                         IN THE SUPREME COURT OF MISSISSIPPI
                                  NO. 92-CA-01017-SCT
CAROLYN McCORD
v.
GULF GUARANTY LIFE INSURANCE COMPANY




DATE OF JUDGMENT:                              06/12/92
TRIAL JUDGE:                                   HON. THOMAS J. GARDNER
COURT FROM WHICH APPEALED:                     UNION COUNTY CIRCUIT COURT
ATTORNEY FOR APPELLANT:                        DUNCAN L. LOTT
ATTORNEY FOR APPELLEE:                         LESTER SUMNERS
NATURE OF THE CASE:                            CIVIL - INSURANCE
DISPOSITION:                                   REVERSED AND REMANDED - 8/14/97
MOTION FOR REHEARING FILED:
MANDATE ISSUED:                                9/5/97




     EN BANC.


     McRAE, JUSTICE, FOR THE COURT:


¶1. Carolyn McCord appeals the June 12, 1992 jury decision of the Union County Circuit Court
finding her property insurer, Gulf Guaranty Life Insurance Company, not liable for payment on a fire
loss claim. We find that the circuit court erred in denying McCord's motion in limine and in granting
Gulf Guaranty's Instruction D-3 and therefore, reverse and remand for a new trial.

                                                  I.

¶2. Carolyn McCord's house in Blue Springs, Mississippi was destroyed by fire sometime during the
night of November 8, 1990. The house and its contents were insured for $67,000 under a Gulf
Guaranty Life Insurance Company comprehensive dwelling policy in effect at the time of the fire.

¶3. McCord had left Blue Springs for Dallas, Georgia with a friend, Lisa Ross, the day before the
fire, with plans to be gone for two or three weeks. Bo Evans, who she was visiting, and Phil Sparks
arrived in Dallas the same day. McCord learned of the fire after an unidentified person called Evans'
mother.
¶4. McCord reported the loss to her insurance agent, Savery Insurance, around November 14, 1990.
She was given a questionnaire to complete and advised by the agent to make a list of the contents
destroyed in the fire. She reported on the questionnaire that she did not know how the fire started,
but that it may have been caused by faulty wiring. She also indicated that the Sheriff had told her on
September 29, 1990, that "my neighbors wanted to burn me out."

¶5. On November 15, 1990, Shelby Sparks, an acquaintance of McCord's, reported to the Sheriff's
office that, about two weeks before the fire, she had seen McCord pay her ex-husband, Phil Sparks,
and his friend, Danny Steele, some money. Sparks claimed that Steele had told her that McCord paid
them $300 to set fire to her house. Sparks later tried to recant her statement, variously claiming that
she had made it to get her ex-husband in trouble, that she wanted the $1,000 reward offered in the
case and that McCord's friend, Lisa Ross, had threatened to kill her if McCord went to jail.

¶6. The day after McCord filed her claim, Eugene Adcock and Cecil McCrory, investigators for Gulf
Guaranty Life Insurance Company, McCord's property insurance carrier, began their examination of
the debris and determined that the fire had been started by a liquid accelerant. They reported to Gulf
Guaranty that the house had been destroyed by an incendiary fire.

¶7. Laurel Waters, a qualified gas chromatographic analyst, indicated in her certified test report that
the two samples of rubble from the kitchen and living room of the house that she tested contained
components of aromatic naptha, an industrial solvent. McCrory found newspaper stuck in the
chimney flue and signs of "spalling" in the chimney, suggesting to him that "this fire was set from the
outside using the paper as wick to go through and set the Naphtha on the inside." Robert Wilhite, a
New Albany Fire Department volunteer who was accepted as an expert in the field of fire
investigation, found multiple points of origin as well as evidence of "spalling."

¶8. On August 26, 1991, Carolyn McCord sued Gulf Guaranty after her claim was denied. She
further sought punitive damages, alleging that the insurer had acted in bad faith in refusing to pay the
claim. Gulf Guaranty defended on grounds that the fire was incendiary in nature, and that McCord
had conspired with others to set the fire.

¶9. A trial was held on June 11 and 12, 1991. The jury returned a verdict for Gulf Guaranty. After
McCord's motion for a new trial was denied, she appealed to this Court.

