Freedman v. Queen Insurance

California Supreme Court Aug 7, 1961 No. L. A. 26276Published

Before: Dooling

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Holding. The court held that the terms 'delivered' or 'entrusted' in an insurance policy exclusion do not encompass a situation where possession of property is obtained through fraudulent representations, as such consent is legally ineffectual. Consequently, the loss was covered because the exclusionary clause did not explicitly include losses resulting from fraud or false pretenses.

Issues

Whether the transfer of jewelry to a person using fraudulent representations constitutes a 'delivery' or 'entrustment' under an insurance policy exclusion clause.

Disposition. reversed

Quotations verified verbatim against the opinion

“it is, at the very least, one tenable construction that there can be no valid “delivery” or “entrustment” of property to another where the possession of the property is acquired by means of some fraudulent device.”

“in the absence of such express language as an exception to coverage, the exclusion may not be engrafted into the parties’ contract under the settled rules applying to the construction of insurance policies.”

DOOLING, J.

Plaintiff, a jeweler, sought to recover almost $8,000 from defendant because of the loss of some diamond jewelry allegedly covered by an insurance policy issued by defendant. Upon undisputed facts the trial court made findings exonerating defendant from liability under the exclusionary clause of the policy. Plaintiff appeals from the adverse judgment accordingly entered and from the order denying

[456]

Ms motion to vacate such judgment. (Code Civ. Proc., §§ 663, 663a;

Rounds

Dippolito,

34 Cal.2d 59, 61 [206 P.2d 1083].)

Plaintiff was in the business of selling diamonds and jewelry set in diamonds to retailers. He received a telephone call from a person representing himself to be Bill Bates, an employee of a retail jeweler, advising plaintiff that there was in Ms store a customer who desired a three-carat diamond and that he, Bill Bates, wished that plaintiff would let him have several diamonds on memorandum.

Plaintiff was well acquainted with Bill Bates, thought that he recognized his voice over the telephone and when, within a few minutes, a person presented himself as Irving Davis, sent by Bill Bates, plaintiff assumed that he was the relative named by Bill Bates ’ ’ and sent to pick up the desired items. Accordingly, plaintiff handed to “Irving Davis” diamond jewelry costing approximately $8,000. Later in the day plaintiff learned that neither Bill Bates nor any other employee of the retail jeweler had telephoned plaintiff, and that the retail jeweler never received the diamond jewelry that plaintiff had placed in the hands of “Irving Davis.”

The jewelry disappeared with “Irving Davis,” and the sole question is whether the loss occurred under circumstances which excluded it from coverage under plaintiff’s insurance policy. The policy, as here pertinent, insured “Against All Risks of Loss or of Damage to the Above Described Property Arising From Any Cause Whatsoever Except: ‘(A) Loss, damage, or expense caused by or resulting from sabotage, theft, conversion or other act or omission of a dishonest character (1) on the part of the Assured or his or their employees or (2) on the part of any person to whom the property hereby insured may be

Freedman v. Queen Insurance

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DOOLING, J.

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