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April 25, 1967

G. R. KINNEY CO. Pennsylvania, Inc. and Philadelphia Electric Company

Luongo, Judge.

The opinion of the court was delivered by: LUONGO

LUONGO, Judge:

On Monday, February 19, 1962, the contents of a store occupied by M. Buten and Sons, Inc. (Buten) were damaged by water used to put out a fire in an adjoining store premises occupied by G. R. Kinney Co. Pennsylvania, Inc. (Kinney). Manufacturers Mutual Fire Insurance Company, Buten's fire insurer, paid Buten for the water damage loss and, as subrogee of Buten's rights, instituted suit against Kinney and against Philadelphia Electric Company, charging that they negligently caused the fire. The case came on for trial before the court and a jury. At the conclusion of plaintiff's evidence, both defendants moved under Rule 50(b) for a directed verdict. The defendants' motions were granted. Contending that the court erred in granting the motions, plaintiff now seeks a new trial. The motion for new trial will be denied.

 Viewed in the light most favorable to the plaintiff, the evidence established that the fire which resulted in the water damage to Buten's property originated in the basement of premises occupied by defendant Kinney. The Kinney premises were heated by an oil burner located in the basement. The oil burner was in operation at the time the fire was discovered. Approximately six feet or so distant from the oil burner was located some trash which had been accumulated over a period of several business days awaiting the regular weekly collection.

 The accumulation of trash in such proximity to the oil burner was probably an unsafe and a negligent condition, and the court so commented at the time of trial, but there was no evidence to establish a causal relationship between that negligent condition and the fire. Plaintiff's evidence disclosed that the oil burner was located at the rear of the basement which was approximately 85 feet long; that when Kinney's manager went into the basement to investigate, he saw no sign of fire at or near the trash or the furnace; that the smoke and the red glow which he saw were at the right front portion of the basement, in an area approximately beneath the display window of the store premises. There was no evidence at all on which a jury could conclude that the accumulation of trash had anything to do with causing the fire. See Stewart v. DeNoon, 220 Pa. 154, 69 A. 587 (1908).

 There was evidence also that an electric panel box was located at the front of the Kinney basement, but it was at a point removed from the smoke and the red glow. There was no evidence that the panel box was installed or maintained by defendant Philadelphia Electric Company, or that it was in any way connected with the fire. Indeed, from statements made in its brief, plaintiff seems to have abandoned its motion for new trial as against Philadelphia Electric Company.

 The sole issue in this case was stated by the court in a colloquy with plaintiff's counsel prior to ruling upon defendants' motions for directed verdict.


"[You] will have to get by in this case on the bare legal principle . . . that once you have shown that there was a fire and that you sustained loss from that fire, the burden then shifts to the defendants to prove that they were not negligent . . .." (N.T. 128)

 Plaintiff's argument throughout this case is that under the Pennsylvania doctrine of exclusive control, all it must show is that defendant was in control of the premises, and that a fire occurred therein causing the loss complained of.

 There is little I can add to the reasons I gave at trial in granting the defendants' motions for directed verdict and in distinguishing the cases argued by plaintiff:


"In your Eckman [v. Bethlehem Steel Co., 387 Pa. 437, 128 A.2d 70 (1956)] case the instrumentality which was shown clearly to have caused the scalding to the plaintiff was a steam pipe which was part of a steam system which was clearly under the control of the defendant, and the plaintiff did present evidence to show the manner in which the system was set up and to show that the site of the escape of the steam that scalded the plaintiff, a pop valve, was located in such a way that if the manually-operated valves, which could not be opened other than by the operation of the wheels, had remained closed, the pop valve simply could not have allowed the steam to escape causing the scalding to the plaintiff; so there was ample evidence there to show that an accident had happened which would not have happened but for the negligence of the defendant, and all that case stands for is the proposition that under those circumstances the defendant is then called upon to present evidence to show an absence of negligence on its part.


"In the [ Ten Ten Chestnut St. Corp. v. Quaker State Coca-Cola Bottling Co., 186 Pa. Super. 585, 142 A.2d 306 (1958)] case which you cited . . ., again the plaintiff did show the cause of the fire. He presented expert testimony from which a jury could clearly find that the cause of the fire, the origin, was a certain Coca-Cola machine, the motor of that machine, and showed enough through expert testimony to establish that it was the kind of fire that would not have occurred but for the negligence of the defendant, and there the box, the refrigerated dispensing unit, was shown to be in the exclusive control of the Coca-Cola Company and that under such circumstances it was the defendant's burden to produce some evidence to establish a lack of negligence on its part.


"You seek in this case to extend the doctrine of exclusive control to an area that I have never known it to be extended before-namely, to the owner or occupant of a dwelling or commercial or industrial establishment.


"In all of the cases with which I am familiar, the doctrine of exclusive control has been limited to a particular instrumentality.


"In the [Ten Ten Chestnut St. Corp.] case it was the refrigerated dispensing box. In [Eckman], it was the steam system.


