                                    ___________

                                    No. 96-1082
                                    ___________

Ronald Gidden,                          *
                                        *
              Plaintiff-Appellant,      *
                                        *    Appeal from the United States
     v.                                 *    District Court for the
                                        *    Eastern District of Missouri.
State Farm Fire & Casualty              *
Company,                                *           [UNPUBLISHED]
                                        *
              Defendant-Appellee.       *

                                    ___________

                     Submitted:     September 11, 1996

                          Filed:    October 11, 1996
                                    ___________

Before MAGILL, FLOYD R. GIBSON, and LAY, Circuit Judges.

                                    ___________

PER CURIAM.


     Ron Gidden initiated this action to recover on his homeowners
insurance policy, issued by State Farm Fire & Casualty Company ("State
Farm"), when State Farm refused to compensate Gidden after a July 1993 fire
destroyed his home.      State Farm filed a counterclaim seeking a money
judgment against Gidden for the balance due on two promissory notes
assigned to State Farm.


     A jury returned a verdict in favor of State Farm both as to Gidden's
claims and State Farm's counterclaim.       The court1 entered judgment in State
Farm's favor pursuant to the jury verdict and denied Gidden's subsequent
new trial motion.    Gidden appeals,




     1
      The Honorable David D. Noce, United States Magistrate Judge
for the Eastern District of Missouri, tried the case by consent of
the parties under 28 U.S.C. § 636(c)(3).
challenging certain jury instructions and special interrogatories, and the
court's allowance of the hearsay testimony of Michael Walton.     We affirm.


FACTS


        Before 1990, various fires occurred on the property of Ron Gidden,
including a June 1989 arson fire that destroyed Gidden's house.       After
rebuilding, Gidden had applied for but was denied homeowners insurance by
several companies.   One insurance company noted the 1989 arson fire as the
reason it rejected Gidden's insurance application.   Gidden then applied to
State Farm for insurance, but did not disclose the 1989 fire in his
application.    State Farm insured Gidden's home.


        In 1991 or 1992 Gidden brought an insurance claim under the policy
for storm damage to his home.    State Farm paid the claim.


        In February 1993, Ron Gidden's brother, Rick Gidden, along with
Rick's family, moved into Ron's home.     In July 1993, fire destroyed Ron's
home once again.   At the time of the 1993 fire, nine people were living in
the house; including, among others, Ron and his brother Rick's family.
Rick also kept his pet parrot in the house.


        State Farm refused to cover the loss.   Ron sued in state court and
State Farm timely removed the action to federal district court.   It claimed
no duty to pay on the policy because (1) the fire was intentionally set by
or at the direction of Ron, (2) an insured misrepresented or concealed
material facts after the fire, and (3) Ron made material misrepresentations
when he applied for the




                                    -2-
policy.2


     At trial, the jury heard undisputed evidence that the 1993 fire
resulted from arson.     The jury also learned of the prior fires on the
property, including the June 1989 arson fire that destroyed Ron's house but
which Ron had failed to disclose to State Farm.    The jury heard evidence
that Ron had received $108,500 on his insurance claim following the 1989
fire, rebuilt the new house for $61,000, and then claimed a $267,000 loss
after the 1993 fire.   State Farm also presented evidence that Ron acquired
a second mortgage on the house seven months before the 1993 fire, and that
Ron's monthly household income was $2400 at the time of the fire while his
monthly expenses were over $3700.    State Farm established that it would
have rejected Ron's application had Ron properly reported the June 1989
arson fire.3


     Evidence was also adduced that Rick and Ron had lived together
several times as adults; that Rick helped Ron pay for the property; that
Rick and his family had been living in the house for over a five-month
period before the fire; that Rick and his wife were unemployed when they
moved in; that Ron told the fire marshal that




          2
       State Farm also filed a counterclaim seeking a judgment
against Ron for the balance due on two promissory notes and deeds
of trust assigned to State Farm by two of Ron’s creditors.
      3
      The evidence showed that all nine occupants were away from
the house the night of the 1993 fire.      Rick and his wife were
camping the weekend of the fire, and had taken their pet parrot
with them. Rick testified that the parrot would not eat if left in
the house, but the jury learned that Rick had recently left the
bird alone in the house over the three-day 4th of July weekend.
Ron sent his two daughters to his former wife's house for the
weekend. Packed in their suitcases were keepsakes, including photo
albums and their mother's death certificate. The jury learned that
Ron later asked his former wife not to disclose that she had seen
these items in the suitcases. Evidence was also adduced that after
the fire one of Ron's former wives entered a shed behind the house
and found a box, previously kept in the house, containing titles,
insurance papers, birth certificates and school papers.


