Certiorari to review the judg- _ ee

ment from the Court of Appeals of the Fifth Circuit is

based upon the following grounds: | . i

| 14

> aah

‘ ; 1. .

@ ~

The Court of Appeals below thas rendered a decision

in conflict ‘with decisions of all other Courts of Appeals

and of this Court in holding that on review of a denial

of a notion under Rule 60(b)(2) the Court of Appeals

cannot reverse the findings of fact of lack of due diligence

of the District Judge and vacate the exercise of discretion

“by the District. Judge in denying relief because there

was no due diligence on the part of the movant. unless

the finding of the ‘District Judge. to that effect was a

manifest abuse of his discretion. _

Respondent by his motion tendered his newly- esata

Records’ as newly discov@red evidence under ‘Rule

60(b)(2). This rule which grants the sole’ right to such

relief limits it to newly discovered evidence “which By due

diligence could not have been discovered in time to move

for a’ new trial under Ruié 59(b).”~

The District Judge found as a fact that there had not

been due diligence on the ‘part of respondent in finding

his lost Records. The decision based thereort denying re-_

lief constituted an exercise of discretion by the trial judge.

Such a decision is reviewable by a Court of Appeals

only indixectly where there is a manifest abuse of that

discretion. Every Court of eT and this Court has

so ,held,*

v

*"See for example Hobart vy.‘ O’Brien, C.A..1, 243 F.2d 735,

cer. den. 2 L.* Ed. 2d “ 355 U.S. 830: Helene Curtis Industries *

v. Sales Affiliates, C.A. 2,-233 F.2d 148, cer: den. 1.L. Bd. 2d 80.

352.°U.S. 879; Cathedral ‘Estates v.. Taft Realty Corp., C.A. 2, 228

F.2d 8: Hill v. Pennsylvania Greyhound Lines, C.A. 2. 174 F: 2d:

171: Aetna Casualty & Surety Co. v. Yeatts, C.A. 4, 122 F.2d

350. Turner v: U."S., C.A. 6; ‘929 F.2d 944: Miller v. N. Y.-Central

RR. Co. CA 7, 239 F.2d 10; Kansas Citu Stockyards Co of

~

, | i. R

/ .

15

And yet the Court of Appeais below has vacated such

exercise of discretion by the District Judge without ‘hold-

ing that there was'a manifest abuse’ of discrétion and un- .

der circumstances where there could not be a holding of

manifest abuse of discretion -in determining, that there

was a lack of due diligencé on the part of movant.

; There’ was substantin] evidence, submitted by ’ Re-

spondent-in his own affidavits on his motion, of lack of

tue diligence. Respondent was under an affirmative con-

tractual duty to so care for his-Records that he could pro-

duce them after a fire. The Records were originally lost

due to the negligence of Serio and: his employees, for

after the fire in’ making no-search for such Records even

incan oovious place,i. e., the unburned storage room where

Varnado had moved some records and where a fireman

might have moved, other’ records. . He made_no inquiry

of or check on Varnado as to what he had moved. Serio.

“* Was charged’ with constructive knowledge or notice of or

“put ‘upon ieee as to what Varnado had moved. Green-:

spahn v. Seagram, CA. 2, 186 F.2d 616; Harris v. Gulf Re-

fining Co., C.A: 5, 240 F.2d249; Smith v. Pacif® Mutual

Life Ins. Co., C.A. 6, 192 F.2d+248; Booth Fisheries Corp.

"Vv. Coe, C.A. D.C., 114 F.2d 462, cer. den. 85 L. Ed. 447, 311

US, 690-692. == ‘

é ; ?

* Instead of making any search or inquiry Respondent

merely says that he “assurned ” that the recofds were de-

stroved by fire. Such a mere assumption by Respondent

is no exctise. A litigant who relies on an assumption

“When under an affirmative duty to exercise’ due diligence

tee

Meine «Anderson. C.A. 8. 199 F.2d 91; Norwich Union Fire Ins.

¥ Glescere C4. 9; 224 F.9d 385: Atchison, Topeka & Santa Fe

P_R. Co. y Jockson, C.A. 10; 235 F.2d 390: Washington Times

fv" Ronner, CA DC. 86° F2d 896

‘ which negligence he was responsible. Serio was negligent

~

16

does so at his peril. Lrés v. Sargent, 119 US. 652, 30 L. Ed. = |

544: Toledo Scale Co. v. Computing. Scale Co., 261 US

399. 67 L: Ed. 719; Greenspahn v. Seagram, C.A. 2, 186

F.2d 616, where the court pointed’ out “Negligent ignor-

ance frequently has the same effect in law as actual knowl-

" edge.”

