Duckworth v. U.S. Fidelity & Guaranty Co.

• Decision Date: 24 February 1970
• Docket Number: No. 33520,33520
• Parties: John DUCKWORTH and Rosemary Duckworth, Plaintiffs-Respondents, v. UNITED STATES FIDELITY AND GUARANTY COMPANY, Defendant-Appellant.
• Court: Missouri Court of Appeals

Page 280

452 S.W.2d 280

John DUCKWORTH and Rosemary Duckworth, Plaintiffs-Respondents, v. UNITED STATES FIDELITY AND GUARANTY COMPANY, Defendant-Appellant.

No. 33520.

St. Louis Court of Appeals, Missouri.

Feb. 24, 1970.

Adolph K. Schwartz, St. Louis, for appellant.

Benson Cytron, House Springs, for respondents.

WEIER, Commissioner.

On August 31, 1966, fire completely consumed the frame clubhouse of Mr. and Mrs. John Duckworth, together with the contents of the building. They had previously purchased fire insurance from defendant, United States Fidelity and Guaranty Company, on May 25, 1966. The policy provided $5,000.00 coverage on the building and $2,000.00 on the contents. The defendant insurance company paid the $5,000.00 on the building, but contended that the personal property destroyed could not have a value of $2,000.00. In order to show a lesser value the defendant tried to develop on cross examination of Duckworth the amount of the purchase price paid in May of 1966. Objection to such inquiry was sustained by the trial court. Defendant then offered to prove that the building and all of the contents were purchased for $2,000.00 and that the contents could not exceed $500.00 in value. The court did not change its ruling. When the defendant indicated it had no evidence after plaintiffs closed their case, the trial judge, sitting without a jury, found for plaintiffs and awarded them $2,000.00 with interest.

It was defendant's contention in the court below and it remains the principal issue on appeal that the valued policy laws of Missouri are limited in their application to insurance against loss by fire of improvements on real property and are inapplicable to policies of fire insurance on personal property. We find that the valued policy statutes are not limited to real estate, but apply as well to personal property.

Defendant's attack, although frontal, does not have the simplicity of force such as may be found in the mere weight of authority. At defendant's side are three venerable cases of this court and a reasoned analysis of the statutory enactments. Plaintiffs, on the other hand, are in a position to repulse this attempt to unseat an interpretation of our statutory law with Missouri decisions in depth.

More specifically, defendant says that the valued policy statutes of Missouri are Sections 379.140 and 379.145, RSMo 1959, V.A.M.S. Section 379.140 provides that in suits brought on policies providing coverage for loss or damage by fire, the insurer 'shall not be permitted to deny that the property insured thereby was worth at the time of the issuing of the policy the full amount insured therein on said property.' It further directs that in case of a total loss, the measure of damages shall be the amount for which the same was insured, less any depreciation in value the property may have sustained between the date insured and the date of loss. The burden of proving depreciation is placed on the insurer. In case of partial loss, the measure is that portion of the value of the whole property as determined above, which the part damaged bears to the whole property insured.

Section 379.145 provides the same rule for multiple policies on the same property so that the aggregate of the policies shall be considered the value when policies are issued, except in cases of willful fraud or misrepresentation. It applies the same rule as to measure of damages and then limits the application of the two sections to real property. ¹

Defendant urges that these two sections are the only true valued policy statutes in Missouri and that they apply only to real estate as is specifically stated. It further says that plaintiffs ignore these sections and instead mistakenly rely on Section 379.160, subd. 3, RSMo 1959, V.A.M.S., as a valued policy statute; whereas this section is the 'Uniform Policy Act' and the provision therein found, which forbids any insurance company from denying the value of real or personal property, merely fixes the value for policies of co-insurance which are not involved in this case. This is for the reason, that a co-insurance provision immediately precedes the clause fixing value.

What is now Section 379.160 was enacted in its original form and approved March 18, 1895. It related to fire insurance and the form of policies. In its concluding clause, it prohibited any company from taking a risk on any property greater than three-fourths of the value of the property insured, and, when taken, the clause forbid that the value so stated should be questioned in any proceeding. Howerton v. Iowa State Ins. Co., 105 Mo.App. 575, 80 S.W. 27. In construing this section, this court in Howerton said: 'This law was passed subsequent to the enactment of sections 7969 and 7970 (Now Sections 379.140, 379.145), which provided for valued policies on real estate, but expressly recited that they should have no application to personal property. It follows that, if the law enacted in 1895 is inconsistent with those sections, in so far as it is inconsistent with them it takes precedence of them, as an amendment of the law.' l.c. 29. This court then went on to hold that Section 7979 (now Sec. 379.160) was a valued policy law that applied to both real and personal property, pointing out that the Kansas City Court of Appeals had arrived at the same conclusion in Gibson v. Missouri Town Mutual Ins. Co., 82 Mo.App. 515. The opinion noted that the Gibson case was the only opinion down to the time of Howerton (1904) that had considered this section. In the other cases, according to Howerton, the section apparently had not been called to the attention of the courts or passed on.

