J. J. Lawson, Doing Business Under the Name of Industrial Manufacturing Company, Appellant, v. American Motorists Insurance Corporation, Appellee, 217 F.2d 724 (5th Cir. 1955)

The question on this appeal is whether the trial court properly granted a summary judgment to the defendant, or whether there was any genuine issue of fact presented by the pleadings and the motion for summary judgment, together with supporting affidavits and exhibits.

The complaint alleged in substance as follows: Defendant issued a "comprehensive dishonesty, disappearance, and destruction" policy for a valuable consideration to the Industrial Manufacturing Company, a corporation, whose rights under such policy were assigned by operation of law to its then sole stockholder, plaintiff herein, upon dissolution thereof. Defendant undertook by the policy and attached riders to indemnify the insured corporation for any loss sustained during a three-year term from and after May 1, 1948, through "larceny, theft, embezzlement, forgery, misappropriation, wrongful abstraction, willful misapplication or other dishonest or fraudulent act or acts, committed anywhere by any of the employees" of the insured, up to $2500 for each guilty employee. The policy further provided that if insured by evidence submitted to the insurer could establish reasonably (or in case of inventory shortage conclusively) that a loss was caused by dishonesty or fraud of one or more employees, it would have a right to indemnity even though it should be unable to prove which employee or employees caused the loss. Insured was engaged in the manufacture of industrial machinery. In the early part of 1949, the complaint further alleged, the insured corporation's employees entered into a wrongful scheme and conspiracy to bankrupt the corporation, and began to carry out such conspiracy "by acts of larceny, theft, embezzlement, forgery, misappropriation, wrongful abstraction, wrongful misapplication, destruction, and the disablement of the plant, machinery and equipment of plaintiff [sic; sc. the insured], by the wrongful and intentional failure to keep accurate books, records and accounts of the business of that company, by the wrongful fomenting of discontent among the employees of said company, by the wrongful and fraudulent failure to manufacture the equipment which was ordered by the customers of said company, and, in general, to completely destroy and wreck the business of said company by any and all means possible, and to wrongfully destroy the market for the products manufactured by said company, by deliberately producing inferior, defective, and unworkable machinery and equipment, and to completely destroy the faith and confidence of said company's purchasers and prospective purchasers of its products." The plaintiff alleged he was unable to designate the specific members of the conspiracy; and further that all conditions precedent to the bringing of the action had been performed or had occurred.

Defendant's principal defenses, raised in both its answer and its motion for summary judgment, were, briefly stated, (1) that the alleged dishonest acts of the insured's employees were not within the coverage of the policy; (2) that the insured failed to perform the express condition precedent of furnishing proofs of loss within 100 days after discovery of loss, a condition of the contract not waived by defendant; and (3) that suit was not instituted by plaintiff within 28 months after accrual of the cause of action, as provided by express condition subsequent in the contract.

Both the motion and part of the answer were verified.¹  Other papers supporting the motion and forming part of the record herein, consist of a lengthy deposition²  of plaintiff and copies of certain letters, the insurance policy and attached riders, and certain extracts from the minutes of the insured corporation.³ 

If the parts of these papers which the trial court was permitted to consider by Rule 56(e), R.C.P., 28 U.S.C., conclusively show that there was no genuine issue of fact in the premises, then it was correct to grant the motion for summary judgment. Although we do not hold that it would have been improper for the court to construe the language of the policy, merely because it does not appear that a sworn or certified copy of the policy was ever served with the motion or attached thereto, according to Rule 56(e), since, like other rules of evidence this lack could be waived, we will not consider here the first and third of defendant's principal defenses, because a disposition of the case does not require that we decide these matters. The second defense does not involve construction of the policy. That there was an unequivocal condition of filing proof of loss is an undisputed fact, sworn to in defendant's motion and not denied in plaintiff's deposition. Plaintiff had the opportunity to submit opposing affidavits under Rule 56 (c) but never did so. His mere formal and unsworn allegation that he had performed all conditions precedent necessary to be performed by him does not raise a genuine issue for the purpose of this motion. Engl v. Aetna Life Ins. Co., 2 Cir., 139 F.2d 469; Dewey v. Clark, 86 U.S.App.D.C. 137, 180 F.2d 766, 772; McClellan v. Montana-Dakota Utilities Co., D.C.D. Minn., 104 F. Supp. 46, affirmed, 8 Cir., 204 F.2d 166; Pennsylvania Greyhound Lines v. Amalgamated Ass'n of Street Electric Ry. and Motor Coach Employees of America, D.C.W.D. Pa., 14 F.R.D. 11; Griffith v. William Penn Broadcasting Co., D.C.E.D. Pa., 4 F.R.D. 475. It is patent from the plaintiff's deposition that neither he nor the insured corporation ever filed any proof of loss, and that the insurer never waived such condition but on the contrary constantly insisted that particulars be filed whenever the insured or the plaintiff claimed a loss had occurred. Plaintiff readily admitted in the deposition that he could not provide the information required to prove the losses, and that the insurer always insisted on strict compliance with this condition. Nor is any issue raised that the condition was unreasonable or invalid. See Art. 5546, Vernon's Texas Civil Statutes.

Consequently, since no genuine issue exists as to the liability of the insurer, the judgment must be affirmed.