                                                   II.

¶10. McCord first contends that the circuit court erred in denying her two motions in limine, both of
which were intended to limit the testimony of the Union County Sheriff. A motion in limine should be
granted only when "(1) the material or evidence in question will be inadmissible at a trial under the
rules of evidence; and (2) the mere offer, reference, or statements made during trial concerning the
material will tend to prejudice the jury." Whittley v. City of Meridian, 530 So. 2d 1341, 1344 (Miss.
1988)(quoting State v. Quick, 242 Kan. 252, 747 P.2d 802, 810 (1987)). See also Gifford v. Four-
County Electric Power Ass'n, 615 So. 2d 1166, 1171 (Miss. 1992); Davis v. Neshoba County
General Hospital, 611 So. 2d 904, 906 (Miss. 1992). The primary purpose of the motion in limine is
to exclude evidence that would be highly prejudicial to the moving party. Gifford, 615 So. 2d at
1171-1172.
¶11. Considering the standard to which the trial court is held in determining whether such motion
should be granted, we look first at whether testimony that the sheriff had received an anonymous
telephone call threatening to blow up McCord's house would be either inadmissable under the rules
of evidence or prejudicial to her case. McCord sought to suppress a statement made to her by the
Union County Sheriff, who, testified at trial:

     Q: Was any statement made by you to her at that time about anyone wanting to do harm to her
     house?

     A: Yes, sir. To the best of my knowledge I made a statement to Ms. McCord that a lady had
     called me; that she had found some dope, marijuana on her son; and that he told her that it came
     from Carolyn McCord's house. He bought it at Carolyn McCord's house; and that if I didn't do
     something about it, they was going to blow the house off the hill.

¶12. McCord also asserts that the circuit court should have excluded evidence that cash in the
amount of $956 was found in a September, 1990, search of her home by the Union County Sheriff.
At trial, Gulf Guaranty questioned McCord about her employment history, on the theory that she
might have had difficulty meeting her house payments, thus providing a motive for the fire. During
the months prior to the fire, she had held a variety of odd jobs. She stated in her deposition that the
cash belonged to the Blair Company, despite invoices indicating that she had sold only $639.94 of its
products over the previous seven months. Gulf Guaranty asserted that evidence of cash in the house,
together with McCord's claim that it came from sales of Blair products, might have indicated that she
was conducting a business in her home, contrary to provisions of the policy.

¶13. Looking at the inferences that may be drawn from the combination of testimony that threats to
blow up McCord's house were drug-related and that the sheriff had searched her house in September
of 1990, less than two months before the fire, and found a large amount of cash, we have no doubt
that the evidence sought to be excluded would be highly prejudicial to McCord. Further, the fact that
the sheriff had made a call to McCord was irrelevant and hearsay. The circuit court should have
granted McCord's motion in limine because the evidence at issue was unfairly prejudicial.

                                                  III.

¶14. Gulf Guaranty sought to void its policy with McCord on grounds that she had misrepresented
whether she had ever been arrested and that she had indicated on her proof of loss questionnaire that
she thought the fire could have been caused by faulty wiring. The trial court granted Gulf Guaranty's
Instruction D-3, which allowed the jury to consider any false or incorrect statements made by
McCord as requiring a verdict in its favor. Instruction D-3 reads as follows:

     Under Mississippi law an insurance company has the right to depose its insured after a loss and
     if the insured does not answer truthfully all questions material at the time asked, then the policy
     is voided. Defendant Gulf Guaranty Life Insurance Company had the right under its policy to
     take plaintiff's deposition on October 29, 1991, and plaintiff was required to answer all
     questions truthfully. If you believe from clear and convincing evidence that plaintiff gave a false
     answer to any question then you shall find for the defendant.

McCord specifically complains of the language, "false answer to any question." Gulf Guaranty,
however, contends that there is nothing wrong with the instruction because it is taken "verbatim"
from Edmiston v. Schellenger, 343 So. 2d 465 (Miss. 1977). Even if we could find the specific
language in Edmiston that the insurer claims to have followed "verbatim" in drafting the instruction,
we have admonished attorneys against taking language from our decisions and using it to create jury
instructions. Day v. Morrison, 657 So. 2d 808, 814 (Miss. 1995)(citing Freeze v. Taylor, 257 So. 2d
509, 511 (Miss. 1972)).

