# Petition for Writ of Certiorari — Howard Foundry Co. v. Hartford Fire Ins.

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition for Writ of Certiorari
- **Published:** January 1, 1955
- **Citation:** 350 U.S. 885

## Text

v FILBD
SEP 2 1955
HAROLD B. WILLEY, C

IN THE

Supreme Court of the United States

Ocroser Term, 1955.

wo, oO tl

HOWARD FOUNDRY COMPANY,
Petitioner,

vs.

HARTFORD FIRE INSURANCE COMPANY,
Respondent.

PETITION FOR WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS FOR THE
SEVENTH CIRCUIT.

Lawrence C. Mis,
29 South La Salle Street,
Chicago 3, Illinois,
Attorney for Petitioner.
Pau I. Fuemine,
Marearet H. McDowe 1,
29 South La Salle Street,
Chicago 3, Illinois,
Of Counsel.

‘INDEX.

PAGE
Petition for Writ of Certiorari .................... 1
Judgment of the Court Below .................+..-. 1
Ne ns ak eesae Oe oeee ewe MROE 2
Statutes and Rules Involved ..........-........5-. 2
NNR WRU ook eric conpac ce cescesbiew anes 2
eer eee er ree ee 4
Reasons for Granting the Writ .................... 10
I. The Decision of the Court of Appeals Is in
Conflict With Applicable State Law ....... 10

(a) Under Illinois Law a Unilateral or
Mutual Mistake in Preparation of
an Insurance Policy Is a Controlling
PU, Kaa Nckbe Vdcbas Vea chdmepe<eas 10
(b) Under Illinois Law the Mere Posses-
sion, or Reading, of Such Policy By
the Insured Does Not Bar Recovery .. 11

II. The Decision of the Court of Appeals Con-
flicts With Decisions Within Its Own Cir-
cuit and With Decisions of Courts of Appeals
for Other Circuits, and With the Law Estab-
lished By the United States Supreme Court 12
(a) Relief Will Be Granted Upon the Facts

Proven Whether It Be in Law or

Equity Regardless of the Theory Pro-

ee | on or the Prayer for Relief onc ee
(b) Binder Contract Controlled in Absence
of Agreed Variation in Subsequent
Policy and Could Not Merge in Policy
With Different Description .......... 15
Under the Evidence Heard and the In-
structions Given, the Jury’s Verdict
Should Have Been Accepted as Con-

SRR San bdbavdsrabasecackveckins 16

ii

III. Decision of the Court of Appeals So Far
Departed From the Accepted and Usual
Judicial Procedure That an Examination of
Its Decision Is Required .............+-5.

(a) The Policy of Insurance Should Be
Construed Most Favorably to the In-
sured and if at All Possible Indemnity
EES reer rr ery

Cs is ona be do's tee baea AA OESOR LED BAS ERS AS

APPENDIX.

Opinion and Order of the Court of Appeals for the
Seventh Circuit and Statutes and Rules Involved:
Li) Opitbom son os i ee eee teen cee

2. Order Denying Rehearing ................--

3. Statutes and Rules Involved ................
Title 28, U. S. C. A. §1254(1) ..........

Federal Rules of Civil Procedure, Rule 2

Federal Rules of Civil Procedure, Rule 8

Federal Rules of Civil Procedure, Rule 38
Federal Rules of Civil Procedure, Rule 39
Federal Rules of Civil Procedure, Rule 54

19

19

23
27
28
28
28
28
30
31

List oF AUTHORITIES.

Anderson v. Pettigrew Foundry Company, 297 IIl.
BE «0 ec cee eC i EN ee

ORY ER CTY OCET TET TELE T OP ae TEER eee

Barnett v. New England Mutual Life Ins. Co. (C. C. A.
eS A eS ey ert eae areca

Bereslavsky v. Caffey (C. C. A. 2d, 1947), 161 F. 2d

ESP Perce tere re Try Fey Teer eC rE toy

Broidy v. State Mutual Life Assurance Co. of Wor-
cester (C. A. 2d, 1951), 186 F. 2d 490 ..............

Buchanan v. Scottish Union and National Insurance

10

14

17

13

13

ae OR Be ee oe ee rece 10, 11, 15

Central State Cooperatives, Inc. v. Watson Bros.
Transp. Co. (C. A. 7th, 1950), 180 F. 2d 689, Cert.
Denied 340 U. S. 815, 71 S. Ct. 44, 95 L. Ed. 599

City of Morgantown, W. Va. v. Royal Insurance Com-
pany, Ltd. (1949), 337 U. S. 254, 69 S. Ct. 1067, 93
By kB NGS Nu NCA sak SANSA A wk cesses koh menan

Commercial National Bank in Shreveport v. Parsons
(C. C. A. Sth, 1944), 144 F. 2d 231 ................

Equitable Safety Insurance Company v. Hearn, 20
Wall. 494, 87 U. S. 494, 22 L. Ed. 398 ............

Garland v. Garland (C. C. A. 10th, 1947), 165 F. 2d
BE ES ERRRENSAECER CARR RAN ODIES URL OER ORES Boia ce

German Alliance Insurance Co. v. Kansas, 233 U. S.
389, 34 S. Ct. 612, 58 L. Ed. 1011 ................

German Insurance Co. v. Miller, 39 Ill. App. 633 ....

Gulbenkian v. Gulbenkian (C. C. A. 2d, 1945), 147 F.
See error Pr irr Pere ry rr rrr mee pa:

18

17

13

15

12

19
14

lv

Hargrove v. American Central Insurance Co. (C. C.

A. FOU, 2009), BOB Pe Be BG Sn idence sa ciccscess 17
Herzbergs, Inc. v. Ohio Accident and Guarantee Corp.
(D. Neb., 1941), 42 F. Supp. 52 ...............05. 14

Hutches v. Renfro (C. A. 5th, 1952), 200 F. 2d 337 12
Johnson v. Royal Neighbors of America, 253 Ill. 570 11
Jordine v. Walling (C. A. 3rd, 1950), 185 F. 2d 662 13

Kansas City, St. Louis, and Chicago R. R. Co. v.
Alton R. R. Co. (C. C. A. 7th, 1941), 124 F. 2d 780 .13, 14

Leimer v. Woods (C. A. 8th, 1952), 196 F. 2d 828 .... 17
Lumbermens Mutual Insurance Co. v. Bell, 166 Ill. 400 14

Maltz v. Sax (C. C. A. 7th, 1943), 134 F. 2d 2, Cert.
Denied 219 U. S. 772, 63 S. Ct. 1487, 87 L. Ed. 1720 14

Mercury Oil Refining Co. v. Oil Workers International
Union C. I. 0. (C. A. 10th, 1947), 187 F. 2d 980 .... 12

Metropolitan Casualty Insurance Co. of New York v.

Friedley (N. D. Iowa, 1948), 79 F. Supp. 978 ...... 14
Mooney v. Commercial Casualty and Insurance Com-
SOUS, Tad Nik I. GO 6a a sn on Cae Se dedi ee ciavee’s 10

Pollock v. Connecticut Fire Insurance Company .of
Hartford, 281 Ill. App. 305, affirmed 362 Ill. 313 ...10, 11

Prudential Insurance Co. v. Saxe (App. D. C., 1943),

SY Se SEG a onc ckd Sow CAD Ween es Shae os vee 17
Reconstruction Finance Corporation v. Goldberg (C.

CL, FER, TPE) Be Be BE TR sas 6 v0 0s Kes van eins 12
Republic Insurance Company, Dallas, Texas v. French

(C. A. 10th, 1950), 180 F. 2nd 796 ................ 16
Ring v. Spina (C. C. A. 2d, 1945), 148 F. 2d 647 ...... 12

Royal Neighbors of America v. Boman, 177 Ill. 27 ..10, 11

Schongalla v. Hickey (C. C. A. 2nd, 1945), 149 F. 2d
687, Cert, Denied, 326 U. S. 736, 66 S. Ct. 46, 9 L. Ed.

v

Snell v. Atlantic Fire and Marine Insurance Company
of Providence, R. I. (1878), 98 U. S. 85, 25 L. Ed.
UE cael Na 4 Aa 5 55s MANE UE PR hee aK oeacubad

Truth Seeker Co., Inc. v. Durning (C. C. A. 2d, 1945),
st ES AR ad BE ig ttyl e eg aan

Williamson v. Columbia Gas and Electric Corporation
(C.-C A. Sed, 1000), 130 FF. 9d 26 |...

Worcester v. Pure Torpedo Co. (C. C. A. 7th, 1944),
gg eR et RP ee ree Nees

19

12

14

13

Supreme Court of the United States

Ocroser Term, 1955.

BE Seasaee

HOWARD FOUNDRY COMPANY,

Petitioner,
vs.
HARTFORD FIRE INSURANCE COMPANY,
Respondent.

PETITION FOR WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS FOR THE
SEVENTH CIRCUIT.

To the Honorable Chief Justice and Associate Justices of
the Supreme Court of the United States:

The petitioner, Howard Foundry Company, prays that
a writ of certiorari be issued to review the decision of
the United States Court of Appeals for the Seventh Cir-
cuit in the above case.

JUDGMENT OF THE COURT BELOW.

The judgment of the United States District Court for
the Northern District of Illinois, Eastern Division, was
entered on May 27, 1953, without opinion and has not been
reported, but is printed in the record filed herewith on

page 481.

2

The opinion of the United States Court of Appeals for
the Seventh Circuit reversing said judgment was filed May
16, 1955, and is reported at 222 F. 2d 767 and is set forth
in the appendix hereto infra, page 23, and in the certified
copy of the record.

JURISDICTION.

On June 9, 1955, the United States Court of Appeals
for the Seventh Circuit entered its order denying a petition
for rehearing in this cause. This petition is filed within
ninety (90) days of the denial of the Petition for Re-
hearing by the United States Court of Appeals for the
Seventh Circuit.

The jurisdiction of this Court is invoked under 28 U.
S. C. A. 1254(1).

STATUTES AND RULES INVOLVED.

28 U.S. C. A. 1254(1).

Federal Rules of Civil Procedure, Rule 2.

Federal Rules of Civil Procedure, Rule 8.

Federal Rules of Civil Procedure, Rule 38.

Federal Rules of Civil Procedure, Rule 39.

Federal Rules of Civil Procedure, Rule 54.

Pertinent sections are set forth in Appendix, infra, pages
28-32.

QUESTIONS PRESENTED.

1. Under the rules of civil procedure for the United
States District Court, is not a party entitled to relief which
is warranted by the facts disclosed on the hearing of a
ease, regardless of the theory under which that party
proceeded, and whether or not such relief is provided at
law or in equity, or both? Even prior to such rules, could

3

not a reformation be granted in conjunction with legal
relief in the same action? -

2. Did the Court of Appeals err in holding that a mis-
take by the agent of the insurer in describing the prop-
erty insured had no bearing on the insured’s right of
recovery, where the established law of the State of Illinois
provides that such a mistake estops the insurer from setting
up the defense that the description in the policy does not
include the property destroyed?

3. When a fire insurance binder is issued by an insur-
ance company, which admittedly describes the location of
the real property accurately, and which has not been re-
voked, can the insurance company alter the legal descrip-
tion in the printed policy later issued and so be released
from liability on destroyed property described in the
original binder?

4. Where a jury has rendered a verdict based on proper
instructions and where such verdict could have been ren-
dered as a result of such instructions on any one of vari-
ous alternative theories, is it not error on the part of
an appeals court to reverse the jury’s verdict on the
assumption that their finding was based on only one of
such theories, completely ignoring the others?

d. Is not the opinion by the Court of Appeals in this
case a departure from the usual course of judicial proceed-
ings in that it interprets the insurance company’s policy in
favor of the insurer contrary to a jury’s finding, so as
directly to affect, through establishing such a precedent,
the rights of innumerable insureds, who now labor under
the false apprehension that their security is protected
through insurance policies which they have depended upon
the insurers to prepare accurately?

4

STATEMENT OF THE CASE.

