25 F.(2d) 415 of William's signature. However that may NEW YORK UNDERWRITERS' FIRE INS. CO. v. MALHAM & CO. STERLING FIRE INS. CO. v. SAME. be, for other reasons we are of the opinion [5-8] But aside from that consideration, Other pleas of estoppel or laches do not require detailed discussion. The contentions are either without support in fact, or they are wanting in essential elements to constitute such defenses. It is fair to infer from the intimate knowledge defendants had of the controversy from the beginning, if not from the small sum bid-scarcely 50 cents an acre -that they understood they were buying but a chance. Nos. 7982, 7983. 505-Under fire insurance pol icy provision requiring insured to protect property and separate damaged from undamaged property, insured cannot recover in absence of waiver, where he sells property before insurer had opportunity to appraise damage. Under provision of fire insurance policy which requires insured to protect property and separate damaged from undamaged property, etc., insured cannot recover on policy in absence of waiver, where he sells property before insurer has reasonable opportunity to inspect it or appraise damage. 2. Insurance 146(3) Forfeitures of insurance policies are not favored. Forfeitures of insurance policies are not favored in law. Estoppel and waiver of compliance with provisions of fire insurance policies, may be inferred from conduct of insurance company. 4. Insurance 668 (2)-Whether fire insurance adjuster represented all insurers or whether his acts were ratified by defendant insurer was fact question. In suit on fire insurance policy, where property was covered by policies in four insurance companies, question whether adjuster making offer of settlement represented all insurance companies, or whether his acts were there after ratified by insurance company claiming he was not representing it was fact question. 5. Appeal and error 1010(1)-Trial court's findings of fact will not be disturbed if there is substantial evidence supporting them. Where jury is waived and case is tried to court, trial court's findings on questions of fact will not be disturbed if there is any substantial evidence to support them. 6. Evidence 20(1)-It is common knowledge that, where loss covered by several policies occurs, adjuster seldom appears for each of insurers. It is matter of common knowledge that, where loss occurs and is covered by number of fire insurance policies, it is seldom that an adjuster appears for each one of companies. [9, 10] Nor do the orders and judgments of the probate court relating to the sale render the issue of title res adjudicata. In re Tuohy's Estate, 33 Mont. 230, 83 P. 486. We are quite unable to see how there is involved any question of comity or conflict of jurisdiction between the federal and the state court. The state court was sitting in probate and was without jurisdiction to determine questions of title between an estate and persons claiming adversely. In re Dolenty's Estate, 53 Mont. 33, 161 P. 524. See, also, Barker v. Edwards (C. C. A.) 259 F. 484, 486; Watson v. Jones, 13 Wall. (80 property which was covered by policies in four U. S.) 679, 20 L. Ed. 666. The judgment is affirmed. 7. Insurance 76-Evidence sustained finding that fire insurance adjuster making offer of settlement represented defendant as well as other Insurers. In suit on fire insurance policy covering insurance companies, evidence held sufficient to sustain finding that insurance adjuster making offer of settlement represented defendant. 8. Insurance 665(8)-Where insured sold merchandise damaged by fire before sending proofs of loss, evidence sustained finding that insurer waived salvage clause provisions. Where insured merchandise stock was damaged by fire and insured had fire sale to dispose of damaged merchandise before proofs of loss were sent to insurance companies, and later adjuster representing fire insurance companies made offer of settlement, evidence held to sustain finding that insurance companies waived provisions of policies giving them right to examine salvaged stock and have an appraisal and take same at appraised value or replace property lost or damaged with other of like character. 9. Insurance 665(1)-Evidence in suits on fire insurance policies warranted holding that insurers elected not to take salvaged goods. In suits on fire insurance policies covering stock of merchandise, evidence warranted holding that insurance companies elected not to take salvaged goods. 