No, 12081 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1972 

MAURICE R, STAGGERS and 

HORTENSE JOHNSON, 

P'J.aintif fs and Respondents, 

UNITED STATES FIDELITY & GUARANTY COMPANY, 

Defendant 'and Appellant. 

Appeal from: District Court of the Fifth Judicial District, 

Honorable James D, Freebourn, Judge presiding. 

Counsel of Record: 

For Appellant : 

John H. Jardine argued, Whitehall, Montana, 

Chester L. Jones, Virginia City, Montana, 

For Respondent: 

Morrow, Nash and Sedivy, Bozeman, Montana, 

Edward P. Sedivy argued, Bozeman, Montana. 

Submitted : February 18, 1972 

Decided : MAY 1 0 
Mr. Chief Justice James T. Harrison delivered the Opinion of the Court. 

This is an appeal by defendant, United States Fidelity and Guaranty 

Company, from a judgment entered in the district court of Madison County in 

favor of plaintiffs, Maurice R. Staggers and Hortense Johnson. Since the 

entry of the judgment Maurice R. Staggers has died; his estate has been probated in the state of Idaho and certified copy of the decree of distribution 

has been filed in this Court. The decree distributes all interest of the 

decedent in this cause of action to the surviving spouse, Hortense Johnson. 

Plaintiffs brought this action against the defendant to recover under 

certain fire insurance policies as a result of damages which plaintiffs sustained from a fire which occurred on October 11, 1963. The jury returned a 

verdict for plaintiffs in the sum of $15,620. Defendant's motion for a new 

trial was subsequently denied and this appeal followed. 

The sequence of events leading up to this action can be summarized 

in this manner: 

Plaintiffs, Maurice R. Staggers and Hortense Johnson were elderly 

and lived in the Madison Valley area for many years. In 1958 Mrs. Johnson 

bought a Nashua trailer house and had it moved to what was known as the 

Stagger's Ranch, located some thirty-five miles south of Ennis, Montana. During the trial, these lands were referred to as the "Greenough Ranch". The 

title to the ranch was in dispute, although the transcript reveals Staggers 

had occupied the land prior to World War I. This property consisted of three 

cabins, in which Staggers had accumulated many possessions. 

On April 30, 1963, Staggers purchased a fire insurance policy from 

Cloe Paugh, now deceased, but then an agent of defendant. She maintained her 

agency at Ennis. This pol icy covered household furniture and personal property 

contained in the three cabins. The face amount of the policy was originally 

$3,500, but at Stagger's request an additional $1,000 was purchased on July 1, 

1963. On August 9, 1963, another policy was issued to Staggers, providing 

coverage of $4,500 on the Nashua trailer house and $2,000 on its contents. The 
premiums were paid on the policies and they were in full force and effect 

on October 11 , 1963. 

Mrs. Johnson had been employed at various motels as a clerk and 

manager for many years, and was employed at the Kruse Motel in Idaho Falls, 

Idaho, during the year before and after the fire. She would go to the ranch 

in the fall, after the tourist season, and would stay there from time to 

time. 

The day before the fire Staggers and one Roy Thompson, who was staying at a dude ranch known as Neely Ranch, had been at the cabins and trailer. 

The neighbors, Mr. and Mrs. Daryl Stroud, observed Staggers leaving the area 

about 5:00 p.m. and neither of them saw any fire in the area of the cabins or 

trailer house when Staggers left. 

At the trial the plaintiffs' case consisted of testimony by them 

about the insurance policies, the items lost, their efforts in advising the 

defendant of their losses, and the fact that their claims had not been reimbursed by the defendant. Part of the defendant's case consisted of attempting to prove that the contents of the cabins and trailer had been removed by 

the plaintiffs prior to the fire and were still in their possession. However, 

at the trial plaintiffs' offered explicit testimony by certain witnesses 

which clearly negated any allegations by defendant that plaintiffs still held 

possession to items claimed to have been lost in the fire. 

The issues in this matter are: 

(I) Was the evidence sufficient to support the verdict of the jury 

as to its finding that proof of loss was tendered within sixty days after loss? 

(2) Was there sufficient evidence to support the verdict of the jury 

based upon "substantial compliance" of the provisions of defendant's fire insurance policy? 

(3) Was there sufficient evidence to support the verdict of the jury, 

based upon waiver? 

(4) Was the verdict and judgment contrary to law? 