‘There being evidence to support the District Judge

_in exercising his discretion in denying the Motion there

‘was'no “abuse of discretion”. Before there is an abuse -

of discretion the decision of the trial judge must not rest

on any facts or circumstances nor be supported ‘by any

deductions or conclusions therefrom. There is no abuse

of discretion merely because the- appellate court would

have arrived at a different conclusion from the facts and

circumstances or might sbe inclined to ‘take a different

view of the matter or has a different opinion w ith refer- ,

ence thereto.” Here the Court of Appeals~below merely

sQbstituted its own cpinion or conclusion for that of the—

District Judge. This, a Court of Appeals’ cannot do. See

U. S. v: Johnson, C.A. 7, 142 F.2d 588; 149 F.2d 31; 327

-ULS. 106, 90 L. Ed. 562, where this Court held that a Court,

of. Appeals in reviewing a denial of a Motion for a New

Trial could not substitute its judgment on the facts for

that of the trial judge and approved the language ‘of the

dissenting opinion in the Court of Appeals reported 149

F.2d 31 to the effect that:

“We (the. Court of Appeals) determine only

whether the trial court reached, a decision it might

~ reasonably have reached upon the facts before it: not

whether we, gn tnese facts, might have rei iched a dif-

ferent conclusion.” ° *. |

‘Stobc den vy. True O1, Cal., 281 P.2d 85: Van Ostrum vy. State.

Cl. 206 P.2d 44: Stockhausen v. Oehler, Wis.. 211 NW

No nilter ve US. 31 Ald 887: Dolen 4 State, Neb., 27 N.W 2d

iv 4

This Court, in affirming the action of the Court of

Appeals on the first appeal, as reported in 142 F.2d 588,

“where the Court of. Appeals affirmed the District Judge in

denying a Motion for a New Trial, and in criticizing and re-.

j . versing the action of the. Court of Appeals on the second

appeal, as reported in 149 ...2d 31, where the Court of

Appeals reversed the trial court in denying a motion for

a new trial, and in upholding the District Judge in deny-

ing the motions for a. new trial, used the following” lan-

guage:

“The Circuit Court of Appeals affirmed. "142 F.2d

588. It unanimously held that it could not substitute

us judgment on the facts for that of the trial judge;

that it did not. have power to try these facts de novo;.

that’ it could review the record for errors of law, to

determine, among other things, whetHter the *-ial ies

_had abused his discretion; that a review ‘of the new

evidence in the record did not inevitablr y lead to the

conclusion that Goldstein had testified: falsely; that

the trial judge had not reached his conclusion ‘arbi-

trarily, Secs: awed in the misapplication of any

Tule of law’ and hence had not abused his discretion.

* ¢ @

ton

The Circuit Court of Appeais was right in the

first instance, when it declared that it did not sit to

‘try de novo motions for a new trial. It was wrong in

the second instance- when it did review the facts de

‘novo and order the judgment set aside.”

Here the facts do not ‘ ‘nevitably lead’to the conclu-

sion that the Records ‘could not have been discovered in

the two years between the fire and the trial by due dili-

gence. The court below does not purport to so state but

admittedly merely draws a different conclusion from the-

18

facts and circumstances presented by the record and mere'y -

substitutes its judgment for that of the trial] judge.

Presumably, the Court of Appeals below realized this i

and sought to bolster its opinion by again announcing the

doctrine (in face of the fact that Rule 60(b)(2) which.

‘grants the right of a new trial specifically limits it to cases

-where due diligence has been exercised), that where the

ends of justice require it a new trial may be granted on

newly discovered evidence even though. proper diligence

was not used, to secure such evidence. -We so state because *

the Court ited its prior opinion of Ferrell v. Trail mobile,

‘Tne., CA. 3, 223 F.2d 697.*.

This holding is in conflict w ith decisions of this C -

and of other Courts of Appealg. In Toledo Scale Co.

