Lovas v. St. Paul Ins. Companies

• Decision Date: 12 March 1976
• Docket Number: No. 9163,9163
• Parties: Gerhard LOVAS, Plaintiff-Appellant, v. ST. PAUL INSURANCE COMPANIES, a corporation, Defendant-Appellee.
• Court: North Dakota Supreme Court

Page 53

240 N.W.2d 53

Gerhard LOVAS, Plaintiff-Appellant, v. ST. PAUL INSURANCE COMPANIES, a corporation,

Defendant-Appellee.

No. 9163.

Supreme Court of North Dakota.

March 12, 1976.

Syllabus by the Court

1. On a motion for judgment notwithstanding the verdict, the evidence must be viewed in the light most favorable to the party in whose favor the verdict was rendered, and such motion should not be granted unless the evidence shows that the moving party is entitled to judgment on the merits as a matter of law and is such that reasonable men could reach but one conclusion as to the verdict.

2. In an action to recover on a policy insuring against theft the same quantum of proof is not required to support a recovery as is required to support a conviction for theft.

3. Under a theft insurance policy which specifically excludes mysterious disappearance, the fact that the circumstantial evidence also established a mysterious disappearance does not preclude the trier of facts from relying on such evidence to establish a probable and reasonable inference of theft.

4. The burden is on the insurer who asserts the exclusion to prove the loss was caused by an excluded event.

5. The classification of the property covered by the policy as either animate or inanimate is not controlling, but rather the manner and circumstances as to how the property is secured is significant.

Lamb, Schaefer & McNair, Moorhead, Minn., for appellant; argued by Michael D. McNair, Moorhead, Minn.

Nilles, Hansen, Selbo, Magill & Davies, Fargo, for appellee; argued by E. Thomas Conmy III, Fargo.

SAND, Judge.

This is an appeal from the decision of the Cass County District Court granting a judgment notwithstanding the verdict to St. Paul Insurance Companies.

The appellant Gerhard Lovas took out a policy of insurance with St. Paul Insurance Companies (through the Goose River Insurance Agency of Mayville, North Dakota) on August 2, 1973. The policy insured certain hogs in which Lovas had a half interest, 'against theft but excluding escape or mysterious disappearance.' On January 29, 1974, Lovas discovered a shortage and reported this to the insurance agent, who later filed a claim with the insurance company alleging the theft of 79 of the hogs. The insurance company denied the claim on the ground that the alleged loss was not covered under the terms and conditions of the policy. The issue was brought to the Cass County district court, where a jury returned a verdict against the St. Paul Insurance Companies. The defendant moved for a judgment notwithstanding the verdict or alternatively for a new trial. The trial court granted defendant's motion to set aside the verdict and for judgment notwithstanding the verdict.

Lovas appealed from this decision, claiming there was substantial evidence to support the jury verdict and that the trial court erred in setting aside the jury verdict in his favor and in ordering judgment notwithstanding the verdict in favor of St. Paul Insurance Companies.

The rule stated in Lee v. AAA North Dakota Automobile Club, 68 N.W.2d 835, 837 (N.D.1955), and cited in Erhardt v. Gold Seal Chinchillas, Inc., 144 N.W.2d 744 (N.D.1966), is that in an appeal from a judgment notwithstanding the verdict 'the first question for decision is whether the defendant was entitled to a directed verdict at the time the motion for a directed verdict was made. (Citations omitted.) This question in turn is dependent upon whether the evidence, when viewed in the light most favorable to the party against whom the judgment notwithstanding was entered, presents any substantial issues of fact for the jury to determine. (Citations omitted.)'

This Court has held that on a motion for judgment notwithstanding the verdict, the evidence must be viewed in the light most favorable to the party in whose favor the verdict was rendered, and such motion should not be granted unless the evidence shows that the moving party is entitled to judgment on the merits as a matter of law. Smith v. Michael Kurtz Construction Company, 232 N.W.2d 35 (N.D.1975); Jore v. Saturday Night Club, Inc., 227 N.W.2d 889 (N.D.1975).

This Court said in Nokota Feeds, Inc. v. State Bank of Lakota, 210 N.W.2d 182 (N.D.1973), that

'When ruling on a motion for a directed verdict or for judgment notwithstanding the verdict, the court must decide whether the evidence is such that, without weighing the credibility of the witnesses or otherwise considering the weight of the evidence, reasonable men could reach but one conclusion as to the verdict, or, otherwise stated, whether the evidence, viewed most favorably to the party against whom the motion is made, and giving that party the benefit of all reasonable inferences from the evidence, compels a result with which no reasonable person might differ.'

