No, 12081 INTHE SUPREME COURT OF THE STATE OF MONTANA 1972

MAURICE R, STAGGERS and HORTENSE JOHNSON, P'J.aintiffsand 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 10

### Mr. Chief JusticeJames T. Harrison delivered the Opinion of the Court. This isan appeal by defendant, United States Fidelity and Guaranty Company, from a judgment entered inthe district court of Madison County in favor of plaintiffs, Maurice R. Staggers and Hortense Johnson. Since the entry of thejudgment Maurice R. Staggers has died; his estate has been probated in the stateof Idaho and certified copy of the decree of distribution has been filed inthis 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 firewhich occurred on October 11, 1963. The jury returned a verdict for plaintiffs in the 

### sum of $15,620. Defendant'smotion for a new trial was subsequently denied and this appeal followed. The sequence of events leading up tothis action can be summarized in thismanner: Plaintiffs, Maurice R. Staggers and Hortense Johnson were elderly and lived inthe Madison Valley area formany years. In 1958

### Mrs. Johnson bought a Nashua trailer house and had itmoved towhat 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 titleto 

### the ranch was indispute, although the transcript reveals Staggers had occupied the land prior toWorld War I. Thisproperty 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 atEnnis. This policy covered household furniture and personal property contained in the three cabins. The face amount of the policy was originally $3,500, but atStagger'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 itscontents. Thepremiums were paid on the policies and they were in full force and effect

on October 11

## , 1963. Mrs. Johnson had been employed atvarious motels as a clerk and manager formany years, and was employed atthe Kruse Motel in Idaho Falls, Idaho, during theyear before and after the fire. She would go to the ranch inthe 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 ata dude ranch known as Neely Ranch, had been atthe 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 fireinthe area of the cabins or trailer house when Staggers left. 

### Atthe 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 fireand were still in their possession. However, atthe trial plaintiffs' offered explicit testimony by certain witnesses which clearlynegated any allegations by defendant that plaintiffs still held possession to items claimed to have been lost inthe fire. The issues in thismatter are: 

### (I) Was the evidence sufficient to support the verdict of thejury

as to itsfinding that proof of loss was tendered within sixty days after loss? (2) Was there sufficient evidence to support the verdict of thejury based upon "substantial compliance" of the provisions of defendant's fire insurance policy? (3) Was there sufficient evidence to support theverdict of thejury, based upon waiver? 

### (4) Was the verdict and judgment contrary to law? -3-(5) Was the court inerror inexcluding proposed exhibit "G"? (6) Was the court inerror ingiving or refusing certain instructions? 

### In reference to the first issue on appeal, the districtcourt properly reviewed this issue on defendant's motion for new trial, and by overruling said motion ruledthe jury's verdictwas supported by sufficient evidence. This Court has on several occasions reviewed the rules on sufficiency of evidence. InCampeau 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 itissubstantial. Adami v. Murphy, 118 Mont. 172, 164 P.2d 150. Inthe Adami case, the court, quoting from Morton v. Mooney, 97 Mont. 1, 33 P.2d 262, heldthat 'substantial evidence' could be defined as such "'as will convince reasonable men and on which such men may not reasonably differ as to whether itestablishes the plaintiff's case, and, ifall reasonable men must conclude that the evidence does not establishsuch case, then itisnot substantial evidence."' 118 Mont. 172, atpage 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 establishthe preponderance of a case. Batchoff v. Craney, 119 Mont. 157, 161, 172 P.2d 308. Also, substantial evidence may conflictwith 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' inthe statute. The jury isdelegated the task offinding the facts. Their verdict isbased upon their findings. The trial judge, however, has the discretionto prevent a miscarriage ofjustice by granting a new trial ifthere isan insufficiency of evidence to support the verdict." Specifically, defendant contends that itsown method ofcalculation 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 itwill presume that the jury, inreaching itsverdict, followed the instructions thatwere given to itby 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, andthat interest could be assessed accordingly. Our examination ofthe record reveals there was no specific finding by interrogatory inthe 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 meritwhatsoever indefendant's argument that there was not sufficient evidence tosupport the verdict of thejury based upon "substantial compliance" by plaintiffswith the provisions of the fire insurance policies. Succinctly stated, the ruleof "substantial compliance" isas foll ows:"Since a provision ina fire insurance policy requiring the f i l i n g o fproofs of loss istobe liberally construed, there need be only a substantial