_ Computing Scale Co., 261°U.S. 399, 67 L. Ed. 718. this ese

held that: “* * * THe indispensable condition of their (.mo-

tions'for new trials, etc.) being granted was that the fail-

ure to discover the evidence in time.for the trial was not

due to a lack of diligence on the part of the applicant.”

Other Courts of Appeals making due diligence an ab-

solute requirement as a condition precedent to relief by

motion*for a new trialen ground of newly discovered evi- -'

dence include: C.A.. 6¢-Grant County Deposit “Bank \

Greene, 200.F.2d 835; C.A. 9— U.S. v. Bransen, 142 F.2d .232:.

C.A. 10—Kansas City Southern Railway.Co. v. Cagle, 229 .

F.2d 12, cer. den. 351U.S. 908, 100 L. Ed. 1443; together with |

__numeroug other cases. The court below in. Ferrell v. Trai!-

mobile, Inc., supra, cited no other federal decisions bit

*The opinien ‘in this case, however, not only limits such

a rule as appheable only to prevent manifest miscarriage of

justice but also -limits it-to a case where the “practically con->

-lusive evidence” shows that the movant would be suecessful

on the new trial, inapplicable here as will be discussed under

Point IT.

4

19,

| relied merely on a few ‘state cases which can be e readily

distingu. ished.*" |

‘The Court of Appeals below now mune seeks. to °

bqJster ‘such a rule by citation ,of the case of Klapprott v.

U. S., 335 U.S. 601, 93 L. Ed. 266. This case, however, did

" not involve a motion for a new trial under Rute 60(b) (2),

‘on the ground of newly discovered evidence”but: a motion

'. - to%et.aside a default ‘judgment,** and the granting of the

relief was’ expressly under Rule 60(b) (6), ‘which this

Court held to be applicable only. when the other five rea-

. Sons were inapplicable, using the following language:

“In simple English, the language of the ‘other

reason’ clause, for all reasons except the five partic- —

ularly: specified, vest power in courts adequate tc to en-

able them to vacate judgments whenever such action

is arDropriate to accomplish justice.

Moreover, there was no such manifest miscarriage of

justice here as there was in the Kilapprott case. Such re- _

lief was there - justified because of the following unusual

. conditions: (1) The judgment was a‘default one and a ~

citizen was stripped of his citizenship by his government |

without. evidence or hearing or benefit of counsel; (2) At

the time of the default judgment the deféndant was in jail,

o

weakened from illness, without an“attorney or any funds * 6

with which to obtain an, attorney; (3) At the time of the

nev. trial on the ground of newly discovered evidence. .Hutto v.

Aremer, Miss., 76 So.2d ‘204; Roberts. v. International Harvester,

Miss., 179-So, 745, 180 So. 747; Redmond v. Marshal, Miss., 137,

SO, ie aaa

Relief from default judgments. always being more

libe rally -allowed. Bridoux v. Eastern Airlines, C.A. D.C. 214

F“ od 207 . : :

"1. The Mississippi rule has dlways been that due diligence © -

is an sndispgnsable condition precedent to the granting of a

judgment defendant was under such disability beca se of

the action of the United States Government, the plaints

in the suit in which the default judgment was taken, and

his inability to defend was therefore the fault of. the United

States Government, this Court pointing out: “It is clear

therefore that for four and a half years this petitioner. was

held in prison on eharges that the Government wes unable

_ to sustain.” Under these unusual cireumstances the Court

permitted relief from the judgment but permitted the same

~ under Rule 60(b) (6).°

", Néhé of these elements of unjustice are present here.

Aguado was not “deprived” by anyone else of any right

he had to attempt to prove that he had sustained a loss

within the terms of the. policies He could certainly blame

rio one. but himéelf and his own employees for the fact that

e records were lost at the time of the trial. He had his

day in court and had a full and fair trial, represented by

able counsel.: He was not rushed into trial but two years

intervened between the fire and the trial. There, is no

- suggestion of any unfair, w congful or inequitable conduct |

on the part of petitioners here. There is no suggestion 0!