By amendment of 1919 (Session Laws, p. 386) Section 7030, RSMo 1909, was changed to its present form (now Sec. 379.160) so that the provision relied on by plaintiffs appeared in Section 6239, RSMo 1919, and in subsequent revisions to the present as follows:

'* * * Provided, further, that in all suits brought upon policies of insurance against loss or damage by fire hereafter issued or renewed, the defendant shall not be permitted to deny that the property insured thereby was worth at the time of the issuing of the policy the full amount insured therein on said property covering both real and personal property; * * *.' ²

Since the inception of the statute in 1895, and after the amendment of 1919, many cases involving claims under policies of insurance for loss of personal property by fire have been passed on by our appellate courts in which Section 379.160, subd. 3, in both its present and prior phrasing, has been construed as a valued policy law applicable to personal property. ³ Under this construction of the terms of this section, an insurer will not be heard to deny the full amount for which the property was insured as being its actual value at the time the policy of insurance was issued.

Defendant relies on three cases decided by this court as authority for its position. They are Green v. Lancashire Insurance Co. (1897), 69 Mo.App. 429; Coleman v. Phoenix Insurance Company of Hartford, Conn. (1897), 69 Mo.App. 566; and City of De Soto v. American Guaranty Fund Mut. Fire Ins. Co. (1903), 102 Mo.App. 1, 74 S.W. 1.

Green was a suit on a fire policy for loss of household goods. All of the goods were destroyed except a sewing machine. The court found that plaintiff should have been nonsuited for failure to prove the value of the goods. The opinion pointed out that plaintiff's instruction treated the case as though coming under Sections 5897, 5898, RSMo 1889 (now Sections 379.140, 379.145, supra) and emphasizes that the last section expressly limits the application of these sections to real property.

Coleman was also a case involving a total loss of personal property. Our court again pointed out that Sections 5897, 5898, RSMo 1889 (now Sections 379.140, 379.145) applied only to real estate. It was therefore incumbent on plaintiff to plead and prove the value of the personal property destroyed by the fire. The court further ruled that the doctrine of aider by verdict could not be applied. But this last portion of the opinion was later overruled by the Missouri Supreme Court in Gustin v. Concordia Fire Ins. Co., 164 Mo. 172, 64 S.W. 178, 180; although here again no mention is made of what is now Section 379.160. (See also Koropchensky v. Goddard, Mo.App., 266 S.W. 343, on this same point).

In City of DeSoto, a pest house owned by the city burned, consuming all the furniture. Our court again held that Sections 7969, 7970, RSMo 1899, (now Section 379.140, 379.145) applied to real estate only and that proof of the value of the personalty destroyed was essential to recovery for its destruction. No reference is made to what is now Section 379.160.

It would appear from reading these three cases relied on by defendant that unless the facts therein occurred before March 18, 1895, (which is not disclosed by the opinions and which is the date when the first version of Section 379.160 was approved) this section was not called to the attention of the courts and passed on by them. This last was the explanation in Howerton, supra, and seems to be a logical one. In order that there may be no confusion in the future, we hold that Green v. Lancashire Insurance Co., 69 Mo.App. 429; Coleman v. Phoenix Insurance Company of Hartford, Conn., 69 Mo.App. 566; and City of De Soto v. American Guaranty Fund Mut. Fire Ins. Co., 102 Mo.App. 1, 74 S.W. 1, shall no longer be considered authority in a fire insurance case with regard to fixing the value of personal property totally destroyed by fire.

The value of personal property which is the subject of a suit in a fire loss case against an insurer is fixed by Section 379.160 at the full amount of the insurance policy issued on this property as of the time of the issuance of the policy. Meier v. Eureka-Security Fire & Marine Ins. Co. of Cincinnati, Ohio, Mo.App., 168 S.W.2d 127, 134(18). The measure of damages...