10. Insurance335 (3)-Fire insurance policy clause requiring insured to keep certain books is enforceable. Clause of fire insurance policy requiring insured to keep detailed inventory and set of books which shall clearly present complete record of business transacted, including all purchases, sales, and shipments, both for cash and credit, is enforceable. 11. Insurance 335 (3)-Substantial compliance with fire insurance policy provision requiring insured to keep set of books is sufficient (Crawford & Moses' Dig. Ark. § 6148). Under Crawford & Moses' Dig. Ark. § 6148, substantial compliance with fire insurance policy provision requiring insured to keep detailed inventory and set of books showing business transacted, purchases, sales, and shipments, both for cash and credit, etc., is all that is essential. 12. Insurance 335 (3)-If Insured's books, unaided by oral testimony, furnish information necessary to determine loss, fire insurance policy clause regarding keeping books is complied with. If books themselves kept by insured, unaided by oral testimony, except to explain method in which they were kept, furnish requisite information necessary to determine extent of loss, intent and purpose of fire insurance policy clause requiring insured to keep set of books showing business transacted, purchases, sales, and shipments, both for cash and credit, etc., is accomplished. 13. Insurance 335(3)-Insured held to have substantially complied with fire insurance policy provision requiring keeping of books showing business transacted, etc. (Crawford & Moses' Dig. Ark. § 6148). Insured held to have substantially complied with clause of fire insurance policies covering stock of merchandise requiring insured to keep inventory and set of books showing business transacted, etc., which is sufficient under Crawford & Moses' Dig. Ark. § 6148. 4 14. Insurance 665(1)-Evidence held to show insured made demand on insurer within statute providing for additional damages for failure to pay fire loss within time specified; formal demand not being necessary. Evidence showing that insured was endeavoring to have policies paid and that insurer understood that payment was demanded held sufficient to show demand by insured within meaning of Arkansas statute, providing that, where loss occurs under fire insurance policies and company fails to pay within time specified in policy after demand, company shall be liable for 12 per cent. damages on amount of loss, since it is not necessary that there should have been formal demand for payment. 15. Insurance 602-In suits on fire insurance policies commenced in state court and removed to federal court, attorney's fees provided by state statute where insurer does not pay loss within time specified could be taxed as costs. In suits on fire insurance policies commenced in state court and removed to federal court, attorney's fees provided by Arkansas statute where insurer fails to pay loss within time specified in policy after demand could be taxed as costs. 16. Insurance 553(1)-Where court found fire loss to be $21,000, amount of $24,423.20 stated in proofs of loss did not warrant assumption that insured's affidavit was willfully false. Where trial court found loss to be $21,000 in suits on fire insurance policies, amount stated in proofs of loss, $24,423.20, held not to warrant assumption that insured's affidavit was willfully false. 17. Insurance 661-In suits on fire insurance policies, permitting inventory compiled from yearly invoices as evidence of goods on hand when fire occurred held not error, where books showing purchases and invoices were introduced. In suits on fire insurance policies covering stock of merchandise, permitting inventory compiled from yearly invoices to be introduced as evidence of stock of goods on hand at time of fire held not error, where books of insured were introduced showing amount of merchandise purchased, and all invoices were introduced. 18. Appeal and error 197(8)-Objection that waiver was not pleaded, not made during trial, could not be raised on appeal. Where no objection was made to evidence on ground that no waiver was pleaded of certain provisions in fire insurance policies, but case was tried on theory of claimed waiver of such provisions, question could not be raised on appeal. 19. Appeal and error 1058(1)-Excluding evidence that special agent and fire insurance adjuster calling on insured were not defendant's representatives held harmless, where parties testified to matter themselves. In suits on fire insurance policies covering property covered by policies in four companies, excluding evidence that special agent and insurance adjuster calling on insured after fire did 1 25 F.