‘any wrongful conduct on.the part of the trial judge. At

the time of the trial he was under no incapacity or’ disa-

-bility. -His only excuse is the carelessness of his employees,

negligence on his part and reliance on statements of others

and a false assumption. There are no equities in vaanaranal

ent’s favor. * ,

' 9

The Court of Appeals below has rendered a decision

in conflict with decisions of all other Courts of Appeal

if holding that relief can be granted a Movant under Rule

60(b)(2) where the Movant has not proved that the newly

' discovered evidence would produce different results on a

‘new trial.

in conflict with the Sectahene of the Supreme ‘Court of

‘Mississippi and of\this Court in that there was a breach

of the Iron Safe Clauses even though the Records were not

destroyed by fire. "

The District Judge below

cising his discretion to deny reli

cifically found, ‘in exer-

under Rule 60(b) (2),

ue

that Respondent not only was not enNtled to relief because

he had failed to use due diligence in producing his records

at the trial but also that he had violated his contractual -

agreement to produce his records and books of account for ~

inspection by the insurers within a reasonable time after

the fire and that such failure prevented any recovery _ on_ -

the policies; that therefore because of this breach-of a con- -

tractual provision the Respondent could not obtain a dif-

_ ferent result. on the-new trial. :

The District Judge heard the motion under Rule 43/e)

on affidavits, taking into consideration all previous testl-

- mony and exhibits «McLanahan v. Universal, 1 Peters 170,

' tai 2%

‘The: District Judge found: “In my judgment. their (the

OKs) production at this late date would not be sufficient ‘to

nd forfciture Of the policy. It was the duty of Serio to, pre-

‘ht these records within a reasonable time, which~he failed to

ne excuce for the failure is not sufficient in law to comply

Nhe teros af the poliev ” ia ‘pb

D

—_=

—

71. Ed. 98), and his decision as to whether the newly dis-

covered evidence would probably. produce a different result

on a new trial must stand in the absence of a clear showing

‘of abuse of discretion. Chambers vy. Anderson, C. A. 6. 58°

F.2d 151; Royal Insurance Co. v. Eastham, C.A. 5, 71 F2 qd

385; Barrington V. Swanson, C.A. 10, 249 F.2d 640; ery

v. Employers Mutual ‘Liability: Ins. Co., C:A. 5, 239 F.2d 7

Pela Warehouse ‘Co. v. Parnell Co., C.A. 8,-242 F.2d 165

Fisher Studio v. Loew's, Inc., C.A.,2, 232 F.2d 199, cer. den.

L. Ed. 2d 3D, 392 US. 836.

The Court of Appeals below did not specifically

held that the offer to produce certain alleged original

books and records two and one-half years after. the

fire ‘would: produce a different result on a new trial.*!

Unless it did and ceuld so find then granting relief under

Rule 60(b)(2) was in direct conflict with decisions

‘of every other Court of “Appeals and with former de-

_ visions of that Court itself. Union Bleachery ee, Pe

C.A. 4, 176 F.2d-517, cer. den: 339 U.S. 964, 94 L. Ed. i373;

Rumsey V. Curtis, C.A.D.C., 182 F.2d: 687; Harris v.:White-

man, C.A. 5, 243 F.2d 536; Royal Insurance. Co. v. Eastham,

C.A. 5, 71 F.2d 385, cer. den. 79 L. Ed’ 658; Davis v. Yellow.

Cab Co.,of St. Petersburg, C.A. 5, 220 F.2d 790; Johnson v.

Masonic R:. g. Co., C.A. 5, '38 F. 2d 817; Che nical Delinting

Co. v. Jackson, CA. S, 193 F.2d 123.’ +s

eee 2 ,

-*And yet on anew ‘trial when this defense is raised, can

it. be said that the trial judge is:free to decide this question

‘n the rule ef substantive law in force in Mississippi to the ef-

fect that such offer is too late to constitute a compliance with

Respondent’ s contract of insurance?

“2. A very different~situation was ‘presented ” in Ferrell v.

Traitmobile, Inc., C.A. 5, 223 F.2d 697, cited by the court below |

where that Court held, and correctly held, that the newly dis-

vovered ‘evidence was “practically conclusive” of the right of

Movant to final judgment. ; BS i

r

/. ; ei 23

/

The Mississippi rule is ‘weleted i in Haber v. Lane, 45 7

_ Miss. 608, where. the Court used the following ‘language:

“We cannot say, if the matter of defense set up in

the affidavit had been put in evidence before the jury,

it. would conclusively follow that the plaintiffs should

not recover. * *.* A full and complete defense muist

be set up so * * * that, upon another trial, a different

result would be reached. re

The Court of Appeals below was in error if it reasoned

that because the judgment against Respondent in the Dis-

trict Court was based on the destruction of ,his records by

fire that when such records were now found a different: -

result would be obtained on a new trial in the court below.