In November of 1943, one Frank C. Howard acquired a
one-half interest in a farm in McHenry County, Illinois,
from one Edward E. Fleury. At the time Mr. Howard
purchased the one-half interest in said farm in McHenry
County, Illinois, which was commonly referred to as the
Schaefer or Bohr Farm, he was acting in his capacity as
President of the Howard Foundry Company, to purchase
farms ir McHenry County, Illinois, for an operation con-
ducted by the Howard Foundry Company, which later be-
came known as the Hickory Creek Farm. (R. 129, 216.)
The name ‘‘Schaefer farm’’ had been used to describe the
property for a good many years; however, it also had the
name of ‘‘Bohr farm”? for the reason that the said Edward
E. Fleury had purchased the farm in October, 1943, from
Magdalena Bohr, who held a purchase money mortgage on
the farm for some time thereafter, until it was ultimately
paid off in 1945. (Def. Hartford’s Ex. 3.)

On November 10, 1943, Frank C. Howard and Edward
E. Fleury purchased a policy of fire insurance covering
the Schaefer farm from the Travelers Fire Insurance Com-
pany of Hartford, Connecticut, for a period of five years,
expiring on November 10, 1948, for a total premium of
$449.37. (R. 217, Pitf.’s Ex. 1.) The total amount of
$12,590 included the amount of $5,600 on a frame barn on
the premises. The farm was described to be in McHenry
County, Illinois, situated in Sections 15 and 22, Township
45, Range 8, near McHenry, with a loss payable clause to
be adjusted with the insured named in said policy and pay-
able to the insured and Mrs. Magdalena Bohr as their re-
spective interests may appear.

Between November 10, 1943 and September 10, 1945,
the title to the farm was transferred by Frank C. Howard
and Edward E. Fleury to the Howard Foundry Company

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5

after the interest of Edward E. Fleury was purchased by
it. (R. 129, 130, 216.) During the year 1945, the Howard
Foundry Company was making extensive alterations and
remodeling and repairs of the said barn, which was recon-
structed at a cost of approximately $35,000. (R. 131.) In
September, 1945, the Howard Foundry Company had had
a policy on the buildings on said Schaefer farm issued
by the Fidelity-Phenix Fire Insurance Company (R. 135)
which included, among other things, some $15,000 worth of
insurance on the said barn. The Fidelity-Phenix Fire In-
surance Company reinsured a portion of its risk with the
Defendant Hartford Fire Insurance Company. (After the
fire which later occurred, the Fidelity-Phenix Fire Insur-
ance Company paid the Plaintiff Howard Foundry Com-
pany for the loss and the Hartford Fire Insurance Company
paid its share of the loss under its contract of reinsur-
ance.) (R. 228, 199.)

On December 10, 1945, said Frank C. Howard, President
of the Howard Foundry Company, telephoned Mr. Arthur
J. Feicht, who was an insurance floor agent and also an
insurance broker of the Travelers Fire Insurance Com-
pany, and informed him of the extensive alterations and
repairs on the Schaefer farm and requested that the cov-
erage on the barn under the Travelers policy be raised
to at least $15,000. (R. 132, 133, 75.) Said Feicht ac-
cepted the order for the increased insurance and informed
Mr. Howard by letter that the insurance of the barn was
increased to $15,000. At the same time, Feicht informed
Travelers underwriting department that the old barn had
been so reconstructed that it was a wholly new structure
and requested an additional binder for $15,000 on Item 14
of Policy Number 53,969. (R. 74, 75, 77, 80.)

According to defendant Travelers’ agent’s evidence, it
was the policy of the Travelers Insurance Company to

6

limit its coverage on any item of farm property on any
building to not more than $5,000 (R. 225, 257), and, ac-
cordingly, the branch office of the Travelers Insurance
Company requested permission from its home office to in-
crease its coverage on the said premises. Travelers’ evi-
dence also was that the home office of the Travelers Insur-
ance Company informed the Chicago office that it did not
desire to increase the insurance and that, if increased in-
surance was desired, the risk should be refused and the
policy cancelled. None of the inter-office communications
within the Travelers’ and Hartford organizations, which
occurred after December 10, 1945, were ever communicated
to the Plaintiff, Howard Foundry Company, which was
ignorant of the request of Travelers to the home office to
increase the insurance.

It is difficult for the Plaintiff to relate exactly what oc-
curred from this point forward, but the evidence introduced
was that on December 17, 1945, Mr. George Wagner, the
chief underwriter for the Travelers Fire Insurance Com-
pany, telephoned H. B. Allen, farm underwriter of the
Hartford Fire Insurance Company, and informed him that
the Travelers had a piece of business and wanted to know
if the Hartford would be interested in taking over, because
the amount of insurance required was more than the
amount Travelers wanted to carry on farm property. (R.
202.)

Thereupon, Hartford issued its ‘‘binder’’ the exact same
date of cancellation of the Travelers Policy, in the names
of the owners, Frank C. Howard and Edward Fleury, and
identifying the farm by legal description, Sections 15 and
22, Township 45, Range 8, McHenry, Illinois, including
among other things, $15,000 barn and loss clause, Mrs.
Bohr, marked ‘‘bound 12-17-45.’’ (Plaintiff’s Exhibit 19,
R. 203.)

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7

On December 19, there was another telephone conversa-
tion between said Wagner, underwriter for the Travelers
Insurance Company, and Allen, farm underwriter for the
Hartford, increasing by $2,500 the insurance bound on the
dwelling and a change of the name of the insured from
Frank C. Howard and Edward E. Fleury to the Howard
Foundry Co. (R. 207.)

Thereafter Mr. Wagner, underwriter at the Travelers,
informed Mr. Feicht that Mr. Allen at the Hartford was
taking over the entire risk and requested Mr. Feicht to ob-
tain the Travelers policy of insurance for the said farm
from the Howard Foundry Company as the risk was being
taken over by the Hartford. Mr. Feicht, agent and broker,
subsequently telephoned Howard Foundry Company to
return its policy of insurance so that the increase could
be accomplished. On March 29, 1946, the policy of Trav-
elers Insurance Company was cancelled as of December
17, 1945 (R. 89, 258; Plaintiff’s Exhibit 1) and on March
6, 1946, the policy of insurance of the Hartford Fire In-
surance Company No. 205910 was issued, insuring Howard
Foundry Company in the amount of $21,350, for a total
premium of $737.52. This policy was back dated to Decem-
ber 17, 1945 and was for a term of 5 years from that date,
covering, among other things, a sum of $10,000 insurance
on the barn and $750 on the silo. (R. 209-210.)

There was much testimony in the record, over plaintiff’s
objections, having to do with the private files of the Hart-
ford Fire Insurance Company and conversations between
its inspector, Glen L. Russell, and officials of the Hartford
Fire Insurance Company, as well as some claimed con-
versations with said Arthur Feicht to indicate that the
Hartford Fire Insurance Company issued a policy of in-
surance on the Justen Farm, which happened to be a farm

8

also owned by the Howard Foundry Company situated
adjacent to said Schaefer farm and also located in See-
tions 15 and 22, Township 45, Range 8, McHenry County,
Illinois. The policy of insurance issued by the Hartford
Fire Insurance Company described a farm owned by the
insured and occupied by a tenant, and ‘‘situated on and con-
fined to 166 acres in the _.... of Section 15, Township
45, range 8, McHenry County, Illinois.’’ (Pltf.’s Ex. 6.)

During January, February and March, 1946, the How-
ard Foundry Company converted the barn on the Schaefer
farm from a horse barn to a cow barn, with some appre-
ciation in the value of the building. (R. 130-131, P. 246.)

During the month of August, 1947, the barn on the
Schaefer farm was destroyed by fire and two silos con-
nected with said barn were also totally destroyed by the
fire. (R. 90, 135-136, 227.) At the time of the fire, the
barn which burned had a replacement value in excess of
$50,000. (R. 135.)

Due notice of loss and demand for payment was made
on the Hartford Fire Insurance Company. Upon Hart-
ford’s refusal to pay for such loss, Howard filed a pro-
ceeding to enforce such claim in a state court of competent
jurisdiction.

The case was removed to the United States District
Court for the Northern District of Illinois, Eastern Divi-
sion and thereafter the plaintiff twice amended its com-
plaint.

Plaintiff’s second amended complaint on which the case
was tried, contained three counts.

Count I was drafted on the theory that che Hartford
Fire Insurance Company had issued a contract of insurance
to the Plaintiff on the Schaefer farm and Plaintiff was
entitled to collection on its contract of fire insurance with
Hartford; Count II was d-afted on the theory that, if the |
policy of insurance issued by the Hartford Fire Insurance —

a

9

Company did not cover the barn on the Schaefer farm but
covered the Justen farm as claimed by Hartford, then the
fact that the policy of insurance did not cover the Schaefer
farm was due to the negligence of the Defendant Hartford
Fire Insurance Company or the Defendant Travelers Fire
Insurance Company, or both; and Count III of the Com-
plaint was drafted on the binder of insurance issued by the
Hartford Fire Insurance Company on the Schaefer farm,
and that its binder was never cancelled or terminated and
on the date of the fire was still in full foree and effect.

After the completion of that trial, the jury rendered a
verdict in favor of Travelers Fire Insurance Company
and a verdict against the defendant, Hartford Fire In-
surance Company, in the amount of $10,750.00 with interest
from February Ist, 1948. (R. 4, 480.) Defendant, Hart-
ford Fire Insurance Company moved for a directed verdict
at the close of the plaintiff’s case and at the close of all
the evidence. Both motions were denied by the trial court.
Judgments were entered on the verdict, and the motions
of the Hartford Fire Insurance Company for judgment
notwithstanding the verdict and in the alternative for a
new trial were overruled by the ‘rial court. (R. 488.) The
defendant, Hartford Fire Insurance Company, appealed
from the judgment, and the plaintiff, Howard Foundry
Company, appealed from the judgment in favor of the
Travelers Fire Insurance Company and cross-appealed
from the judgment in favor of the Hartford Fire In-
surance Company on the question of attorneys’ fees. The
basis of Hartford’s appeal was the denial by the trial
court of its motion for judgment notwithstanding the ver-
dict. Briefs were filed by all parties and oral argument
was heard by the Court of Appeals which affirmed the ver-
dict as to Travelers and reversed the judgment in favor of
the plaintiff and against the Hartford Fire Insurance
Company. The petition for rehearing was denied, result-
ing in the filing of this petition.

10

REASONS FOR GRANTING THE WRIT.

I.

THE DECISION OF THE COURT OF APPEALS IS IN CON.
FLICT WITH APPLICABLE STATE LAW.

(a) Under Illinois Law a Unilateral or Mutual Mistake in
Preparation of an Insurance Policy Is a Controlling
Factor.

The Court of Appeals was obligated, as agreed by both
parties and the court in its opinion, to follow the law of
Tilinois in deciding whether or not the insured could re-
cover on a policy which contained an erroneous description.

The court completely ignored Illinois law when it held:

‘*On the state of this record we think it unnecessary
to narrate evidence presented below purporting to
demonstrate intention of the contracting parties, or of
a unilateral or mutual mistake.’’ (App. 25.)

The trial court had properly followed the law of the
State of Illinois and instructed the jury that if the de-
fendant were guilty of fraud or mistake in the preparation
of the policy, so that the proper description was not in-
serted, the issues should be found for the plaintiff. The
jury entered a verdict for the plaintiff. Illinois law has
historically followed that rule and even the case cited the
Appellate Court of Appeals in its decision, Pollock v. Con-
necticut Fire Insurance Company of Hartford, 281 I.
App. 305, affirmed 362 Ill. 313, so holds. The weight of
authority on this issue is further set forth in Royal Neigh-
bors of America v. Boman, 177 Il. 27; Buchanan v. Scottish
Union and National Insurance Co., 210 Til. App. 523;
Mooney v. Commercial Casualty and Insurance Company,
350 Ill. App. 328; Anderson v. Pettigrew Foundry Com-
pany, 297 Ill. App. 14.

ll

(b) Under Illinois Law the Mere Possession, or Reading,
of Such Policy by the Insured Does Not Bar Recovery.

The Court of Appeals based its reversal upon the fact
that the insured received the policy and had access to it.
Such a ruling is contrary to the law of the State of Illinois
as set forth in Pollock v. Connecticut Fire Insurance Com-
pany of Hartford, 281 Ill. App. 305, affirmed 362 Ill. 313,
where it is stated:

“‘Unless he has been misled by some act of the in-
surer, it is generally held that a person who accepts

and retains possession of an insurance policy is bound
to know its contents.’’ (Emphasis supplied.)

