Doreen C. Mann v. Glens Falls Insurance Company

Glens Falls Insurance Company appeals from a judgment requiring it to pay a disputed insurance claim, plus interest, and general damages flowing from the initial refusal to pay. This diversity case was tried under Nevada law.

In 1969, the company insured Mrs. Mann’s house for $15,000. The policy was a standard-form fire policy with a “mortgage clause” making the insurance proceeds partially payable to a local bank which then held a mortgage on the property. In 1971, Mrs. Mann paid off the mortgage and the bank lost its insurable interest in the property.

Mrs. Mann subsequently sold the house for $25,000. The buyers, Mr. and Mrs. Bates, paid $2,000 cash and agreed to pay $23,000 secured by a purchase-money mortgage payable to Mrs. Mann.

The Bateses agreed orally to insure the house against fire loss and to name Mrs. Mann as loss-payable mortgagee. However, before the Bateses purchased any insurance, the house burned to the ground. At the time of the loss, Mrs. Mann’s 1969 policy had not expired.

The company’s claims adjuster estimated that the house was a total loss and that the actual damage exceeded the policy limits. The adjuster recommended payment of $15,000, the policy…