"I have never known any case in which the doctrine of exclusive control has been extended to the occupant of an entire premises to require that occupant, in the absence of evidence of any negligence, to give an explanation as to why a fire started.


"There is absolutely no evidence in this case as to the origin of this fire from the standpoint of whether it may have been caused by defective wiring, whether it may have been caused by intense sunlight passing through a prism of some sort, whether it may have been caused by arson, other than arson of your insured, or that it might have been caused by some passerby flinging a piece of burning substance into the premises.


"There is just a total absence of evidence as to the cause and origin of the fire, and on that basis I must grant the motion for directed verdict . . .." (N.T. 135-37)

 This total absence of evidence also serves to distinguish this case from Schwartz v. Warwick-Philadelphia Corp., 424 Pa. 185, 226 A.2d 484 (1967) upon which plaintiff also relies. There was ample evidence in Schwartz that defendant banquet caterer knew, or had reason to know, that food was being spilled on the dance floor in the banquet room and that the banquet guests were moving about the floor. The court, quoting from Smith v. Bell Telephone Co., 397 Pa. 134, 153 A.2d 477 (1959), recognized that the jury must be given a factual basis on which to predicate a reasonable conclusion of liability. There is no such factual basis here.

 Finally, the alternative holding in Stewart v. DeNoon, supra, is noteworthy even though, or perhaps because, the court did not discuss the doctrine of exclusive control. In Stewart, the plaintiffs adduced sufficient proof that the fire originated in defendants' premises, but this was not enough. It was held that, before the defendants could be called upon to explain, the plaintiffs must submit either direct or circumstantial evidence from which a jury could reasonably conclude that the fire was due to defendants' negligence; without such evidence the jury could only guess as to defendants' negligence. On the state of plaintiff's proof in the instant case, the jury could only have guessed, not only as to the cause of the fire, but also as to any possible negligence of either of the defendants which might have caused it or helped bring it about.


 And now, April 25, 1967, it is ordered that plaintiff's motion for new trial be and it is hereby denied. U.S.C. ยง 1332(a). The complaint all eges that on February 18, 1959 the defendant had two policies in force with Adele Duggan and Francis A. Duggan, liability insurance policy No. HPS 5686266 in the amount of $10,000 and comprehensive personal liability insurance policy No. CP 7786628 in the amount of $20,000, in which the defendant agreed to pay on behalf of the insured all sums which the insured should become legally obligated to pay as damages because of bodily injury, sickness or disease sustained by any person; that on February 18, 1959 a dog owned and controlled by the Duggans bit one Maud S. Koller causing bodily injuries to her; that as a result Koller brought suit against the Duggans, which was defended by the defendant's attorneys and in which Koller recovered a judgment of $30,685; that the defendant paid only $10,000 in partial satisfaction of the judgment and has refused to pay any further sums. In its answer the defendant denied that there was any policy of insurance in effect on February 18, 1959 other than the one for $10,000. Further answering, the defendant stated that any policy for $20,000 was procured by fraud in that it was procured after the loss occurred and no notice of a claim under any policy other than the one for $10,000 was received prior to entry of final judgment in the suit by Koller against the Duggans.

 The case was tried without a jury and the court finds the following facts:

 1. In February, 1959 Adele S. Duggan was the sole trustee of a trust which owned the building at 139 Charles Street, Boston, Massachusetts, where Mrs. Duggan owned and operated the Adele Coiffeur Salon, a beauty parlor. On June 21, 1956, the Duggans procured the $10,000 policy from Travelers to cover the premises at 139 Charles Street and other properties. On February 17, 1959 (at what time ofday does not appear). Francis Duggan telephoned John Quincy, an insurance agent, and requested an adjustment in his insurance to eliminate certain coverage and to put on a $20,000 comprehensive liability policy at the same time. Quincy immediately telephoned Obrion, Russell & Co., general insurance agents for Travelers, and asked them to make the adjustments requested by Francis Duggan. On the following day, Quincy's secretary wrote a confirmatory letter to Obrion, Russell & Co. which requested that the adjustments be made effective as of February 17.

 2. On February 18, *fn1" Mrs. Duggan finished cutting Mrs. Koller's hair in the Adele Coiffeur Salon while Bonnie-Blue-Sean O'Casey, a Kerry Blue terrier owned by the Duggans, slept on the floor nearby. Mrs. Koller walked over to the dog and patted it and the dog, startled, jumped up and bit her on the lip. The dog was not usually in the beauty parlor but had been left there by Mr. Duggan while he brought some shopping bundles to the Duggans' home. Shortly thereafter the Duggans notified John Quincy of the incident and claimed coverage under the $10,000 policy which Travelers had issued in 1956; they did not then claim coverage under any other insurance policy. Mr. Joseph Dolan, an employee of Quincy, called Obrion, Russell & Co. on March 13 and asked them to notify Travelers of the Duggans' claim under the $10,000 policy.