On a new trial the same result would be reached although

on a different ground i. e. on a failure to produce the rec-

ords for the inspection of the-insurer and to enable it

_ to inv estigate t' loss within a resonable time after the.

fire, rather than upon, the failure. to preserve the records

from being destroyed by fire.

The standard Iron Safe Clauses here involved not only

require an insured to keep adequate books and records,

which without the aid of oral evidence present a complete

record of business transacted, and to make \annual inven-

tories and to preserve-the last two preceging inventories

and the books of accounts so@hat they would not be de-

stroyed by fire; but also provide: °

“In the event of failure to produce such set of ~

-books and -inventories for the inspection of this com--

pany, this policy shall become nul] and void, and such

failure shail constitute a. inal bar to any recov ery

thereon.” - ;

\ Under ‘jak contractual p-ovisions such records must

be prodaced ina reasonable’ tin’e after the fire, w hen called

\

7

‘24

for. Stovall v. Sterling Fire, ta 111 So. 707; Cont pt

‘Insurance Co. Vv. Rosenberg, 74 Atl. 1073; Appleton on, In-

surance, Sec. 3026; Couch on Insurance, Sec. 1036.

-That petitioners here were ‘prejudiced by . the failure to.

produce the records when called for in a reasonable~time

_ after the fire ‘stands undisputed here. . The affidavit ‘of

Petitioners in opposition:to a Motion for a New Trials was

to the effect that if Serio had furnished his complete rec

. ords within a reasonable time after the firé the companies —

would have had an opportunity to check those records |

with the: people with whom Serio claimed to have done .

business at a time when the transactions were reasonably *

fresh in the minds of alt concerned and their records st!!]

in ‘existence and.that the delay in the tender of the records

for two and one-half years after the fire destroyed the

ability of Petitioners to make that type of check of the.

ys records’ to which they were entitled and to which. the con-

: tract gave them a right. The facts in the affidavit were not.

—. stout Sia ta Sey atts .%

In the case of World-Fire & Marine Ins. Ca v. King,

Miss, 191 So. 665, the Court pointed out that the-produc-

tion of, books and records in. a reasonable time after’ the

fire was\vital to the insurer so ‘that the insurer could -in-

spect and examine the same and #0 enable the insurer “to

trace the. tra ysactians reflected by the books so as to verify

- the truth of the. matters contained therein as * so that the

transactions might be investigated.

The production, of .such books and records within a

reasonable time after the fire is not excused merely by the

_ fact that the records are | lest. If the failure to comply with

the contractual agreement to- produce the records in ae

reasonable time after the fixe was ‘due to insureg’s own fault

or negligence then: the eames of producing the.n af:

forded him no excuse, = .

“a

e

25

‘ /

In Liverpool, London, etc., Inc. Co. v. Kearney, 180 US.

132, 45 L. Ed. 460, cited. with approval in Lewis v. National

Fire, ‘Miss., 101 So. 296,-there appears this language:

“We are of opinion that the failure to produce the

books and inventory, referred to in the policy, means .

* . the failure to produce them if they are in existence

‘when called. for, or if they have ‘been lost or destr@ red

by the fault, negligence or design: -of the insur

Now the books and records were allegedly not pro- °.

duced because they were lost, rather than because they

were destroyed by fire, but they were iost through the .

negligence and fault of the insured and his employees.

; Wot. only ‘were the records not produced within a rea-

sonable.time after the fire, thus causing a breach of.-a con- -

‘tractual agreement so as to require a Girectad verdict for

‘Petitioners on a: new trial on that” ground, but also Re-

_ spondent does not tender,. by his affidavits, records and ;

books which would necessarily cause a different result

“ona new trial. Even if we assume that most of the records

-. found are originals, which is not alleged under oath by

- either Serio, Miss Ledérer or the auditor, the previous in-

ventory, not theretofore submitted but allegedly -now

- found, is admittedly a “copy”, not an original record.

_ Necessary reeords not found were the Daily Production *

Sheets, the only records from which. the value of canned .

goods on hand could be determined (R. 523-4, 329). The

burden of proof of the sufficiency of the records kept and °

“now submitted was upon Mov ant.

.

