Lewis Food Company of California, a Corporation, Appellant, v. Milwaukee Insurance Company, a Corporation, Appellee, 257 F.2d 525 (9th Cir. 1958)

This is an action on two insurance policies by an insured against an insurer, based on their diversity of citizenship. (28 U.S.C. § 1332.)

A fire occurred on December 20, 1954, on and in the Los Angeles premises occupied by appellant. Judgment was recovered on the first policy (No. 12073, insuring against loss of damage by fire to stock and merchandise) in the sum of $56,309.66, without interest or costs, and on the second policy (No. 11944, insuring against loss of equipment located on those premises) in the sum of $36,223.66, without interest or costs — or a total of $92,533.32. Appellee was awarded its costs, taxed at $359.72. Appellant, dissatisfied with the judgment, appeals, and relies on five alleged errors:

(1) The court erred in holding the appraisers appointed acted within, and did not exceed their authority.

(2) The court erred in holding that the policies covered all goods and equipment owned by appellant, and that coverage was not limited to the street number addresses listed on the policies.

(3) The court erred in holding that certain goods and equipment stored elsewhere were not considered by the appraisers.

(4) The court erred in holding buildings described by street numbers and "designating areas covered by the policies," had no meaning or effect.

(5) The court erred in not allowing appellant interest on the sums awarded it.

Appellant apparently fails to realize that the first four alleged errors relate to findings made by the trial court which were based on disputed questions of fact. Appellant repeatedly refers to evidence which, if believed, would substantiate its position. It emphasizes that some of this testimony favorable to it was uncontradicted. But neither of these factors is enough to justify a reversal here. In its constant reference to the favorable testimony, it overlooks and nowhere refers to the unfavorable or contradictory testimony in the record. Nowhere does appellant attempt to point out a total lack of evidence to support any finding of fact made by the trial court.

We are faced with the elementary rule of law embodied in our Court rules that the findings of the trial court are presumptively correct and will not be set aside unless clearly erroneous. Fed. R. Civ. P. 52(a), 28 U.S.C. Graver Tank & Mfg. Co. Inc., v. Linde Air Products Co., 1949, 336 U.S. 271, 69 S. Ct. 535, 93 L. Ed. 672. That same rule cautions us, as an appellate court, that due regard shall be given to the opportunity resting with the trial court to judge of the credibility of the witnesses and to appraise the significance of conflicting testimony. Such admonition is particularly apposite here for two reasons. First, the trial court made a personal visit to the insured's premises to observe the physical plant; to note how the dog-food processing plant operated; and, after viewing it, stated:

"* * * I am holding as a matter of fact that this policy covers the entire plant [and not merely the premises designated by street numbers in the policy]. I don't think there is any way you can get away from that." [Tr. p. 444.]

The trial judge then gave his reasons for such finding of fact, including the forceful observation that there existed conveyor belts extending through the walls of some buildings which "connect [ed] the entire plant together."¹ 

Secondly, the matters urged upon us as improper findings manifestly depend upon conflicting testimony. For example, appellant strenuously urges that the amount found by the court as the value of the property insured on the 30th day of November, 1954, $346,422.66,²  must have been based upon an original figure of $418,509.14 for stock on hand, less $72,000 worth of stock stored at the El Monte plant, and did not take into consideration the approximately $187,000 in stock allegedly stored outside the state of California which would have resulted in insurable stock at the plant worth approximately $159,000. The court was required to accept this figure, says appellant, and it was error not to do so. Yet defendant introduced testimony that two certified public accountants had determined the actual value of the stock as of November 30, 1954 at the various Los Angeles buildings covered by the policy, to be (after deducting the El Monte stock) $325,022.25. They did not take the Honeyville, Utah stock of $21,000 into consideration originally, nor the lump storage of $2,964, nor the barley in Utah, nor any goods in outside locations except El Monte. The defendant relied on the testimony of public insurance adjuster Greenspan, who had determined the actual cash value of the stock of goods on hand on November 30, 1954 as $148,509.14. This did not include anything outside the plant. Despite this testimony in the record, which was based on an auditor's examination of appellant's available books, ledgers and records (some of which had been destroyed in the fire), appellant attacks the witnesses' conclusions as erroneous because those same books, ledgers and records showed various amounts of stock stored in Utah and at the Federal Warehouse in Los Angeles.

