Hawkinson Tread Tire Service Co. v. Indiana Lumbermens Mut. Ins. Co. of Indianapolis, Ind.

• Court: Missouri Supreme Court
• Writing for the Court: PER CURIAM
• Citation: Hawkinson Tread Tire Service Co. v. Indiana Lumbermens Mut. Ins. Co. of Indianapolis, Ind., 245 S.W.2d 24, 362 Mo. 823 (Mo. 1951)
• Decision Date: 10 December 1951
• Docket Number: No. 1,No. 42348,42348,1
• Parties: HAWKINSON TREAD TIRE SERVICE CO. v. INDIANA LUMBERMENS MUT. INS. CO. OF INDIANAPOLIS, IND

Page 24

245 S.W.2d 24

362 Mo. 823

HAWKINSON TREAD TIRE SERVICE CO. v. INDIANA LUMBERMENS MUT. INS. CO. OF INDIANAPOLIS, IND.

No. 42348.

Supreme Court of Missouri, Division No. 1.

Dec. 10, 1951.

Motion for Rehearing or to Transfer to Court en Banc Denied

Jan. 14, 1952.

Franklin E. Reagan, St. Louis (Sievers & Reagan and Adolph K. Schwartz, all of St. Louis, of counsel), for appellant.

B. W. La Tourette, G. M. Rebman, St. Louis, for respondent.

VAN OSDOL, Commissioner.

Appeal from a judgment for $14,611.74, the amount found by the trial court to have been the 'actual loss sustained,' indemnified by a fire insurance policy, plaintiff Hawkinson Tread Tire Service Company, a corporation, insured. The fire occurred about noon on February 28, 1946, destroying a building and equipment therein on North Twelfth Street in St. Louis. The building was occupied by plaintiff as a lessee. The building and equipment were occupied and used by plaintiff in its tire retreading business. Plaintiff's lease on the building expired on the day of the fire, and plaintiff subsequently availed itself of a building on Market Street in a resumption of its tire retreading business.

Upon this appeal we are not concerned with any indemnity for property loss. We are concerned with the provisions of the policy indemnifying plaintiff for damage or destruction by fire of the 'use and occupancy' of the described property necessitating an interruption of business. See generally Annotation 75 A.L.R. 253; Vol. 5, Appleman, Insurance Law and Practice, Sec. 3120; General Ins. Co. of America v. Pathfinder Petroleum Co., 9 Cir., 145 F.2d 368; National Union Fire Ins. Co. v. Anderson-Prichard Oil Corp., 10 Cir., 141 F.2d 443; Fidelity-Phenix Fire Ins. Co. v. Benedict Coal Corp., 4 Cir., 64 F.2d 347; Hutchings v. Caledonian Ins. Co. of Scotland, D.C., 52 F.2d 744; Goetz v. Hartford Fire Ins. Co., 193 Wis. 638, 215 N.W. 440.

Defendant-insurer, Indiana Lumbermens Mutual Insurance Company of Indianapolis, upon this appeal, contends that plaintiff may not maintain the instant action 'in violation' of an appraisal clause of the policy; that the insurance policy covered only the operations of plaintiff at the Twelfth Street address mentioned in the policy, and the policy is not to be construed to cover plaintiff's business operations at a different address; and that, in any event, the court erred in refusing to limit plaintiff's claim to the period of time required to resume plaintiff's normal tire retreading operations. There is the further contention that interest was erroneously allowed by the trial court in its findings and judgment.

The policy insured plaintiff against loss in case the described building, and machinery and equipment contained therein, situated at 1119-23 North Twelfth Street, were destroyed or damaged by fire so as to necessitate a total or partial suspension of business. It was provided the defendant-insurer was to be liable 'for the actual loss sustained, for not exceeding such length of time as would be required with the exercise of due diligence and dispatch, to rebuild, repair or replace such part of the property * * * as has been destroyed or damaged, commencing with the date of the fire and not limited by the date of expiration of this policy, to wit:--Item I. $25,000--On (a) the net profit which is thereby prevented from being earned and (b) such charges and other expenses, including salaries of officers[362 Mo. 827] --executives--department managers--employees under contract and other important employees, as must necessarily continue during a total or partial suspension of business, to the extent only that such charges and expenses would have been earned had no fire occurred. * * * The amount of net profit and/or charges and expenses * * * shall be determined, whether for the purpose of ascertaining the amount of loss sustained or for the application of the Contribution Clause, by giving due consideration to the experience of the business before the fire and the probable experience thereafter.' It was also provided, 'as soon as practicable after any loss, the Insured shall resume complete or partial operation of the property herein described and shall make use of other property, if obtainable, if by so doing the amount of loss hereunder will be reduced, and in the event of the loss being so reduced such reduction shall be taken into account in arriving at the amount of the loss hereunder.'

