Gamel v. Continental Ins. Co.

• Decision Date: 26 January 1971
• Docket Number: No. 33737,33737
• Citation: 463 S.W.2d 590
• Parties: John W. GAMEL, Plaintiff-Respondent, v. The CONTINENTAL INSURANCE COMPANY, Defendant-Appellant.
• Court: Missouri Court of Appeals

Page 590

463 S.W.2d 590

John W. GAMEL, Plaintiff-Respondent, v. The CONTINENTAL INSURANCE COMPANY, Defendant-Appellant.

No. 33737.

St. Louis Court of Appeals, Missouri.

Jan. 26, 1971.

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

Thurman, Nixon, Smith & Howald, James E. Bowles, Hillsboro, for plaintiff-respondent.

BRADY, Presiding Judge.

This is an appeal from a summary judgment in the amount of $10,000.00 and costs entered in favor of plaintiff and against the defendant. The determinative issue is whether a statement by the plaintiff to defendant's agent to the effect he wanted a policy for $10,000.00 can constitute a fraudulent misrepresentation. If it can then a disputed issue of fact prohibiting the entry of a summary judgment exists. Civil Rule 74.04, V.A.M.R. If, as a matter of law, it cannot then the judgment was properly entered. We are to consider that issue in the light of the provisions of § 379.140, V.A.M.S.; this state's 'valued policy' statute. ¹

Plaintiff was the owner of a one-family dwelling located on two acres of ground which he had purchased for the total sum of $800.00. Thirteen months and eighteen days later plaintiff purchased a policy of fire insurance from the defendant insuring said dwelling in the amount of $10,000.00. A fire resulting in a total loss occurred five months and eleven days after issuance of the policy. Prior to the fire plaintiff had advertised the property for sale at a price of $1,800.00. Accompanying the stated price was the notation: 'house needs work.'

By interrogatory plaintiff was asked: 'Before the insurance policy described in the petition was issued did you represent to any insurance agent or broker the value of the dwelling described in the petition, if so state what value was represented by you, and from what source or sources you obtained said value?' His answer was: 'I gave Clinton Insurance Agency a description of the property and told them the amount of insurance desired upon said property and they issued the policy.' He was also asked the same questions with regard to his actions subsequent to the fire. He answered: 'In the proof of loss, I stated that the value was $10,000 based upon my own experience in building houses and my own knowledge of the costs of replacing the dwelling.' He was then asked what the actual cash value of the dwelling was at the date he applied for insurance, also at the date of the fire, and where did he '* * * obtain the figures for said actual cash value?' His answer was: 'In my opinion, the actual cash value of the dwelling at the time that I applied for insurance was at least $10,000 and I am of the further opinion that the actual cash value of the dwelling at the date of the fire was $10,000. I obtained these figures from my own personal knowledge and experience in building and constructing houses and my own knowledge of the costs of replacing the dwelling on this property.' It further appeared plaintiff had never obtained any estimate of cost of material to repair or replace the dwelling.

The insurance policy contains the following provision: 'This entire policy shall be void if, whether before or after a loss, the insured has wilfully concealed or misrepresented any material fact or circumstance concerning this insurance or the subject thereof, or the interest of the insured therein, or in case of any fraud or false swearing by the insured relating thereto.' The defendant's affidavit filed in opposition to plaintiff's motion for summary judgment avers plaintiff fraudulently misrepresented the value of the property at the time he made application for the policy of insurance and at the time he filed a proof of loss. It further appears from that affidavit that the agent who issued the policy would testify he was not familiar with the property, took plaintiff's words for its value, and intended to inspect it himself but did not have an opportunity to do so before it burned. Defendant contends that in view of the price paid for the house, the listing and advertising of the property by plaintiff for sale at the price of $1,800.00, and the statements to the agent as to the value at the time of taking out the policy and in the proof of loss, there is a disputed question of fact as to fraud and misrepresentation by the plaintiff in the procurement of the policy and in the filing of the claim. It follows, defendant urges, that summary judgment will not lie.