¶15. If, as Gulf Guaranty appears to assert, the insurer seeks to void the policy based on a
"concealment" clause, it carries the burden of showing "that statements by the insured were (1) false,
(2) material and (3) knowingly and wilfully made." Hall v. State Farm Fire & Casualty Co., 937
F.2d 210, 214 (5th Cir. 1991). Further, under Mississippi law, when violation of a concealment
clause is charged, as distinguished from those cases where fraud is raised as a defense, proof of the
violation is subject only to the "preponderance of the evidence" standard, not the "clear and
convincing evidence" standard articulated in the instruction. Id. at 215 (citing Weems v. American
Security Insurance Co., 450 So. 2d 431 (Miss. 1984)). The instruction, as written, is confusing to
the jury in its reference to giving a false answer to any question in light of its earlier reference to
answering all questions truthfully "material at the time asked." It also neglects to instruct the jury that
any misstatement must be wilful or intentional in order for the policy to be voided. Further, by failing
to acknowledge that the burden of proof is on the insurer and employing the "clear and convincing
evidence" standard, it does not present an accurate statement of the law. Accordingly, the instruction
should not have been given.

                                                   IV.

¶16. There is no merit to the remaining issues raised by McCord and we decline to address them here.
Because the circuit court erroneously denied her motion in limine and granted Instruction D-3, a
confusing and incorrect statement of the law, we reverse and remand for a new trial consistent with
this opinion.

¶17. REVERSED AND REMANDED.

BANKS AND MILLS, JJ., CONCUR. MILLS, J., SPECIALLY CONCURS WITH
SEPARATE WRITTEN OPINION JOINED BY LEE, C.J., AND SULLIVAN, P.J. SMITH, J.,
DISSENTS WITH SEPARATE WRITTEN OPINION JOINED BY PRATHER, P.J., AND
PITTMAN, J. ROBERTS, J., NOT PARTICIPATING.




     MILLS, JUSTICE, SPECIALLY CONCURRING:


¶18. While I agree with the decision reached by the majority in this case, I write separately because
the majority has used an incorrect standard in determining that the trial court erred in denying
McCord's motion in limine.

¶19. The majority correctly states the two-part test for granting a motion in limine, which should be
granted only when "(1) the material or evidence in question will be inadmissible at a trial under the
rules of evidence; and (2) the mere offer, reference, or statements made during trial concerning the
material will tend to prejudice the jury." Whittley v. City of Meridian, 530 So. 2d 1341, 1344 (Miss.
1988) (quoting State v. Quick, 242 Kan. 252, 747 P.2d 802, 810 (1987)). However, the majority
then states that its determination is whether the evidence sought to be excluded by McCord's motion
in limine "would be either inadmissible under the rules of evidence or prejudicial to her case."
(emphasis added). The majority concludes that because the evidence would be highly prejudicial to
McCord, the motion in limine should have been granted. This simply is not the correct standard.

¶20. To be sure, any evidence sought to be introduced against a party is almost certain to be
prejudicial to that party's case. Such is the inherent nature, and in fact the very purpose, of evidence.
The question for purposes of a motion in limine, however, is whether the evidence is highly
prejudicial and inadmissible. The majority fails even to mention the admissibility, or lack thereof, of
the evidence sought to be excluded by McCord's motion in limine. However, because the testimony
indicating that threats to blow up McCord's house were drug-related is inadmissible hearsay, the
majority is correct in finding that the trial court should have granted McCord's motion in limine to
exclude the evidence.

LEE, C.J., AND SULLIVAN, P.J., JOIN THIS OPINION.




     SMITH, JUSTICE, DISSENTING:


¶21. I respectfully disagree with the majority's contention that Instruction D-3 is confusing to the jury
because of its reference to "giving a false answer to any question" in view of the earlier reference
therein to "answering all questions truthfully material at the time asked."

