Stahlberg v. Travelers Indem. Co.

• Decision Date: 30 May 1978
• Docket Number: No. 39521,39521
• Citation: 568 S.W.2d 79
• Parties: Harry O. STAHLBERG, Appellant, v. The TRAVELERS INDEMNITY COMPANY, Respondent. . Louis District,Division One
• Court: Missouri Court of Appeals

Page 79

568 S.W.2d 79

Harry O. STAHLBERG, Appellant, v. The TRAVELERS INDEMNITY COMPANY, Respondent.

No. 39521.

Missouri Court of Appeals,St. Louis District,Division One.

May 30, 1978.

John F. Sutherland, IV, Clayton, for appellant.

Evans & Dixon, Ralph C. Kleinschmidt, St. Louis, for respondent.

McMILLIAN, Judge.

Appellant Harry O. Stahlberg appeals from a judgment entered in the circuit court of St. Louis County in favor of respondent, The Travelers Indemnity Company. For reversal appellant argues the trial court erred in (1) construing "total loss" to mean actual total physical loss, (2) finding respondent was only liable for partial loss, and (3) finding the terms of the insurance policy to be controlling and the valued policy statute inapplicable. For the reasons discussed below, we reverse and remand the judgment with directions to the trial court to enter a judgment not inconsistent with this opinion.

This cause was submitted to the trial court upon a stipulation of facts, exhibits and briefs of counsel. The parties stipulated that appellant is a resident of St. Louis County, Missouri; respondent is a Connecticut corporation authorized and qualified to conduct the business of insurance in Missouri; appellant is the owner of property (a single-family residence) located at 3319 Calvert Avenue in the village of Breckenridge Hills, Missouri; respondent (insurer) issued a policy of fire insurance, No. 2220239, to appellant (insured), effective March 17, 1973 to March 17, 1974, in the amount of $9000 (the policy was admitted into evidence, Exhibit A); on April 21, 1973, appellant's property was partially destroyed by fire; on May 30, 1973, the building commissioner of Breckenridge Hills advised appellant that his building would have to be torn down and removed pursuant to village ordinance # 321, which provides that a building which is 60% destroyed cannot be repaired ¹ (the letter and ordinance were admitted into evidence as Exhibits B and C); appellant's building was torn down after May 30, 1973; appellant made a demand upon respondent for $9,000, the face value of the insurance policy; respondent offered appellant $5,810.12, the estimated cost, less depreciation, to repair and replace appellant's building with material of like kind and quality. In order to expeditiously resolve the controversy, appellant agreed to accept the offered sum of $5,810.12 without prejudice to either party. Appellant also agreed to withdraw all claims against respondent except for the difference between the amount paid by respondent and the face amount of the policy, $3,189.88, which is the amount in dispute in the present action. Respondent also agreed to withdraw all defenses except with respect to the amount due under the terms of the policy.

The trial court entered its judgment in favor of respondent. The trial court construed "total loss" to mean "actual total physical loss wherein any remaining portion is not subject to use as a basis for reconstruction" and concluded appellant did not suffer a total loss, making Missouri's valued policy statute, § 379.140 RSMo 1969, inapplicable. The trial court noted that the parties stipulated the building was partially damaged by fire and that the prohibition against reconstruction was apparently based upon the building's status as a nonconforming use, ² not because the remaining portion was not usable in reconstruction. The trial court also found the insurance policy to be a matter of contract and the exclusionary provision limiting the insurer's liability to be enforceable. The trial court held that respondent had discharged its obligation and responsibility under the insurance policy by paying to appellant the sum of $5,810.12 and that respondent was not responsible for any additional loss alleged to have occurred by reason of the prohibition against reconstruction and the demolition of the remaining portion of the building.

For reversal appellant argues that he has suffered a constructive total loss of his building as the result of the fire damage and the municipal building commissioner's order to tear down the remaining portion. Because the loss was total, appellant argues the valued policy statute is applicable, the policy's exclusionary provision is void and he is therefore entitled to recover the balance of the face value of the policy, $3,189.88. Respondent argues that the valued policy statute is not part of the cause and the real question is whether the policy is to be enforced according to its terms including the exclusionary provision. Respondent argues that the trial court correctly held that appellant was entitled to recover only for partial loss because the parties had agreed to exclude any further loss occasioned by an ordinance which prohibited repairs and no public policy or statute prohibits such an agreement.

We note initially that the decree or judgment of the trial court will be sustained by an appellate court unless there is no substantial evidence to support it, unless it is against the weight of the evidence, unless it erroneously declares the law, or unless it erroneously applies the law. Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976). We hold that the trial court has erroneously declared and applied the law in the present case and accordingly reverse the judgment. As discussed above, appellant argues he has sustained a total loss, advancing the theory of constructive total loss, and is therefore entitled to recover the full face value, less depreciation, of the insurance policy under Missouri's valued policy statute, § 379.140 RSMo 1969. ³ Because appellant stipulated to the partial destruction by fire of his building, the question presented is whether appellant nevertheless suffered a total loss within the meaning of the policy and the valued policy statute when the building was subsequently demolished pursuant to municipal order.

