22

1140,46 Sup
G.481.

10 FEDERAL REPORTER, 2d SERIES.

WALZ et al.' v. FIDELITY-PHOENIX FIRE
INS. CO. OF NEW YORK.

(Circuit Court of Appeals, Sixth Circuit.
January 6, 1926.)

No. 4317.

1. Trial 70-Reopening of case and calling

of witnesses after disagreement of jury held

reversible error.

In suit on fire policies, where jury had in practical effect already disagreed, reopening of case and calling by court of witnesses not examined by counsel held reversible error, where there was no suppression or quasi suppression of apparently material evidence. 2. Appeal and error 1033 (7)-Finding in favor of litigant not ground for complaint. Litigant cannot complain on appeal of a finding in his favor, nor proceedings which lead up to it.

3. Evidence

77(1)-Counsel might take creditor's interest into account in deciding to submit to any inference drawn by not calling certain apparently material witnesses.

Question whether a witness shall testify being normally one for counsel to decide finally, in suit by trustee for creditors of insured on fire policy, though he stood in most respects in shoes of insured, counsel might take creditors' interest into account in deciding to submit to any inference which might be drawn by not calling certain apparently material witnesses. 4. Judgment 828 (1)—Judgment in state court not controlling adjudication in suit in

federal court.

In suit on fire policies, removed from state to federal court, judgment in state court in one of unremoved cases was not controlling.

5. Evidence 272-Statements against interest by insured and her agent, after assignments for security of causes of action on fire policies, held admissible.

In suit on fire policies, where insured was equitable owner of cause of action, subject to charge for her debts, and plaintiff was not a

ultimate rightful presence in the case on finding by jury that a conspiracy did exist, should not be received preliminarily, or retained in case, except with great caution.

In Error to the District Court of the United States for the Eastern District of

Michigan; Arthur J. Tuttle, Judge.

Separate suits by William L. Walz, trustee, and others against the Fidelity-Phoenix Fire Insurance Company of New York and others, removed from the state court and tried together. Judgment for defendant named, and plaintiffs bring error. Reversed and remanded.

James O. Murfin, of Detroit, Mich. (Cavanaugh & Burke, of Ann Arbor, Mich., on the brief), for plaintiffs in error.

Arthur P. Hicks and Henry C. Walters, both of Detroit, Mich. (Frank B. De Vine, of Ann Arbor, Mich., on the brief), for defendant in error.

Before DENISON, DONAHUE, and MOORMAN, Circuit Judges.

PER CURIAM. Sarah Goffe was doing business as the Ann Arbor Stamping & Metal Company. Her husband, Jacob, was more or less her general manager. By a group of policies, she carried an insurance of $94,000 on the buildings, $71,000 on equipment, and $210,000 on stock and materials, manufactured and unmanufactured. Following a fire, she submitted proofs, claiming $560,000 loss, of which $375,000 was for stock and material. She was largely indebted to the Ann Arbor Savings Bank, partly secured by mortgage on the property, and partly unsecured. The plaintiff in this action, Walz, was cashier of the bank, and all her claims against the insurance companies she assigned to him as trustee, to collect, pay her debts, and return the surplus to her. The insurance companies denied liability, on the grounds that the fire was purposely caused by or for her, and that the proofs were fraudulent, as claiming losses for property which was not in the fire, and as claiming losses which had not accrued to the property which had gone through the fire. Suits were brought in the state court upon all the policies, the nonresident defendants removed their cases to the federal court, and all of them were tried as one case, resulting in the In suit on fire policies, act of 1921, passed judgment for the defendants, now under re

bona fide assignee for value, statements against interest by insured and her agent after assignments were admissible, subject to proper limi

tation.

6. Insurance

553(1)-Absolute personal knowledge of insured that statement in proofs of loss was false not required to defeat recovery on fire policies.

If insured's statement in proofs of loss was

intended to get money, and was materially false, and believed by her to be false, her absolute personal knowledge that it was false was not required to defeat recovery on fire policies.

7. Insurance 4-Statute passed after fire held inapplicable to loss.

after fire, held inapplicable to loss.

