Title: STAGGERS v U S F G CO
Citation: N/A
Docket Number: 12081
State: Montana
Issuer: Montana Supreme Court
Date: May 10, 1972

No, 12081 I N THE S U P R E M E COURT O F THE STATE O F M O N T A N A 1972 MAURICE R, S T A G G E R S and H O R T E N S E JOHNSON, P'J.aintif f s and Respondents, UNITED STATES FIDELITY & GUARANTY C O M P A N Y , Defendant 'and Appellant. Appeal from: District Court of the F i f t h Judicial D i s t r i c t , 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 M r . Chief Justice James T. Harrison delivered the Opinion of the Court. This i s an appeal by defendant, United States Fidelity and Guaranty Company, from a judgment entered i n the d i s t r i c t 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 pro- bated in the s t a t e of Idaho and certified copy of the decree of distribution has been filed i n this Court. The decree distributes a l l interest of the decedent in this cause of action to the surviving spouse, Hortense Johnson. Plaintiffs brought t h i s action against the defendant to recover under certain f i r e insurance policies as a result of damages which plaintiffs sus- tained from a f i r e which occurred on October 11, 1963. The jury returned a verdict for plaintiffs in the s u m of $15,620. Defendant's motion for a new t r i a l was subsequently denied and t h i s appeal followed. The sequence of events leading u p t o this action can be summarized in t h i s manner: Plaintiffs, Maurice R. Staggers and Hortense Johnson were elderly and lived i n the Madison Valley area for many years. In 1958 Mrs. Johnson bought a Nashua t r a i l e r house and had i t moved to what was known as the Stagger's Ranch, located some thirty-five miles south of Ennis, Montana. Dur- ing the t r i a l , these lands were referred to as the "Greenough Ranch". The t i t l e to the ranch was i n dispute, although the transcript reveals Staggers had occupied the land prior to World War I. T h i s property consisted of three cabins, in which Staggers had accumulated many possessions. On April 30, 1963, Staggers purchased a f i r e insurance policy from Cloe Paugh, now deceased, but then an agent of defendant. She maintained her agency a t 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 a t Stagger's request an additional $1,000 was purchased on July 1, 1963. On August 9, 1963, another policy was issued t o Staggers, providing coverage of $4,500 on the Nashua t r a i l e r house and $2,000 on i t s 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 a t various motels as a clerk and manager for many years, and was employed a t the Kruse Motel in Idaho Falls, Idaho, during the year before and after the f i r e . She would go to the ranch i n the f a l l , after the tourist season, and would stay there from time to time. The day before the f i r e Staggers and one Roy Thompson, who was stay- ing a t a dude ranch known as Neely Ranch, had been a t the cabins and t r a i l e r . The neighbors, M r . and Mrs. Daryl Stroud, observed Staggers leaving the area about 5:00 p.m. and neither of them saw any f i r e i n the area of the cabins or t r a i l e r house when Staggers l e f t . A t the t r i a l 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 reim- bursed by the defendant. Part of the defendant's case consisted of attempt- ing to prove that the contents of the cabins and t r a i l e r had been removed by the plaintiffs prior t o the f i r e and were s t i l l in their possession. However, a t the t r i a l plaintiffs' offered explicit testimony by certain witnesses which clearly negated any allegations by defendant that plaintiffs s t i l l held possession to items claimed to have been lost i n the f i r e . The issues in this matter are: ( I ) W a s the evidence sufficient to support the verdict of the jury as to i t s finding that proof of loss was tendered within sixty days after loss? (2) W a s there sufficient evidence to support the verdict of the jury based upon "substantial compliance" of the provisions of defendant's f i r e in- surance policy? (3) W a s there sufficient evidence to support the verdict of the jury, based upon waiver? (4) W a s the verdict and judgment contrary to law? - 3 - ( 5 ) W a s the c o u r t i n e r r o r i n excluding proposed exhi b i t "G"? ( 6 ) Was the c o u r t i n e r r o r i n g i v i n g o r r e f u s i n g c e r t a i n i n - s t r u c t i o n s ? In reference t o the f i r s t issue on appeal, the d i s t r i c t c o u r t properly reviewed t h i s issue on defendant's motion f o r new t r i a l , and by over- r u l i n g said motion r u l e d the j u r y ' s v e r d i c t was supported by s u f f i c i e n t evidence. This Court has on several occasions reviewed the r u l e s on s u f f i c i e n c y of evidence. I n Campeau v. Lewis, 144 Mont. 543, 547, 398 P.2d 960 (1965), w e stated : "The Court has c o n s i s t e n t l y held t h a t the evidence i s n o t i n s u f f i c i e n t i f i t i s substantial. Adami v. Murphy, 118 Mont. 172, 164 P.2d 150. I n t h e Adami case, the court, quoting from Morton v. Mooney, 97 Mont. 1, 33 P.2d 262, h e l d t h a t ' s u b s t a n t i a l evidence' could be defined as such "'as w i l l convince reasonable men and on which such men may n o t reasonably d i f f e r as t o whether i t establishes the p l a i n t i f f ' s case, and, if a l l reasonable men must conclude t h a t the evidence does n o t e s t a b l i s h such case, then i t i s n o t s u b s t a n t i a l evidence."' 