DeLisle v. Cape Mut. Ins. Co.

• Decision Date: 12 July 1984
• Docket Number: No. 13314,13314
• Citation: 675 S.W.2d 97
• Parties: J. Byron DeLISLE and Madelon DeLisle, Plaintiffs-Respondents, v. CAPE MUTUAL INSURANCE COMPANY, Defendant-Appellant.
• Court: Missouri Court of Appeals

Page 97

675 S.W.2d 97

J. Byron DeLISLE and Madelon DeLisle, Plaintiffs-Respondents, v. CAPE MUTUAL INSURANCE COMPANY, Defendant-Appellant.

No. 13314.

Missouri Court of Appeals,

Southern District,

Division Three.

July 12, 1984.

Motion for Rehearing or Transfer Denied

Aug. 3, 1984.

Albert C. Lowes, Catherine R. McBride, Buerkle, Lowes, Beeson & Ludwig, Jackson, for defendant-appellant.

James E. Reeves, Caruthersville, for plaintiffs-respondents.

MAUS, Judge.

By his petition J. Byron DeLisle, the named insured, sought to recover upon a policy of fire insurance issued by defendant Cape Mutual Insurance Company. The insured real property was a home in Portageville owned and occupied by J. Byron DeLisle and Madelon DeLisle, his wife. In response to the defendant's objection to the interest and capacity of J. Byron DeLisle, Madelon DeLisle was added as a party plaintiff.

The defendant admitted the policy was in force and the insured property was damaged by a fire. It denied the insured's compliance with the policy and disputed the extent of the loss. The defendant also alleged seven additional defenses. These included misrepresentation of prior fire losses in the application for insurance and the defense of arson. After a two-day jury waived trial, the court made extensive findings of fact and conclusions of law. Those findings and conclusions determined the issues in favor of the plaintiffs. Judgment was entered awarding them a total of $52,014.58, plus interest at the rate of 9 percent from June 21, 1982. A brief outline of the evidence is sufficient for consideration of the defendant's ten points on appeal.

A fire occurred in the insured home at approximately 12:00 noon on January 25, 1982. DeLisle was at his laundromat. Mrs. DeLisle was visiting a friend. After doing considerable damage to the home and its contents, the fire was extinguished by the local volunteer fire department. The fire was reported to the defendant that day. Its managing officer immediately employed a firm specializing in the investigation of arson to investigate the loss. One of the two employees of that firm inspected the scene the next morning. He took samples of charred material from the kitchen floor, a baseboard and a stairway. He made no subsequent investigation at the scene. No member of the volunteer fire department was contacted until a few weeks before trial.

The defendant presented the opinion of the investigator the fire was an intentional fire. He based that conclusion upon ruling out "natural causes," the areas of heavy burning, the pattern of the burning and his judgment there were two areas where the fire could have originated. However, he later stated that he found a burner on the electric stove in the "on" position. He concluded the burner had heated up grease in a pan that caught fire.

The samples of charred material were sent to a laboratory in North Carolina for analysis. That laboratory found two of the three samples had traces of automotive gasoline. The defendant also emphasized the financial difficulties of the DeLisles.

On the other hand, the plaintiffs developed the circumstances of the defendant's losses in two of the three preceding years, its reorganization and its recent employment of a new managing officer to improve the profitability of the company. Their cross-examination developed the availability of local analysis laboratories. Emphasized was the fact that the North Carolina laboratory, in examining approximately 50 samples submitted to it by the investigator, found accelerants in 70 to 80 percent of those samples. The plaintiffs also presented the testimony of two of the firemen, each of whom had over 30 years of experience. These firemen saw no evidence of gasoline, no suspicious burn pattern, no sign of an explosion and no indication of an intentional fire. The fire chief upon entry carefully checked the electric stove and found all burners in the "off" position. There was evidence the property was substantially under insured. The plaintiffs denied the charge of arson.

The trial court found the conclusion of the laboratory to be speculative. It expressly found the testimony of the arson investigator was not credible. It concluded the defendant failed to produce any credible evidence the fire was of incendiary origin. Evidence supporting the position of the plaintiffs was found to be credible and probative. The trial court determined that no arson had been committed.

The defendant's first point is based upon alleged misrepresentations in DeLisle's applications for insurance. There was evidence the plaintiffs had suffered the following fire losses. In 1971 their summer home or cabin at Reelfoot Lake burned and they were paid $12,000. In 1973 there was a grease fire in their home for which they were paid $677.80. In 1976 their Door-III dress shop was damaged by fire and they were paid approximately $26,000. DeLisle's initial application for insurance dated March 13, 1976 disclosed a 1972 minor smoke ($300) loss. It was conceded this referred to the grease fire. The renewal application dated April 5, 1979 reported a "1977 fire $1800 or thereabout." This referred to the fire at Door-III. Neither application made reference to the Reelfoot Lake fire.