See also:

Royal Neighbors of America v. Boman, 177 Ill. 27;
Johnson v. Royal Neighbors of America, 253 Ill. 570. In
Buchanan v. Scottish Union & National Insurance Co., 210
Ill. App. 523, the court states:

‘‘the principle applied in these cases is not new in

this state but has been uniformly announced and ad-
hered to in a long line of cases.’’

Yet the Court of Appeals nevertheless ruled as a matter
of law that because the comptroller of the insured corpo-
ration possessed and looked at a policy the insured was
bound by an error in description. Is not such a question
of contributory negligence one for the trial court to de-
termine?

12

I.

THE DECISION OF THE COURT OF APPEALS CONFLICTS
WITH DECISIONS WITHIN ITS OWN CIRCUIT AND WITH
DECISIONS OF COURTS OF APPEALS FOR OTHER CIR-
CUITS, AND WITH THE LAW ESTABLISHED BY THE
UNITED STATES SUPREME COURT.

(a) Relief Will Be Granted Upon the Facts Proven Whether
It Be in Law or Equity Regardless of the Theory Pro-
ceeded on or the Prayer for Relief.

The Court of Appeals erred when it based its decision
on this premise:

‘‘But plaintiff proceeded on the theory that the
policy of insurance, on which it grounds this claim
against Hartford, is sufficiently supple to cover the
loss by fire of buildings located within Section 22.”
(App. 25.)

Under the Rules of Federal Civil Procedure it has be-
come the established law that a plaintiff is to be granted
any relief to which the facts show he is entitled. (Federal
Rules of Civil Procedure 54 (c).) This rule applies whether
such relief has been prayed for, whether it be legal or
equitable, and regardless of the theory alleged or pro-
ceeded on.

Hutches v. Renfro (C. A. 5th, 1952), 200 F. 2d 337;
Gulbenkian v. Gulbenkian (C. C. A. 2d, 1945), 147 F. 2d 173;
Truth Seeker Co., Inc. v. Durning (C. C. A. 2d, 1945), 147
F. 2d 54; Ring v. Spina (C. C. A. 2d, 1945), 148 F. 2d 647;
Mercury Oil Refining Co. v. Oil Workers International
Union, CIO (C. A. 10th, 1947), 187 F. 2d 980; Garland v.
Garland (C. C. A. 10th, 1947), 165 F. 2d 131.

The quoted ruling is directly contrary to the ruling of

the same court in Reconstruction Finance Corporation v.
Goldberg (C. C. A. 7th, 1944), 143 F. 2d 752.

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Again, this same court has stated, in Kansas City, St.
Louis, and Chicago R. R. Co. v. Alton R. R. Co. (C. C. A.
7th, 1941), 124 F. 2d 780, in an opinion by Mr. Justice
Minton:

‘‘We do not think the prayer on this part of the
complaint is for equitable relief. Even if it were, the
prayer does not control. The prayer may be looked
to to help determine the relief to which the appellant
is entitled, but it is not controlling.

‘¢*The question is not whether the plaintiff has
asked for the proper remedy but whether under his
pleadings he is entitled to any remedy.’ ’’ Catangzaritti
v. Bianco, D. C. 25 F. Supp. 457.

“If the appellant has stated a cause of action for
any relief, it is immaterial what he designates it or
what he has asked for in his prayer; the court will
grant him the relief to which he is entitled under the
facts pleaded.’’ (Citing cases.)

The second holding by the court which directly conflicts
with the rule cited and also rules 2, 38 and 39 of the
Federal Rules of Civil Procedure is:

««* * * it was beyond the province of the jury in
this action at law, to reform or, indeed, apply that

policy to the fire loss sustained by plaintiff.’’ (App.
26.)

Under present rules the distinction between proceedings
at law and in equity have been abolished and cases bearing
elements of both can be determined in one action, regard-
less of the theory pleaded or relief asked for. Williamson
v. Columbia Gas and Electric Corporation (C. C. A. 3d,
1939), 110 F. 24 15; Commercial Natl. Bank in Shreveport v.
Parsons (C. C. A. 5th, 1944), 144 F. 2d 231; Bereslavsky
v. Caffey (C. C. A. 2d, 1947), 161 F. 2d 499; Bereslavsky
v. Kloeb (C. C. A. 6th, 1947), 162 F. 2d 862; Jordine v.
Walling (C. A. 3d, 1950), 185 F. 2d 662.

The Court of Appeals in this Seventh Circuit has pre-

14

viously recognized this to be the rule and has so held in
Kansas City, St. Louis and Chicago R. R. Co. v. Alton R. R.
Co. (C. C. A. 7th, 1941), 124 F. 2d 780; Malte v. Sax
(C. C. A. 7th, 1943), 134 F. 2d 2, cert. denied (1943) 219
U. S. 772, 63 S. Ct. 1437, 87 L. Ed. 1720; Weeks v. Bareco
Oil (C. C. A. 7th, 1941), 125 F. 2d 84.

Under the above holdings as well as under decisions
construing Rule 8(a) of the Federal Rules of Civil Pro-
cedure, which simplifies the method of stating a claim, the
decision below is in error.

In all of the following cases reformation and other ap-
propriate relief was granted, although not pleaded or
prayed for in an action at law: Metropolitan Casualty
Insurance Co. of New York v. Friedley (N. D. Iowa, 1948),
79 F. Supp. 978; Herzbergs Inc. v. Ohio Accident and Guar-
antee Corp. (D. Neb., 1941), 42 F. Supp. 52; Broidy vy.
State Mutual Life Assurance Co. of Worcester (C. A.
2d, 1951) 186 F. 2d 490.

Even without considering present rules of Federal Civil
Procedure, the case of Schongalla v. Hickey, (C. C. A. 2nd,
1945) 149 F. 2d 687, cert. denied, 326 U. S. 736, 66 S. Ct. 46,
9 L. Ed. 439, established the rule that reformation would
be deemed granted and the proper relief awarded in an
action at law.

‘In a suit upon the contract of insurance, where
such procedural right to reform the policy exists, the

courts often give the same relief as though a decree
of reformation had actually been obtained.”

That case cited Aetna Ins. Co. v. Brannon, 99 Tex. 391,
89 S. W. 1057, as its authority, wherein an excellent dis-
cussion of the procedure is explained.

Illinois, and the majority of states, have long followed
the same rule. German Insurance Co. v. Miller, 39 Il.
App. 633; Lumbermens Mutual Insurance Co. v. Bell, 166

_———-

15

IU. 400; Buchannan v. Scottish Union and National In-
surance Co., 210 Ill. App. 523. An exhaustive analysis
covering the law of other jurisdictions is contained in
66 A. L, R. 767.

(b) Binder Contract Controlled in Absence of Agreed
Variation in Subsequent Policy and Could Not Merge
in Policy With Different Description.

It is admitted by all parties that a binder contract was
granted properly describing the now destroyed property.
Hartford’s theory was that such « binder merged with
the policy issued even though different properties were
described. Nowhere is it contended that the binder was
cancelled.

It is impossible for a binder of insurance on one build-
ing to merge into a policy of insurance on a completely
different building. This court held in Equitable Safety
Insurance Company v. Hearn, 20 Wall. 494, 87 U. S. 494,
22 L. Ed. 398, that

‘Tt is not denied that the correspondence constituted
a preliminary agreement. Such clearly was its effect.
The policy was intended to put the contract in more
full and formal shape.

“«“* * * he had a right to assume that the policy
would accurately conform to the agreement thus made,
and rest confidently in that belief. It is not probable
that he scanned the policy with the same vigilance
as the letters of the company. They intended to pre-
vent such scrutiny, and if it was necessary, threw
him off his guard.’’

and in the same case:

‘‘In this controversy the clear terms of the pre-
liminary agreement warranted the court below in over-
ruling the departure from it, found in the policy.’’

16

Also, in the case of Republic Insurance Company, Dal-
las, Texas v. French, (C. A. 10th, 1950) 180 F. 2d 796:

‘«* * * the company cannot avoid liability by issuing

a policy which does not cover the risk contemplated

by the binder. * * * it cannot promise one contract

and fulfill it with another. Mut. Fire Ins. Co. v. Gold-

stein, 119 2d 83, 86 a. 35, Ann. Cas., 1914 C, 723,
Couch on Insurance, Vol. 1, Sec. 81.’’

How then can the Circuit Court, in reversing the trial
court, be justified in saying,
‘‘We have fully considered all plaintiff’s conten-

tions, including those bottomed on the binder’’. (App.
26.)

If the binder was on the destroyed property, the de-
scription therein contained must control. Any ruling to
the contrary conflicts with the cited decision of this court
and that of the Tenth Circuit.

(c) Under the Evidence Heard and the Instructions Given,
the Jury’s Verdict Should Have Been Accepted as Con-
trolling.

The appellate court overruled the jury’s determination
for the stated reason that it was beyond the jury’s pro-
vinee, in the absence of an ambiguity, to reform the policy
or to apply it to Howard’s loss in an action at law. This
ruling followed the assumption that the jury by their
verdict

‘«* * * fitted the loss of the buildings situated in

Section 22 into this policy which mentions structures -
in Section 15.’’ (App. 25.)

The right to trial by jury has been retained and re-
emphasized in Rule 38 of the Federal Rules of Civil
Procedure. Such a concept is basic and needs no citation
of authority.

17

Since the passage of the Federal Rules of Civil Pro-
cedure, joining legal and equitable causes of action, ques-
tion has arisen as to the propriety of a jury deciding issues
where mixed causes exist. The Courts of Appeals in all
Circuits have resolved this problem by ruling that the
basic nature of the proceeding controls. Prudential In-
surance Co. v. Saxe (App. D. C., 1943), 134 F. 2d 16;
Barnett v. New England Mutual Life Ins. Co. (C. C. A.
5th, 1941), 123 F. 2d 712; Hargrove v. American Central
Insurance Co. (C. C. A. 10th, 1942), 125 F. 2d 225.

It is submitted here that the basic issues were legal
and that reformation, if necessary, was only an incidental
element under the oft-held theory that, ‘‘equity considers
done that which ought to be done.’’

Even if the appellate court considered it an equitable
action, no objection was raised to the jury’s determining
the issues. Under Rule 39, of the Federal Rules of Civil
Procedure, the court could have called a jury for an ad-
visory opinion.

In a case similar to this the jury’s verdict was so con-
sidered and therefore no error resulted. Hargrove v.
American Central Insurance Co. (C. C. A. 10th, 1942),
125 F. 2d 225. To deny such right has been held to be
error. Leimer v. Woods (C. A. 8th, 1952), 196 F. 2d 828.

It is important to note that this precise question, the
right of jury trial, was appealed in a similar case, but
was never determined by this court for lack of a final
judgment subject to review. City of Morgantown, W. Va.
v. Royal Insurance Company Lid. (1949), 337 U. S. 254,
69 S. Ct. 1067, 93 L. Ed. 1347. This case therefore pre-
sents an opportunity for this Court to determine that
issue for the benefit of future litigants.

18

Did the jury fit a loss in Section 15 into a policy on a
building in Section 22? Or did they find
(a) That the error was caused by Hartford, estop-
ping it from raising the defense of faulty description,
or
(b) That the true contract was the binder?
or

(e) That the policy was reformed due to a uni-
lateral or mutual mistake?

All of the above possibilities exist and any would be
legitimate basis for the jury’s finding as it did. When
such alternatives exist, the Court of Appeals is bound to
draw all reasonable inference in favor of the jury’s find-
ing. Worcester v. Pure Torpedo Co. (C. C. A. 7th, 1944),
140 F. 2d 358; Central State Cooperatives, Inc. v. Watson
Bros. Transp. Co. (C. A. 7th, 1950), 180 F. 2d 689, cert.
denied 340 U. S. 815, 71 S. Ct. 44, 95 L. Ed. 599. With
the various alternative possibilities presented and with
the wealth of evidence presented on all such issues, it
was the appellate court’s duty to accept the verdict if at
all possible and to affirm the judgment entered, if under
any theory the plaintiff was entitled thereto. Has it not
substituted its conclusions for those of the jury and the
trial court?

19

Il.

DECISION OF THE COURT OF APPEALS SO FAR DE-
PARTED FROM THE ACCEPTED AND USUAL JUDICIAL
PROCEDURE THAT AN EXAMINATION OF ITS DECISION
IS REQUIRED.

(a) The Policy of Insurance Should Be Construed Most

Favorably to the Insured and If at All Possible Indem-
nity Granted.