(2d) 415 KENYON, Circuit Judge. The stock of merchandise of defendants in error, a partnership composed of Raymond Malham, Joe Malham, and R. Mahfouz (hereinafter designated the insured), engaged in the mercantile business at Brinkley, Ark., was partially destroyed by fire on the 12th day of December, 1926. The New York Fire Insurance Company, plaintiff in error in case No. 7982 (hereinafter designated the New York Company) had issued a policy which was in effect at the time of the fire covering insured's stock to the extent of $4,000. The Sterling Fire Insurance Company (hereinafter called the Sterling Company), plaintiff in error in case No. 7983, had a similar policy covering said stock. Two other companies had policies thereon. Suits were brought against the New York Company and the Sterling Company to recover on the policies in the state court of Arkansas, and duly removed to the federal court. The cases were there consolidated and tried together. A jury was waived by written stipulation, and the trial court found in favor of the insured on both policies and entered judgments thereon. Certain questions involved in the writs of error are common to both companies. We consider both writs in this opinion. The contract of the New York Company contains the following provision: "This company shall not be liable beyond the actual cash value of the property at the time any loss or damage occurs, and the loss or damage shall be ascertained, or estimated, 25 F.(2d)-27 according to such actual cash value, with proper deduction for depreciation, however caused, and shall in no event exceed what it would then cost the insured to repair or replace the same with material of like kind and quality; said ascertainment, or estimate, shall be made by the insured and this company, or, if they differ, then by appraisers as hereinafter provided; and the amount of loss, or damage, having thus been determined, the sum for which this company is liable pursuant to this policy shall be payable sixty days after due notice, ascertainment, estimate, and satisfactory proof of the loss have been received by this company, in accordance with the terms of this policy. It shall be optional, however, with this company to take all, or any part, of the articles at such ascertained or appraised value, and also to repair, rebuild, or replace the property lost or damaged with other of like kind and quality, within a reasonable time on giving notice within thirty days after receipt of the proof herein required, of its intention so to do. The contract provided for giving the insurance company notice in writing of loss in case of fire, the protection of the property by separation of damaged from undamaged goods, the making of a complete inventory, etc., and within sixty days after fire making proof of loss, the loss not to be payable until sixty days after such notice; also "no suit or action on this policy for the recovery of any claim shall be sustainable in any court of law or equity until after full compliance, by the insured, with all the foregoing requirements." Similar provisions exist in the Sterling Company policy. Proofs of loss were sent by insured to the companies February 2, 1927. About January 7, 1927, the insured inaugurated a fire sale to dispose of the damaged merchandise. A few days after the fire, a Mr. Cress, who was special agent of the Underwriters' Salvage Company of New York, went to Brinkley to assist in taking an inventory of the remaining and damaged stock, at the request of Coates & Raines, who were the general agents in Arkansas of the insurance companies holding policies on the stock, with the exception of the New York Company. Later a Mr. Overstreet, adjuster for the general agency of Coates & Raines, went to Brinkley for the purpose of adjusting the loss. He testified that he represented all the companies interested, except the New York Company. He offered insured $5,500 in full settlement of all the insurance policies. There was evidence that he told John Malham, one of the partners, with reference to the $5,500, that that was all he would get, and, when asked by Malham as to what he was going to do with the stock, he said, "That's yours." Out of the fire sale the insured realized $1,623.25. A Mr. Watkins, conceded to be a representative of the New York Company, went to Brinkley February 2, 1927, to investigate and adjust the loss on behalf of his company. He found the salvaged stock had been sold, and testified that was the first he or his company knew of said sale. The New York Company claims that it never consented to the sale of the salvaged stock. After this sale the local