As to the proof of theft, we are satisfied, and it appears to be without question, that in an action to recover on a policy insuring against theft the same quantum of proof is not required to support a recovery as is required or as it necessary to support a conviction for theft.

Before analyzing the evidence we should examine the pertinent provision of the policy to determine its legal effect and what evidence is needed to support a recovery thereunder.

'PROPERTY COVERED:

'This Policy covers the following livestock of the Insured:

'C. Swine $80.00 (per animal)

'Total amount of insurance $48,160.00

'1. PERILS COVERED.

'This policy insures against:

'B. Theft, but excluding escape or mysterious disappearance.

'2. PERILS EXCLUDED.

'This Policy does not insure against:

(Then lists a number of items which are not covered by the policy which are not pertinent.)'

The underlined language in 'B' is pertinent to the issue before us on appeal.

A brief review of case law on similar policy provisions will also be helpful.

Early theft insurance policies merely provided for coverage for loss by theft but did not include or exclude or make reference to mysterious disappearance. The measure of proof required of the insured varied, but as a general rule it was held that a logical inference of a felonious taking might be drawn from circumstances surrounding a mysterious disappearance. Stich v. Fidelity & Deposit Co. of Maryland, 159 N.Y.S. 712 (Sup.1916). See also, Reed v. American Bonding Co., 102 Neb. 113, 166 N.W. 196 (1918), and Emery v. Ocean Accident Guarantee Co., 209 Mich. 295, 176 N.W. 566 (1920).

Occasionally, provisions were added to the effect that mere disappearance of the insured object would not be deemed sufficient evidence of its loss by theft or burglary.

Under the old policies it was not necessary for the insured to offer direct proof of the theft. Circumstantial evidence could be relied on and if the insured was able to prove facts and circumstances sufficient to justify the inference of theft as the more rational hypothesis the case would go to the jury. Proof of the mysterious disappearance of property alone was insufficient to support a verdict; 'and if there was no evidence of a breaking and entry or other circumstances pointing to theft as the more probable cause of the loss, a recovery under the policy was not permitted. Thus, the insured, under the old policies, often-times found his claim contested and encountered difficulty in making out a case for the jury.' Davis v. St. Paul Mercury & Indemnity Co., 227 N.C. 80, 40 S.E.2d 609 (1946).

In 12 A.L.R.3d 866, 867, Theft Insurance--Disappearance, we find the following:

' § 2. Background and summary 'Pre-1943 burglary and theft insurance policies occasionally contained provisions to the effect that disappearance of the insured object would not be considered evidence of theft or burglary. Generally, these provisions were interpreted as not preventing the insured from proving his loss through theft or burglary by the use of circumstantial evidence. And since a mysterious disappearance was one circumstance from which a theft might be deduced, the courts readily accepted proof of disappearance of insured property under mysterious circumstances as adequate to support recovery under a policy in which the insurer agreed to pay for loss by theft.

'Prior to 1943, however, the insurance companies varied widely in their requirements as to proof of theft, and in order to bring about a greater uniformity in adjustment practices and thereby eliminate a source of policyholder dissatisfaction, and motivated not so much by a sense of resignation as by a desire to make the policy more informative in this respect, both to insurance companies and policyholders alike, a clause specifically covering the 'mysterious disappearance' contingency was introduced into the standard from theft policy, on April 19, 1943.

'Such a clause, as originally introduced, usually read: 'The word 'theft' includes larceny, burglary and robbery. Mysterious disappearance of any insured property shall be presumed to be due to theft.' This presumption clause had the effect of creating a contractual rule of evidence which facilitated proof of 'theft' by the insured in the absence of evidence either affirmatively establishing or clearly negating the existence of a theft in fact.

'Many persons thought that the presumption clause was designed to broaden the coverage of the policy so as to make it extend to losses which would not otherwise be covered. It was reasoned that, something new having been added to the policy, something additional in the way of protection must have been intended. As noted, however, the clause was not intended to give more coverage but rather was designed to reflect what had, by 1943, long been the judicial view as to what kind of evidence it takes to prove a loss within the coverage of a theft policy.

'The unmistakable trend has been toward an expansion of theft coverage to include loss from mysterious disappearance. Some policies actually include the term 'mysterious disappearance' within the definition of 'theft,' while others simply co-ordinate...