Moreland v. State Farm Fire and Cas. Co.

• Decision Date: 08 December 1983
• Docket Number: 12957,Nos. 12946,s. 12946
• Parties: Inas MORELAND, Appellant, v. STATE FARM FIRE AND CASUALTY COMPANY, Respondent. Inas MORELAND, Respondent, v. STATE FARM FIRE AND CASUALTY COMPANY, Appellant.
• Court: Missouri Court of Appeals

Page 556

662 S.W.2d 556

Inas MORELAND, Appellant, v. STATE FARM FIRE AND CASUALTY COMPANY, Respondent.

Inas MORELAND, Respondent, v. STATE FARM FIRE AND CASUALTY COMPANY, Appellant.

Nos. 12946, 12957.

Missouri Court of Appeals,

Southern District,

Division One.

Dec. 8, 1983.

Robert S. Wiley, Crane, Joe R. Ellis, Cassville, for Inas Moreland.

Bussell, Hough, O'Neal, Crouch & Hall, E. Mitchell Hough, Dale L. Davis, Springfield, for State Farm Fire and Cas. Co.

CROW, Judge.

These consolidated appeals come from a two-count suit by Inas Moreland (plaintiff) against State Farm Fire and Casualty Company (defendant) on a fire insurance policy. In Count I, plaintiff sought judgment reforming the policy so it would state the legal description of the location of a dwelling allegedly destroyed by fire during the policy period. In Count II, plaintiff sought $25,000 for loss of the dwelling, $12,500 for loss of unscheduled personal property therein, and $5,000 for additional living expense incurred because of the fire, together with a penalty of $4,250 for defendant's alleged vexatious refusal to pay, an attorney's fee of $6,375, interest and costs.

Count I was tried by the court ¹ without a jury, and judgment was entered May 5, 1980, reforming the policy as prayed. An appeal by defendant from that judgment was dismissed as premature because Count II, at that time, remained untried. ² Thereafter, a motion by defendant for summary judgment on Count II was granted, and judgment was entered September 27, 1982, in favor of defendant on that count. ³

Now, defendant appeals anew from the judgment on Count I, and plaintiff appeals from the judgment on Count II.

All of the testimony in the transcript was presented in the trial of Count I. No testimony was heard in adjudicating Count II.

At all times pertinent to the issues before us, plaintiff and her husband, Arvis Moreland, owned land (as tenants by the entirety) in the southeast quarter of the southeast quarter of section 26, township 25, range 25, and in the northeast quarter of the northeast quarter of section 35, same township and range, all in Barry County. The land in section 26 lay north of, and contiguous to, the land in section 35. There were 57 acres in all, 40 of which were in section 35. The dwelling in controversy was on the acreage in section 26.

Plaintiff had owned the 57 acres by herself before marrying Arvis. ⁴ The land had been acquired piecemeal, from different grantors at different times.

On June 12, 1975, plaintiff was residing in the subject dwelling. According to plaintiff, she and Arvis were "separated" at that time, having been so for "seven or eight months." Plaintiff recalled she had "already filed for a dissolution," and the division of property was "already settled on." She was to keep the land she had owned before marrying Arvis.

That morning (June 12, 1975), plaintiff, unaccompanied, went to the office of Richard E. Henderson in Aurora. Henderson was a self-described "independent contractor agent" for defendant.

Plaintiff told Henderson she "was about ready for some insurance" on the dwelling, as she had just redecorated it and was adding a room.

Henderson testified he did not know plaintiff or Arvis before June 12, 1975, and did not know where they lived. When plaintiff told Henderson where the dwelling was, he advised her he would have to see it before he could quote a rate. He arranged to meet her at the dwelling later that day.

During the afternoon of June 12, Henderson, as planned, went to the dwelling, meeting plaintiff there. Henderson inspected the dwelling, took pictures and made measurements. He told plaintiff he would insure the dwelling for $25,000, and prepared an application for insurance in that amount. ⁵

Henderson placed plaintiff's name, alone, on the application. There was a conflict in the testimony as to why.

Plaintiff testified that Henderson "never asked me one word about the title." Plaintiff recalled telling Henderson that she and her husband were separated but not divorced, and that she had the property before the marriage. According to plaintiff, she explained to Henderson that the property would be hers later, "when the divorce was finished up." Plaintiff testified she told Henderson she wanted the insurance in her name even though her husband's name was on the property, because "he was signing that back to me along with some other or more stuff."