### ,reasonabl e compli ance with such a provision and a strictly literal compliance isnot necessary." Couch on Insurance 2d, § 49:498, at Page 76-77. Montana has applied the doctrine of "substantial compliance" for a considerable period oftime. Da Rin v. Casualty Company ofAmerica, 41 Mont. 175, 108 P. 649. We feel the doctrineofsubstantial compliance isapplicable tothe resolution of this case, and our examination ofall the testimony indicates indisputableevidence ofsubstantial compliance by plaintiffs infurnishing defendant with a proof of loss. On the morning ofthe day after the fireStaggers heard rumors ofa possible fireatthe trailer house and cabins. He immediately drove over to the fire scene and found that everything was burned tothe ground. Staggers had been staying atthe Neely ranch recovering from health problems. He then immediately calledthe agent Cloe Paugh who originallysold him the policies. The next day a Mr. Divel, who was an insurance adjuster, met Staggers and they along with Cloe Paugh went up tothe firescene and carefully covered and discussed the entire loss. Divel had some fifteenyears of experience inadjustingfires and hiscompany did adjustmentwork for the defendant. Divel took several photographs ofthe firescene, all ofwhich were marked and offered asdefendant's exhibits atthe trial. These photos showed the remnants and debris of the trailer house and cabins. Atthe trial Divel testifiedthat Staggers fully discussed with him theownership ofthe destroyed structures and the contents inthem. Dive1 testified he concluded atthat time the loss

was a total one and he was unable todetermine the originoffire. 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 feltthe firewas a total loss. She reaffirmed this inher letter tothe defendant on October 17, 1966. About the same time Divel gave toStaggers a form tofill out entitled "statement of loss". Divel testifiedthese forms were "standard company forms" for the purpose$ of helping the insured listtheir inventories of losses. Divel did not recall whether he told Staggers tosend the completed "statement of loss" to himself or toCloe Paugh but Divel did acknowledge ultimately receiving it. The record further reveals Staggers stayed atthe Neely ranch a few days after the fireand then drove directly down to Idaho Falls tovisit with Mrs. Johnson. Atthe time ofthe fireMrs. Johnson was inthe state of Utah attending the funeral of her father. Upon her returnto Idaho Falls from the funeral one week later,the two of them began tocompi1 e the 1i sts of personal property lost inthe fire. The record shows these two elderly people worked diligently inthis regard, relyingmuch on their memory as they had no prior liststowork from. The two ofthem did complete the "statement of loss" and Staggers testified he took itto Cloe Paugh sometime before Thanksgiving of thatyear. Itcontained the listsof the property lost inthe fireand the costs and values ofsuch property. Atthis point the record discloses that everything seemed inorder as far as the plaintiffswere concerned until they received a letter inJanuary, 1964 from Divel requesting a narrative statement from them regarding the loss and expecting them tocome to Ennis to do so. Staggers promptly responded to Divel by letterdated January 13, 1964, and stated as follows:"Sorry to say I don't intend tobe inEnnis till lastof May or June

## * *

## *. Itwould be much more satisfactory withme ifyou could arrange a settlement forme inthe near futurewithout me driving some 350 miles over icy roads, that will require some expenses tome." The record shows Staggers did not receive a reply from Divel to the above letter and Divel admitted further atthe trial that after he received the letterthe entirematter was referred from Divel's office atEnnis to the Helena office. Divel further testified that when he wrote Staggers on January 10, 1964 he knew Staggerswas down in Idaho and itwould be difficultfor 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 firebut even atthat 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 "Iwouldn't have togo toBozeman". In view of the foregoing itisdifficult for this Court to comprehend defendant's contention that plaintiffs' compliance in thematter 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 fullycooperated with Divel and Cloe Paugh in discussing all aspects of the fire. The evidence shows the plaintiffs diligentlyfilled 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 disputewere alleged by defendant. Atthat date defendant company wrote a letter to plaintiffs' lawyer and stated that "no proper proof of loss

was ever presented". This letterwas written inreply toa letter from plaintiffs

### ' attorney to defendant transmitting a "Supplemental and Amended Report and Proof of Loss" dated August 31, 1965. This document was prepared atthe direction of plaintiffs' attorney after plaintiffs came to him for counsel inview of the factthey had not obtained payment on their claim of

### loss for a period of two years sincethe fire. On 

### the basis of the foregoing factsthejury found that the plaintiffs did substantiallyand reasonably comply with 

### the provisions of their respective insurance policies. The record herein lends sound credence to the diligence and good faithof 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, 135N.E. 