                                    -3-
Rick's daughter was a permanent resident; that Rick's name had been on the
property previously; and that Rick repeatedly referred to the property as
"theirs."    Rick also claimed he owned the trailer behind the house and
considered the occupants his tenants.


INSTRUCTIONS


     Ron argues that Instruction No. 9 was not supported by the evidence
and improperly defined "resident."4    We note at the outset that while Ron
objected to Instruction No. 9 as not supported by substantial evidence, he
did not otherwise object to the substance of the instruction and did not
provide an alternative.   Trial Tr., vol. IV, at 6-8.    Where a party does
not distinctly object to an instruction pursuant to Rule 51 of the Federal
Rules of Civil Procedure, we review only for plain error.5    See Kostelec
v. State Farm Fire & Casualty Co., 64 F.3d 1220, 1226-27 (8th Cir. 1995);
Norton v. Carmark, Inc., 20 F.3d 330, 335-36 (8th Cir. 1994).


     The facts presented at trial support a finding that Rick was




     4
      Instruction No. 9 defines "resident of plaintiff's household"
as

     one of the persons who live together as a family with the
     plaintiff in a closely knit group, whether or not related
     by blood, where the members of the group deal with each
     other informally and direct their attention and energies
     to achieving common goals and interests, and who intends
     to remain a member of plaintiff's household for an
     indefinite period of time . . . . A number of people can
     live together in one location and be members of separate
     households, and not of the same household, if their lives
     are substantially independent of one another or if their
     common abode is intended to be only a temporary
     arrangement.
         5
         An error is "plain" where it is obvious or otherwise
seriously affects the fairness, integrity or public reputation of
the judicial proceedings, or where the error almost surely affected
the outcome of the case. Champagne v. United States, 40 F.3d 946,
947 (8th Cir. 1994).

                                      -4-
a "resident" of Ron's household as defined by the instruction.                The policy
defines "insured" as a "resident" but does not define "resident."                      The
question of residence is a question of fact.            Countryside Casualty Co. v.
McCormick, 722 S.W.2d 655, 658 (Mo. Ct. App. 1987).                  Under Missouri law,
the district court properly submitted the issue of Rick's residency to the
jury.    See id. at 658-59 (finding child was "resident" of her father's home
where she visited regularly, had her own wardrobe, personal belongings and
bedroom, and where they dealt with each other informally).                   We find the
district court did not err in giving Instruction No. 9.


        Ron also challenges Jury Instruction No. 10.           That instruction lists
State Farm's affirmative defenses, including Ron's intentional concealment
of material information upon applying to State Farm for insurance.                      At
trial, Ron objected to the instruction only on the basis that State Farm
failed to present evidence to support it, and he offered no alternative
instruction.       Trial   Tr.,   vol.   IV,   at   8-10.      Ron    now   contends   the
instruction was erroneous because State Farm previously paid a loss to Ron
for     storm   damage   and   because   the   policy    did    not     incorporate    the
application.


        Given Ron's failure to preserve the issue now raised on appeal and
the absence of any outcome-determinative error or error seriously affecting
the fairness of the trial, Ron's argument fails.            See Champagne v. United
States, 40 F.3d 946, 947 (8th Cir. 1994) (plain error standard).


        Ron also contests Instruction No. 11.           Instruction No. 11 advises
that Ron cannot recover if State Farm proved that Ron, in applying to State
Farm for insurance, intentionally concealed a coverable loss within three
years prior to the application, without which concealment State Farm would
not have issued the policy to Ron.        While Ron does not dispute that State
Farm proved his application misrepresentation was false and material, he
maintains




                                         -5-
that the instruction is erroneous as it fails to contain every element of
fraud.       We reject this contention.