The rule that an insured should be protected if at all
possible has been universally upheld. This rule has been
derived through a multitude of decisions recognizing the
insurance business to be ‘‘clothed with public interest’’
above and beyond the problem existing in eny particular
case. (German Alliance Insurance Co. v. Kansas, 233 U. S.
389, 34 S. Ct. 612, 58 L. Ed. 1011.) All policies of insur-
ance are prepared by the company insuring them and are
normally completed by such company’s agents or repre-
sentatives. Unlike most contracts, the signature of the
insured is not required, yet he is considered to have agreed
to the policy he retains. The layman is dependent upon
the agent or representative of the eompany he deals with
to prepare a policy to protect him from the risk which
it is purportedly covering. Therefore, responsibility for
an error by the company, or its agent, which would other-
wise nullify the contract involved has, throughout the his-
tory of this Court, been placed upon the insurer, even
where the insured has the policy in his possession. This
Court has held that a different ruling would give the in-
surance company an unconscionable advantage and that
the insured should be free to rest in the belief that the
policy will be prepared in conformance with his contract.
Snell v. Atlantic Fire and Marine Insurance Company of
Providence, R. I. (1878), 98 U. S. 85, 25 L. Ed. 52.

20

The authorities in all states and the decision of the
various Courts of Appeals are universal in so holding.

The decision in this case has completely transgressed
that basic concept and has established a precedent which,
if left to stand unclarified, will not only deprive this in.
sured of its just dues but will create a situation where
many people will be resting in the false belief that they
have frugally protected themselves against an unfore-
seen catastrophe. This decision will in effect force every
layman to become as educated in the law of insurance
as the ruling courts, but without the advantage of sup-
porting briefs.

It is imperative that we not revert to the law of caveat
emptor in insurance dealings and that this court review
the decision below so that such a result does not follow.

The decision in this case requires clarification. The
basic reasoning and the rules of law upon which the de-
cision is based are jumbled and unintelligible. If the
decision hinges upon whether court or jury should decide
the issues, then it is time for this court clearly to estab-
lish what rights exist under the present Federal Rules
of Civil Proce@a If the decision rests upon another
basis, the conflict with existing law and the major im-
portance of the business of insurance requires a more full
and complete decision for the edification of the many who
will undoubtedly be affected.

CONCLUSION.

It is imperative that a decision, so intimately affecting
the insurance business and its relationship to every holder
of any insurance policy, be reviewed, where the decision
has summarily dismissed both the jury’s finding and the
rules of law with reference to binders, agents’ mistakes,
and theory of proceedings, and has ruled in effect that,

a

regardless of all things, a description written in an insur-
ance policy controls. It is submitted that such a decision
would, if allowed to stand unchallenged, destroy the many
safeguards established to protect both insured and in-
surers and would relegate the practice in Federal Courts
to the days of common law pleading.

Respectfully submitted,

Lawrence C. MIs,
29 S. La Salle St.,
Chicago 3, Illinois,
Counsel for Petitioner.

21

Paut I. Fuemrine,

Marcaret H. McDoweE tL,
29 S. La Salle St.,
Chicago 3, Illinois,

Of Counsel.

23

APPENDIX.

OPINION AND ORDER OF THE COURT OF APPEALS FOR
THE SEVENTH CIRCUIT AND STATUTES AND RULES

INVOLVED.
1. Opinion.
In tHe Unrrep States Court or APPEALs
For the Seventh Circuit

No. 11075, 11076.
October Term, 1954, January Session, 1955.

Howarp Founpry Company, }) Appeals from the

Plaintiff-Appellee-Appellant, United States Dis-

vs. % trict Court for the

Hartrorp Fire Insurance Com- Northern District

PANY, ET AL., of Illinois, East-
Defendants-Appellants-Appellees.) ern Division.

May 16, 1955.

Before Durry, Chief Judge, Finnecan and Linviey,
Circuit Judges.

Fixnecan, Circuit Judge. Howard Foundry Company,
plaintiff, sustained a loss by fire on its Schaefer farm in
August, 1947. Howard sued the Hartford Fire Insurance
Company, January 23, 1948, on a policy of fire insurance
numbered 205910 in the Superior Court of Cook County,
Illinois, and the case was removed to the district court
below. The Travelers Fire Insurance Company was joined
as a co-defendant on the theory that if no coverage was
rovided by that Hartford policy, then Travelers was neg-
gent in failing to procure a fire policy from Hartford
for the plaintiff. A jury awarded $10,750.00 damages to
Howard in its action against Hartford. That judgment

24

is brought here on review as case number 11075 by Hart-
ford seeking reversal because the district court denied
its several motions for: (i) a directed verdict, made at the
usual junctures during a trial on the merits, (ii) judgment
notwithstanding the verdict and, (iii) a new trial. In this
same appeal, plaintiff is a cross-appellant challenging
the district judge’s refusal to allow it, Howard, recovery
of attorney fees from Hartford. Case number 11076 is
Howard’s appeal from an adverse verdict rendered by
the same jury in favor of the co-defendant Travelers Fire
Insurance Company. We continued Travelers’ motion to
dismiss appeal number 11076; taking it with the case for
disposition. It is treated in this opinion.

Hartford’s appeal in 11075 pivots on its fire insurance
policy number 20910 covering plaintiff’s property “...
situated on and confined to 166 acres in . . . Section 15
Township 45 Range 8 County of McHenry State of Illi-
nois.’’ Scheduled in this eye for specific sums, are
these buildings protected for the assured-plaintiff: ‘‘24
story app. roof frame Dwelling House ... Private Garage
and Tool House .. . Chicken House .. . App. roof frame
Barn and Sheds . . . solid cement Silo . . .’’ (italics sup-
plied) It is undisputed that plaintiff suffered a loss by
fire which destroyed a barn and two silos, in Section 22,
Twp. 45 N. Range 8, EB. 3rd P. M., situated on its Schaefer
(also known as Bohr) farm. But, plaintiff also owned
several other farms, including one known as the Justen
farm, the buildings of which were located in Section 15,
Twp. 48, N. R. 8 East of the 3rd P. M. Acreage of the
Bohr and Justen farms ran over into both sections 15
and 22. Plaintiff grounds its claim of recovery from Hart-
ford on the aforesaid policy asserting that this contract
of insurance sufficiently identified the Schaefer-Bohr farm,
so that buildings situated on it were covered when the
loss occurred. Hartford resists this claim because, it con-
tends, the policy described plaintiff’s buildings located on
its Justen farm and there was, in fact, no fire at that place.
Obviously, no question exists as to the physical site of
the destroyed buildings. The core question is whether
[yaecend was insured against the loss of structures in

ection 22 thongh Hartford’s policy 20910 describes acre-
age and buildings as located in Section 15.

Both litigants agree Illinois law is determinative here

and cite us to decisions of varying vintage reported by

we

25

the Appellate Court of Illinois; an intermediate tribunal.
Yet we are constrained to follow an earlier benchmark set
in Ballard v. Citizen Cas. Co., 196 F. 2d 96, 100 (7th Cir.
1952) by adhering to the guide announced in West v.
American Telephone and Telegraph Co., 311 U. 8. 223,
237 (1940):
‘*Where an intermediate appellate state court rests
its considered judgment upon the rule of law which it
announces, that is a datum for ascertaining state law
which is not to be age srt by a federal court unless
it is convinced by other persuasive data that the
highest court of the state would decide otherwise.”’

Of course we are unable to predict whether the Illinois
Supreme Court would, or will, — from, or adhere to,
the holding mages by the Appe te Court as Niedring-
haus v. Aetna Life Insurance Co., 235 Ill. App. 335 (1925).
Yet Hartford relies heavily upon that decision and plain-
tiff responds by enthusiastically extracting a rule from
the identical opinion, urging that proposition as virtuall
determinative of Howard’s position here. But plaintiff
proceeded on the theory that the arg: § of insurance, on
which it grounds this claim against Hartford, is suffi-
ciently supple to cover the loss by fire of buildings located
within Section 22. Consequently, at the trial below, plain-
tiff introduced evidence of events in competition with the
written description, Section 15. By their verdict, the jury
fitted the loss of buildings situated in Section 22 into
this policy which mentions structures in Section 15. Hart-
ford refrains from voiding policy No. 205190, and simply
denies liability under that contract of insurance because
there was in fact no fire, or loss occasioned thereby, to
buildings in Section 15. Testimony of plaintiff’s comp-
troller, since 1936, establishes that he received policy
205190 sometime in March 1946 and he read it over; it
also appears from evidence given by this witness that
he had access to the policy. Pollock v. Connecticut Fire
Insurance Company, 281 Ill. App. 305 (1935) affirmed 362
Ill. 313, 322, 199 N. E. 816 (1936), Lumber Underwriters
of N. Y. v. Rife, 237 U. S. 605 (1915).

Plaintiff would have us ignore the clear recital of acre-
age and section number in the policy. On the state of this
record we think it unnecessary to narrate evidence pre-
sented below purporting to demonstrate intention of the
contracting parties, or of a unilateral or mutual mistake:

26

We hold that judgment should have been entered in favor
of Hartford Fire Insurance Company non obstante vere-
dicto [Pringle v. Gulf, Mobile & Ohio R. R. 212 F. 2d 632
(7th Cir., 1954) ] under the motion filed by that defendant at
the trial level. In the absence of an ambiguity in policy
905190 it was beyond the province of the jury in this action
at law, to reform or, indeed, apply that po icy to the fire
loss sustained by plaintiff. In reaching this disposition
we fully considered all plaintiff’s contentions, including
those bottomed on the binder, its argument concerning

eneral principles involved when interpreting policies of
insurance, and the inapposite case, German Insurance Co.
y. Miller, 39 Ill. App. 633 (1890).

Allowance or disallowance of attorney fees under IIl.
Rev. Stat. 1953, § 155 of the Illinois Insurance Code,
Ill. Rev. Stat. 1953, chap. 73, par. 767 is a matter vested
in a trial judge. Nor would we disturb the district judge’s
exercise of judgment and discretion on the face of this
record, and therefore affirm the denial of plaintiff’s mo-
tion for attorney fees.

In appeal number 11076, plaintiff, as cross-appellant,
urges that the final judgment entered on the jury’s verdict
finding the issues for Travelers is vulnerable owing to a
particular instruction given, and one that was refused.
After examining the Supplement to Volume II, steno-
graphic transcript of proceedings, we are satisfied that

laintiff failed to properly comply with Rule 51, Fed.

. Civ. Proe., 28 t. S. C. A., thereby disqualifying its
assignment of errors concerning jury instructions.

We do not reach the motion (already mentioned) to
dismiss the appeal taken by plaintiff in case 11076, because
after examining the underlying record found free of re-
versible error it is our opinion that the jury’s verdict
should be left undisturbed.

Judgment entered below for plaintiff Howard Foundry
Company against Hartford Fire Insurance Company, ap-
peal number 11075 is reversed and the order denying plain-
tiff’s motion for allowance of attorney’s fees is affirmed.

The final judgment in case number 11076 in favor of
The Travelers Fire Insurance Company against Howard
Foundry Company is

AFFIRMED.

Durry, Chief Judge. I concur in the result.

27

2. Order Denying Rehearing.
Unrrep States Court or APPEALS
For the Seventh Circuit,
Chicago 10, Illinois.
Thursday, June 9, 1955.

Before:
Hon. F. Ryan Duffy, Chief Judge.
Hon. Philip J. Finnegan, Circuit Judge.
Hon. Walter C. Lindley, Circuit Judge.

Howarp Founpry ComMPANY, a Cor- )
poration,
Plaintiff-Appellee,
No.11075 vs.
eee Fre Insurance Com- Appeals, inti ithe
' United States Dis-
Defendant-Appellant; . trict Court for the
Northern District
Howarp Fiounpry ComPaANy, “Raa
Plaintiff-Appeliant,| % Uhnors, Eastern
No. 11076 vs. sain
Hartrorp Fire Insurance Com-
PANY and THE TRAVELERS Fre In-
SURANCE CoMPANY,

Defendants-Appellees.

It is ordered by the Court that the petition for a rehear-
ing of this cause be, and the same is hereby,
DENIED.

Title 28 U. S. C. A. § 1254(1):

Federal Rules of Civil Procedure, Rule 2: One Form of
Action.

