G. M. Battery & Boat Company v. L.K.N. Corporation

747 S.W.2d 624 (1988)

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Nature of the Case

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Facts

LKN (D) leased a commercial building from P for a term of two years commencing March 1, 1982, at a rental of $1,500 per month. The lease granted the lessee an option to purchase the property during the term for $145,000 with a credit on the purchase price of one-half of the rental paid during the second year. LKN (D) also agreed to maintain at its expense throughout the term an all-hazard insurance policy in the amount of $75,000.00 payable to and acceptable to P. LKN (D) agreed to deliver to the landlord a certificate of the insuring company certifying that such insurance is in full force and effect. LKN (D) did not obtain an insurance policy that complied with the requirements of the lease. It purchased a policy from St. Paul (P) effective June 1, 1983, covering the building on the leased premises for $125,000 and the contents for $70,000. P was not named as a loss payee but Mark Twain State Bank, which had lent money secured by inventory, was so named. The building and contents were totally destroyed by fire. P collected $75,000 on a policy that it had obtained on the building from an insurer other than St. Paul (D). St. Paul (D) denied liability for any part of the building loss, claiming that LKN (D) had no insurable interest in the building. It admitted liability for the contents coverage. The trial court entered summary judgment for P against LKN (D) for $75,000 for a failure to provide insurance and for LKN (D) against St. Paul (D for $125,000, this being the entire building coverage under its policy. St. Paul (D) appealed, but LKN (D) did not. The court of appeals reversed, finding that LKN (D) did not have an insurable interest in the building. This appeal resulted.