agent of the New York Company at Brinkley, at the request of Mr. Malham, called up L. B. Leigh & Co., general agents of the New York Company, at Little Rock, who had charge of adjusting losses in Arkansas, and talked with them concerning a settlement of his loss. To this we advert later. [1] Both insurance companies contend that the sale of the salvaged stock deprived them of their rights under the policy to examine the same and to have an appraisal, and, if they desired, to take it at its appraised value, or to replace the property lost or damaged with other of like character; that therefore the insured has violated the contracts, and cannot recover thereon. It is without question that the proofs of loss were not served until February, 1927. The sale of the salvaged merchandise was in the fore part of January. It would seem, therefore, that the provision of the contracts hereinbefore set out was violated, and that the insurance companies were deprived of a substantial right thereunder. If the salvaged property was sold without the consent of the insurance companies, the insured forfeited the right to claim indemnity, and, unless there was a waiver of such provision, the insured cannot recover on these policies. The doctrine is stated in 26 C. J. 366: "Under the provision which requires the insured to protect the property and separate the damaged from the undamaged property, etc., the insured cannot recover on the policy, in the absence of waiver, where he sells the property before the insurer has a reasonable opportunity to inspect it or appraise the damage." Astrich v. German-American Ins. Co. of New York (C. C. A.) 131 F. 13; Farmers' Merc. Co. v. Ins. Co., 161 Iowa, 5, 141 N. W. 447; Lancashire Ins. Co. v. Barnard (C. C. A.) 111 F. 702; Hamilton v. Liverpool, etc., Ins. Co., 136 U. S. 242, 10 S. Ct. 945, 34 L. Ed. 419; Thornton v. Security Ins. Co. (C. C. A.) 117 F. 773; Oshkosh Match Works v. Manches ter Fire Assur. Co., 92 Wis. 510, 66 N. W. 525. [2] That forfeitures are not favored in law is axiomatic. Knickerbocker Life Insurance Co. v. Norton, 96 U. S. 234, 24 L. Ed. 689. In May on Insurance, 272, it is said: "The courts will proceed with caution in determining the question of the liability of the insurer; but, when this liability is fixed by the capital fact of a loss within the range of their responsibility, they will be very reluctant to deprive the insured of the benefit of that liability, by any failure or neglect to comply with the mere formal requisitions of the contract, by which his right is to be made available for his indemnification." From the syllabus in German Insurance Co. v. Gibson, 53 Ark. 494, 14 S. W. 672, we quote: "Forfeitures are not favored in law; and any agreement, declaration, or course of action on the part of an insurance company, which leads a party insured honestly to believe that by conforming thereto a forfeiture of his policy will not be incurred, followed by conformity on his part, will estop the company from insisting upon the forfeiture." [3] Waiver and estoppel may be inferred from the conduct of the insurance company. American Ins. Co. v. Dannehower, 89 Ark. 111, 115 S. W. 950; Pacific Mutual Life Ins. Co. v. Carter, 92 Ark. 378, 123 S. W. 384, 124 S. W. 764; Queen of Ark. Ins. Co. v. Forlines, 94 Ark. 227, 126 S. W. 719; Lord v. Des Moines Fire Ins. Co., 99 Ark. 476, 138 S. W. 1008; Inter-State Bus. Men's Acc. Ass'n v. Greene, 132 Ark. 546, 201 S. W. 799; Knickerbocker Life Ins. Co. v. Pendleton et al., 112 U. S. 696, 5 S. Ct. 314, 28 L. Ed. 866; Iowa Life Ins. Co. v. Lewis, 187 U. S. 335, 23 S. Ct. 126, 47 L. Ed. 204. The question of waiver or estoppel is of controlling importance in these cases. [4,5] If there was any waiver of the provision of the policies giving insurers the right to take the property at the appraised value or to replace same, it was through the acts of Overstreet in telling the assured to sell the salvaged goods, and standing pat on the offer of the $5,500 settlement, and stating assured would receive no more on all the policies. That Overstreet represented the Sterling Company is admitted. It is claimed he did not represent the New York Company in any way. Of course, if this is so, what he did or said was not binding on it unless subsequently ratified. The question therefore of whether Overstreet represented the New York Company at the time he went to Brinkley after the fire and before the salvage sale and made the offer of settlement on be 25 F.