118 Mont. 172, a t page 179, 164 P.2d a t page 153. The evidence may be i n h e r e n t l y weak and s t i l l be deemed ' s u b s t a n t i a l , ' and one witness may be s u f f i c i e n t t o e s t a b l i s h t h e preponderance o f a case. Batchoff v. Craney, 119 Mont. 157, 161, 172 P.2d 308. Also, sub- s t a n t i a l evidence may c o n f l i c t w i t h other evidence presented. Win Del Ranches v. Rolfe and Wood, Inc., 137 Mont. 44, 49, 350 P.2d 581. W e t h i n k these cases dealing w i t h substantial evidence c l e a r l y o u t l i n e the meaning o f ' i n s u f f i c i e n t evidence' i n the s t a t u t e . The j u r y i s delegated the task o f f i n d i n g t h e f a c t s . Their v e r d i c t i s based upon t h e i r f i n d i n g s . The t r i a l judge, however, has the d i s c r e t i o n t o prevent a miscarriage o f j u s t i c e by granting a new t r i a l i f t h e r e i s an i n - s u f f i c i e n c y o f evidence t o support the v e r d i c t . " S p e c i f i c a l l y , defendant contends t h a t i t s own method o f c a l c u l a t i o n c l e a r l y shows the proof o f l o s s was submitted on e i t h e r December 20 o r 21, 1963, thereby exceeding t h e sixty-day requirement f o r proof o f loss. This Court has repeatedly i n d i c a t e d t h a t i t w i l l presume t h a t the j u r y , i n reach- i n g i t s v e r d i c t , followed the i n s t r u c t i o n s t h a t were given t o i t by the t r i a l judge. Welsh v. Roehm, 125 Mont. 517, 241 P.2d 816 (1952). The defendant acknowledges t h e j u r y was f u l l y i n s t r u c t e d on the sixty-day requirement, and t h a t i n t e r e s t could be assessed accordingly. Our examination o f the record reveals there was no s p e c i f i c f i n d i n g by interrogatory i n the v e r d i c t as t o any s p e c i f i c date as t o the submission o f proof o f loss by p l a i n t i f f s . The v e r d i c t was f o r a t o t a l f i g u r e o f $15,620 and was not broken down as t o principal and i n t e r e s t . Secondly, we f i n d no m e r i t whatsoever i n defendant's argument t h a t there was not s u f f i c i e n t evidence t o support the v e r d i c t o f the j u r y based upon "substantial compliance" by p l a i n t i f f s w i t h the provisions o f the f i r e insurance policies. Succinctly stated, the r u l e o f "substantial compliance" i s as f o l l ows : "Since a provision i n a f i r e insurance p o l i c y requiring the f i l i n g o f proofs o f loss i s t o be l i b e r a l l y construed, there need be only a substantial , reasonabl e compl i ance w i t h such a provision and a s t r i c t l y l i t e r a l compliance i s not necessary." Couch on Insurance 2d, § 49:498, a t Page 76-77. Montana has applied the doctrine o f "substantial compliance" f o r a considerable period o f time. Da Rin v. Casualty Company o f America, 41 Mont. 175, 108 P. 649. W e f e e l the doctrine o f substantial compliance i s applicable t o the resolution o f t h i s case, and our examination o f a l l the testimony i n - dicates indisputable evidence o f substantial compliance by p l a i n t i f f s i n f u r - nishing defendant w i t h a proof o f loss. O n the morning o f the day a f t e r the f i r e Staggers heard rumors o f a possible f i r e a t the t r a i l e r house and cabins. He immediately drove over t o the f i r e scene and found t h a t everything was burned t o the ground. Staggers had been staying a t the Neely ranch recovering from health problems. He then immediately c a l l e d the agent Cloe Paugh who o r i g i n a l l y sold him the p o l i c i e s . The next day a M r . Divel, who was an insurance adjuster, met Staggers and they along w i t h Cloe Paugh went up t o the f i r e scene and c a r e f u l l y covered and dis- cussed the e n t i r e loss. Divel had some f i f t e e n years o f experience i n adjust- i n g f i r e s and h i s company d i d adjustment work f o r the defendant. Divel took several photographs o f the f i r e scene, a l l o f which were marked and offered as defendant's exhibits a t the t r i a l . These photos showed the remnants and debris of the t r a i l e r house and cabins. A t the t r i a l Divel t e s t i f i e d t h a t Staggers f u l l y discussed w i t h him the ownership o f the destroyed structures and the contents i n them. Dive1 t e s t i f i e d he concluded a t t h a t time the loss was a t o t a l one and he was unable t o determine the o r i g i n o f f i r e . Further, on t h a t day, October 12, 1963, Divel d i d not request any w r i t t e n statements from Staggers about the items o f loss. The record f u r t h e r reveals t h a t Cloe Paugh also f e l t the f i r e was a t o t a l loss. She reaffirmed t h i s i n her l e t t e r t o the defendant on October 17, 1966. About the same time Divel gave t o Staggers a form t o f i l l out e n t i t l e d "statement o f loss". Divel t e s t i f i e d these forms were "standard company forms" f o r the purpose$ o f helping the insured l i s t t h e i r inventories o f losses. Divel d i d not r e c a l l