The whole structure of the Twelfth Street building was burned out, except a small section in the front on the east. On the floor was 'a tangle of steel, burned out roof, plus the materials that the Hawkinson retread had in there.' There was substantial evidence tending to show that 'it would take anywhere from ten to eleven months up to clean out that building, redesign, procure the steel, and have it ready for occupancy.' However, R. W. Filkey, Incorporated, of which R. W. Filkey was president and principal stockholder, was in the process of constructing a building on Market Street, and it had been the intention of plaintiff corporation, of which R. W. Filkey was also president and principal stockholder, to lease the new building and to remove its tire retreading business to the new building when it was ready for occupancy. A contract of lease was entered into by R. W. Filkey, Incorporated, lessor, and plaintiff, lessee, as of May 29, 1946. On February 28th, the Market Street property was a 'long ways from completion.' The completion of the building had been delayed by the shortage of materials and adverse weather conditions. It would have taken sixty to ninety days to 'get into' the Market Street property under normal conditions. Plaintiff had not availed itself of its option to renew its lease of the Twelfth Street property, and, had it not been for the delay in the completion of the Market Street building, plaintiff might have moved into that building prior to February 28th.

After the destruction of the building on Twelfth Street, plaintiff obtained some new retreading equipment, installed same in the incomplete Market Street building, and recapped a few tires during the month of March 1946. More new retreading equipment was delivered to plaintiff during the months of April, May, June and July, 1946 and in August the plaintiff's retreading of tires in its operations at the Market Street address was but seventeen per cent less than in August 1945 at the Twelfth Street address. There was a fifteen per cent downward trend in the tire retreading industry in 1946.

During all negotiations between the parties with the purpose of arriving at an agreement relating to the actual loss sustained, defendant-appellant contended and herein contends that, inasmuch as plaintiff contemplated the removal of its business to the Market Street location and was able (defendant-appellant asserts) to resume its normal operations by the end of a six-month period (by August 31, 1946) at the Market Street address, the 'actual loss sustained' should be computed during the six-month period following the fire. Plaintiff-respondent contended, and herein contends, effect should be given to the business at the Twelfth Street address as forecast or projected during the ten-month period following the fire in computing the actual loss sustained, and the actual operations at the Market Street address should be taken into account (in so far as the operations at that address reduced the loss) during the minimum time (ten months) which would have been necessary to have rebuilt and restored the property destroyed, and to have resumed operations at the Twelfth Street location.

An accountant, witness for plaintiff, computed plaintiff's claim as per plaintiff's 'Exhibit 5' to be in the amount for which the trial court rendered judgment for plaintiff, $14,611.74; but an accountant, witness for defendant, computed the actual loss sustained as per defendant's 'Exhibits B and C' in the amount of $6,049.10. The difference of results of computations of the accountants was in large measure due to the legal contentions of the parties, plaintiff-insured and defendant-insurer, as to the construction of the provisions of the policy. Plaintiff's accountant in the preparation of Exhibit 5 had adopted plaintiff's theory that insurance was recoverable to December 31, 1946, that is, to the date upon which the Twelfth Street property could have been rebuilt and restored. Defendant's accountant, in the preparation of Exhibits B and C, had adopted defendant's theory that insurance was recoverable to August 31, 1946, the date defendant contends plaintiff attained 'normal operations' at the Market Street location.

Another material difference of opinion between the insured and the insurer, which is reflected in the computations of their respective accountants, relates to the question whether one Beckerle was an 'important employee.' See the quoted provision '(b)' of the policy pertaining to charges and expenses, supra. It was and is the contention of plaintiff-insured that Beckerle, a shop foreman, was not an 'important employee' and would not have been continued upon its payroll after the fire during an indefinite period, or for the ten months required to rebuild and restore the Twelfth Street property. It was and is the contention of defendant-insurer that Backerle should have been considered an 'important employee.' These contentions are of significance because, if Backerle was an important employee, his salary was insurable and the loss would be increased; but the 'use and occupancy' value of the Twelfth Street property would also be increased, and the ultimate 'actual loss sustained' would be reduced by the 'Contribution Clause' of the policy.

Having endeavored to generally state the facts giving rise to the instant litigation, we will examine the contention of defendant-appellant that the action was brought in violation of the appraisal provision contained in the policy.

The...