State Auto. and Cas. Underwriters v. Johnson

• Decision Date: 16 February 1989
• Docket Number: No. 15723,15723
• Citation: 766 S.W.2d 113
• Parties: STATE AUTOMOBILE AND CASUALTY UNDERWRITERS, Plaintiff, v. Calvin C. JOHNSON and Patty Rose Johnson, Defendants-Appellants, and Rudi Basecke and Loretta Basecke, Defendants-Respondents.
• Court: Missouri Court of Appeals

Page 113

766 S.W.2d 113

STATE AUTOMOBILE AND CASUALTY UNDERWRITERS, Plaintiff, v. Calvin C. JOHNSON and Patty Rose Johnson, Defendants-Appellants and Rudi Basecke and Loretta Basecke, Defendants-Respondents.

No. 15723.

Missouri Court of Appeals,

Southern District,

Division One.

Feb. 16, 1989.

J.D. Baker, Baker & Dull, Osceola, for defendants-appellants.

Craig Oliver, Mark A. Powell, Miller & Sanford, Springfield, for defendants-respondents.

CROW, Presiding Judge.

The primary dispute in this case is a quarrel between Calvin C. Johnson ("Calvin") and Patty Rose Johnson ("Patty") on the one hand, and Rudi Ewing Basecke ("Rudi") and Loretta Basecke ("Loretta") on the other, over proceeds of insurance policy number CC-20429 ("the policy") issued by State Automobile and Casualty Underwriters ("State Automobile"). The policy, among other coverages, insured a building against loss by fire in the amount of $225,000, and insured the furniture and fixtures therein against loss by fire in the amount of $25,000.

A fire destroyed the building and its contents. At the time that occurred ownership of the land on which the building sat was vested in "Calvin ... and Patty ..., husband and wife by the entirety, and Rudi ... and Loretta ..., husband and wife by the entirety." The named insureds on the policy, however, were Calvin and Patty, alone.

Calvin and Patty asserted they were entitled to all insurance proceeds. State Automobile commenced the instant action by a petition praying that the Johnsons and the Baseckes be required to interplead so the trial court could determine entitlement to the proceeds. A nonjury trial produced a judgment awarding the Baseckes part of the proceeds and resolving other issues between the Johnsons and the Baseckes. The Johnsons appeal.

The building was erected in 1947 by W.O. Basecke and his wife, Edna, who, at that time, owned the land on which it was built. The building housed Stockton Cheese Company, founded by W.O. and Edna that year. They owned and operated the business until 1965, during which time they put additions on the building and purchased all equipment used in the business.

Patty and Rudi are offspring of W.O. and Edna. Rudi, so he testified, worked at Stockton Cheese Company practically all his life. Calvin, according to Edna, began working at Stockton Cheese Company in 1950.

In 1965 W.O. Basecke retired, and he and Edna turned the operation of the business over to Rudi and Calvin, who ran it thereafter as a partnership on a "fifty/fifty basis." W.O. and Edna, however, retained ownership of the property.

This arrangement persisted until 1976 when W.O. and Edna, as grantors, executed a warranty deed conveying the property to the four grantees set forth in the second sentence of the second paragraph of this opinion. Simultaneously therewith W.O. and Edna gave those grantees the equipment and fixtures used in the business.

The partnership continued manufacturing and selling cheese until 1978. In that year the partnership ceased manufacturing cheese but continued to operate a cheese store on the premises.

Patty and Calvin testified that in March, 1979, they began manufacturing cheese on their own, calling the activity "Stockton Cheese Company, Manufacturing Division" to differentiate it from the cheese store. Asked how long he and Patty made cheese, Calvin replied, "A short time."

On January 31, 1981, Calvin and Patty, as first parties, and Rudi and Loretta, as second parties, signed a contract providing:

"WHEREAS the parties hereto own the Stockton Cheese Company and inventory therein, it is agreed that the parties hereto will inventory the contents of the building, and when the inventory is completed, first parties agree to buy the interest of second parties in the cheese sales division, except cheese and products that are not salable and first parties do not want; which cheese and products second parties agree to remove and dispose of.

It is further agreed that first parties shall have the building rent free for a period of one (1) year, from the 31st day of January, 1981, to the 31st day of January, 1982, with option to renew the lease for another year upon request of first parties, at a reasonable rental.

Should first parties lease the cheese manufacturing equipment during the term of this lease, second parties are to receive one-half ( 1/2) of the rental received therefrom.

It is further agreed that all major repairs on the building and equipment shall be paid by first and second parties half and half, and no major repairs shall be made without the consent of all parties to this contract. All minor repairs shall be at the expense of first parties.