### 537, 539 (1922)adds thoughtful import tothe crux of defendant's conduct and activity in thismatter. There the Ohio Supreme Court was asked todecide the question of whether an insured substantiallycomplied with

### a particular policy provision requiring

a sixty-day notice of a fireclaim and the Court stated: "The law of an insurance contract isnot basically differentfrom 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 issubstantial performance upon one side when such performance does not result in any wrongful substantial injury to the other side.

"Itistime toget away from some of the old-time doctrines--insuring the owner of property in 

### 1line, and then uninsuring him in

### the next 99, involving his contractual right in amaze of conditions precedent, conditions subsequent, conditions directory, and conditions mandatory, under a contract, requiring formal and technical exactness as to themanner 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 errormaterially affecting the substantial rights of plaintiff in error, and we further find under therecord that substantial justice has been done." In reference to the third 

### issue on appeal, namely, was there sufficient evidence to support the verdict of thejury 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 itsconduct, caused the plaintiffs 

### tobelieve 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 itwas not until January 10, 1964that Divel ever wrote to the plaintiffs and even atthat specific instance the defendant made no mention whatsoever about the timeliness of the furnishing of any information. Itwas more than two years after the firebefore 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 applicabilityto 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 fol1

### owing: 

### " 

## ** * Itisconceded 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 furtherwould be required of him, such cor~duct would constituteawaiver. This isundoubtedly a correct statement of the rule. (26 C.

### J. 403, and cases cited.)

"Upon the second ground the great weight of authority is 

### tothe 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 insurerwithout objection constitutes a waiver of its right to object thereto as not satisfying the requirements of the policy. (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 filea 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 actof "Furnishing forms for reporting a loss or claim, for giving information relative thereto, or formaking proof of loss, or receiving or acknowledging

### receipt of any such forms or proofs completed or uncompleted" shall not constitutewaiver. However, we deem itequally 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 legislaturewould 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 ita 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 towhat 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 letterfrom attorney Jones, on behalf of Daryl Stroud, requesting plaintiff Staggers to remove his belongings from the cabin. The defendant contends that this letterwould have some legitimate bearing on themotive for the fire. However, the record clearly shows that defendant offered no proof that plaintiff Staggers deliberately setthe fireto 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 firein the area. Thus, the defendant failed to show any relevancy, competency ormateriality todefendant's proposed exhibit G.

### Finally, defendant contends the district court erred in

### giving or

### refusing certain instructions tothejury. Namely, defendant suggests that the court's instruction No. 9and No. 10, relating to proof of loss, engender manifest inconsistencies. These two instructions clearly purport to setforth the correct principles of law concerning proof of loss and substantial compliance. Defendant next objects tothe 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 isthe law of the Stateof Montana thatwhenever any policy of insurance shall be written to insure any im

### provements upon real property in this stateagainst loss by fire, and the property insured shall be wholly destroyed, without criminal faulton thepart of the insured, the amount of insurance written in such policy shall be taken conclusive1y tobe 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 istobe 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: "Valued policy 1 aw. Whenever any policy of insurance shall be written to insure any improvements upon real property in

### this stateagainst lbss by fire, tornado or lightning, and the property insured shall be who1lydestroyed, 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 tobe 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 facieevidence thattheparty paying such insurance premium isthe owner of the property insured; provided, that any insurance company may setup fraud in obtaining the policy as a defense to a suitthereon." Instruction No. 16 applied solely tothe Nashua trailerhouse which was covered by the insurance policy in the amount of $4,500. Agent Dive1 testified that the trailerhouse was a total loss. After reviewing a11the testimony herein pertaining tothe appropriatenessof instruction No. 16,we conclude the districtcourt properly determined, as amatter of law, that the trailerwas an "improvement upon real property", within the meaning of section 40-4302, supra. The testimony shows the trailer house had been originallymoved to itslocation atthe Staggers ranch in 1958. Itwas fully set up to live in, connected to a cesspool, and hooked up to a lightplant. Itwas 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 atbar iswithout 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 subinit 

### 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. Itisclear 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 filingtheir claims in the above matter. 

### On the basis of the foregoing and finding no reversible error herein, the judgment of the district court isaff court to show Hortense Johnson



### n. Jack Shanstrom, districtjudge, '/sitting in place of Mr. Justice Castles.

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