Henderson testified he asked plaintiff how the property was titled and she said it was in her name. Henderson recalled plaintiff saying "something about her separation and divorce but that her husband didn't have any interest in the property and it was hers." Henderson was not sure whether plaintiff said the property was hers before the marriage. According to Henderson, plaintiff did not refer to her husband by name.

On the application, Henderson showed the location of the dwelling as 57 acres in the "N 1/4 of NE 1/4" of section 35, township 25, range 25 in Barry County. There was also a conflict in the testimony as to how this occurred.

Plaintiff testified she told Henderson she did not know what section and township the property was in, that it could be section 35 or section 26, and she "didn't have no papers to show because I wasn't looking to insure it that day." Plaintiff quoted Henderson as saying it made no difference because he knew where the dwelling was located. Plaintiff denied having the legal description written on a paper in her purse.

Henderson testified plaintiff supplied the description he wrote on the application, that she had it written on a paper "like an old book they used in country stores that had a carbon on the back, a sales book." According to Henderson, plaintiff had this paper in her purse. Henderson admitted he was unfamiliar with the ranges and sections in the area and did not check the accuracy of the description, even though he could have. He denied telling plaintiff it did not matter whether the description was correct.

After Henderson finished preparing the application, plaintiff signed it and gave Henderson a check for the premium ($115) signed "Arvis Moreland By Inas Moreland." Henderson issued plaintiff a "binder" verifying coverage.

Defendant thereafter issued the policy in question, bearing a "countersignature date" of June 27, 1975, an inception date of June 12, 1975, and an expiration date of June 12, 1976. The policy showed the dwelling was located on "57 acres in the N 1/4 of NE 1/4" of section 35, township 25, range 25 in Barry County. Plaintiff, alone, was shown as the named insured.

On August 26, 1975, the dwelling was destroyed by fire.

Plaintiff thereafter submitted a proof of loss, which defendant rejected. Defendant's reasons for rejection included, among others, that plaintiff's statements as to ownership and location of the dwelling were "false and fraudulent," and were "highly material" to defendant's willingness to issue the policy. Defendant asserted the policy would not have been issued "had the correct information been available to the company." Defendant declared the policy void "from the beginning," and tendered back the premium, which plaintiff refused.

This suit followed.

* * *

Defendant's appeal (number 12957)

In deciding Count I, the trial court found that plaintiff gave Henderson the legal description shown on the application and the policy, that there were never any buildings on the land in section 35, and that the land in that section was virtually landlocked.

The court further found that when Henderson asked plaintiff how the property was titled, plaintiff informed Henderson that the property was in her name and that her husband had no interest in it. The court also found that Henderson made inquiry into plaintiff's marital status, and that he thereafter accepted the premium without making any further investigation.

The court concluded that the evidence failed to establish that plaintiff willfully provided an erroneous property description or that she willfully misrepresented her ownership interest in the property with the intent to defraud defendant. Any such conclusion, said the court, was overcome by the evidence that clearly established both plaintiff and Henderson were standing in the house that was in fact intended to be insured.

The judgment on Count I reformed the policy to show that the dwelling was located on 57 acres in the northeast quarter of the northeast quarter of section 35, township 25, range 25, and the southeast quarter of the southeast quarter of section 26, same township and range, in Barry County.

Defendant, seeking to overturn that judgment, briefs seven points. Before dealing with them, some observations about the remedy of reformation are helpful.

Equity will reform an instrument which, through mutual mistake of the parties, does not accurately set forth the terms of the agreement actually made, or which does not incorporate the true prior intentions of the parties. King v. Riley, 498 S.W.2d 564, 566 (Mo.1973). A mistake affording ground for the relief of reformation must be mutual and common to both parties to the instrument; it must appear that both have done what neither intended, and the mutual mistake, in order to justify granting the relief of reformation, must be established by clear and convincing evidence. J.E. Hathman, Inc. v. Sigma Alpha Epsilon Club, 491 S.W.2d 261, 267-68 (Mo. banc 1973); Allan v. Allan, 364 S.W.2d 578, 581 (Mo.1963).

Here, the trial court found that plaintiff and defendant intended the policy to cover the dwelling that burned August 26, 1975--the same dwelling Henderson had inspected, photographed and measured June 12, 1975. The evidence permits no other inference.

Plaintiff directed Henderson to that dwelling on June 12, 1975, met him there, and showed him through. He noted certain characteristics of the dwelling, including its dimensions, its partial second story, and the fact that it had been remodeled and had...