Seals, Inc. v. Tioga County Grange Mut. Ins. Co.

• Decision Date: 26 January 1987
• Citation: 519 A.2d 951,359 Pa.Super. 606
• Parties: SEALS, INC., Appellant, v. The TIOGA COUNTY GRANGE MUTUAL INSURANCE COMPANY, a/k/a Tioga Mutual Insurance Co.
• Court: Pennsylvania Superior Court

Page 951

519 A.2d 951

359 Pa.Super. 606

SEALS, INC., Appellant, v. The TIOGA COUNTY GRANGE MUTUAL INSURANCE COMPANY, a/k/a Tioga Mutual Insurance Co.

Superior Court of Pennsylvania.

Argued June 26, 1986.

Filed Dec. 16, 1986.

Reargument Denied Jan. 26, 1987.

Robert A. Eckenrode, Williamsport, for appellant.

David Mills, York, for appellee.

Before WIEAND, BECK and WATKINS, JJ.

BECK, Judge:

This is an appeal from a judgment entered on a jury's verdict for appellee-insurer in an assumpsit action to recover under a policy of fire insurance. The appeal presents the following three questions:

1. In an action by an insured-corporation under a fire insurance policy where the insurer raises the affirmative defense of arson by the President and sole shareholder of the insured, is evidence of the suicide of the President and sole shareholder ten days after the fire admissible as circumstantial evidence of arson?

2. In such an action, is evidence suggesting that ten days after the fire, the President and sole shareholder of the insured murdered his girlfriend, on whom he depended to provide his sole alibi as to his whereabouts at the time of the fire, admissible as circumstantial evidence of arson?

3. In such an action, should the trial court have granted a compulsory nonsuit at the close of the insured's evidence as to that portion of the insured's claim relating to the inventory destroyed in the fire on the ground that the insured had no insurable interest in the inventory, where the insured did not have any legal or equitable title to the inventory but depended on the proceeds from the sale of the inventory for payment of franchise fees and rent from the inventory owners and submitted evidence to show that it was co-obligated with the owners on a Note (or the obligation underlying the Note) which the owners repaid from the proceeds of inventory sales?

As to the first two of these issues, our standard or review is quite limited. A ruling on evidence will constitute reversible error only if the complaining party shows that the ruling was both erroneous and harmful to him. Bessemer Stores v. Reed Shaw Stenhouse, 344 Pa.Super. 218, 496 A.2d 762, 765 (1985); Anderson v. Hughes, 417 Pa. 87, 92, 208 A.2d 789, 791 (1965). Only if both error and prejudice are shown can we conclude that the trial court's admission of the evidence was an abuse of discretion. Bessemer, supra; Lewis v. Mellor, 259 Pa.Super. 509, 515, 393 A.2d 941, 944 (1978). On such a finding that improperly admitted evidence may have affected the verdict, the correct remedy is the grant of a new trial. Bessemer, supra; Mapp v. Dube, 330 Pa.Super. 284, 292, 479 A.2d 553, 555 (1984). See also Walasavage v. Marinelli, 334 Pa.Super. 396, 483 A.2d 509, 516 (1984).

In contrast, in reviewing the trial court's grant of a compulsory nonsuit, our inquiry is whether the plaintiff's evidence was sufficient to present a question for the jury on which a verdict for the plaintiff could have been based. Commonwealth Trust Co. v. Carnegie-Illinois Steel Co., 353 Pa. 150, 44 A.2d 594 (1945). Our review is based on the evidence of record at the time the nonsuit was entered. Francioni v. Gibsonia Truck Corp., 472 Pa. 362, 372 A.2d 736 (1977). In reviewing that evidence, we must give the plaintiff the benefit of every fact and reasonable inference arising from the evidence, resolve all conflicts in the testimony in plaintiff's favor and affirm the entry of the nonsuit only where that review leads ineluctably to the conclusion that the defendant is not liable. Woelfel v. Murphy Ford Co., 337 Pa.Super. 433, 487 A.2d 23 (1985); Agriss v. Roadway Express, Inc., 334 Pa.Super. 295, 483 A.2d 456 (1984).

Having reviewed the record and arguments of the parties in accordance with these standards, we conclude that in this case the trial court did abuse its discretion in admitting evidence of suicide and possible murder because of the low probative value coupled with the highly prejudicial character of such evidence. We, therefore, reverse the trial court's refusal of a new trial. Moreover, we also reverse the trial court's entry of a nonsuit on appellant's claim for the value of the destroyed inventory. On retrial, the question of the appellant's insurable interest should be submitted to the jury with appropriate instructions in accordance with this opinion.