Federal Rules of Civil Procedure, Rule 8: General Rules

28

3. Statutes and Rules Involved.

Cases in the courts of appeals may be reviewed by
the Supreme Court by the following methods:

(1) By writ of certiorari granted upon the peti-
tion of any party to any civil or criminal case, before
or after rendition of judgment or decree[.]

There shall be one form of action to be known as
‘‘eivil action’’.

of Pleading.

(a) Claims for Relief. A pleading which sets
forth a claim for relief, whether an original claim,
counterclaim, cross-claim, or third-party claim, shall
contain (1) a short and plain statement of the grounds
upon which the court’s jurisdiction depends, unless
the court already has jurisdiction and the claim needs
no new grounds of jurisdiction to support it, (2) 8
short and plain statement of the claim showing that
the pleader is entitled to relief, and (3) a demand for
judgment for the relief to which he deems himself en-
titled. Relief in the alternative or of several different
types may be demanded.

(b) Defenses; Form of Denials. A party shall
state in short and plain terms his defenses to each
claim asserted and shall admit or deny the averments
upon which the adverse party relies. If he is without
knowledge or information sufficient to form a belief
as to the truth of an averment, he shall so state and
this has the effect of a denial. Denials shall fairly
meet the substance of the averments denied. When 8
pleader intends in good faith to deny only a part or
a qualification of an averment, he shall specify s0
much of it as is true and material and shall deny only
the remainder. Unless the pleader intends in good

29

faith to controvert all the averments of the preceding
pleading, he may make his denials as specific denials
of designated averments or paragraphs, or he may
generally deny all the averments except such desig-
nated averments or paragraphs as he expressly ad-
mits; but, when he does so intend to controvert all its
averments, including averments of the grounds upon
which the court’s jurisdiction depends, he may do so
by general denial subject to the obligations set forth
in Rule 11.

(c) Affirmative Defenses. In pleading to a pre-
ceding pleading, a party shall set forth affirmatively
accord and satisfaction, arbitration and award, assump-
tion of risks, contributory negligence, discharge in
bankruptcy, duress, estoppel, failure of consideration,
fraud, illegality, injury by fellow servant, laches, li-
cense, payment, release, res judicata, statute of frauds,
statute of limitations, waiver, and any other matter
constituting an avoidance or affirmative defense. When
a party has mistakenly designated a defense as a
counterclaim or a counterclaim as a defense, the court
on terms, if justice so requires, shall treat the plead-
ing as if there had been a proper designation.

(d) Effect of Failure to Deny. Averments in a
pleading to which a responsive pleading is required,
other than those as to the amount of damage, are
admitted when not denied in the responsive pleading.
Averments in a pleading to which no responsive plead-
ing is required or permitted shall be taken as denied
or avoided.

(e) Pleading to Be Concise and Direct; Consist-
ency.

(1) Each averment of a pleading shall be simple,
concise, and direct. No technical forms of pleading
or motions are required.

(2) A party may set forth two or more statements
of a claim or defense alternatively or hypothetically,
either in one count or defense or in separate counts
or defenses. When two or more statements are made
in the alternative and one of them if made independ-

30

ently would be sufficient, the pleading is not made in-
sufficient by the insufficiency of one or more of the
alternative statements. A party may also state as
many separate claims or defenses as he has regardless
of consistency and whether based on legal or on equi-
table grounds or on both. All statements shall be
made subject to the obligations set forth in Rule 11.

(f) Construction of Pleadings. All pleadings shall
be so construed as to do substantial justice.

Federal Rules of Civil Procedure, Rule 38: Jury Trial of
Right.

(a) Right Preserved. The right of trial by jury
as declared by the Seventh Amendment to the Con-
stitution or as.given by a statute of the United States
shall be preserved to the parties inviolate.

(b) Demand. Any party may demand a trial by
jury of any issue triable of right by a jury by serving
upon the other parties a demand therefor in writing
at any time after the commencement of the action and
not later than 10 days after the service of the last
pleading directed to such issue. Such demand may be
indorsed upon a pleading of the party.

(c) Same: Specification of Issues. In his demand
a party may specify the issues which he wishes so
tried; otherwise he shall be deemed to have demanded
trial by jury for all the issues so triable. If he has
demanded trial by jury for only some of the issues, any
other party within 10 days after service of the demand
or such lesser time as the court may order, may serve
a demand for trial by jury of any other or all of the
issues of fact in the action.

(d) Waiver. The failure of a party to serve a de-
mand as required by this rule and to file it as required
by Rule 5 (d) constitutes a waiver by him of trial by
jury. A demand for trial by jury made as herein
provided may not be withdrawn without the consent
of the parties.

_—

31
Federal Rules of Civil Procedure, Rule 39: Trial by Jury
or by the Court.

(a) By Jury. When trial by jury has been de-
manded as provided in Rule 38, the action shall be
designated upon the docket as a jury action. The
trial of all issues so demanded shall be by jury, un-
less (1) the parties or their attorneys of record, by
written stipulation filed with the court or by an oral
stipulation made in open court and entered in the rec-
ord, consent to trial by the court sitting without a
jury or (2) the court upon motion or of its own initia-
tive finds that a right of trial by jury of some or all of
those issues does not exist under the Constitution or
statutes of the United States.

(b) By the Court. Issues not demanded for trial
by jury as provided in Rule 38 shall be tried by the
court; but, notwithstanding the failure of a party to
demand a jury in an action in which such a demand
might have been made of right, the court in its discre-
tion upon motion may order a trial by a jury of any
or all issues.

(c) Advisory Jury and Trial by Consent. In all
actions not triable of right by a jury the court upon
motion or of its own initiative may try any issue with
an advisory jury or, except in actions against the
United States when a statute of the United States
provides for trial without a jury, the court, with the
consent of both parties, may order a trial with a jury
whose verdict has the same effect as if trial by jury
had been a matter of right.

Federal Rules of Civil Procedure, Rule 54: Judgments; —
Costs. %
(a) Definition; Form. ‘Judgment’? as used in ©
these rules includes a decree and any order from which —
an appeal lies. A judgment shall not contain a recital —
of pleadings, the report of a master, or the record of —
prior proceedings. ‘4
(b) Judgment Upon Multiple Claims. When more —
than one claim for relief is presented in an action, q
whether as a claim, counterclaim, cross-claim, or third- —
party claim, the court may direct the entry of a final
judgment upon one or more but less than all of the
claims only upon an express determination that there —
is no just reason for delay and upon an express direc- —
tion for the entry of judgment. In the absence of such ©
determination and direction, any order or other form of
decision, however designated, which adjudicates less
than all the claims shall not terminate the action as _—
to any of the claims, and the order or other form of de- —
cision is subject to revision at any time before the
entry of judgment adjudicating all the claims.

(c) Demand for Judgment. A judgment by de —
fault shall not be different in kind from or exceed in —
amount that prayed for in the demand for judgment. —
Except as to a party against whom a judgment is en-
tered by default, every final judgment shall grant the
relief to which the party in whose favor it is rendered
is entitled, even if the party has not demanded such
relief in his pleadings.

(d) Costs. Except when express provision therefor
is made either in a statute of the United States or in
these rules, costs shall be allowed as of course to the
prevailing party unless the court otherwise directs ; but
costs against the United States, its officers, and agen- —
cies shall be imposed only to the extent permitted by |
law. Costs may be taxed by the clerk on one day’s —
notice. On motion served within 5 days thereafter, the —
action of the clerk may be reviewed by the court.

INDEX

| PAGE
50 ce billet
: urisdiction

-¢ nestion Presented . 9
Nature of the Case 2-3
f atement of the Case 3-10
| PArgament --------e.ee-en ne 11-24

. L The Judgment Of The Court Of Appeals Applied
+) And Followed Applicable State And Federal
Law 11-20

(a) Where A Policy Of Insurance Is Clear And
Unambiguous A Recovery Cannot Be Had
For Loss To Property Not Described In The
Policy 11-12

(b) Petitioner Was Not Entitled To Recover On
A Theory Of Mistake Under Tilinois Law 12-13

(c) Petitioner Cannot Recover Here Under Any
Theory Of Equitable Relief 14-19

a (d) The Court Correctly Applied The Law Of

a Illinois As Announced In Pollack v. Connecti-

4 cut Fire Insurance Company, 281 Ill. App.

. 305, 362 Tl. 313 ..19-20
“IL. The Original Binder Was Not In Effect At The
F Time Of The Fire Pee
IIL. No Issue Existed In This Case For Determina-

tion By A Jury And J udgment N.O.V. Was

Proper 22-23

ii

PAGE

IV. The Policy Was Not Subject To Construction,
And The Enforcement Of The Policy As Writ-
ten Was Required In Order That There Not Be
A Departure From The Accepted And Usual

Judicial Procedure 23-24

Conclusion

TABLE OF CASES.

Anderson v. Pettigrew Foundry Company, 297 Il.
App. 14

Bellavance v. Plastic-Craft Novelty Company, 30 Fed.
Supp. 37

Blume v. Pittsburgh Life & Trust Company, 104 N.E.
1031; 263 Ill 160

Buchanan v. Scottish Union and National Insurance
Co., 210 Ill. App. 523

Capps v. National Union Fire Insurance Company, 149
N. E. 247; 318 Ill. 350

Christ v. Rake, 122 N.B, 854; 287 Ill. 619...

City of Morgantown, W. Va. v. Royal Insurance Com-
pany, Ltd., 337 U.S. 254; 93 L. Ed. BER nee i

Collins v. St. Paul Fire & Marine Insurance Company,
44 Minn. 440; 46 N.W. 906

Delaware L. & W. Railroad v. Converse, 139 U.S. 469;
35 L. Ed. 213

Galloway v. United States, 319 U.S. 372; 87 L. Ed. 1458

Graves and Barnewall v. Boston Marine Insurance Com-
pany, 2 Cranch 419; 2 L. Ed. 324

Hearne v. New England Mutual Marine Insurance
Company, 20 Wallace 490; 22 L. | een

25

13

16

16

-

PAGE
Herzbergs Inc. v. Ohio Accident and Guarantee Corp.,
100 Fed. 2 (d) 171; 42 Fed. Supp. 52; 132 Fed. 2 (d)
438 14

Hill v. Standard Mutual Casualty Company, 110 Fed.
2(d) 1001 - 24

Landers v. Cooper, 115 N.Y. 279; 22 N.E. 212 ...........- 12
Leimer v. Woods, 196 Fed. 2(d) 828 23

Lumber Underwriters of New York v. Rife, 237 U.S.
605; 59 L. Ed. 1140 20

Moone v. Commercial Casualty and Insurance Com-
~ pany, 350 Ill. App. 328 .. 13

Niedringhaus v. Aetna Insurance Co., 235 Il. App. 335 11

Norwich Union Indemnity Company v. Kobacker &
Sons Co., 31 Fed. 2(d) 411 20

Pearce v. Osterman, 175 N.E. 416; eT 3 on

Pollock v. Connecticut Fire Insurance Company, 281
Tl. App. 305, 362 Ill. 313 12, 13, 19

Royal Neighbors of America v. Boman, 177 Ill. 27 ... 18
Silurian Oil Company v. Neal, 115 N.E. 114; 277 IL

45 17
Simmons Creek Coal Company v. Doran, 142 US. 417;

35 L. Ed. 1063 15
Skelly v. Ersch, 137 N.E. 106; 905 Il. 126 ...........- 18
Snell v. Atlantic Fire & Marine Insurance Company,

98 U.S. 85; 25 L. Ed. 52 16, 24
Souchie v. Illinois Agricultural Mutual Assurance

Company, 56 N.E, 2(d) 59; 323 Ill. App. 456 .......... 24

United States Casualty Company v. Charleston Min-
ing & Mfg. Co., 183 Fed. 238 20

Supreme Court of the United States

Ocroser Term, A. D. 1955.

No. 371

HOWARD FOUNDRY COMPANY,
Petitioner,
vs.

HARTFORD FIRE INSURANCE COMPANY,
Respondent.

BRIEF OF RESPONDENT IN OPPOSITION TO
PETITION FOR WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS FOR
THE SEVENTH CIRCUIT.

OPINION.

The opinion of the United States Court of Appeals for
the Seventh Circuit is reported in 222 Fed. 2(d) 767.

JURISDICTION.

The judgment of the Court of Appeals for the Seventh

Circuit was entered on May 16, 1955, and rehearing was
denied on June 9, 1955. Petition for writ of certiorari
was filed September 2, 1955. The jurisdiction of this Court
is invoked under Section 1254 (1) Title 28 U.S.C.A.