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(5) Was the court in error in excluding proposed exhi bit "G"? 

(6) Was the court in error in giving or refusing certain ins tructions? 

In reference to the first issue on appeal, the district court 

properly reviewed this issue on defendant's motion for new trial, and by overruling said motion ruled the jury's verdict was supported by sufficient 

evidence. 

This Court has on several occasions reviewed the rules on sufficiency 

of evidence. In Campeau v. Lewis, 144 Mont. 543, 547, 398 P.2d 960 (1965), we 

stated : 

"The Court has consistently held that the evidence is 

not insufficient if it is substantial. Adami v. Murphy, 

118 Mont. 172, 164 P.2d 150. In the Adami case, the 

court, quoting from Morton v. Mooney, 97 Mont. 1, 33 

P.2d 262, held that 'substantial evidence' could be 

defined as such "'as will convince reasonable men and 

on which such men may not reasonably differ as to 

whether it establishes the plaintiff's case, and, if all 

reasonable men must conclude that the evidence does not 

establish such case, then it is not substantial evidence."' 

118 Mont. 172, at page 179, 164 P.2d at page 153. The 

evidence may be inherently weak and still be deemed 

'substantial,' and one witness may be sufficient to 

establish the preponderance of a case. Batchoff v. 

Craney, 119 Mont. 157, 161, 172 P.2d 308. Also, substantial evidence may conflict with other evidence 

presented. Win Del Ranches v. Rolfe and Wood, Inc., 

137 Mont. 44, 49, 350 P.2d 581. We think these cases 

dealing with substantial evidence clearly outline the 

meaning of 'insufficient evidence' in the statute. The 

jury is delegated the task of finding the facts. Their 

verdict is based upon their findings. The trial judge, 

however, has the discretion to prevent a miscarriage 

of justice by granting a new trial if there is an insufficiency of evidence to support the verdict." 

Specifically, defendant contends that its own method of calculation 

clearly shows the proof of loss was submitted on either December 20 or 21, 

1963, thereby exceeding the sixty-day requirement for proof of loss. This 

Court has repeatedly indicated that it will presume that the jury, in reaching its verdict, followed the instructions that were given to it by the trial 

judge. Welsh v. Roehm, 125 Mont. 517, 241 P.2d 816 (1952). The defendant 

acknowledges the jury was fully instructed on the sixty-day requirement, and 
that interest could be assessed accordingly. Our examination of the record 

reveals there was no specific finding by interrogatory in the verdict as to 

any specific date as to the submission of proof of loss by plaintiffs. The 

verdict was for a total figure of $15,620 and was not broken down as to 

principal and interest. 

Secondly, we find no merit whatsoever in defendant's argument that 

there was not sufficient evidence to support the verdict of the jury based 

upon "substantial compliance" by plaintiffs with the provisions of the fire 

insurance policies. 

Succinctly stated, the rule of "substantial compliance" is as 

fol l ows : 

"Since a provision in a fire insurance policy requiring 

the f i l i n g o f proofs of loss is to be liberally construed, 

there need be only a substantial , reasonabl e compl i ance 

with such a provision and a strictly literal compliance 

is not necessary." Couch on Insurance 2d, § 49:498, at 

Page 76-77. 

Montana has applied the doctrine of "substantial compliance" for a 

considerable period of time. Da Rin v. Casualty Company of America, 41 Mont. 

175, 108 P. 649. We feel the doctrine of substantial compliance is applicable 

to the resolution of this case, and our examination of all the testimony indicates indisputable evidence of substantial compliance by plaintiffs in furnishing defendant with a proof of loss. 

On the morning of the day after the fire Staggers heard rumors of a 

possible fire at the trailer house and cabins. He immediately drove over to 

the fire scene and found that everything was burned to the ground. Staggers 

had been staying at the Neely ranch recovering from health problems. He then 

immediately called the agent Cloe Paugh who originally sold him the policies. 

The next day a Mr. Divel, who was an insurance adjuster, met Staggers and they 

along with Cloe Paugh went up to the fire scene and carefully covered and discussed the entire loss. Divel had some fifteen years of experience in adjusting fires and his company did adjustment work for the defendant. Divel took 

several photographs of the fire scene, all of which were marked and offered as 
defendant's exhibits at the trial. These photos showed the remnants and 

debris of the trailer house and cabins. At the trial Divel testified that 

Staggers fully discussed with him the ownership of the destroyed structures 

and the contents in them. Dive1 testified he concluded at that time the loss 

was a total one and he was unable to determine the origin of fire. Further, 

on that day, October 12, 1963, Divel did not request any written statements 

from Staggers about the items of loss. The record further reveals that Cloe 

Paugh also felt the fire was a total loss. She reaffirmed this in her letter 

to the defendant on October 17, 1966. 