I. Factual Background.

This case arose from a fire that occurred on November 21, 1982. The fire totally destroyed a retail hardware store located in Westfield, Pennsylvania. Appellant-insured, Seals, Inc. ("Seals") owned the Westfield store building. George Plank, deceased, was at all time pertinent to this matter the President and sole shareholder of Seals. Seals was the franchisor of the business conducted at the store. The franchisees, Russell and Eileen Outman, owned the store inventory. They paid their rental and franchise fees to Seals primarily out of the proceeds of the sale of the inventory. (R. 23a). The Outmans had purchased the inventory out of the proceeds of a loan from Citizens and Northern Bank of Wellsboro, Pennsylvania (the "Bank"), which was evidenced by a promissory note. Both Russell and Eileen Outman signed their names to the Note as obligors. Following their names on the Note appear the signature of George Plank and the hand-printed name of Seals. Both appear on additional obligor signature lines.

Seals insured both the store building and the inventory therein against fire loss with appellee-insurer, The Tioga County Grange Mutual Fire Insurance Co., a/k/a Tioga Mutual Insurance Company ("Tioga"). Tioga declined coverage of Seals' claim under the policy primarily because it contended that the fire was arson and George Plank was the arsonist. Tioga also contended that in any event no payment was due as to the destroyed inventory because Seals had no insurable interest therein.

On September 29, 1983, Seals instituted an action against Tioga in the Tioga Court of Common Pleas. Seals sought payment of the proceeds of the fire policy. A jury trial commenced on January 22, 1985 and ended with a verdict for Tioga on January 25, 1985. On the second day of trial, the trial court entered a compulsory nonsuit against Seals as to its claim for the value of the destroyed inventory, finding as a matter of law that Seals had no insurable interest therein. In accordance with Rule 227.1(c), Seals filed a post-trial motion seeking removal of the nonsuit within ten days after its entry. Pa.R.C.P. No. 227.1(c).

During the trial, Tioga supported its arson defense by introducing evidence of the fact that approximately ten days after the fire, George Plank committed suicide. The trial court allowed the evidence over the objection of Seals' counsel. Tioga also sought to introduce evidence that immediately prior to his own death, Plank had shot and killed his girl friend, Ms. Mann. Seals' counsel's objection to this evidence was overruled. Faced with the trial court's ruling, Seals' counsel agreed that in lieu of Tioga's submitting testimony as to the murder theory, the following stipulation would be read to the jury:

Detective Daniel O'Brien of the office of the Sheriff of Chemung County, New York is here in Court and is prepared to testify. He would testify that he conducted an investigation concerning the death of Martha Mann and George Plank, Jr., which deaths occurred December 1, 1982. He will testify that as a result of his investigation, he came to the following conclusions. (1) Miss Mann died as a result of a gunshot wound from a 30/30 rifle, and later, the same day, George Plank committed suicide by the use of the same 30/30 rifle.

(R. 88a). Counsel for Seals specifically preserved his exception to the admission of any testimony about Plank's suicide or the murder theory despite the stipulation. (R. 87a).

On February 1, 1985, Seals filed a Motion for a New Trial raising the issues set forth above. On October 23, 1985, the trial court denied Seals' motion and this timely appeal followed.

We shall consider the three issues Seals raises seriatim.

II. Evidentiary Issues.

Arson by an insured under a policy of fire insurance is an affirmative defense to the insurer's obligations under the policy. As such, the burden is on the insurer to prove by a fair preponderance of the evidence that the fire was caused by arson. Sperrazza v. Cambridge Mutual Fire Insur. Co., 313 Pa.Super. 60, 459 A.2d 409 (1983); Greenberg v. Aetna Insurance Company, 427 Pa. 494, 235 A.2d 582 (1962). In this case, Tioga sought to sustain this burden by offering evidence from which it hoped that the jury would infer that Plank had killed himself and Ms. Mann because he was aware that he was going to be prosecuted for the burning of the Westfield store. Tioga sought to lead the jury to conclude that Plank's suicide resulted from fear and guilty conscience. Further, Tioga wanted the jury to infer that Plank had killed Ms. Mann because his alibi for the night of the fire was that he was with Ms. Mann at his home in New York. Tioga hoped that the jury would believe that Plank was lying about his whereabouts that night and since he feared Ms. Mann would not support his alibi, he killed her. Thus, Tioga sought to prove arson by this and other circumstantial evidence.

At the outset, we should note that it is perfectly proper for circumstantial evidence to support a jury's finding of arson by an insured. The District Court for the Eastern District of Pennsylvania has correctly described the evidence to be considered by a jury in such cases:

[I]n a civil matter to determine whether a reasonable inference exists that an insured is responsible for the fire which damaged the insured property, a jury should consider the combination of evidence of: (1) an incendiary fire; (2) a motive by the insured to destroy the property and (3) circumstantial evidence connecting the insured to the fire.

Mele v. All-Star Insurance Company, 453 F.Supp. 1338,...