¶22. First, there is nothing confusing about these two phrases. Simply put, both are two different
ways of saying the same thing. Regardless, McCord was required to truthfully answer questions
posed to her concerning the fire loss claim that she filed against her insurance company. Instead, she
gave several false responses to certain questions which were clearly material to the fire investigation.

¶23. While the majority faults the argument of the carrier that Instruction D-3 was taken "verbatim"
from Edmiston v. Schellenger, 343 So. 2d 465 (Miss. 1977), nevertheless, Edminston clearly held
that an insured, who knew that his statement made during a deposition concerning circumstances
surrounding a fire was incorrect, had a duty to correct such answers at the earliest possible date. The
Edminston Court stated that "The insurance company had a right to obtain truthful answers from its
insured as to material matters. . . . This Court has consistently held that a refusal to answer material
questions will defeat recovery on the policy." Edminston, at 467, citing Taylor v. Fireman's Fund
Ins. Co., 306 So. 2d 638, 644-45 (Miss. 1975). The Court further stated, "The company needed to
introduce no evidence to prove Schellenger's intent to deceive. Where false and material statements
are knowingly and willfully made, "the intent to deceive will be implied." Edmiston at 467, citing
Claxton v. Fidelity & Guar. Fire Corp., 179 Miss. 556, 175 So. at 212 (1937). Here, McCord's
knowingly and willfully made false statements demonstrate her intent to deceive her carrier, this clear
intent to deceive is implied.

¶24. More importantly, McCord's only objection was to the phrase "false answer to any question"
which the trial court, sua sponte, corrected. Equally important, however is the fact that the
instruction at issue referred only to the plaintiff's deposition which was not shown to or examined by
the jury. The only knowledge gained by the jury about McCord's false statements resulted solely from
defense counsel's reading to her on cross examination. The deposition statements of McCord put in
issue were: (1) Her sources of income; (2) Whether she went to Dallas, Georgia, and if so, whether
she intended to remain there for three to four weeks; and (3) Whether she reported power failures to
the electric company which they attributed to a lack of proper grounding. Clearly, each of these
statements were material and admissible.

¶25. McCord was unable to explain from what source she had received large sums of cash found on
her premises and recently deposited into her account. She was unemployed at the time, yet her only
attempt to explain how she came to have such large sums was that she had received such sums from
Miller, and the remainder from Blair, (an Avon-type selling business). The proof in this record
however, showed that she had only ordered $639.94 worth of Blair products during a seven month
time frame in question and had profited only $50 to $75 per week. Thus, based on the facts such
explanation supposedly accounting for the large sum of cash was physically impossible. The jury
obviously agreed.

¶26. McCord claimed that she had complained to the electric company about a power failure in
January and that a service representative had come out to her home and advised her that the house
was not grounded. However, at trial, Harold Smith, the manager of the electric company, testifying
from a strict log, stated that upon searching the months of December, January, and February of 1990,
that there was only one call from McCord, made in January. Smith stated that McCord's sole
complaint on that single occasion was noise on her outside light.

¶27. Obviously, the jury could have concluded that McCord wilfully and deliberately gave false
answers to material questions in order to cover up the arson. McCord failed to object to the proof of
false statements. M.R.C.P. l5(b), requires an objection to evidence on issues not plead and provides
that upon objection, liberal amendment should be allowed. However, if there is no objection to
evidence, it is waived and the issue is treated as tried by consent. Queen v. Queen, 551 So. 2d 197,
200 (Miss. 1989); PACCAR Financial Corporation v. Howard, 615 So. 2d 583 (Miss. 1993).

¶28. The majority also faults the trial court in its denial of McCord's motion in limine concerning her
attempt to limit the testimony by the Sheriff of Union County that an anonymous caller had
telephoned him threatening to blow up McCord's house and that he had seized $956 in cash from
McCord on September 28th, as well as recent deposits of large sums of cash.