2

QUESTION PRESENTED.

Whether the Circuit Court of Appeals erred in its judg-
ment which refused to allow petitioner to recover for loss
to property not described in or covered by the policy of fire
insurance.

NATURE OF THE CASE.

The plaintiff originally brought its action in the Superior
Court of Cook County, Illinois, against the Hartford Fire
Insurance Company to recover under a policy of fire in-
surance for an alleged loss by fire to certain farm property
consisting of a frame building used as a barn (R. 3, 7).

The case was removed to the United States District
Court for the Northern District of Illinois, Eastern Divi-
sion, and thereafter plaintiff amended its complaint to
include The Travelers Fire Insurance Company and Arthur
J. Feicht, d/b/a Arthur J. Feicht & Company, an insurance
agent and broker, as additional defendants (R. 4, 17).

The additional parties were brought into the case on the
theory that if the Hartford policy did not cover the dam-
aged property then one or more of the defendants was
guilty of negligence for not having procured from the
Hartford a policy covering the property which burned (R.
39).

Defendant Feicht was later dismissed from the suit (R.
4, 55), and upon the trial the jury rendered a verdict in
favor of defendant Travelers Fire Insurance Company and
a verdict against the defendant Hartford Fire Insurance
Company in the amount of $10,750.00 with interest from
February 1, 1948 (R. 4, 480).

Defendant, Hartford Fire Insurance Company, appealed
from the judgment against it because of the denial by the

=

3

trial court of its motions for directed verdicts at the close
of the plaintiff’s evidence and at the close of all the evi-
dence, and its motions for judgment notwithstanding the
verdict and in the alternative for a new trial. The plaintiff
appealed from the judgment in favor of the Travelers and
filed a cross appeal because of the denial of its motion for
attorneys fees against Hartford. The Court of Appeals
for the Seventh Circuit without dissent reversed the judg-
ment against the Hartford Fire Insurance Company and
affirmed the judgment in favor of the Travelers Fire In-
surance Company, and plaintiff’s petition for rehearing
was denied.

STATEMENT OF THE CASE.

Respondent deems petitioner’s statement of the case
wholly inadequate.

The plaintiff, Howard Foundry Company, an Illinois
corporation, was the owner of several farms and other
tracts of land in McHenry County, Illinois (R. 138). The
two farms involved in this action were both in McHenry
County, Illinois, and were commonly referred to as the
Schaefer or Bohr farm and the Justen farm.

The deeds from the former owners of these two proper-
ties include, in both instances, some parcels situated in
Section 15 and some situated in Section 22, Township 45
North, Range 8, McHenry County (Pl. Ex. 23, R. 343, 469;
Pl. Ex. 24, R. 374, 471). Most of the Schaefer, or Bohr,
properties were in Section 22, and most of the Justen
properties were in Section 15 (Def. Ex. 3, R. 274, 476).

All the buildings on the Schaefer farm were located in
Section 22 (R. 363, 364; Def. Ex. 5, R. 361). All the build-
ings on the Justen farm were located in Section 15 (R.

4

365, 366, Def. Ex. 5). Both the Hartford policy and the
application therefor described the property insured as
situated on and confined to Section 15 (Pl. Ex. 6, R. 88, 463;
Def. Ex. 1-I, R. 392, 473).

The Schaefer farm was reached by going north on Route
31 in McHenry County then traveling west on the biack
top road across the tracks of the Chicago & Northwestern
Railroad, and all the buildings on the Schaefer farm were
west of the tracks at a distance of about three-quarters
of a mile west of the intersection of the railroad tracks
and the black top road (R. 365, Def. Ex. 5). These build-
ings are about three hundred feet south of the section line
dividing Sections 15 and 22 (R. 363, Def. Ex. 5).

The Justen farm was reached by traveling north on
Route 31 and turning west on the black top road and then,
before crossing the tracks, going north on a road parallel
to the tracks and on the east side of the railroad tracks,
or, by continuing on Route 31 past the black top road to
a gravel road running west off of Route 31 (R. 366, 367).
The buildings on the Justen farm are all east of the Chi-
cago & Northwestern Railroad tracks and about one quarter
of a mile north of the section line between Sections 15 and
22 (R. 366, Def. Ex. 5).

The barn on the Schaefer farm was damaged by fire
in August, 1947 (R. 227). The buildings on the Justen
farm were never involved in a fire (R. 399).

In December of 1945 the property on the Schaefer farm
was insured against loss by fire and other perils by @
policy in the Travelers Fire Insurance Company in the
name of Frank C. Howard and Edward L. Fleury with
a Loss Payable Clause to Mrs. Bohr (Pl. Ex. 1, RB. 60, 449,
450). This insurance covered certain buildings situated
on and confined to Sections 15 and 22 near McHenry, Tl-
nois.

re

5

The Plaintiff also had a policy on the buildings on the
Schaefer farm issued by the Fidelity Phenix Fire Insur-
ance Company on September 11, 1945, which described the
property as located in Sections 15 and 22 (R. 176, 177).
That company purchased the amount of $4,980.00 of re-
insurance on this policy from Hartford (R. 180) and vari-
ous amounts from other companies (R. 198). After the fire
on the Schaefer farm the Fidelity Phenix Fire Insurance
Company paid the plaintiff $17,660.00 for damage to the
barn, and the Hartford paid its share of this loss, under
its contract of reinsurance, to the Fidelity Phenix Fire
Insurance Company in the amount of $3,580.67 (R. 199).

In the early part of December, 1945, Frank Howard,
president of the Howard Foundry Company, told A, J.
Feicht that he wanted an additional $15,000.00 insurance
on the barn covered by the Travelers policy (R. 72). Mr.
Feicht is an insurance broker and also an agent of the
Travelers Fire Insurance Company (R. 57). He had been
tending to insurance business for Mr. Howard for about
twelve years prior to the fire (R. 97). He had never been
an agent of the Hartford Fire Insurance Company (R. 97).
Mr. Feicht contacted George Wagner, an employee of the
Travelers Fire Insurance Company, concerning the in-
crease, and Wagner told Mr. Feicht they could not write
any more on the farm and would have to cancel the policy
(R. 255). He said he would give it to Mr. H. B. Allen of
the Hartford Fire Insurance Company (R. 255), and the
Travelers policy was cancelled as of December 17, 1945 (R.
62).

Mr. Wagner called Mr. Allen at the Hartford and Allen
orally bound certain coverage, including $15,000 on the
barn in the name of Frank C. Howard and Edward L.
Fleury, Loss Payable Clause to Mrs. Bohr, and located in
Sections 15 and 22 (R. 202, 468). Mr. Allen made a writ-

—;

6

ten memo for his own use (Pl. Ex. 19, R. 203, 468). This
was a temporary binder (R. 209), and was only effective
pending inspection of the risk by a representative of the
company to determine whether the company desired to
write a policy covering this property (R. 204, 205).

On January 19, 1946, Glenn Russell, special agent ot the
Hartford Fire Insurance Company, inspected the buildings
on the Schaefer farm in Section 22 (R. 273, 279). This
was the same farm upon which the barn later burned since
he went back to it after the fire and identified it as the
farm which he visited the first time and which he refused
to recommend for insurance (R. 276). Three days later
Mr. Russell with Mr. F. W. Linahan, supervising special
agent of the Hartford, again took Route 31 in a northerly
direction, turned west on the blacktop road, crossed the
Chicago & Northwestern Railroad tracks while going west
and thus arrived at the Schaefer farm where Mr. Russell
and Mr. Linahan both inspected the various buildings (R.
282, 381). Both Russell and Linahan decided that the
buildings on the Schaefer farm were not a good risk and
should not be insured (R. 381, 382), and Russell recom-
mended to the company that it not write the risk in ques-
tion (R. 285, 406).

Mr. Allen thereupon called Wagner at the Travelers Fire
Insurance Company and stated that the Hartford could
not write this business, and Mr. Wagner requested that
he communicate this to Mr. Feicht (R. 406, 407). Mr.
Russell was then advised by Mr. Allen that he had in-
spected the wrong farm and that he should go to see Mr.
Feicht about this (R. 286).

Russell testified that he went to the office of the Travelers
Fire Insurance Company and there Wagner introduced
him to Feicht (R. 287) who told him to go to a different
farm and make an inspection there for the purpose of

7

determining the eligibility of the buildings on that farm
for coverage by the Hartford (R. 292). He further stated
he told Mr. Feicht that the farm he inspected was the one
you reach after you cross the railroad tracks. Mr. Feicht
told him he had inspected the wrong farm, and that he
should have followed this same course but when he got
to the railroad tracks not to cross them but before cross-
ing the track to take another road that led into the fields
(R. 295, 324).

Mr. Russell then made another trip in which he attempted
to go north on the road which runs east of the railroad
tracks but he could not drive up this road because it was
too soft (R. 295). He, therefore, went to the Schaefer
farm again where he received instructions to the effect
that he could reach the other farm another way. This
was to proceed north on highway 31 until he came to a
gravel road running to the left (R. 295, 296). Follow-
ing these directions he arrived at the Justen farm (R.
295, 297), and this is the same farm which is reached by
the road running parallel to the railroad tracks and on the
east side thereof which is now a gravel road (R. 366).

Feicht admitted that he had been contacted by someone
from the Hartford who told him about the farm which he
had inspected, and that he, Mr. Feicht, told this person he
had gone to the wrong farm and he gave him directions
as to the farm that they wanted to have insured (R. 443,
444). He contended, however, that this party said some-
thing about not having gone over the railroad tracks,
and that he gave him directions to cross the railroad tracks
and go on for about half a mile or a mile (R. 444).

Russell measured and inspected the buildings on the
Justen farm and made a work sheet showing the amount
of insurance he would recommend on each building and the
description and measurements of the buildings (R. 299, 300,

8

Def. Ex. 4, R. 393, 477, 478). He then prepared an appli-
cation (R. 301) and submitted it te a lady in the office Mr,
Feicht occupied at the Travelers Fire Insurance Company
(R. 303). She called on the telephone and asked for Mr.
Feicht and told him about the applivation, the amounts of
insurance on the various items and the amount of the
premium. After having this telephone conversation she
signed the application, ‘‘Howard Foundry Company by
Arthur J. Feicht, Agent’’ (R. 304, Def. Ex. 1-I, R. 473,
474). Mr. Feicht denied engaging in this telephone con-
versation, but he did admit that the signature appeared
to be in the handwriting of his secretary (R. 104-106).
Russell then attached his work sheet to the application,
wrote ‘‘inspected’’ on the back of the application and
signed his name which meant that he recommended the risk
(R. 305). The policy of the Hartford Fire Insurance Com-
pany in question (Pl. Ex. 6, R. 461-467) was then written
from this application (R. 306) to cover certain property
situated on and confined to 166 acres in Section 15, Town-
ship 45, Range 8, County of McHenry, State of Illinois.

This policy was sent by the Hartford to Mr. Feicht who
read it and sent it on to Wesley Mundil, Controller of the
Howard Foundry Company, in March of 1946 (R. 118, 245).
Mr. Mundil read the policy, was satisfied with it, and it re-
mained in the plaintiff’s possession without objection until
the fire occurred in August of 1947 (R. 245).

After the fire on the Schaefer farm Allen, Linahan and
Russell made a trip to both farms and checked the build-
ings on each farm against the contents of the application
and the work sheet (R. 320, 321, 397, 398). Both Allen and
Russell testified that the descriptions of the buildings and
the measurements of the buildings in these documents co-
incided perfectly with the buildings on the Justen farm
but did not compare at all with those on the Schaefer farm
(R. 322, 397, 398).

—.

9

Also, another employee of the Hartford Fire Insurance
Company, Mr. H. G. Bannerman, who later became Super-
intendent of its Farm Department, made an inspection trip
to the two farms after the fire (R. 417). He checked the
buildings with the application and later on he also com-
pared them with the policy (R. 418, 419). He also testified
that the buildings on the Schaefer farm did not fit the
descriptions in those documents, and that the buildings of
the Justen farm did fit the description (R. 418, 420).