     The policy here explicitly declares that State Farm "insure[s] [Ron
Gidden] on the basis [his] statements are true."       (emphasis added).   The
policy then expressly notes Ron's implicit representation: "that during the
three years preceding the time of your application for this insurance . .
. you and the members of your household have not had any insured losses,
whether paid or not, that would have been covered under the terms of this
or a similar policy."      Because the policy is expressly conditioned on the
truth of Ron's application representations, State Farm needed to prove only
that Ron's representations were false and material. Continental Casualty
Co. v. Maxwell, 799 S.W.2d 882, 887-88 (Mo. Ct. App. 1990).     The court did
not err for failure to include every element of fraud.


INTERROGATORIES


     Ron argues that the jury's answer to Interrogatory 3, finding that
neither Ron or Rick intentionally caused the fire, was inconsistent with
its ultimate verdict in favor of State Farm.       This argument lacks merit.
Here, the jury's findings are wholly consistent.     To determine which party
would prevail required a finding as to each of State Farm's alternative
affirmative defenses.       Contrary to Ron's assertion, a finding that State
Farm did not prove Ron or Rick caused the fire does not preclude a finding
that Rick was an insured or that Rick and Ron provided false material
information to State Farm after the fire.6


         6
      Ron’s reliance on Depalma v. Bates County Mutual Ins., No.
51293 (Mo. Ct. App. Mar. 19, 1996), as precluding denial of
coverage to an innocent co-insured where another insured commits
arson, is misplaced.     The Depalma court considered whether an
innocent spouse may recover for a loss to property owned by the
couple as tenants by the entirety where the property is
intentionally destroyed by the other spouse and where the property
is insured jointly. Here, the jury’s finding established that the
actions of both Ron and Rick justified State Farm’s denial of
coverage. Depalma is inapposite.



                                          -6-
HEARSAY


      Rick was unavailable for trial.        The district court permitted hearsay
evidence offered by Michael Walton, who formerly worked with Rick.              Walton
testified that while he delivered a mobile home to Rick in 1987, Rick said
to him, "I had a previous house that I made look like an electrical fire
and . . . the insurance money I collected off that house is how I am able
to buy this house."


      The district court permitted the hearsay testimony of Michael Walton
after determining the testimony constituted a statement against Rick's
penal interest under Rule 804(b)(3) of the Federal Rules of Evidence.                Ron
argues that the district court committed reversible error by admitting the
hearsay testimony.


      In United States v. Riley, 657 F.2d 1377 (8th Cir. 1981), we adopted
a three-prong test a movant must satisfy to overcome a hearsay objection
and admit testimony as against a penal interest: the movant must show that
(1) the declarant is unavailable as a witness, (2) the statement must so
far tend to subject the declarant to criminal liability that a reasonable
person in the declarant's position would not have made the statement unless
he or she believed it to be true, and (3) corroborating circumstances
clearly indicate the trustworthiness of the statement.              Id. at 1382-83.


      Here,    Walton        testified    that   Rick    admitted      he   previously
intentionally set a fire and disguised it as an accidental electrical fire
to   collect   under    an    insurance    policy.      State   Farm   points   to    no
corroborating circumstance clearly indicating the




                                          -7-
trustworthiness of Walton's statement.     Indeed, Walton is embroiled in a
lawsuit against Rick in which Walton would benefit by a determination that
Rick is an arsonist.   Instead of corroborating, the circumstantial context
directly contradicts the trustworthiness of Walton's testimony, and State
Farm points to no circumstance tending to support the statement.       State
Farm fails to meet the third prong of the test.


     However, notwithstanding that Walton's hearsay testimony tends to
show Rick set the fire, the jury found State Farm did not prove Rick set
the fire.   Nor did the jury find that Ron set the fire.   Rule 103(a) of the
Federal Rules of Evidence provides, "Error may not be predicated upon a
ruling which admits or excludes evidence unless a substantial right of the
party is affected."    The challenged evidentiary ruling fails to undermine
the jury's determination that Ron concealed material information when he
applied for insurance.    It also is irrelevant to the jury's finding that
Ron and Rick provided false information to State Farm after the fire.
Therefore, admission of the hearsay testimony, even if erroneous, did not
affect a substantial right of Ron and provides no basis for reversal.


     In conclusion, we affirm the district court's judgment as to the
denial of Gidden's claim and the money judgment entered as to State Farm's
counterclaim.


     JUDGMENT AFFIRMED.


     A true copy.


            Attest:


                  CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.




                                     -8-