¶29. McCord's possession of large sums of cash and deposit thereof with no reasonable explanation
was material and presented a fair issue of fact for the jury. MRE 401 and 402, favor the admission of
evidence that makes the existence of a fact of consequence more probable than not. In Foster v.
State, 508 So. 2d 1111, 1117 (Miss. 1987), this Court stated, "If the evidence has any probative
value at all, the rule favors its admission." Id. The evidence at issue here is not one which brings Rule
403 into play, as that only occurs when the evidence tendered is "unfairly prejudicial." Here, the
issues of motive, policy violation by conducting a business in her home, and more importantly false
statements on policy examination are clearly, "facts of consequence," hence admissible. The
admission of this evidence was discretionary with the trial court and this Court will only reverse when
the trial court has abused its discretion. Exclusion thereof under Rule 403 surfaces when prejudice
"substantially outweigh," probative value, and still, it is within the trial judge's discretion to allow the
evidence. Foster, at 1117. See also, Williams v. State, 543 So. 2d 665, 667 (Miss. 1989); Jenkins v.
State, 507 So. 2d 89, 92 (Miss. 1987).

¶30. The evidence against McCord is overwhelming as to arson. Shelby Sparks voluntarily reported
to the Union County Sheriff that on November 3, 1990, she had seen McCord pay Danny K. Steele
and Phil Sparks, $300 to burn her house. She also stated that the two men on November 8, 1990,
stated that they had burned McCord's house. Shelby only attempted to change her version when Lisa
Ross, who had been staying with McCord, threatened Shelby that she would be killed if McCord
went to jail.

¶31. The arson investigator for Union County, Tommy Wilhite, accepted as an expert, testified that
he found five different areas of spalling and concluded arson to be the cause of the fire. Cecil
McCrory, an arson expert, testified he too found five areas of spalling. He found burned paper in a
clean chimney flue that was open into the living room of the house. McCrory opined that a large
quantity of accelerate was poured and lit with the burning paper through the flue in order to avoid
flash over burn injuries. McCory took samples which were sent to Laura Waters, an expert of
Applied Technical Services, Inc., who determined that the accelerate used in the fire was heavy
aromatic naphtha, a substance used in the furniture business and which burns hotter than gasoline.

¶32. McCord had worked for a furniture manufacturer. Danny Steele had previously operated his
own furniture business and Phil Sparks had worked for Bassett Furniture Company. Hence, while
knowledge of the particular accelerate used here might not be one familiar to the average person,
because of their employment in the furniture business, these three individuals did not fit the average
person mold. According to Shelby Sparks, Phil was still employed there on November 2, 1990, the
day prior to McCord's paying them to burn her house.

¶33. McCord claimed not to know how the fire started, then claimed that wiring might be the cause,
since she had reported to the New Albany Electric Department that her lights went out in January
1990 and that they told her that her house was not grounded. Harold Smith, testifying from his log,
stated that only one call was received from McCord during a three month period including January
1990, and she only complained that her outside light was making a noise.

¶34. McCord was in serious financial condition during 1990. She had only ordered $639.94 worth of
Blair products from March until September 20, 1990. McCord admitted netting only $50 to $75 per
week from her selling of Blair products. McCord was asked to produce bank account records and she
gave a Bank of Mississippi checking account number. At trial, it was determined that the account
number that McCord had given to her carrier representing it as her own, in fact, belonged to another
Caroyln McCord. McCord, the plaintiff, had never had a checking account at Bank of Mississippi.
McCord could not explain how she got that particular number. McCord's banking records with
Peoples Bank & Trust Company showed deposits of $3,344.63 including $2,300 in cash. She claimed
$l3,968 contents lost in the fire, all of which she claimed to have been purchased with cash, except
for a refrigerator. McCord's house payments were going up and on November 8, 1990, after
withdrawing $60 cash she had only $166.54 remaining in her account.

¶35. Proof of arson is overwhelming, McCord had motive, and gave false statements during the
investigation, all of which was material to the case at bar. Wilful incendiarism is a complete defense
for the insurance carrier. There are three elements required, proof of an incendiary fire, motive of the
insured, and evidence that the insured set the fire or procured its being set. McGory v. Allstate Ins.
Co., 527 So. 2d 632, 633 (Miss. 1988). In the case sub judice, it is clear that all three elements were
sufficiently proven.

¶36. I respectfully dissent.

PRATHER, P.J., AND PITTMAN, J., JOIN THIS OPINION.