(2d) 415 half of all the insurance companies, or whether his acts in that respect were thereafter ratified, is a vital one in the New York Company Case. This is a fact question. It must be borne in mind that a jury was waived in writing and the case tried to the court. The rule under these circumstances is that the findings of the trial court on questions of fact will not be disturbed if there is any substantial evidence to support them. Boak v. Robie (C. C. A.) 16 F. (2d) 33. The record does not show that any requests were made for special findings of fact or conclusions of law. The finding of the court was general, and no special findings were made. It is therefore doubtful whether the important questions now urged are before this court for review. Law v. United States, 266 U. S. 494, 45 S. Ct. 175, 69 L. Ed. 401; Fleischmann Co. v. United States, 270 U. S. 349, 46 S. Ct. 284, 70 L. Ed. 624. However, as that question has not been raised in this court, we have concluded to go into the matter to some extent. In order to find for the insured, as the court did, it must of necessity have found that Overstreet represented the New York Company at the time he negotiated with the insured, and that he was authorized to represent it when he in effest told insured he could sell the damaged property, and that the $5,500 was all it would receive, or, if he did not then represent it, it ratified his acts. Was there any competent evidence to sustain such conclusion of the trial court? The record shows that Overstreet made the offer of $5,500 to settle all four policies, including the New York Company and the Sterling Company policies. We set out part of his crossexamination: "By Mr. Bogle: Q. When you went down there to make this investigation, you kept the plaintiffs under the impression you represented all of the insurance companies, did you not? A. No, sir; I told him I had authority to make a settlement on that basis. "Q. Why did you make an offer of $5,500 in full settlement of all the insurance claims? A. Because, as I stated to him, I had to take the matter up with the other company. "Q. You didn't tell them anything about taking the matter up with the New York Underwriters, did you? A. No, sir; I didn't. "Q. Then when you made this offer of settlement of fifty-five hundred dollars, you meant the New York Underwriters' Company to pay their part of it. A. All losses to be paid on that basis. The company I represent would pay an amount proportionate to that basis. I told him I would pay him on the basis of fifty-five hundred, pay all of the five hundred dollars on the furniture and fixtures and five thousand dollars on the stock of goods. "Q. Did you tell Malham & Co. that? A. Yes; I did." He talked with Watkins, conceded representative of the New York Company, about what he had done in attempting to adjust the loss on the basis of $5,500. We quote further from his testimony: "Q. You did make a report to L. B. Leigh & Co.? A. No, sir; I told Mr. Watkins that I tried to adjust the loss on the basis of $5,500 and that he wouldn't accept it. "Q. Why were you talking to him, if you didn't represent any other company? A. It was a conversation among adjusters. "Q. Did you ever make adjustment for his company? A. No, sir; not authoritative. I have had losses referred to me by L. B. Leigh & Co. through Mr. Watkins, and they have accepted my adjustments. "Q. And if this had gone through, he would have accepted this, too, wouldn't he?" Overstreet had represented the New York Company in other matters. It is highly improbable that he would have made the offer to settle in behalf of all the companies if he had no authority to act in behalf of the New York Company. One Chaney was agent at Brinkley of the New York Company. Some time after Overstreet had been at Brinkley, at Malham's request, Chaney called up Leigh & Co., who were general agents of the New York Company at Little Rock, and asked them concerning settlement. We set out a portion of his testimony, viz.: "Q. Does your insurance agency represent the New York Underwriters' Insurance Company? A. Yes, sir. "Q. I will ask you to state whether or not, after the Malham & Co. fire, after Mr. Overstreet had been down to make investigation, you called up L. B. Leigh & Co., general agents of the defendant underwriters? A. Yes, sir. "Q. Did you call them up and talk to them in regard to this settlement? A. About a settlement? "Q. Yes. A. I called up the office some time afterwards, but I don't remember how long that was. "Q. It was after Mr. Overstreet had been there? A. Yes, sir; after-some time after he had been there. "Q. You called up their office? A. Yes, sir; Mr. Malham asked me to call them up, and I called Mr. William Leigh, or Mr. Gil |