About the same time Divel gave to Staggers a form to fill out entitled 

"statement of loss". Divel testified these forms were "standard company forms" 

for the purpose$ of helping the insured list their inventories of losses. 

Divel did not recall whether he told Staggers to send the completed "statement 

of loss" to himself or to Cloe Paugh but Divel did acknowledge ultimately receiving it. The record further reveals Staggers stayed at the Neely ranch a 

few days after the fire and then drove directly down to Idaho Falls to visit 

with Mrs. Johnson. At the time of the fire Mrs. Johnson was in the state of 

Utah attending the funeral of her father. Upon her return to Idaho Falls 

from the funeral one week later, the two of them began to compi 1 e the 1 i sts of 

personal property lost in the fire. The record shows these two elderly people 

worked diligently in this regard, relying much on their memory as they had no 

prior lists to work from. The two of them did complete the "statement of loss" 

and Staggers testified he took it to Cloe Paugh sometime before Thanksgiving 

of that year. It contained the lists of the property lost in the fire and 

the costs and values of such property. At this point the record discloses 

that everything seemed in order as far as the plaintiffs were concerned until 

they received a letter in January, 1964 from Divel requesting a narrative 

statement from them regarding the loss and expecting them to come to Ennis to 

do so. Staggers promptly responded to Divel by letter dated January 13, 1964, 

and stated as follows: 
"Sorry to say I don't intend to be in Ennis till 

last of May or June * * *. It would be much more satisfactory with me if you could arrange a settlement for me 

in the near future without me driving some 350 miles 

over icy roads, that will require some expenses to me." 

The record shows Staggers did not receive a reply from Divel to the 

above letter and Divel admitted further at the trial that after he received 

the letter the entire matter was referred from Divel's office at Ennis to 

the Helena office. Divel further testified that when he wrote Staggers on 

January 10, 1964 he knew Staggers was down in Idaho and it would be difficult for Staggers to come to see him. Approximately one month later a Mr. 

Kennedy, who was an agent of defendant, visited with Staggers in Idaho Falls 

about the fire but even at that time he did not ask for a narrative statement 

or anything else. Staggers testified Kennedy told him the case was being 

transferred to Idaho Falls so that "I wouldn't have to go to Bozeman". In view 

of the foregoing it is difficult for this Court to comprehend defendant's 

contention that plaintiffs' compliance in the matter was "half-hearted, ineffectual, or careless compliance". On the contrary, our full review of this 

matter leads us to the conclusion that plaintiffs did all that reasonable 

persons would be expected to do under the circumstances they were confronted 

with. They fully cooperated with Divel and Cloe Paugh in discussing all 

aspects of the fire. The evidence shows the plaintiffs diligently filled out 

the "statement of loss" forms. No objection whatsoever was ever made by defendant regarding the validity of the "statement of loss" form until October 

12, 1965, approximately two years after the fire, and even then no specific 

points of dispute were alleged by defendant. At that date defendant company 

wrote a letter to plaintiffs' lawyer and stated that "no proper proof of loss 

was ever presented". This letter was written in reply to a letter from 

plaintiffs ' attorney to defendant transmitting a "Supplemental and Amended 

Report and Proof of Loss" dated August 31, 1965. This document was prepared 

at the direction of plaintiffs' attorney after plaintiffs came to him for 

counsel in view of the fact they had not obtained payment on their claim of 
loss for a period of two years since the fire. 

On the basis of the foregoing facts the jury found that the plaintiffs did substantially and reasonably comply with the provisions of their 

respective insurance policies. The record herein lends sound credence to 

the diligence and good faith of these two elderly individual plaintiffs in 

complying with the proof of loss provisions contained within their policies. 

We feel the language contained in the early decision of Ohio Farmers' Ins. 

Co. v. Cochran, 104 Ohio St. 427, 135 N.E. 537, 539 (1922) adds thoughtful 

import to the crux of defendant's conduct and activity in this matter. 