 3. Koller sued the Duggans in December, 1959 in the Suffolk County Superior Court claiming damages of $50,000. On January 12, 1960 Travelers wrote a letter to the Duggans stating that it had designated an attorney to protect their interests under the $10,000 policy, that the policy afforded protection only up to $10,000 and that the Duggans might want to have their own attorney present to protect their interests over and above the policy limits. The case was referred to an auditor who found for Koller in the amount of $25,000. The auditor's report was confirmed and on July 10, 1963 an execution issued against the Duggans in the amount of $30,685, including interests and costs. Travelers paid $10,000 toward its satisfaction and the Duggans paid the balance. Francis A. Duggan died on May 4, 1964.

 4. At no time prior to July 10, 1963, when the execution issued, did the Duggans notify Travelers that they sought protection under the $20,000 policy. Mrs. Duggan did not learn of the existence of that policy from her husband but from Manuel Sherman, Esquire, an attorney from whom she sought advice concerning the satisfaction of the execution. Mr. Sherman discovered the $20,000 policy in the course of examining the Duggans' personal papers and brought it to Mrs. Duggan's attention. *fn2" It contained the following provision as to notice:

 "1. Notice of Occurrence. When an occurrence takes place written notice shall be given by or on behalf of the insured to the company or any of its authorized agents as soon as practicable. Such notice shall contain particulars sufficient to identify the insured and also reasonably obtainable information respecting the time, place and circumstances of the occurrence, the names and addresses of the injured and of available witnesses."

 This provision as to notice was substantially the same as, though not identical with, that contained in the other policy. The $20,000 policy did not apply "to any business pursuits of an insured", an exclusion not provided for in the other policy.


 The controlling principles of law are well settled. The failure of an insured to comply with a requirement of notice of claim in an insurance contract prevents recovery against the insurer, in the absence of showing of excuse or waiver. Baker v. Hartford Acc. & Indem. Co., 1963, 346 Mass. 774, 194 N.E.2d 635, Peters v. Saulinier, 1967, Mass. Adv. Sh. 131. Notice of an occurrence is necessary to give the insurer an opportunity to investigate the circumstances surrounding a possible claim and the absence of proper notice may prejudice the insurer. Fisher's Case, 1963, 346 Mass. 770, 193 N.E. 2d 693.To give notice "as soon as practicable" means within a reasonable time. Segal v. Aetna Casualty and Surety Co., 1958, 337 Mass. 185, 148 N.E.2d 659. Notice does not always have to be in the particular mode specified in the policy. Employers' Fire Ins. Co. v. Garney, 1965, 348 Mass. 627, 205 N.E.2d 8.

 The crux of this litigation is whether the admittedly timely notice by the Duggans to the defendant under the $10,000 policy satisfied the notice requirement of the $20,000 policy which insured the same risk. The plaintiff contends that the purpose of the notice requirement of the $20,000 policy, of enabling the insurer to investigate promptly, was satisfied by the notice given under the other policy because the defendant did investigate promptly and has not been prejudiced by the notice's omission of specific reference to the $20,000 policy of which a copy was undoubtedly kept in the defendant's files. An initial difficulty with the plaintiff's position is that, so far as shown by the evidence, the defendant never associated the claim under the $10,000 policy with the existence of the larger one. On the contrary, the defendant's letter of January 12, 1960 inviting the Duggans to take steps on their own to protect their interests above the $10,000 policy limit indicates that the defendant acted on the assumption that only the $10,000 policy covered the dog-bite incident. The basic fallacy of the plaintiff's contention is its oversimplification of the function of notice which serves not only to alert the insurer to the need for an investigation but also to remind it of its maximum exposure to liability so that it may act accordingly. It is common sense that an insurer with a potential liability of $30,000 might act differently in defending against a $50,000 claim for serious personal injuries than it would if its exposure were limited to $10,000. Among other things, it might engage the services of different or additional investigators, expert witnesses and trial counsel or settle the claim advantageously by offering in settlement a sum higher than would be offered if maximum exposure were $10,000.

 The probability of prejudice becomes all the greater when, as here, different policies are involved. Legal and factual defenses to liability may pertain to one policy but not to another. For example, in the Superior Court suit defended by the defendant in this case, the precise time and date of the dog-bite was immaterial because the $10,000 policy which admittedly covered the accident had been in force for over two years. At the trial in this court, chronology was highly material to the defendant's contention that the accident occurred prior to the issuance of the $20,000 policy.

 The plaintiff has made no showing that the defendant waived its defense of lack of notice on the $20,000 policy nor that failure to give notice specifically relating to that policy should be excused for any reason. The plaintiff has not attempted to explain why the late Mr. Duggan failed to tell his wife about having taken out a new $20,000 liability policy on the very day before the dog-bite incident. It is inconceivable that the coincidence never dawned upon him.

 I conclude that although the accident on February 18, 1959 was an occurrrnce within the coverage of the $20,000 policiv, *fn3" the Duggans did not give timely notice of it to the defendant under that policy and their failure to do so was a material breach of a condition of the defendant's liability under that policy which was prejudicial to and not waived by the defendant.Judgment for the defendant.

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