Taxes on the building and equipment shall be paid by first and second parties half and half.

It is agreed that insurance premiums have been paid on the building up to about the middle of the year and thereafter first parties will pay insurance premiums during the term of their rental and obtain liability policy in connection therewith.

First parties, during the term of their rental, shall pay the electric bills, water bills and heating bills.

It is further agreed that after all standing bills and notes have been paid by Stockton Cheese Company, the balance of the account in the Sac River Valley Bank will be divided between first parties and second parties half and half; and that the remaining trucks will be advertised and sold to the highest bidder and the money obtained therefrom will be divided between first parties and second parties half and half."

In regard to the trucks referred to in the contract, Rudi testified the partnership owned trucks for collecting milk used in manufacturing cheese.

Fire insurance on the building had been written by State Automobile as far back as June 1, 1979. Coverage was provided for 12-month periods. For the period from June 1, 1979, to June 1, 1980, the policy insured the building in the amount of $140,000, and insured the furniture and fixtures in the amount of $50,000. The policy also provided $5,000 coverage for the cheese inventory and $10,000 coverage for loss of earnings. The named insureds were: "Calvin Johnson & Rudi Basecke DBA Stockton Cheese Co. Sales Division." Coverage in the same amounts was provided for the same named insureds for the ensuing 12-month period, June 1, 1980, to June 1, 1981.

For the period from June 1, 1981, to June 1, 1982, however, the named insureds on the policy were changed to: "Calvin & Patty Rose Johnson DBA Stockton Cheese Plant, Mfg. Div.," and the amount of coverage on the furniture and fixtures was decreased to $25,000. This was the first 12-month period following the contract of January 31, 1981, quoted above. All other coverages remained unchanged.

Thereafter, at a time not revealed by the evidence, the coverage on the cheese inventory was increased to $30,000. The policy stayed that way until June 1, 1984, when the coverage on the building was increased to $225,000. No further changes were made in the policy, and it was in force January 6 and 7, 1986, when the building and its contents were destroyed by fire.

During the pendency of this case in the trial court the parties stipulated that neither Rudi nor Loretta claimed any of the $30,000 coverage on the cheese inventory or any of the $10,000 coverage for loss of earnings, and that the full amounts of those respective coverages could be paid by State Automobile to Calvin and Patty. That was done, narrowing the dispute to the $225,000 coverage on the building and the $25,000 coverage on the furniture and fixtures. The sum of those coverages--$250,000--was paid into the registry of the trial court by State Automobile July 10, 1987.

The trial court ordered that $5,000 of the $250,000 be set aside pending a ruling on State Automobile's request for attorney fees. Noting that Rudi and Loretta, in their pleadings, claimed only half the coverage on the building and half the coverage on the furniture and fixtures, the trial court ordered that $122,500 (half the $245,000 available for distribution) be disbursed to Calvin, Patty and their lawyer. The remaining $122,500, together with $5,000 set aside pending determination of State Automobile's entitlement to attorney fees, was placed at interest by the circuit clerk.

Calvin and Patty, in their pleadings, sought not only the funds remaining on deposit, but also (1) partition of the land where the building had sat, (2) partition of a multitude of items of personal property in which Calvin and Patty allegedly owned an undivided one-half interest and Rudi and Loretta allegedly owned an undivided one-half interest, and (3) judgment against Rudi and Loretta for $2,801.37 representing half the amount allegedly paid by Calvin and Patty on a debt to Sac River Valley Bank incurred by Calvin, Patty, Rudi and Loretta, and half the amount paid by Calvin and Patty for repairs on a gasoline service station allegedly operated by Calvin, Patty, Rudi and Loretta.

Rudi and Loretta, in their pleadings, sought not only the insurance proceeds held by the trial court, but also a dissolution of the partnership between Calvin and Rudi and an accounting of "all partnership matters in controversy."

Rudi testified that although he and Calvin operated Stockton Cheese Company as co-owners beginning in 1965, dividing assets and liabilities equally, they never had a written agreement until the contract of January 31, 1981. Rudi explained that the property deeded to him, Loretta, Calvin and Patty by W.O. and Edna Basecke in 1976 included not only the cheese factory but also a restaurant and a gasoline service station. According to Rudi, he and Calvin subsequently purchased equipment for the cheese factory, paying for it by "a partnership check."

Asked why the partnership ceased making cheese in 1978, Rudi answered that the milk producers in Cedar County from whom the partnership had traditionally acquired milk had dropped out of business, compelling the...