First, we disagree with the trial court's definition of total loss as " actual total physical loss wherein any remaining portion is not subject to use as a basis for reconstruction." ⁴ The rule in Missouri has been long settled that the words "total loss," as used in its statute, mean

". . . 'that the building has lost its identity and specific character as a building, and become so far disintegrated that it cannot be properly designated as a building, although some part of it may remain standing'. . . ."

St. Paul Fire & Marine Ins. Co. v. Eldracher, 33 F.2d 675, 681 (8th Cir. 1929) citing O'Keefe v. Liverpool & L. & G. Ins. Co., 140 Mo. 558, 41 S.W. 922, 923 (1897) (discussion of § 5897 RSMo 1889, the valued policy statute then in effect). See also Lux v. Milwaukee Mechanics' Ins. Co., 221 Mo.App. 999, 295 S.W. 847 (1927); Lowry v. Fidelity-Phenix Fire Ins. Co., 219 Mo.App. 121, 272 S.W. 79 (1925); Stevens v. Norwich Union Fire Ins. Co., 120 Mo.App. 88, 96 S.W. 684 (1906).

Similarly, under the doctrine of constructive total loss, there is a total loss by fire if the building is so damaged that no substantial remnant remains that a prudent uninsured person would use on rebuilding. Fidelity & Guaranty Ins. Corp. v. Mondzelewski, 49 Del. 306, 115 A.2d 697, 699 (1955); see also Hart v. North British & Mercantile Ins. Co., 182 La. 551, 162 So. 177, 179 (1935), citing Wallerstein v. Ins. Co., 44 N.Y. 204, 4 Am.Rep. 664 (comparison between actual total physical loss or demolition and annihilation, and constructive total loss or a destruction of all value to the owner); Monteleone v. Royal Ins. Co., 47 La.Ann. 1563, 18 So. 472 (1895). An extension of the doctrine of constructive total loss is at issue in the present case. The general rule is that if repair or reconstruction of a building damaged by fire is prohibited by municipal authorities acting under proper authority of law, recovery may be had by the insured as for a total loss; this is a total fire loss by operation of law. E. g., St. Paul Fire & Marine Ins. Co. v. Eldracher, 33 F.2d 675, 682 (8th Cir. 1929); Lux v. Milwaukee Mechanics' Ins. Co., supra (demolition order); 6 J.A. Appleman & J. Appleman, Insurance Law and Practice, §§ 3821-22 (1972, Supp.1978); 15 G. Couch, Insurance § 54.163-165 (2d ed. R A Anderson 1966); 44 Am.Jur.2d, Insurance, § 1631 (1969); 45 C.J.S. Insurance § 913 (1946); Annot., 90 A.L.R.2d 790, 792-95 (1963). This rule is also followed in other jurisdictions, especially those with valued policy statutes. See, e. g., Ollie v. Security Mut. Underwriters, 235 F.2d 932 (4th Cir. 1956) (South Carolina); City of New York Fire Ins. Co. v. Chapman, 76 F.2d 76 (7th Cir. 1935) (Wisconsin, valued policy statute); Rutherford v. Royal Ins. Co., 12 F.2d 880 (4th Cir. 1926) (North Carolina); Fidelity & Guaranty Ins. Corp. v. Mondzelewski, supra (valued policy statute); Hart v. North British & Mercantile Ins. Co., supra (valued policy statute); Palatine Ins. Co. v. Nunn, 99 Miss. 493, 55 So. 44 (1911) (valued policy statute); Meccage v. Spartan Ins. Co., 156 Mont. 135, 477 P.2d 115 (1970) (valued policy statute); Dinneen v. American Ins. Co., 98 Neb. 97, 152 N.W. 307 (1915) (valued policy statute); Maryland Cas. Co. v. Frank, 85 Nev. 209, 452 P.2d 919 (1969); Firemen's Ins. Co. v. Houle, 96 N.H. 30, 69 A.2d 696 (1949); Scanlan v. Home Ins. Co., 79 S.W.2d 186 (Tex.Civ.App.1935) (valued policy statute).

After reviewing these authorities, we conclude that appellant has suffered a total loss in accordance with the general rule. Appellant's building was partially destroyed by fire; he was then prohibited by law from repairing or restoring it and was ordered to demolish the remaining structure pursuant to municipal ordinance. By demolishing his building in compliance with the municipal order, appellant suffered a total loss.

In addition, we find the demolition order is in itself sufficient to support a finding of total loss. ⁵ For example, in Lux the court stated that a demolition order may be fairly and reasonably construed to mean that the...