Charles and Loralee Wagnon purchased a renter's policy from State Farm Fire and Casualty Co. Theft was covered by the policy. In April of 1992, the Wagnons experienced a theft loss. They submitted a claim and a proof of loss for personal property including tools. No receipts, photos or other documents were submitted by the Wagnons to support the claim. The Wagnons claimed that the file cabinets containing them were stolen.

The Wagnons claimed the tools were given them by Charles' father. In a statement by the father, he admitted to giving his son some tools but not to the extent claimed. The son then changed his statement regarding the acquisition of the tools. The insured's age and income were inconsistent with the type and amount of tools claimed. Physical inspection of the insured's premises showed that high target items such as a television and other electronic appliances were not stolen

In August of 1992, a brother-in-law notified State Farm that the claim was fraudulent and that he had knowledge that the Wagnons intended to set fire to the premises (it did indeed burn in December). State Farm denied the claim. The Wagnons filed suit for breach of contract and won a decision in their favor stating that the misrepresentations did not void the policy.

State Farm appealed, and in a decision by the U.S. District Court, the decision of the lower court was overturned, ruling that the misstatements were material and intentional and thus the policy was void.

(Wagnon et us., Plaintiffs-Appellees v. State Farm Fire and Casualty Company, Defendant-Appellant. 10thCir. Nos. 96-5013, 96-5013 and 96-5213. Filed June 19, 1998. CCH 1998 Fire and Casualty Cases, Paragraph 9517.)