That any iebeinde lost through the negligence of an

insured and -not submitted .to an ‘insurer until two and

one-half years after the fixe are too late to constitute a.

compliance with the contractual provisions of the. policy,

a question of substantive law, is controlled by the decision

a

r

26:

-in Standard Ins. Co. Vv. Anderson, Miss., 86 So.2d 298, where

the insured failed to furnish the insurer with oral informa-

“N.. tion requested during an Examination Under Oath. The

information was later tendered Is months after the fire,

but the. Court held: ;

“Duis offer came entirely too late. Any benefits,

whic

a

could have been discovered from the examina- ,

tion on Detembex 22, 1953, had long since perished

and cotld not have been resurrec*ed as a result of

compliance with this. belated -offer.”

‘D> a

“This is not merely a case where. a litigant. failed to. ~

_ produce evidence that he needed to prove his case at a

. drial. ‘This is a case where appellant failed to comply with

a solemn, contractual agreement to care for and preserve |

his records-so that they would be available to the insurer

within a reasonable, time after the fire, before any trial

was even thought of, so that the insurer could verify them,

determine their validity and sufficiency, check and. ‘de-

termine the amouni “of the loss if. there: was liability or

make a decisidn as to whether all-liability would be denied.

There is involved more than mere negligence of a party

to a law suit in failing to produce evidenee. for his own

benefit, but on the other hand there is ‘involved a ‘breach

of a, contractual agreement providing that upon such

breach the policy weld be void. Moreover, Respond-

ent cannot take the position. chat he ‘failed to - produce

sufficient evidence te make .a -jury issue at the tnal

of the -case but that’ he is entitled to a new.trial. merely -

because. he can now produce evidence which might be

sufficient to take the cdse to the jury. He must go further

“and prove that he can row produce evidence that pract!

cally conclusively shows that he has complied with his

-eontract” 7. ‘Respor.dent did not do:

: power ‘of Supervision.

27

The Court: ot Appeals hairs ii so far defarted from

the accepted and usual course of judicial pretéedings, ina

case involving an important ‘matter ay “deral law. and

public policy, as to call for an exgiréise of. is asactiah s

2

The Court of Appeals below is. now committed to a

doctrine of extreme liberality in granting relief under Rule

60(b) (2). and in granting such relief: , Where there has been

"no due diligence on’ ‘the part of the Movant in discovering

the new ev idence; where the trial court has defiiéd the‘mo-

.tion in the exercise of its discretion, such decision being

amply supported by the evidence; where the granting ‘of

the new trial would not change the result of the litigation.

upon a.new trial because ofa rule of substantive law of the

State e trial.

in so doing the Court of Kpneats below has decided

an important question of federal procedural law- in. con-

flict with atl other circuits and Has decided in a Diversity

case a question of substantive insurance’ law, of vital im-

* portance. to all insurance companies, in conflict w ith the

. readily ascer tainable State Law. : :

In so doing. the Court of Appeals b below has adopted a

policy of protracting litigation contrary to public policy.

* In the case of Toledo Seale Co. v. Computing Scale Co.

67 L. Ed. 719, 261 US. 399, this Court in affirming the ac-

tion, of the tric 11 judge in denying a motion for a new. trial

used the following language:

“The apparent hardship of particular cases should - —

“not and canhot weigh against the application of this

“sound aan sage i> Mr. Justice Story remarked in’.

Ocean Ins.°Co. v: Fields, 2 Story 59, Fed. Cas. No.

‘2

“@

2 - es.

| ‘ part'of the public policy of the’ ‘State. of Mississippi 12—~

“*

28

’ . e -

10,406: jt is nie the. public interest and policy to make

an end to litigation; or, as was pointedly said by a great

jurist, that suits may not be immortal while men. are

mortal. dey

In Sec. 1323 of Barron & Holtzoff's Federal Practice

and Procedure the’ test points out the policy of the other

Courts of Appeal as follows: *

‘“Laudable as is the goal of ,.remedying injustice, .

Rule 60(b), requires ‘the courts to striké a balance be-

_ tween that goal and thé desire to achieve finality. in

. litigation. The cases show that the courts have ex-

ercised discretion under that rule with a scrupulous. °

regard: for .the* aims of finality—they have pre-,

vented the -needless protraction of litigation by re-

quiring the mov deen party t6 snow a good claim or de-

fense.” , ‘ ‘

\ .

iiieiuiaias tie strict enforcement of the contractual

provisions in Tron Safe Clauses, in order that the insurance

cornpany may investigate the transactions, was held to be

World*Fire & Marine .Jns. Co.'v. King, Miss., au 665,

a here the. Court stated:

“The provisions a in clause 3, * above “

“quoted, are of the Kighest importance and are consistent

with the public policy and general gvod of the people o

the State.”

