Happy Hank Auction Co.
American Eagle Fire Ins. Co.
[145 N.Y.S.2d 208] Herbert P. Polk, New York City, of counsel (Frederic C. Pitcher and Robert S. Newman, New York City, with him on the brief; Lowenstein, Pitcher, Amann & Parr, New York City, attys.), for defendants-appellants.
Gilbert Goldstein, New York City, of counsel (Lawrence Kovalsky, New York City, with him on the brief; Goldstein & Goldstein, New York City, attys.), for plaintiff-respondent.
Before BREITEL, J. P., and BASTOW, BOTEIN, RABIN and COX, JJ.
Plaintiff is a corporation engaged in the retail furniture business. On December 7, 1953, a fire occurred on its premises which damaged plaintiff's property. Plaintiff was insured with defendant insurance companies in a substantial amount against loss by fire.
Following inability to adjust it claim plaintiff commenced an action upon the policies. In the first cause of action it seeks a direction for an appraisal to determine the amount of the loss. The second cause of action seeks a money judgment in the amount determined on appraisal, or in the alternative, the face amount of the policies. As affirmative defenses defendants assert fraud, false swearing, concealment and noncompliance with the requirements of the policies. Upon proof presently available in support of these defenses defendants moved for summary judgment, which motion has been denied.
Plaintiff submitted a proof of loss to defendants for the alleged damage to merchandise, fixtures and leasehold improvements. A substantial portion of this claim was represented as consisting of merchandise burned 'out-of-sight'. On an examination under oath of plaintiff, conducted by defendant companies pursuant to the policy provisions, plaintiff [145 N.Y.S.2d 209] claimed that except for some looseleaf pages covering a period commencing a little less than one year before the date of the fire, all
of its books of account had been lost in the fire. One of the pages so providentially preserved purported to be the current inventory account from plaintiff's general ledger. This page contained one lone entry, showing a merchandise inventory figure as of January 1, 1953--eleven months before the fire occurred. Therefore, the accuracy of the inventory figures claimed as of the date of the fire, December 7, 1953, obviously hinged on the integrity of the January 1, 1953 inventory figure.
This figure was a balance purportedly copied from the closing entry on the inventory account page for the year 1952, one of the records which plaintiff claimed had been destroyed in the fire. Plaintiff's Federal income tax and State franchise tax returns for 1952 would contain a closing inventory figure which should have been identical with the closing entry on the missing inventory account page. There were also other sizeable portions of plaintiff's claim that lacked impressive substantiation because their bookkeeping credentials had been lost in the fire; but which could be reconstructed from the tax returns. Since presumably not a vestige of the out-of-sight merchandise survived the fire, the inventory figures assumed especial significance in establishing that aspect of plaintiff's claim. After first refusing to furnish copies of its tax returns, then agreeing, and then equivocating, plaintiff finally maintained at the closing session of the original examination that the copies had not yet been received. More to the point here, at the conclusion of this examination plaintiff had also not responded to certain questions and demands touching upon its claims for the merchandise burned out-of-sight, but had promised to obtain and submit such information to defendants.
Several months after the minutes of the examination had been signed plaintiff demanded an opportunity 'to answer all questions and to produce all records and papers in its possession or under its control' which defendants maintained had not been answered or produced. Defendants acceded to this demand.
At the opening of the re-examination plaintiff, through its counsel, announced that it was amending its proof of loss by withdrawing therefrom its claim for the merchandise allegedly burned out-of-sight. Plaintiff then refused to answer any questions or produce any bills relating to the claimed out-of-sight loss or to produce the copies of its tax returns. The basis of these refusals was that by amending its proof of loss so as to withdraw its out-of-sight claim plaintiff had rendered defendants' questions and demands immaterial. Defendants
charge plaintiff with concealments and noncompliance which under the terms of the policies render them void and ...