It is first necessary to determine what the alleged fraudulent misrepresentation consists of. Defendant presents this case on the basis that there was a misrepresentation as to the value of the property by the plaintiff both at the time of taking out the policy and in the proof of loss. It is obvious from the answer to the interrogatory concerning plaintiff's actions after the fire that he did then make, as a statement of opinion, a representation as to value. From the same source it is equally apparent that when he took out the policy he did not make any representation as to value. All he did was tell the agency the amount of insurance he desired. Defendant's affidavit filed in opposition to the motion for summary judgment was to the effect that plaintiff did make a representation as to value at the time he took out the policy. The parties have briefed and presented the case as if there were a representation as to value made at that time in the form of an opinion by plaintiff. We will rule the case on that basis.

Section 379.140, V.A.M.S., was first enacted in 1879. It was construed and held constitutional in Daggs v. Orient Ins. Co., 136 Mo. 382, 38 S.W. 85, where at l.c. 87 the court points out the purpose of the statute is to prevent insurance companies from taking reckless risks in order to obtain large premiums by advising them in advance that they would be held to the value agreed upon when the policy was issued; that while no company is required to insure property without first examining the premises--and may even refuse full coverage thereafter--after having the opportunity to inspect, fixing the amount of the risk, and receiving the premium for such amount it was estopped from denying the valuation stated in the policy; that the purpose of the act was wise and wholesome but, if not, its change was for the legislative not judicial authority; and that such valued policies were in use as a result of contract long before enactment of statutes of this nature. The court then held that under such statutes the face value of the policy '* * * was conclusive, both at law and in equity, save in cases of fraud.' Another of the purposes of such statute was to put at rest the measure of damages in a suit on a fire insurance policy in case of total loss and arbitrarily to fix the same at the amount for which the property was insured less depreciation, an item not in this case. Michigan Fire & Marine Ins. Co. v. Magee, 240 Mo.App. 767, 218 S.W.2d 151, l.c. 155.

In his brief able counsel for plaintiff states that under our valued policy statute '* * * a defense of fraud and misrepresentation may be raised to void the policy sued upon, * * *.' This conclusion of law (as contrasted to a judicial admission) may be warranted as a general statement or when used in the context of fraudulent misrepresentation going to some matter other than value. To the issue of value the conclusion has no application.

Defendant cites cases which it contends hold otherwise. They do not so hold, or are inapplicable to this specific issue, or have been effectively overruled. Defendant cites Duckworth v. United States Fidelity & Guaranty Co., Mo.App., 452 S.W.2d 280, l.c. 282, as follows: '(The valued policy statute) 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.' This is how the excerpt from our opinion appears in defendant's brief. In the opinion the words in parentheses are deleted and in lieu thereof appears 'Section 379.145'. We are not here concerned with that statute, with multiple policies, or with the issue ruled in Duckworth; i.e., the applicability of the valued policy statute to personalty. Value was not an issue in that case. Neither was it an issue in Maddox v. Dwelling House Ins. Co., 56 Mo.App. 343, where the misrepresentation was as to what the insured did in fact own; in Bushong v. Security Ins. Co. of New Haven, Conn., 214 Mo.App. 462, 253 S.W. 175, as to the model year of the automobile insured; in Mackey v. Home Ins. Co. of New York, Mo.App., 284 S.W. 161, as to where the property was to be kept (the iron safe clause), or in Dolan v. Missouri Town Mut. Fire Ins. Co., 88 Mo.App. 666, as to the existence of other insurance and whether, if it did exist, the insurance then purchased was for more than three-fourths of the value of his stock of merchandise. Lama v Dwelling House Ins. Co. of Boston, 51 Mo.App. 447, involved misrepresentations as to the fact of the amount of the existing mortgage, when...