# Petition for Writ of Certiorari — Badger Mutual Insurance v. Serio > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA0438614_1058%3A3 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 1959 - **Citation:** 361 U.S. 832 ## Text 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. ~ 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, 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 ‘ 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 --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA0438614_1058%3A3. Public record. Not legal advice.