whether he t o l d Staggers t o send the completed "statement o f loss" t o himself o r t o Cloe Paugh but Divel d i d acknowledge u l t i m a t e l y r e - ceiving it. The record f u r t h e r reveals Staggers stayed a t the Neely ranch a few days a f t e r the f i r e and then drove d i r e c t l y down t o Idaho F a l l s t o v i s i t w i t h Mrs. Johnson. A t the time o f the f i r e Mrs. Johnson was i n the s t a t e o f Utah attending the funeral o f her father. Upon her r e t u r n t o Idaho F a l l s from the funeral one week later, the two o f them began t o compi 1 e the 1 i s t s o f personal property l o s t i n the f i r e . The record shows these two e l d e r l y people worked d i l i g e n t l y i n t h i s regard, r e l y i n g much on t h e i r memory as they had no p r i o r l i s t s t o work from. The two o f them d i d complete the "statement o f loss" and Staggers t e s t i f i e d he took i t t o Cloe Paugh sometime before Thanksgiving o f t h a t year. It contained the l i s t s o f the property l o s t i n the f i r e and the costs and values o f such property. A t t h i s p o i n t the record discloses t h a t everything seemed i n order as f a r as the p l a i n t i f f s were concerned u n t i l they received a l e t t e r i n January, 1964 from Divel requesting a n a r r a t i v e statement from them regarding the loss and expecting them t o come t o Ennis t o do so. Staggers promptly responded t o Divel by l e t t e r dated January 13, 1964, and stated as follows: "Sorry to say I don't intend t o be i n Ennis t i l l l a s t of M a y or June * * *. I t would be much more satis- factory w i t h m e i f you could arrange a settlement for m e i n the near future without m e 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 t o the above l e t t e r and Divel admitted further a t the t r i a l that after he received the l e t t e r the entire matter was referred from Divel's office a t Ennis t o the Helena office. Divel further testified that when he wrote Staggers on January 10, 1964 he knew Staggers was down in Idaho and i t would be d i f f i - cult for Staggers t o come to see h i m . Approximately one month later a M r . Kennedy, who was an agent of defendant, visited with Staggers in Idaho Falls about the f i r e but even a t that time he did not ask for a narrative statement or anything else. Staggers testified Kennedy told him the case was being transferred t o Idaho Falls so that "I wouldn't have t o go t o Bozeman". In view of the foregoing i t i s difficult for this Court to comprehend defendant's contention that plaintiffs' compliance in the matter was "half-hearted, i n - effectual, or careless compliance". On the contrary, our full review of this matter leads us to the conclusion that plaintiffs did a l l that reasonable persons would be expected to do under the circumstances they were confronted with. They fully cooperated w i t h Divel and Cloe Paugh in discussing a l l aspects of the f i r e . The evidence shows the plaintiffs diligently f i l l e d out the "statement of loss" forms. N o objection whatsoever was ever made by de- fendant regarding the validity of the "statement of loss" form until October 12, 1965, approximately two years after the f i r e , and even then no specific points of dispute were alleged by defendant. A t that date defendant company wrote a l e t t e r to plaintiffs' lawyer and stated that "no proper proof of loss was ever presented". This l e t t e r was written i n reply t o a l e t t e r from plaintiffs ' attorney t o defendant transmitting a "Supplemental and Amended Report and Proof of Loss" dated August 31, 1965. This document was prepared a t the direction of plaintiffs' attorney after plaintiffs came t o him for counsel i n view of the fact they had not obtained payment on their claim of loss for a period of two years since the f i r e . On the basis of the foregoing facts the jury found that the plain- t i f f s did substantially and reasonably comply w i t h 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 w i t h the proof of loss provisions contained within their policies. W e feel the language contained i n 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 w i t h a particular pol icy provision requiring a sixty-day notice of a f i r e claim and the Court stated: "The law of an insurance contract i s not basically different from the law of any other kind of contract. Where there i s substantial performance upon one side, there should be substantial performance upon the other side; and there i s substantial performance upon one side when such performance does not result in any wrongful substantial injury to the other side. " I t i s time to get away from some of the old-time doc- trines--insuring the owner of property i n 1 line, and then uninsuring him i n the next 99, involving his con- tractual right in a maze of conditions precedent, con- ditions subsequent, conditions directory, and conditions mandatory, under a contract, requiring formal and technical exactness as to the manner and form of a l l these policy provisions i n insurance risks, which are not required i n any other kind of contract. "Under the record in this case, w e find no prejudicial error materially affecting the substantial rights of