Opinion ID: 1699391
Heading Depth: 1
Heading Rank: 3

Heading: state auto's cross-appeal

Text: State Auto's first issue is whether the trial court was correct in allowing $6,500 in damages to Dolajak. State Auto points out that, as determined by the special jury verdict, Dolajak had supplied only $200 worth of materials for the silo erection, all of which went into the concrete base for the silo which was not damaged in the windstorm. State Auto argues that because Dolajak had breached the contract by not erecting the silo, and because the policy of insurance does not cover breach of contract by the insured, Dolajak is not entitled to the award of $6,500 made by the trial court. State Auto urges, instead, that the sum of $3,000 would be the maximum award. It contends that because the contract between Dolajak and the Bos brothers provided that the sum Dolajak was to receive for completing the concrete work and erecting the silo was $6,500, $3,000 to be paid upon completion of the concrete work and $3,500 when the silo was finished, and because the concrete base was not damaged, $3,500 should be deducted from the award by the trial court. We do not find State Auto's argument persuasive. The jury, in its special verdict, found that the damage was not due to the neglect of Dolajak. Therefore, the provision in paragraph 3(A) of the insurance contract excluding Loss or damage directly or indirectly by faulty workmanship or faulty design or by the neglect of the assured to use all reasonable means to save and preserve the property at and after any disaster insured against is not applicable. Paragraph 3(N)(4) of the policy, on the other hand, provides: Valuation: This company shall not be liable beyond the actual cash value of the property insured at the time any loss or damage occurs plus labor and other charges and/or expenses accured [sic], but not exceeding the amount which it would cost to repair or replace the same with material of like kind and quality. In the event of a total or total constructive loss to a building completed, the actual cash value shall include the insured's normal profit.  [Emphasis added.] We have no doubt that Dolajak's failure to complete the silo was caused by the windstorm, for which the insurance policy provided coverage to the extent of his materials and labor. The trial court found [paragraph IX of its findings of fact] that Dolajak furnished the labor and services incorporated in the concrete base of the silo and in the erection of the silo in accordance with his written contract with the Bos brothers, and that the value of such labor and services at the time the silo was destroyed totaled $6,500. We conclude that the terms of the insurance contract covered Dolajak's loss to that amount, and the coverage was not inapplicable because of Dolajak's breach of contract resulting from the damage by the windstorm. State Auto's third issue is that the trial court erred in allowing interest on the $6,500 judgment awarded Dolajak because the insurer never was notified that Dolajak had made any commitment to insure materials owned by the Bos brothers. The trial court determined that no written proof of loss was ever submitted to State Auto but none was required because State Auto denied the claim by letter. State Auto contends, however, that under the evidence and the findings of the trial court, an insurer would not know the amount of the claim nor that the claim was in fact valid because Dolajak had demanded the full amount of the coverage, i. e., $20,000. State Auto argues that while furnishing proof of loss may dispense with the formal notice of loss, the giving of notice of loss does not dispense with the necessity of a formal proof of loss. State Auto's position is not persuasive. The letter of denial of July 20, 1972, [5] from State Auto to Mike Dolajak indicates several reasons for denying the claim, only one of which concerned the issue of an insurable interest. The other reasons given in the letter for denial of the claim were that it was due to an act of God and a breach of the standard care, custody, and control exclusion in the policy. Given those reasons for denial of the claim, it is apparent that State Auto would have denied the claim even if Dolajak had submitted written proof of loss indicating his interest in the silo that was insured under the policy. We conclude that the trial court, under this set of circumstances, did not err in determining that Dolajak was entitled to interest from and after July 24, 1972, the date that the trial court found the claim was denied in total by State Auto. Sec. 32-03-04, N.D. C.C. The judgment of the trial court is affirmed. ERICKSTAD, C. J., and SAND, PAULSON and PEDERSON, JJ., concur.