As a result of these detailed examinations the following

physical facts were shown:

1. The roofs on the various buildings on the Justen
farm were composition or ‘‘approved’’ roofs which
are semi-fireproof (R. 317, 399, 423), while the roofs
of all the buildings on the Schaefer farm, including
the roof of the barn which burned, were constructed
of shingles made of wood (R. 317, 418). The Hart-
ford policy shows that the buildings insured as
dwelling house, barn, and sheds had approved roofs
(R. 463) An approved roof cannot be made of
wooden shingles (R. 317).

2. The insured barn was described in the application
as 140 feet long by 40 feet wide (R. 478) which are
the dimensions of the Justen barn. The barn which
burned on the Schaefer farm was 100 feet long by
60 feet wide (R. 338, 344).

3. The silos on the Justen farm consisted of one on the
east side of the barn and one on the west side of
the barn as shown in the diagram in the application
(R. 424, 474), while the silos on the Schaefer farm
were both on the west side of the barn (R. 321, 369,
423).

4. The dwelling house which was insured was a two-
and one-half story building and this was the size of
the dwelling house on the Justen farm (R. 368, 399,

—

10

422). The dwelling house on the Schaefer farm was
a one-and-one-half story building (R. 321, 418, 423).

5. The Schaefer farm had no chicken house or hog
house, both of which are described in the policy (R.
398, 419, 425).

6. There were two buildings on the Schaefer farm, a
garage and a bull barn, which are not described in
the policy at all (R. 418).

The three witnesses, Allen, Russell and Bannerman,
stated that from their personal examinations it was clear
that the descriptions and measurements of the buildings as
set forth in the policy, the application and the work sheet
coincided perfectly with the buildings on the Justen farm
but were not in any way similar to the buildings on the
Schaefer farm (R. 322, 397-399, 418, 420).

ARGUMENT.

THE JUDGMENT OF THE COURT OF APPEALS AP-
PLIED AND FOLLOWED APPLICABLE STATE AND
FEDERAL LAW.

(a) Where a policy of insurance is clear and unambiguous
a@ recovery cannot be had for loss to property not
described in the policy.

The Court of Appeals stated in its opinion that there was
no ambiguity in this policy, and that the clear recital of
acreage and section number in the policy could not be
ignored. All the buildings on the Justen farm were in
Section 15, which was the Section described in the policy,
and all the buildings on the farm where the loss occurred,
including the barn which burned, were in Section 22, which
Section was nowhere included in the policy. The acreage
of the Justen farm in Section 15 was 166, as described in
the policy. Hartford’s Exhibit 3 (R. 476), the page of
the plat book, shows beneath the Justen name in Section 15
the acreage of 166 and a fraction. The policy described the
roofs of the insured buildings as ‘‘approved’’, which was
correct as to the Justen buildings, and none of the Schaefer
buildings had approved roofs. Furthermore, the various
descriptions of the buildings in the policy, application and
work sheet were exact descriptions of the Justen buildings
and could not possibly apply to any buildings on the Schaef-
er farm,

It is agreed that the law of the State of Illinois controls
on the question of the coverage of the policy. The peti-
tioner brought suit to recover under the policy, and re-
covery was rightfully denied to it under the authority of
the case of Niedringhaus v. Aetna Insurance Co., 235 TL
App. 335, which is the law of Illinois as the Court of Ap-

—

12

peals recognized. In that case the facts were almost
identical with those in the instant case, and the Illinois
Court held that the jury could not find for the plaintiff
for fire loss to a building located in a section, which section
was not described in the policy. On page 337 the Court
stated as follows:

‘‘In the absence of ambiguity in the terms of a
policy parol evidence is not admissible for the purpose
of extending the policy to cover property not included
in the description.’’

Under such a set of facts other jurisdictions have made
the same decision. See Collins v. St. Paul Fire & Marine
Insurance Co., 44 Minn. 440, 46 N.W. 906, and Landers v.
Cooper, 115 N. Y. 279, 22 N. E, 212.

(b) Petitioner was not entitled to recover on a theory of
mistake under Illinois law.

Petitioner sued on the policy and contended that it
covered the building which burned by its terms. Peti-
tioner did not advance to the trial court or to the jury
any theory of equitable relief for fraud or mistake. The
jury was not instructed on petitioner’s behalf as to a
theory of fraud or mistake as petitioner intimates. The
only instruction which even mentioned fraud or mistake
was an instruction tendered by respondent, Hartford, re-
lating to the jury’s duty to find for the defendant if the
plaintiff failed to read its policy as was its duty—this
instruction being given under the theory of the case of
Pollock v. Connecticut Fire Insurance Company, 281 I.
App. 305, 362 Ill. 313.

Apparently, petitioner is here concerned with a theory
of estoppel on the assumption that respondent inserted an
erroneous description by mistake. This is essentially
another way of attempting to recover under the theory of
reformation for mutual mistake, which will be dealt with
in the next succeeding sub-paragraph of this brief.

13

Suffice it to say here that petitioner’s cuses in Section I
(a) of the petition have no-application to the case at bar.
The cases of Royal Neighbors of America v. Boman, 177
Ill. 27, and Moone v. Commercial Casualty and Insurance
Company, 350 Ill. App. 328, (cited as ‘“‘Mooney v. Com-
mercial Casualty and Insurance Company”’ in petitioner’s
brief), are life and disability insurance cases where the in-
surance companies’ agents were told the truth but in-
serted false answers in the applications. The cases of
Anderson v. Pettigrew Foundry Company, 297 Ill. App. 14,
and Buchanan v. Scottish Union and National Insurance
Co., 210 Ill. App. 523, are ones where both parties agreed
as to the property intended to be covered by the contract,
but the property was incorrectly described in the docu-
ment. These cases do not apply to a situation as here where
two different sets of buildings are involved with different
legal and physical descriptions, one set of buildings being
described in the policy, but the parties disagreeing as to
which was insured.

We utterly fail to comprehend how petitioner can con-
tend that the case of Pollack v. Conmecticut Fire Insurance
Company, 281 Ill. App. 305, affirmed 362 Ill. 313 (cited by
the Court of Appeals in its decision on other grounds) sus-
tains its position here. That case involved the sole and
unconditional ownership provision of a policy. There
was no question there of fraud or mistake, as the insur-
ance company had no knowledge as to the actual condi-
tion of the title, and the Court did not discuss these ques-
tions. The Court held for the defendant insurance com-
pany, deciding that the clause was valid, that the Company
had not waived it in anyway, and that the plaintiff had
accepted the policy and was bound by its terms.

yy

14

(c) Petitioner cannot recover here under any theory of
equitable relief.

The petitioner brought its action at law to recover under
the policy, and no theory of equitable rights was presented
in the pleadings. No such theory was presented to the
trial judge, who made no independent decision, and the
final decision was made by the jury which was not an ad-
visory jury, and it was not instructed on any equity theory.
And yet, the Howard Foundry Company now contends that
the jury’s verdict should control since it claims the jury
may have found for petitioner on the basis of a reforma-
tion of the instrument.

The cases as cited by petitioner in Section IT (a) of its
brief do not sustain its contentions. None of these cases
are suits at law where no equitable issues were raised or
considered in the trial Court, but equitable relief was af-
forded later. For instance, the case of Herzbergs Ince.
v. Ohio Accident and Guarantee Corp., 100 Fed. 2(d) 171; 42
Fed. Supp. 52; 132 Fed. 2(d) 438, cited by petitioner, was a
suit at law which the plaintiff won in the District Court,
and which was reversed on appeal. The plaintiff then ap-
plied to the trial court to be allowed to amend the com-
plaint to ask for reformation. The District Court, 42 Fed.
Supp. 52 at 53, held ‘‘that an adjudication of a Federal
Court is conclusive of all questions, both law and fact,
upon which rights of parties depend, or those which might
have been determined as well as those which were’’, and,
therefore, the judgment of the Court of Appeals was
res adjudicata on the question of reformation. This judg-
ment was affirmed on appeal on this question in 132 Fed.
2(d) 438, where it was held that the reformation amend-
ment would constitute a new cause of action which was
barred by the statute of limitations, and reformation was
denied.

a

15

Even if notwithstanding the above circumstances, the
Court could, from a procedural standpoint, consider pos-
sible equitable considerations, still there was no substan-
tive right here to a reformation—in fact, quite the con-
trary was the case. That the grounds for reformation of
an instrument are either a mutual mistake, or a mistake
on one side and fraud on the other, is universal law and
hardly needs the citation of authority. This Court con-
cisely stated these grounds in Simmons Creek Coal Co. v.
Doran, 142 U.S. 417, 35 L. Ed. 1063 at 1071 as follows:

‘““The jurisdiction of equity to reform written in-
struments, where there is a mutual mistake, or mis-
take on one side and fraud or inequitable conduct on
the other, is undoubted; but to justify such reforma-
tion the evidence must be sufficiently cogent to thor-
oughly satisfy the mind of the court.’’

Petitioner several times mentions unilateral mistake but
does not claim fraud or show any inequitable conduct on
the part of the representatives of respondent. Without
such a showing a unilateral mistake is never grounds for
reformation. The Hartford’s representatives followed the
instructions of Mr. Feicht, who was procuring insurance
for the Howard Foundry Company, and when they decided
not to write insurance on the Schaefer buildings, this was
communicated to Mr. Wagner and Mr. Feicht. The Hart-
ford then followed Mr. Feicht’s instructions as to insuring
the buildings on the other farm. Clearly no wrongful con-
duct could be shown as far as the respondent is concerned.

In the absence of fraud the law is well settled that a mis-
take must be common to both parties and must be proven
to a certainty and beyond any reasonable doubt to have
been a mutual mistake before a court will grant reforma-
tion. There is a strong presumption that the writing ex-
presses the intention of the parties, and there must be clear

16

and convincing proof that a contract has been entered
into which expresses what neither party intended.

These essential requirements for relief by way of ref-
ormation are set forth by this Court in Hearne v. New
England Mutual Marine Insurance Co., 20 Wallace 490, 22
L. Ed., 395 at 396 and 397:

‘“‘The party alleging the mistake must show exact-
ly in what it consists, and the correction that should
be made. The evidence must be such as to leave no
reasonable doubt upon the mind of the court as to
either of these points .. . The mistake must be mutual
and common to both parties to the instrument. It
must appear that both have done what neither in-
tended. . . . A mistake on one side may be a ground
for rescinding, but not for reforming, a contract. ...
Where the minds of the parties have not met there
is no contract, and hence none to be rectified.’’ (Cita-
tions omitted).

The retention of the policy by the petitioner is also im-
portant in this connection. In Graves and Barnewall v.
Boston Marine Insurance Co., 2 Cranch 419, 2 L. Ed., 324
at 332, this Court said:

‘‘The policy was in the possession of the agent for
the plaintiffs, and ought to have been understood by
him before it was executed; he retained it in his pos-
session for several months before a mistake was al-
leged. Under such circumstances, the information
given to the insurance company ought to be very clear
to justify a court of equity in conforming the policy
to the intention of one of the parties, which was not
communicated to the other till the loss had happened.”

And again in the case of Snell v. Atlantic Fire and Mar-
ine Ins. Co., 98 U.S. 85, 25 L. Ed. 52 at 54, this Court stated:

‘“‘Of course, parol proof in all such cases, is to be
received with great caution and, where the mistake is
denied, should never be made the foundation of a de

17

cree, variant from the written contract, except it be
of the clearest and most satisfactory character. Nor
should relief be granted where the party seeking it
has unreasonably delayed application for redress, or
where the circumstances raise the presumption that he
acquiesced in the written agreement after becoming
aware of the mistake.’’

The courts of Illinois have consistently followed the gen-
eral principles of reformation for mutual mistake. In
Christ v. Rake, 122 N.E. 854 at 855; 287 Ill 619 at 622,
the Supreme Court of Illinois said:

‘‘Where contracting parties have reduced their
agreement to writing it is presumed to express their
mutual intention, and that presumption does not yield
to any claim of a different intention unless the evidence
of a mutual mistake is of a strong and convincing char-
acter. A written instrument will not be reformed on
the ground of mistake unless the evidence that it does
not express the intention of the parties is such as will
strike all minds alike as being unquestionable and free
from reasonable doubt. The remedy of reformation
on account of an alleged mistake is never granted
upon a probability nor upon a mere preponderance
of the evidence but only upon evidence amounting to
a certainty.”’