plaintiff in error, and w e further find under the record that substantial justice has been done." In reference to the t h i r d issue on appeal, namely, was there suf- ficient evidence to support the verdict of the jury based upon the legal doctrine of waiver. Our examination of a l l the facts herein confirms there was sufficient evidence of waiver. The plaintiffs did everything reasonably required of them i n processing their claim for loss. They diligently com- piled the required information and promptly submitted i t to Cloe Paugh that thinking nothing more was required. The facts bear out/ the defendant, by i t s conduct, caused the plaintiffs t o believe that nothing further of them was in fact required. N o 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 i t was not until January 10, 1964 that Divel ever wrote to the plaintiffs and even a t that specific instance the defendant made no mention whatsoever about the timeliness of the furnishing of any information. I t was more than two years after the f i r e 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 i n f i r e insurance cases, stated the fol 1 owing: " * * * I t i s conceded by defendant that i f , in connection w i t h 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 i s undoubtedly a correct statement of the rule. (26 C. J. 403, and cases cited.) "Upon the second ground the great weight of authority i s t o 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 i t s right to object thereto as not satisfying the require- ments of the pol icy. (26 C.J. 399, and cases cited.)" On the basis of the foregoing as applied to the instant facts, w e 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 f i l e a proof of loss. W e further find no merit i n 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, w e deem i t equally clear our legislature d i d not intend that an insurance company could furnish forms to the insured to f i l l out and then mislead the insured into believing that this was all the information required. Neither do w e t h i n k 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. A s 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 i t a duty of the insured to request such forms. The evi- dence 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 n o w infers that these "state- ment 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 w e find nothing i n 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 plain- t i f f 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 f i r e to the cabins. Both Mr. and Mrs. Stroud testified that when they saw Staggers leave the area the afternoon of the f i r e , they did not see any f i r e in the area. Thus, the defendant failed to show any relevancy, competency or materiality to defendant's proposed ex- hibit G. Finally, defendant contends the district court erred i n 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 s e t 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: " I t i s the law of the State of Montana that whenever any policy of insurance shall be written to insure any i m - provements upon real property in this state against loss by f i r e , and the property insured shall be wholly des- troyed, 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 dam- ages. You are further instructed that the Nashua t r a i l e r home i n question i s to be considered as an improvement upon real property, the agreed value of which i s $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 i n this state against lbss by f i r e , 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 i n such policy shall be taken conclusively to be the true value of the property in- sured, 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 i s 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 t r a i l e r house which was covered by the insurance policy in the amount of $4,500. Agent Dive1 testified that the t r a i l e r house was a total loss. After reviewing a1 1 the testimony herein pertaining to the appropriateness of instruction No. 16, w e conclude the d i s t r i c t 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 t r a i l e r house had been originally moved to i t s location a t the Staggers ranch in 1958. I t was fully set u p to live in, connected to a cesspool, and hooked u p to a l i g h t plant. I t was also connected to propane and oil tanks. W e feel our decision in Meccage v . Spartan Ins. Co., 156 Mont. 135, 477 P.2d 115, clearly supports our conclusion that defendant's issue a t bar i s without merit. In Meccage w e 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 sub- ini t t o 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. W e find that this proposed instruction was repetitious of court's instruction No. 7, concerning proof of loss, substantial compliance and waiver, and No. 10 de- fining substantial compliance. I t i s clear therefore, that all matters in the offered instruction were fully covered in the instructions properly sub- mitted, 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 dili- gent, 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 judg- ment of the district court i s aff court to show Hortense Johnson n . Jack Shanstrom, district judge, '/sitting in place of Mr. Justice Castles. 1 ,I - 12 -