There the Ohio Supreme Court was asked to decide the question of whether an 

insured substantial ly compl ied with a particular pol icy provision requiring 

a sixty-day notice of a fire claim and the Court stated: 

"The law of an insurance contract is not basically 

different from the law of any other kind of contract. 

Where there is substantial performance upon one side, 

there should be substantial performance upon the other 

side; and there is substantial performance upon one side 

when such performance does not result in any wrongful 

substantial injury to the other side. 

"It is time to get away from some of the old-time doctrines--insuring the owner of property in 1 line, and 

then uninsuring him in the next 99, involving his contractual right in a maze of conditions precedent, conditions subsequent, conditions directory, and conditions 

mandatory, under a contract, requiring formal and 

technical exactness as to the manner and form of all 

these policy provisions in insurance risks, which are 

not required in any other kind of contract. 

"Under the record in this case, we find no prejudicial 

error materially affecting the substantial rights of 

plaintiff in error, and we further find under the record 

that substantial justice has been done." 

In reference to the third issue on appeal, namely, was there sufficient evidence to support the verdict of the jury based upon the legal 

doctrine of waiver. Our examination of all the facts herein confirms there 

was sufficient evidence of waiver. The plaintiffs did everything reasonably 

required of them in processing their claim for loss. They diligently compiled the required information and promptly submitted it to Cloe Paugh 
that 

thinking nothing more was required. The facts bear out/ the defendant, by 

its conduct, caused the plaintiffs to believe that nothing further of them 

was in fact required. No one on behalf of the insurance company, including 

agents Cloe Paugh or Divel, ever requested any further information from the 

plaintiffs until lcng after the sixty-day period had expired. Indeed it was 

not until January 10, 1964 that Divel ever wrote to the plaintiffs and even 

at that specific instance the defendant made no mention whatsoever about 

the timeliness of the furnishing of any information. It was more than two 

years after the fire before the defendant ever expressed any objection about 

there not being proper proof of loss. The Court's language contained in Snell 

v. North British & Mercantile Ins. Co., 61 Mont. 547, 553, 203 P. 521, bears 

direct applicability to the question of waiver as pertains to the facts now 

before us. In Snell this Court, in discussing the issue of waiver in fire 

insurance cases, stated the fol 1 owing: 

" * * * It is conceded by defendant that if, in connection 

with the estimate or ascertainment of 1 oss, defendant's 

agent so conducted himself that he misled the plaintiff 

and caused him to understand that nothing further would 

be required of him, such cor~duct would constitute a waiver. 

This is undoubtedly a correct statement of the rule. 

(26 C. J. 403, and cases cited.) 

"Upon the second ground the great weight of authority is 

to the effect that, if the assured attempts to comply 

with the requirement of the policy as to notice and proof 

of loss, the receipt and retention of proof of loss by the 

insurer without objection constitutes a waiver of its 

right to object thereto as not satisfying the requirements of the pol icy. (26 C.J. 399, and cases cited.)" 

On the basis of the foregoing as applied to the instant facts, we 

can only conclude defendant's receipt and retention of the "statement of 

loss", without objection, clearly and unequivocally constituted waiver of 

any subsequent claim by defendant of plaintiffs' failing to file a proof of 

loss. We further find no merit in defendant's argument that section 40- 

3733, R.C.M. 1947, prohibits waiver. Section 40-3733 does provide that the 

act of "Furnishing forms for reporting a loss or claim, for giving information 

relative thereto, or for making proof of loss, or receiving or acknowledging 
receipt of any such forms or proofs completed or uncompleted" shall not 

constitute waiver. However, we deem it equally clear our legislature did 

not intend that an insurance company could furnish forms to the insured to 

fill out and then mislead the insured into believing that this was all the 

information required. Neither do we think our legislature would allow the 

insurance company to receive these forms and then retain them for a period 

of sixty days without objection and then later claim that the insured had 

forfeited all his policy rights. 

As a corollary issue herein, defendant raises the applicability of 

section 40-3732, R.C.M. 1947, which concerns the furnishing of proof of loss 

forms, and making it a duty of the insured to request such forms. The evidence clearly shows Staggers requested and received from Dive1 and Paugh 

the proper forms, and the agents gave him forms marked "statement of loss", 

which he properly filled out. The defendant now infers that these "statement of loss" forms are something different from "proof of loss" forms. 