In Silurian Oil Co. v. Neal, 115 N.E. 114 at 115; 277 I.
45 at 48, the Court stated as follows:

‘There is, however, a strong presumption that when
parties reduce their agreement to writing it expresses
their intention, and to overcome the presumption that
the writing is their agreement the evidence must be
clear and convincing. and the court will never grant
relief except upon the most satisfactory evidence and
because of its evident justice and necessity. (Muls v.
Lockwood, 42 Ill. 111.) Three things are necessary
to justify the reformation of a written instrument upon
the ground of a mistake: First, that the mistake be
one of fact and not of law; second, that the mistake

er

18

be proved by convincing and clear evidence; and third,
that the mistake was mutual and common to both par-
ties to the instrument. (Purvines v. Harrison, 151
Ill. 219.) A reformation can only be had upon a clear
proof that the alleged mistake was mutual, and the
proof must be such as to leave no fair and reasonable
doubt upon the mind that the instrument does not em-
body the final intention of the parties but was executed
under a common mistake and expresses what neither of
the parties intended. Sutherland v. Sutherland, 69 Ill.
481; Seeley v. Baldwim, 185 id. 211.’’

See also Pearce v. Osterman, 175 N.E. 416 at 416; 343
Ill. 175 at 176, and Skelly v. Ersch, 137 N.E. 106 at 107;
305 Ill. 126 at 130.

In view of the actions and requests of Mr. Feicht, who
negotiated with respondent on behalf of petitioner, it may
be seriously questioned whether petitioner intended to in-
sure the Schaefer buildings rather than the Justen build-
ings at the time the policy was written. In any event, it
was clear that there was no mutual mistake involved here.
Hartford not only did not intend to insure the Schaefer
buildings in the policy, but it even refused to insure them
after inspecting them. The evidence was overwhelming
that the legal descriptions, physical descriptions, drawings
and notations in the Hartford’s policy, the application and
the work sheet clearly and unmistakably identified the
buildings on the Justen farm as the subject of insurance,
and could not possibly constitute descriptions of the build-
ings on the Schaefer farm. Could it thus be contended that
there was any evidence, much less evidence clear and con-
vineing and beyond a reasonable doubt, that the contract
expressed what neither party intended when Hartford, ac-
cording to the documents and the testimony of the wit-
nesses, obviously intended to insure the Justen buildings
which were accurately described? There was, under such

19

- gireumstances, no possible meeting of the minds as to in-
- gurance on the Schaefer buildings, no mistake common to
both parties, and no grounds for reforming the policy.

The Court of Appeals properly reached this conclusion
and stated in its opinion:

‘On the state of this record we think it unnecessary
to narrate evidence presented below purporting to
demonstrate intention of the contracting parties, or of
a unilateral or mutual mistake.”’

(d) The Court correctly applied the law of Illinois as
announced in Pollock v. Connecticut Fire Insurance
Company, 281 Ill. App. 305; 362 Ill. 313.

Where two representatives of petitioner, including the
person who ordered the insurance, examined the policy, and
it was retained by petitioner for a long period of time as
here, it is the law of Illinois, as set forth in the Pollock
case, the case of Capps v. National Union Fire Insurance
Company, 149 N.E. 247, 318 Ill. 350, and others, that the
insured is conclusively presumed to know the contents of
the policy and is bound thereby. The Howard Foundry
Company admits that this is true, but says that it does not
apply if the insurer misled the petitioner; yet petitioner
does not state one act of any representative of the Hart-
ford which was calculated to mislead petitioner. Every-
thing the Hartford did was at the behest of the only rep-
resentative of petitioner who ever contacted the Hartford.

The statements in the Pollock case, on pages 310 and
311 of 281 Ill. App. fit the situation in the present case
perfectly :

‘“‘Tt appears to us that when the plaintiff appellant
received the policy from the defendant appellee con-
taining the sole and unconditional ownership clause
and when he accepted this policy he thereby became
charged with the knowledge of the terms and condi-

20

tions contained therein; and we fail to see how it can
be successfully contended that any duty rested upon
the defendant appellee to notify the plaintiff appel-
lant of the contents of the policy, for, as said in the
case of Capps v. National Union Fire Ims. Co., 318
Ill. 350, ‘Unless he has been misled by some act of the
insurer, it is generally held that a person who accepts
and retains the possession of an insurance policy is
bound to know its contents.’ (Citing Crikelair v. Citi-
zens’ Ins. Co., 168 Ill. 309.) This being the rule, if
there was anything wrong with the policy which would
give rise to a defense because the terms of the con-
tract had not been complied with such as not correctly
setting out the interest of the plaintiff appellant in the
premises insured, it became the plaintiff appellant’s
duty to return the policy for correction. There is no
evidence in this case that the insurer by any act of its
agents or otherwise made any representations or prom-
ises or used any artifices or deceit to induce the plain-
tiff appellant to enter into the insurance contract, and
we cannot see how it can be successfully argued that
the insured was misled by any act of the insurer.”

That this is also the law under the decisions of this
Court and the other Federal Courts, see the following
cases: Lumber Underwriters of New York v. Rife, 237 US.
605, 59 L. Ed. 1140 at 1143; United States Casualty Co. v.
Charleston Mining & Mfg. Co., 183 Fed. 238 at 242 ana 243;
Norwich Union Indemnity Co. v. Kobacker & Sons Co., 31
Fed. 2(d) 411 at 412.

It will be noted that these cases hold that the rule ap-
plies even where the insured never read the policy after

accepting it.

21

I.
THE ORIGINAL BINDER WAS NOT IN EFFECT AT THE
TIME OF THE FIRE.

Hartford’s underwriter originally orally agreed to bind
insurance on the Schaefer buildings, and there was no
fo‘mal written binder issued, but there was merely a mem-
orandum made by the underwriter for his own use. The
temporary oral binder was subject to inspection of the
property, and after this inspection the Hartford refused
to write the risk and communicated this decision to Mr.
Wagner, who had originally called the Hartford, and also
to Mr. Feicht, who was negotiating for insurance for the
Howard Foundry Company. This eliminated the oral bind-
er in accordance with the terms of its issuance.

Furthermore, Mr. Feicht then changed the request to other
property for which insurance was then written. Feicht is the
only person connected with the Howard Foundry Company
who was shown to have known of the binder and he accepted
the policy as covering the only property to be insured for
the petitioner in accordance with his requests as did the
petitioner. The binder would thus be eliminated by the
writing of the policy, as well as by the prior rejection. The
petitioner cannot accept a policy as being the insurance it
desires and then when the property burns, which is not
covered by the policy, claim that the binder written at the
beginning of the negotiations for insurance is also still in
effect even though the company had refused to write a pol-
icy on the property originally bound and the petitioner had
paid no premium except for the policy which it accepted.
If this were not so petitioner would have two insurance
policies on different property, but would pay for only one.

The Court of Appeals stated in its opinion that it had
fully considered the petitioner’s contentions bottomed
on the binder, and the decision of the Court rejecting this
contention was clearly correct.

22

I.
NO ISSUE EXISTED IN THIS CASE FOR DETERMINATION
BY A JURY AND JUDGMENT N.0.V. WAS PROPER.

The petitioner sued at law to recover on the policy as
written. It received a jury trial, and the Court of Ap-
peals correctly held that the policy was clear and unam-
biguous and that the jury could not change the policy to
cover property of a different description. The entry of
judgment n.o.v. does not, of course, deny a party trial by
jury. See Delaware L. d W. Railroad v. Converse, 139
U.S. 469, 35 L. Ed. 213 at 215, and Galloway v. United
States, 319 U. S. 372, 87 L. Ed. 1458 at 1470.

This was not a case involving both legal and equitable
issues as ~vas the case of City of Morgantown, W. Va. v.
Royal Ins, Co. Ltd., 337 U.S. 254, 93-L. Ed. 1347, and other
cases cited by petitioner. The Howard Foundry Company
never advanced a claim for equitable relief at the trial, nor
was such considered by the Court or presented to the jury.
This was not an advisory jury, and the trial court did not
make any independent finding. Petitioner would not be en-
titled to a jury trial in connection with the question of
reformation. This was well stated in the case of Bella
vance Vv. Plastic-Craft Novelty Co., 30 Fed. Supp. 37 at 39,
where the Court said:

“*To avoid constitutional complications, Rule 38 pre-
served those rights to a jury trial as declared by the
Seventh Amendment, or as given by a statute of the
United States. Inasmuch as this amendment applies
only to suits at common law, a distinction will always
need to be drawn between suits at law and suits in
equity in order to determine whether one has a right,
under the Constitution, to have the issues of the case
determined by a jury.

‘The distinction between Law and Equity, abol-
ished by the new rules, is a distinction in procedure
and not a distinction between remedies. The disiine-

23

tion still remains between jury actions and non-jury
actions; what was, before the adoption of the new
rules, an action at law is a jury action, and what was
a suit in equity falls into the category of a non-jury
action. See Moore’s Federal Practice, Vol. 1, page
107, and Vol. 3, page 3004 et seq.; Trial by Jury and
the New Rules of Procedure, by James, 45 Yale Law
Journal, 1022 et seq.’’

The case of Letmer v. Woods, 196 Fed. 2(d) 828, cited by
petitioner, merely upheld the uncontroverted rule that a
party has a right to jury trial on legal issues. In that same
ease the Court, on page 832, said that there is no right to
jury trial when the Court exercises equity jurisdiction.

Furthermore, as we have shown previously in this brief,
there was no evidence here which would entitle the How-
ard Foundry Company to recover on any equitable theory
if one had been presented.

Iv.

THE POLICY WAS NCT SUBJECT TO CONSTRUC-
TION, AND THE ENFORCEMENT OF THE POLICY
AS WRITTEN WAS REQUIRED IN ORDER THAT
THERE NOT BE A DEPARTURE FROM THE AC-
CEPTED AND USUAL JUDICIAL PROCEDURE.

The general principle that an insurance policy, when
ambiguous, will be construed in favor of the insured can-
not aid the petitioner here. The descriptions in the policy
were clear and precise, and could apply to only one group
of buildings—those on the Justen farm. There was noth-
ing in the policy requiring construction, and in such cases
the courts of the nation invariably enforce the contract
as written. This is true in both the Federal Courts and
the courts of Illinois.

Oe

24

The Supreme Court of Illinois, in the case of Blume v.
Pittsburgh Life € Trust Company, 104 N.E. 1031, 263 I.
160 at 164 said:

**The relation of an insurance company to its policy-
holders is purely contractual. There is ordinarily no
element of trust relation involved. The parties being
competent to contract, had a legal right to insert such
provisions in the agreement as they saw proper, and
it is the duty of courts to construe and enforce agree-
ments as made and not to make new contracts for

parties.”

See also the case of Souchée v. Illinois Agricultural Mu

tual Assurance Company, 56 N.E. 2(d) 55, 323 Ill. App.
456 at 462 and 463.

The Court of Appeals for the Seventh Circuit, prior to
the disposition of the case at bar, enunciated this rule in
the case of Hill v. Standard Mutual Casualty Company,
110 Fed. 2 (d) 1001 at 1003:

‘*When, however, there is no ambiguity in the terms,
neither party is to be favored, Norwaysz v. Thuringia
Ins. Co., 204 Ill. 334, 68 N.E. 551, and if the contract
is one that the parties could lawfully make, it is the
duty of the court to enforce it as the parties made it.”

The case of Snell v. Atlantic Fire and Marine Insurance
Company, 98 U.S. 85, 25 L. Ed. 52, cited by petitioner, has
no applicability here. In that case there was a mutual
mistake involved, and the insured never had possession of
the policy and had never even seen it.

The petitioner is, in effect, contending that where an
insured’s policy does not cover his loss, all he has to do is
claim he intended otherwise, and regardless of ambiguity,
it becomes a question of construction which must be decided
in the insured’s favor. The general principle was never
intended to be perverted for such a purpose.

25

CONCLUSION.

The case at bar presents no question of public importance
or significance, nor is there a conflict with established law.
The contract between the parties was correctly enforced
as written by the decision of the Court of Appeals for the
Seventh Circuit. If the simple provisions of such a con-
tract could be negated and overturned by no more show of
reason than is presented here, contractual terms would be-
come meaningless, litigation would be unceasing, and cer-
tainty in contracts of insurance or contracts of any kind
would be a nullity.

It is respectfully submitted that the petition for writ of
certiorari should be denied.

Respectfully submitted,

C,. F. Syerty
A. M. Anperson

Attorneys for Respondent

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386418_0202%3A1. Public record. Not legal advice.