Western Fire Ins. Co. v. First Presbyterian Church

• Decision Date: 05 February 1968
• Docket Number: No. 21769,21769
• Citation: 437 P.2d 52,165 Colo. 34
• Parties: The WESTERN FIRE INSURANCE COMPANY, a Kansas Corporation, Plaintiff in Error, v. The FIRST PRESBYTERIAN CHURCH, Littleton, Colorado, Defendant in Error.
• Court: Colorado Supreme Court

Page 52

437 P.2d 52

165 Colo. 34

The WESTERN FIRE INSURANCE COMPANY, a Kansas Corporation Plaintiff in Error, v. The FIRST PRESBYTERIAN CHURCH, Littleton, Colorado Defendant in Error.

No. 21769.

Supreme Court of Colorado, En Banc.

Feb. 5, 1968.

Rehearing Denied Feb. 26, 1968.

Blunk & Johnson, Denver, for plaintiff in error.

Shoemaker & Wham, Richard Plock, Denver, for defendant in error.

McWILLIAMS, Justice.

The First Presbyterian Church of Littleton, Colorado, hereinafter referred to as the insured, filed a claim for relief against The Western Fire Insurance Company, a Kansas corporation, hereinafter referred to as the Company. The insured's claim was based on a certain contract of insurance issued the insured by the Company. Trial by jury culminated in a judgment for the insured against the Company in the sum of $21,404.83, and by writ of error the Company now seeks reversal of the judgment thus entered against it.

The central issue here to be resolved is whether the insured suffered a 'direct physical loss' within the period of coverage provided for by the insurance contract. Before summarizing the evidence adduced at the trial of this matter, reference should first be made to certain terms and provisions contained in the insurance contract between the parties.

On March 16, 1963, the Company issued a policy of insurance to the insured covering, among other things, a certain church building located in Littleton. It should be noted that the insured had carried insurance on this church building prior to March 16, 1963, and the particular policy of insurance with which we are here concerned was issued as the result of a consolidation of several policies of insurance theretofore carried by the insured on not only the church building, but also the manse and two other church buildings. In the policy issued on March 16, 1963, the value of the church building was declared to be $320,000. The policy thus issued was one claimed to be specially designed for 'public and institutional property,' and it not only contained an 'Extended Coverage Endorsement' but also contained that which was denominated by the Company as a 'Special Extended Coverage Endorsement.' As concerns coverage, the Special Extended Coverage Endorsement provided that 'in consideration of the premium for this coverage * * * THIS POLICY IS EXTENDED TO INSURE AGAINST ALL OTHER RISKS OF DIRECT PHYSICAL LOSS, EXCEPT AS HEREINAFTER PROVIDED.'

As noted above, the inception date for this policy of insurance was March 16, 1963. At the outset of the trial a part of the pre-trial order was read to the jury as being a 'stipulation' between the insured and the Company. By this stipulation the parties agreed that on March 28, 1963 the insured acting upon the orders of the Littleton Fire Department closed the church building 'because of the infiltration of gasoline in the soil under and around the building, which gasoline and vapors thereof infiltrated and contaminated the foundation and halls and rooms of the church building, making the same uninhabitable and making the use of the building dangerous.' As stated above, trial by jury resulted in a verdict in favor of the insured in the sum of $21,404.83, which sum represented the cost of remedying the infiltration and contamination problem. No complaint is here made regarding the amount of damages thus awarded. Rather it is the basic position of the Company that as a matter of law the trial court should have directed the jury to return a verdict in its favor. More specifically, the Company now contends that: (a) the insured did not suffer 'a direct physical loss' within the meaning of that phrase as such is used in the Special Extended Coverage Endorsement; or that (b) if the insured did sustain such a loss, the loss in such event did not occur Subsequent to the inception date of the policy, namely March 16, 1963.

In connection with this latter contention, at least a brief recital of certain background information established upon trial is in order. And, as we see it, the testimony concerning this phase of the case is not in any real dispute. During January and February, 1963, several persons noted a strange odor in the vault located in the basement of the church. Investigation by church officials, as well as Public Service Company employees, failed to establish with any degree of certainty the exact cause of the odor. Some thought it was a gaseous odor. Others thought it was caused by a dead rodent, or stationery ink, and so on. Nor was there anything to indicate that there was any danger of explosion connected with this odor, whatever it was. Tests to detect the presence of flammable vapors generally proved negative, though in one instance where the test did show the presence of some flammable material, the quantity thereof was said to be below the 'explosion level.' And, in any event, the odor problem was considered to have been 'solved,' at least momentarily, in mid February 1963, when a leak in a joint in a natural gas line was discovered and fixed.

Quite admittedly then, there was evidence of a strange odor in the church vault prior to March 16, 1963. In this regard it should be mentioned, however, that though the Company originally pled misrepresentations and concealment on the part of the insured, these affirmative defenses were voluntarily withdrawn by the Company at the conclusion of all of the evidence. The Company in its brief emphasizes that it does not now suggest any 'bad faith or concealment on the part of the insured.'

Rather, as indicated above, the basic contention advanced here by the Company is that the insured sustained no 'direct physical loss' after March 16, 1963. The argument, as we understand it, runs somewhat as follows:

1. this is not a 'loss of use' policy, as such, and hence the mere 'loss of use' of the church premises occasioned by the 'closing down' of the building by the fire authorities is not covered by the policy, as such does not constitute a 'direct physical loss';

2....