We would be the first to agree that the record in this case is in some areas confusing and contradictory. The trial court's patience was near the breaking point (Tr. pp. 352-357). Yet he patiently heard all the testimony, then re-opened the case to hear further testimony from appellant which had been originally ruled out. He physically viewed the premises. After study, the court came to a conclusion. Having had the opportunity to observe the various witnesses, he concluded that appellant "had failed to establish that any improper matters were considered by the appraisers." The memorandum opinion of the trial court clearly shows the basis for this factual determination.³ 

The appellee was the prevailing party below, and hence we must take that view of the evidence most favorable to it, just as we must take the view most favorable to the appellant in interpreting the insurance policies involved. Appellee is entitled to the benefit of all favorable inferences from the facts proved relative to the amount of the property insured. If, when so viewed, there was substantial evidence to sustain the findings then the judgment may not be reversed by this Court unless against the clear weight of the evidence, or unless influenced by an erroneous view of the law. John Hancock Mut. Life Ins. Co. v. Cohen, 9 Cir., 1958, 254 F.2d 417; United States v. First Trust Co. of St. Paul, 8 Cir., 1958, 251 F.2d 686; Ellison v. Frank, 9 Cir., 1957, 245 F.2d 837; Vidales v. Brownell, 9 Cir., 1954, 217 F.2d 136. There was much evidence to support the factual conclusions of the trial court, and we see no reason to disturb it.

The policy involving the loss of goods and merchandise contained a "Value Reporting Clause"⁴  and "Full Reporting Clause."⁵  The last report of value made by appellant in accordance with said contract provision was made on December 18, 1954, reporting the values of the property insured under said policy as of November 30, 1954 to be $132,000. The court found the value of the property specified in the policy as insured, on that same date of November 30, 1954, to be $346,442.66 (Finding III). The fire damage was $187,228.59 (Finding VI). The formula used by the court to determine what the insurer was obligated to pay, is found in Finding VII;

"That by reason of the provisions of the said policy above quoted, Plaintiff, by reason of said damage by fire, became entitled to recover from Defendant not to exceed that proportion of said loss or damage as the amount reported by Plaintiff to Defendant as the actual cash value of the property insured as of November 30th, 1954, to wit: $132,000.00 bore to the actual cash value of the said property as of the date for said report, to wit:

 $132,000.00 ___________ $346,442.66 or $346,442.66 of $187,228.59, or the sum of $71,359.76."

Salvage was next considered in Finding VIII,⁶  and credited in accordance with the policy provisions. The net amount so found due was found to have been promptly tendered by appellee to appellant.⁷  These findings are not attacked by appellant, except for the last.

Appellant's fifth error relied upon is the failure of the trial court to award interest. The court failed to award interest because it found, as noted above, that the amount due appellant by appellee had been timely tendered by appellee.

The parties stipulated that "tender was made as alleged in (defendant's) answer."⁸  The answer recited a tender of $56,309.67 on the first cause of action⁹  and $36,223.66 on the second.¹⁰  These were the precise respective sums awarded to appellant totaling $92,533.32.

Appellant cites three cases in support of this point, none of which controls. Thus, Mutual Life Ins. Co. of New York v. Wells Fargo Bank, 9 Cir., 1936, 86 F.2d 585, 588, is not applicable, for there the tender was in a lesser amount than that ultimately found due. Appellant cites the case of Sanitary Farm Dairies v. Gammel, 8 Cir., 1952, 195 F.2d 106, for the general rule that when defendant attempts by pleading to prevent plaintiff from obtaining any recovery, the tender is not effective to stop interest. That valid rule is not here applicable, because defendant in answering both the first and second cause of action contained in plaintiff's complaint admitted there were due the sums found due (Tr. pp. 15, 16, 18) and tendered the same. In addition, appellee raised as a separate defense to the second cause of action only the defense of misrepresentation. Nor was the tender here made conditional, and hence the cited case of Maryland Casualty Co. v. Southern Pacific Co., 9 Cir., 1942, 119 F.2d 672, is inapplicable.

The law of California is controlling (Concordia Ins. Co. of Milwaukee v. School District, 1931, 282 U.S. 545, 51 S. Ct. 275, 75 L. Ed. 528) and is found in California Civil Code sections 1504 and 3287, California Code of Civil Procedure, § 2074, and such cases as Lineman v. Schmid, 1948, 32 Cal. 2d 204, 195 P.2d 408; Happoldt v. Guardian Life Ins. Co., 1949, 90 Cal. App. 2d 386, 203 P.2d 55, and, National Union Fire Ins. Co. of Pittsburgh, Pa., v. California Cotton Credit Corp., 9 Cir., 1935, 76 F.2d 279, 289.

The judgment of the District Court is affirmed.