‘Such liberality in the allowance of ‘a new trial would

permit fraudulent litigants to withheld evidence and spec-

ulate On the outcome of the trial without production of .’

the same. It,would make trials of cases mere —

ventures. As was pointed out in Rowlik v. Greenfield

D.C. Pa., 87 F. Supp. “997:

‘Oe 8 & 4 reasonable regard should be had to the

- desirabilit of stability and finality of the trials cf

29

causes once carefully had and completed. And new.

- trials should not“be allowed simply because after the

verdict the losing party has come upon some. witness or’

information theretofore. unknown to him or his attor-

ney. Irrational indulgence in thai respect would in->

evuably make of most trials merely experimental ven- —

tures,” (Emphasis ours), ° .

The rule of this Court that apparent hardship of partic-:

_ ular cases should not weigh against the application of sound

principles, is also applied by the State Of Mississippi. Thy.

Anderson y. American & Foreign Ins. Co., Miss., 86 So.2d .

403, where the insured failed to furnish the insurer, when

requested: in a reasonable time after the fire, with oral.in-

formation, but tendered the same approximately a year

efter the fire, and where the Court held that this constituted

a Violation of the contractual Provision of the policy, the

Court stated: |

“It is unfortunate, assuming the property that was

destroyed by the fire Was Worth from $28,000 to $30,-

000 as testified to by thee insured, that he should lose

the right to collect the insurance sued for in these three

_ €ases, nevertheless the contractual. provisions of the

policies to the effegt that. the same should be null and

Void for a failure of the insured to comply With the,

Provisions therein contained, cannot be disregarded,’"~

In the area composing the Fifth Circuit practically al]

“insurance Cases. are -between citizens of different States, .

The majority of such cases involve the Jurisdictional]

amount. -Any procedural rights allowed insureds Ina

Federal Court IN such Cases superior to the rights’ yn.

‘the applicable State Courts would materially enhance the *

number of cases tried in the Federal. Courts contrary to the .

clear intent of Congress and the Courts. Any substantive ;

rights. allowed insureds in the Federal Courts superior . to,

“the rights of an insured in the applicable State Court. is,

30 3 | F

"of course, in direct conflict with the holding of this Court in

Erie R. Co. v. Tompkins, 304-U.S. 64, 82 L. Ed. 1188.

Or as was said by this Court in Fidelity Union Trust

Co. v. Field, 85 L. Ed. 109, 311 U.S. 169:

“The question has practical aspects of great im-

portance in the proper administration of justice in the

federai courts. It ‘igs inadmissible that there should be

one rule of state law for litigants in the state courts and

another rule for litigants who bring the same question

_ before the federal courts owing to the circumstance of

diversity of citizenship.”

CONCLUSION.

' For the foregoing reasons, it is respectfully urged that

the Petition for Writ of Certiorari be granted.

weer aprysy, Mes ;

Tuos. H. WATKINS,

ELIZABETH HULEN GRAYSON,

800 Plaza Building,

Jackson, Mississippi,

Counsel for Petitioners.

Of Counsel:

WATKINS & EAGER,

800 Plaza Building,

dackson, Mississippi.

31

me CERTIFICATE,

The undersigned of counsel] for petitioners certifies that

a true and correct.copy of the foregoing Petition for Writ

of Certiorari has been served on the Hon. O. W. Phiilips

of Magnolia, Mississippi, dnd the Hon. P. Z. Jones, now be-

ing deceased, upon the Hon. M. B. Montgomery of the firm

of Barnett, Jones & Montgomery ‘of Jackson, Mississippi,

attorneys of record for Respondent, by depositing: the same

in the United States Post Office or mail box with first class

postage prepaid, properly addressed, in: strict accordance

with Rule 33 of the Revised Rules of the Supreme Court

_ of the United States effective July 1, 1954.

This the 2/ — — of July, 1959.

Mutiy _

Eli th Hulen Grayson

‘- Of Counsel for: Petitioners,

* ue