Jones v. State Farm Fire and Cas. Co.
| Decision Date | 01 December 1987 |
| Docket Number | No. 52750,52750 |
| Citation | 740 S.W.2d 708 |
| Parties | Kenneth A. JONES and Alendo Building Company, Appellants, v. STATE FARM FIRE AND CASUALTY COMPANY, Respondent. |
| Court | Missouri Court of Appeals |
1. Insurance
Insured under builder's risk policy for which a reduced premium had been paid, wherein the rate was based on the average amount of liability during the period of construction, was only entitled to recover the value of the premises at the time of destruction, and not the face amount of the policy, which was predicated upon the value of the building upon completion.
2. Insurance
Purpose of valued policy legislation is to prevent overinsurance. V.A.M.S. §§ 379.140, 379.160.
Appeal from a summary judgment in favor of State Farm Fire and Casualty Company (State Farm) and from the denial of appellants' motion for summary judgment. We affirm.
Albert W. Dieffenbach, Hillsboro, for appellants.
John G. Doyen, Clayton, for respondent.
CRIST
The parties have agreed that there is no material question of fact. The facts, as stipulated are:
In July of 1985, Alendo Building Company (Alendo) contracted to construct a 24-unit apartment building and convey it to G. David Voges for $690,000. Kenneth A. Jones (Jones), sole stockholder and officer of Alendo, orally agreed with Alendo to purchase, improve and then convey the property to Alendo also in consideration of $690,000. Jones purchased the unimproved real estate for $54,000.
State Farm issued Jones a "builder's risk" policy in the face amount of $690,000 to cover the property during construction. The policy and the declaration page represent the entire agreement between the parties. The premium paid for the policy was a reduced premium wherein the rate was based on the average amount of liability during the period of construction. On July 8, 1985, the date of the policy's issuance, Jones had not begun construction of the building. By November 23, 1985. Jones had partially completed construction when a fire totally destroyed everything that had been built up to that point. The parties agree the "replacement cost value" of the destroyed building was $440,393.09. The value of the premises upon completion of the building would have been $690,000. After the fire, Jones completed construction of the planned building without being able to salvage any part of the burned building.
In March 1986 Jones and Alendo filed a proof of loss with State Farm claiming a loss in the amount of $690,000. On April 21, 1986, Jones and Alendo filed suit against State Farm. Prior to filing the proof of loss, State Farm paid Jones and Alendo $100,000 in partial satisfaction of its obligation to them; and on August 6, 1986, State Farm paid into the registry of the Circuit Court of Jefferson County, the sum of $340,393.09. The $440,393.09 paid by State Farm represents the agreed upon replacement cost of the first building, a value which includes $11,000 for debris removal.
Jones and Alendo set forth three points relied on. All their claims are controlled by a resolution of whether Jones and Alendo are entitled to the replacement cost value of their partially completed building or if they are entitled to "the full amount insured" under §§ 379.140 and 379.160, RSMo 1986. The policy was issued in the face amount of $690,000, with provisional limits, in consideration of a reduced premium based on the average amount of liability during the period of construction. The parties agreed the replacement cost of the structure following the loss was $440,393.09 and that the land underneath the structure was not destroyed. They stipulated the premises, upon completion, would be worth the face value of the policy. The entire premises were insured; the building was not overinsured. Jones and Alendo's third point relied on wherein they argue they should get at least $54,000 more than replacement cost value is without merit because the land, which was worth $54,000, was not destroyed. Thus, the only issue before us is whether the $690,000 limit of liability under the policy applied to the structure, whether or not it was a completed building when the loss occurred.
The provisional limit of liability is set out on page five of the policy, Section 1--Conditions is as follows:
1. Provisional Limit of Liability.
a. the limit of liability applicable to property under this policy is provisional. It is a condition of this insurance, wherein the rate and premium are based on an average amount of liability during the period of construction, that at any date while this policy is in force, the actual limit of liability is that proportion of the provisional limit of liability that the actual value of the described property on that date bears to the value at the date of completion. This...
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