8. Evidence 260-Declarations of another, depending on finding of conspiracy, not received preliminarily, except with caution. Declarations of another, not covered by principles of agency, and which depend for their

view.

After a trial of several weeks, involving not only the amount of the actual loss, but the defensive issues of fraudulent fire and fraudulent proofs, the jury was charged and

10 F.(2d) 22

retired. At the end of about 48 hours, and after successive reports from the jury, and after some supplemental charges had been given or refused, it became evident that the jury was about equally divided, that for 24 hours it had made no progress toward agreement, and that the jurors were convinced they could not agree. In answer to questions from the court, counsel for each party then said he thought an agreement was hopeless, and that the jury must be discharged. Thereupon the trial judge announced, in effect, that the public interest and the pressure of business upon the court made it important to get an agreement, if possible; that he thought the jury was unable to agree because controlling evidence had been kept away from them; that upon the two defensive is sues Mr. and Mrs. Goffe and Sands and Isaacs were the persons who were best informed, and though all had been available, and some of them in the courtroom, no one of them had been called as a witness by either party; and that, under all the circumstances, this was a suppression of evidence which the court, in the public interest, should not permit. Accordingly he caused these four witnesses to be called, and they were examined in part by the court and to some extent by the parties, each of whom, however, disclaimed any responsibility for the witnesses. Further argument and charge were waived by both parties. Two special questions were submitted as to whether the fire was set by or for plaintiff, and whether there was fraud in the proofs of loss. The first question the jury answered in the negative, and the second in the affirmative, and there was a judgment for the defendants.

[1-3] We think there must be a reversal, on account of the reopening of the case, instead of discharging the jury. We base this conclusion on the particular facts of this case, without passing in any more general way upon the powers or duties of the trial judge under more or less analogous situations. The issue of intentional fire has, for the purposes of this review, disappeared from the case; the jury found the fire was not so caused, and the plaintiff cannot complain of this result nor of the proceedings which led up to it. That left the claim of fraudulent proof as the only defense remaining pertinent. The proof strongly tended to show-to say the least-that the statements of property destroyed were greatly exaggerated, and the substantial controversy was whether these excessive claims were made fraudulently or in good faith. Upon this point Mrs. Goffe and her husband, so far as he represented her in

the matter, seemed to be the best witnesses. However, as it turned out, and as plaintiff's counsel probably knew, they were unable as witnesses to make entirely satisfactory statements as to the vast amount of detail involved. This inability, even if perfectly honest, was bound to count against their credibility. Plaintiff's counsel had doubtless considered this question from both sides, and decided that the interest of the creditors represented by the plaintiff made it wiser for him to submit to any inferences which might be drawn from not calling these witnesses, rather than to suffer the inferences which their ignorance or confusion might create. Such a question is, normally, a proper one for counsel to decide finally; and, even though the plaintiff trustee stood in most respects in the shoes of the insured, yet, in deciding a question like this, counsel may well take the creditors' interest into account.

We conclude that, under these conditions, there was no such suppression, or quasi suppression, of apparently material evidence as to justify the trial judge in the course taken. If important documents, or facts which would appear rather indisputably, or an entire subject-matter1 were omitted, the power of the judge to complete the record would present a different question; and it is not without importance that the jury had, in practical effect, already disagreed. If such action by the trial judge as that here involved had been taken upon the close of the evidence, the case would have a different aspect, while postponing it till the jury has disagreed will tend to encourage experimentation.

[4-8] Since the case must be tried again, the other errors chiefly urged should be noticed, even if not duly saved:

(a) The judgment in the state court in one of the unremoved cases is not an adjudication controlling this one.

(b) Mrs. Goffe was the equitable owner of the cause of action, subject to the charge for her debts, and Walz, trustee, was not a bona fide assignee for value. Hence, if for no other reason, the admission and statements aginst her interest by Mrs. Goffe and her agent, made after the assignments, were generally admissible. If their effect

1 In Bank v. Maines (C. C. A. 6) 195 F. 62, 115 C. C. A. 64, after the testimony was closed and each party had offered no proof on one issue, claiming the burden was on the other, the trial judge called a witness having knowledge thereon, opening the subject, which the parties then tried out. This course was approved, sub silentio, by this court.