The defendant insists these facts establish as a matter of law a misrepresentation rendering the policy voidable. By failing to refer to portions of the evidence in its brief, the defendant emphasizes facts the plaintiffs argue are pertinent. DeLisle testified that when the defendant's agent prepared the applications, the agent asked him no questions. When the applications were completed, they were presented to DeLisle who signed them without reading them. This agent did not dispute this testimony. The plaintiffs also argue that as a matter of common knowledge in the small community, the agent knew or should have known of the Reelfoot Lake fire. There was evidence the defendant had independent knowledge of the Door-III fire. It paid the plaintiffs its maximum for off the premises personal property liability, which was $2050, 10% of the policy limit.

The resolution of this point requires the observance of only the basic rules concerning statements and omissions in applications for insurance. The policy provides, "The entire policy shall be void if, whether before or after a loss, the insured had wilfully concealed or misrepresented any material fact or circumstance concerning this insurance ...." The statements or omissions in the applications were not incorporated into the policy or otherwise made warranties. Miller v. Plains Insurance Company, 409 S.W.2d 770 (Mo.App.1966). In Miller a similar policy provision was held to cause the policy to be subject to the rules otherwise applicable to representations.

It is not necessary to consider all of those rules. For example, it is not necessary to review the cases that hold an applicant is conclusively bound by an application which he signed but did not read. See Cohen v. Metropolitan Life Insurance Company, 444 S.W.2d 498 (Mo.App.1969); Miller v. Plains Insurance Company, supra; Bearden v. Countryside Casualty Company, 352 S.W.2d 701 (Mo.App.1961). But see Farmers Mutual Fire & Lightning Ass'n v. La Vallee, 501 S.W.2d 69 (Mo.App.1973). Cf. Hay v. Utica Mut. Ins. Co., 551 S.W.2d 954 (Mo.App.1977).

The plaintiffs contend the policy is not voidable because the misrepresentation was not made with the intent to deceive. They cite quotations such as "[b]ut where there is no such warranty or provision in the policy a misrepresentation, in order to avoid the policy must have been fraudulently made." Dixon v. Business Men's Assurance Co. of America, 365 Mo. 580, 285 S.W.2d 619, 625 (banc 1955). They also cite Pittman v. West American Insurance Company, 299 F.2d 405 (8th Cir.1962); Grand Lodge, U.B. of F., Etc. v. Massachusetts B. & Ins. Co., 324 Mo. 938, 25 S.W.2d 783 (banc 1930); Pacific Mut. Life Ins. Co. v. Glaser, 245 Mo. 377, 150 S.W. 549 (1912). On the other hand, the defendant contends the policy is voidable "whether such misrepresentation be made intentionally or through mistake and in good faith." Minich v. M.F.A. Mutual Insurance Co., 325 S.W.2d 56, 57 (Mo.App.1959). "The law in Missouri is that a material misrepresentation in an application for insurance is a valid ground for avoiding the policy, even though the misrepresentation is innocently or inadvertently made." American Fire and Indemnity Company v. Lancaster, 415 F.2d 1145, 1147 (8th Cir.1969). Also see Cohen v. Metropolitan Life Insurance Company, supra. It is not necessary to resolve this conflict.

It is clear a misrepresentation will render the policy voidable only if it was material to its issuance. "The fact that there were misrepresentations are not sufficient alone to void the policy. A representation in an application for insurance, which is not in the form of a warranty or incorporated in the policy itself, must not only be false, but also material to the risk in order for the insurer to avoid its policy." Haynes v. Mo. Prop. Ins. Placement Facility, 641 S.W.2d 497, 499 (Mo.App.1982).

The test for determining the materiality of a misrepresentation has received divers expressions. "A representation made to an insurer that is material to its determination as to what premium to fix or to whether it will accept the risk, relates to a fact actually material to the risk which the insurer is asked to assume." Weekly v. Missouri Property Ins. Placement, 538 S.W.2d 375, 378 (Mo.App.1976). Also see United States v. Home Life Ins. Co., 508 F.Supp. 559 (E.D.Mo.1980); Pacific Mut. Life Ins. Co. v. Glaser, supra. "Thus, whether a misrepresentation is material in an application for an automobile insurance policy, is determined by whether the fact, if stated truthfully, might reasonably have influenced the insurance company to accept or reject the risk or to have charged a different premium, and not whether the insurer was actually...