This section contains the nature of the case and procedural background.

Standard (P) sued to recover the proceeds of a fire insurance policy written by Reliance (D). The policy was written by Eaves (D1) and covered a dwelling house owned by P in rural Chatham County. The policy had an exclusion clause in it that D would not be liable for loss occurring while the building is vacant or unoccupied beyond a period of 60 days. P showed at trial that since 1961 he had purchased fire and extended coverage insurance on the dwelling through D1. Prior to 4 March 1976, D had written the coverage on the dwelling. In March 1976, P procured a renewal with D. Prior to writing a renewal policy, D requested Tar Heel to make a fire inspection. Tar Heel made the report and submitted it to D. The report included a statement that the property was not vacant. The report did not otherwise specify whether the dwelling was occupied or unoccupied. D furnished a summary to D1 and expressed concern over repair problems and requested that D1 get the name of the tenant. D1 never responded. At the time of inspection and renewal, the house had in fact been unoccupied since January 1975. The house was destroyed by fire on July 5, 1976. D got the verdict and P appealed.

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