BUCHER & GIBBS PLOW CO. v. INTER- question here is the nature and scope of the

10 F.(2d) 24

a rear set of in-throw discs to a front set of out-throw discs. The connection, as pointed out in that case, was made by "a reach pivotly connected to the rear end of the tongue, thus making a central flexible draft connection." This method of joining the harrows afforded greater facility in turning, and resulted in the better tracking of the rear gangs. The flexibility in the draft connection permitted the turning of the harrow without strain resulting from resistance of the ground. The tracking benefits were produced by what is denominated as "the structural law of a disc harrow"; that is, the disc being arranged with oppositely facing sides, the lateral pressure or side thrust of one side was counterbalanced by that of the other, so as to keep the rear gangs in proper tracking relation with the front gangs. When the rear gangs were deflected or turned aside, the counterbalancing forces would, under ordinary conditions, act on the pivotal connection, creating a tendency to return the gangs to a normal tracking position.

But the evidence shows that the position of the rear gangs, even under the influence of the counterbalancing lateral pressure, could not be accurately maintained on sloping lands, and besides they were easily deflected or turned aside by obstructions or unusual resistance from the earth. The idea of the patent, however, consisted, as indicated, of a central and flexible draft attachment of the rear to the front harrow. This, it appears, is an element in each of the claims of the patent (Ohio Rake Company Case, supra), and this record brings forward no new art not brought to the attention of the court in that case.

Defendant's harrow, though accomplishing some of the same results as plaintiff's perhaps with greater facility and concededly more accuracy-has some essential differences in principle. It has two connecting draft or reach bars pivoted to the front harrow frame, seemingly nearer the respective ends thereof than the center, and extending rearwardly towards the center, which are engaged midway between the front and rear frames by a U-shaped draft bar attached to the rear frame. The ends of the U-shaped bar at the point where attached to the rear frame are in line with the pivotal connection of the reach bars with the front frame. The line of draft is not central, but is at the outer opposite sides. Facility in turning is obtained by the telescoping of the U-shaped bars into the reach bars. When the front harrow is turned at a sufficient angle, the entire draft is thrown on one reach bar, and

the opposite draft bar telescopes with the Ushaped bar and becomes idle. The extent of telescoping is limited to avoid contact between the rear and front gangs.

As has been observed, the central flexible draft connection of the Niesz patent permits the utilization of the "structural law of a disc harrow" to obtain the proper tracking by the rear gangs in straightway work. The defendant's harrow is different, in that in straightway work it has a substantially rigid connection maintained by the two outer bars, so that there is no utilization of opposing lateral pressure or side thrusts in the prevention of side movements of the rear harrow or the maintenance of alignment. It appears from a preponderance of the evidence, we think, that there is no perceptible departure from alignment in the rear gangs of defendant's device in straightway work under any condition except on hillsides, where there is a slight tendency to swing downhill as the result of gravity, which, however, is not sufficient to prevent the splitting of the ridges made by the front disc. Even in encountering obstructions, the gangs merely "jiggle" momentarily and then right themselves. On the other hand, the rear gangs on plaintiff's harrow are thrown out of alignment when brought in contact with obstructions or certain soil conditions, and the side sways on hillsides are often too great to allow of the splitting of the ridges made by the front disc. The balancing tendency of the opposing lateral pressure is the only force provided by Niesz to bring the rear gangs into alignment when once thrown out. The center of resistance is broader, and much less easily shifted on the rear gangs of defendant's harrow; the line of draft being always inside the draft bars. There is seemingly, in straightway work, no such thing as a central flexible draft connection to the harrow. [2] If, notwithstanding the two reach bars, there is a central flexible draft connection or its equivalent on defendant's harrow, then obviously the sales which it has made must be regarded as having been made under the license, and the royalties sued for are due. But it was not an exercise of any right under the license to make a harrow that would perform the same functions as the Niesz harrow, unless there was an adaptation thereto of Niesz's idea of the central flexible draft connection. That connection's main functionaside from facility in turning, to which we have referred-is utilization of the balancing side thrusts to prevent the side swaying of the rear gangs. Defendant's present structure does not appropriate or utilize those