However, defendant offered no evidence as to what a "proof of loss" form was 

and we find nothing in plaintiffs' conduct to hold otherwise than that they 

in no way failed to perform any duty imposed by section 40-3732. 

Defendant next raises the contention that the district court erred 

in excluding defendant's proposed exhibit G. Defendant's proposed exhibit G 

was a letter from attorney Jones, on behalf of Daryl Stroud, requesting plaintiff Staggers to remove his belongings from the cabin. The defendant contends 

that this letter would have some legitimate bearing on the motive for the 

fire. However, the record clearly shows that defendant offered no proof that 

plaintiff Staggers deliberately set the fire to the cabins. Both Mr. and Mrs. 

Stroud testified that when they saw Staggers leave the area the afternoon of 

the fire, they did not see any fire in the area. Thus, the defendant failed 

to show any relevancy, competency or materiality to defendant's proposed exhibit G. 

Finally, defendant contends the district court erred in giving or 
refusing certain instructions to the jury. Namely, defendant suggests 

that the court's instruction No. 9 and No. 10, relating to proof of loss, 

engender manifest inconsistencies. These two instructions clearly purport 

to set forth the correct principles of law concerning proof of loss and 

substantial compliance. 

Defendant next objects to the court's instruction No. 16 on valued 

policy, which instruction was based upon section 40-4302, R.C.M. 1947, and 

reads as follows: 

"It is the law of the State of Montana that whenever any 

policy of insurance shall be written to insure any improvements upon real property in this state against loss 

by fire, and the property insured shall be wholly destroyed, without criminal fault on the part of the insured, 

the amount of insurance written in such policy shall be 

taken conclusive1y to be the true value of the property 

insured and the true amount of loss and measure of damages. You are further instructed that the Nashua trailer 

home in question is to be considered as an improvement 

upon real property, the agreed value of which is $4,500.00." 

Section 40-4302, R.C.M. 1947, reads as follows: 

"Val ued pol icy 1 aw. Whenever any pol icy of insurance shall 

be written to insure any improvements upon real property 

in this state against lbss by fire, tornado or lightning, and 

the property insured shall be who1 ly destroyed, without 

criminal fault on the part of the insured or his assigns, 

the amount of the insurance written in such policy shall be 

taken conclusively to be the true value of the property insured, and the true amount of loss and measure of damages, 

and the payment of money as a premium for insurance shall be 

prima facie evidence that the party paying such insurance 

premium is the owner of the property insured; provided, 

that any insurance company may set up fraud in obtaining 

the policy as a defense to a suit thereon." 

Instruction No. 16 applied solely to the Nashua trailer house 

which was covered by the insurance policy in the amount of $4,500. Agent 

Dive1 testified that the trailer house was a total loss. After reviewing 

a1 1 the testimony herein pertaining to the appropriateness of instruction 

No. 16, we conclude the district court properly determined, as a matter of 

law, that the trailer was an "improvement upon real property", within the 

meaning of section 40-4302, supra. The testimony shows the trailer house had 

been originally moved to its location at the Staggers ranch in 1958. It 
was fully set up to live in, connected to a cesspool, and hooked up to a 

light plant. It was also connected to propane and oil tanks. We feel our 

decision in Meccage v. Spartan Ins. Co., 156 Mont. 135, 477 P.2d 115, clearly 

supports our conclusion that defendant's issue at bar is without merit. In 

Meccage we held that a trailer house was an "improvement on real property" 

mder the definition of section 40-4302. 

Lastly, defendant argues the district court erred in failing to subini t to the jury defendant's proposed instruction No. 5, concerning the time 

when proof of loss was to be given as set forth in the policies. We find 

that this proposed instruction was repetitious of court's instruction No. 7, 

concerning proof of loss, substantial compliance and waiver, and No. 10 defining substantial compliance. It is clear therefore, that all matters in 

the offered instruction were fully covered in the instructions properly submitted, and accordingly the district court was not in error in refusing to 

submit defendant's proposed instruction No. 5. 

Our complete review of all the testimony contained in the entire 

transcript of this appeal leads us to the conclusion plaintiffs were diligent, sincere, and completely proper in filing their claims in the above matter. 

On the basis of the foregoing and finding no reversible error herein, the judgment of the district court is aff 

court to show Hortense Johnson 

n. Jack Shanstrom, district judge, 

'/sitting in place of Mr. Justice Castles. 1 

,I 

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