Board of Trustees of First Congregational Church of Austin v. Cream City Mut. Ins. Co. of Milwaukee, Wis.

Decision Date22 May 1959
Docket NumberNo. 37604,37604
Citation96 N.W.2d 690,255 Minn. 347
PartiesBOARD OF TRUSTEES OF FIRST CONGREGATIONAL CHURCH OF AUSTIN, Minnesota, and First Congregational Church of Austin, Minnesota, Respondents, v. CREAM CITY MUTUAL INSURANCE COMPANY OF MILWAUKEE, WISCONSIN, et al., Appellants.
CourtMinnesota Supreme Court

Syllabus by the Court

1. A 'UNIFORM STANDARD MINNESOTA CHURCH FORM' endorsement upon fire insurance policy covering church property which provides that the policy shall be void when the building 'is abandoned for church purposes' is construed to mean that the policy shall be void under circumstances where by act and intention the church has relinquished possession to part permanently with the property. The fact that the church may have discontinued religious rites on the premises does not of itself constitute abandonment where possession was retained for use in connection with other church purposes.

2. The specific finding that there was no increase in risk of loss was unnecessary where such finding was implicit in the findings of the court that the property was not abandoned for church purposes.

3. Under the provisions of a valued policy (M.S.A. § 65.05) the insured may recover the full value of his policy, even though the value of his actual interest is less than the amount of the insurance. The insurer will not be allowed to go behind the policy to show that the insured's interest is less than the full amount of the policy.

4. Where a valued policy covering loss by fire to property which is the subject of an executory contract for sale is obtained by the grantor, the policy is an agreement between the grantor and the insurance company separate and independent of any relation which the grantor may have with the grantee under the contract for deed. The rights of the grantor-insured are established as of the time of the loss, and those rights are not affected if the insured eventually is compensated for the loss from another source. The recovery of an insured is not diminished because of the fact that he might have a collateral contract with a third person which may operate to relieve the insured from the loss for which the insurer has agreed to compensate him. The insurer, having entered into the contract of insurance in consideration of a premium assumed to be the fair consideration for its obligation and without knowledge or understanding of the existence of collateral remedies, is not entitled to be subrogated to the rights of the insured against a third person who did not cause the loss.

Bang, Nierengarten & Hoversten, Austin, Ralph H. Comaford, Minneapolis, for appellants.

William J. Baudler and Philip Richardson, Austin, for respondents.

MURPHY, Justice.

This is an appeal from an order of the Mower County District Court which denied the defendants' motion for amended findings or alternatively for a new trial.

The facts in this case may be simply stated. The plaintiff church and its board of trustees seek to recover on six fire insurance policies issued by the defendant companies. Each of the six policies complies with the Minnesota standard fire policy form as set forth in M.S.A. § 65.011, and each has appended to it an additional endorsement which is denoted a 'UNIFORM STANDARD MINNESOTA CHURCH FORM.' This additional endorsement contains a clause to the effect that:

'This policy continues in full force and effect during such times as the church is not actually in session and during such times as the church may be closed for temporary periods, provided that, If this form is attached to a fire policy and the building is abandoned for church purposes for an indefinite period without written permission hereon, then this policy shall be void.' (Italics supplied.)

The plaintiff church was completely destroyed by a fire of incendiary origin on April 9, 1956. Previous to this date, the church had been sold to the city of Austin on a contract which was to remain executory until June 1, 1956. The plaintiffs reserved the right to possession until that date. On the date of the fire the unpaid balance on the contract for deed was $75,000. The plaintiffs now seeks to recover under the insurance policies the amount of the fire loss from the six defendants. Additional facts relevant to our decision will be discussed later in the opinion.

This appeal presents two principal questions: (1) Whether the defendant insurers have valid policy defenses to the action; and (2) whether the defendants are entitled to be subrogated to any rights which the plaintiffs might have against the city of Austin.

The insurance companies' first contention is that they are not liable because the church building was 'abandoned for church purposes' within the meaning of the endorsement on the policies. On February 26, 1956, approximately 6 weeks before the fire, the members of the congregation removed their religious services from the building in question to a new church building. They never returned for services in the old building. Also, much of the furnishings of the old church, including the organ, pews, and sanctuary carpeting, had been removed by the time of the fire. Other facts which the defendants cite as evidence of 'abandonment' include: The drinking fountain had been disconnected, lavatory fixtures and the tower bell removed, gas and telephone disconnected, and mail deliveries discontinued. Also, there were piles of discarded drawings on the floor in the Sunday-school room; broken chairs and split frames from blackboards were piled in the basement; and a number of wrappings and boxes were stacked in the former sanctuary. On the other hand, the church building had been the scene of some activity. The pastor, Sunday-school superintendent, and trustees had occasion to visit and make use of the building; a part of the religious and music libraries remained, and the pastor and music director occasionally made reference to these collections; light service was continued; and groups of parishioners had used the building for a rummage sale during 3 days in March and for packing missionary boxes.

1. We think the record supports the findings of the trial court that the church building had not been abandoned for church purposes. It has been stated many times that abandonment is the voluntary relinquishment, surrender, or disclaimer of a known property right, absolutely and without reference to any particular person or purpose. It involves two elements--act and intention--and without the concurrence of these there can be no abandonment. There must be an actual relinquishment of possession accompanied by an intent to part permanently with the property in the goods. State v. McCoy, 228 Minn. 420, 38 N.W.2d 386; Erickson v. Sinykin, 223 Minn. 232, 26 N.W.2d 172, 170 A.L.R. 679; 1 Am.Jur., Abandonment, § 2; 1 Dunnell, Dig. (3 ed.) § 1. Abandonment is an issue of fact and is determined by the trier of fact. State v. Northwestern Nat. Bank, 219 Minn. 471, 486, 18 N.W.2d 569, 577. Although religious services were no longer held in the building, there was still some activity, as related above. It is our view that, although the building was not being used for the purpose of conducting religious rites as such, the use of the property was nevertheless for 'church purposes' as that term is used in the policies.

The phrase 'abandoned for church purposes' is not defined in the policies, and under our accepted rules of construction we must resolve any reasonable doubt as to the meaning of language in an insurance policy in favor of the insured. 1 It cannot be denied that at and prior to the time of the fire the building was being made use of by the plaintiffs. If the insurance companies desired to limit the coverage to those periods during and between which the building was being used for performance of religious services, as distinguished from the broader term 'church purposes,' it would have been a simple matter for them to so provide by appropriate and definite language in their policies. 2

2. The next question raised by the insurers relates to the claim that the policies must be avoided because of an increase in the hazard or risk of loss by reason of the removal from the building of the religious services and the various furnishings. Although the trial court made no findings on this question, he did discuss it in his memorandum, concluding that there was nothing in the usage of the building at the time of the fire which had increased the risk of loss. It is apparent from an examination of the pleadings and record that both parties treated the defenses of abandonment and increase in risk as the same thing. For example, the defendants pleaded that the increase in risk was due to the alleged abandonment of the church building. In light of these facts it is our view that there was no necessity for making an Express finding with reference to the issue of increase in risk by reason of the usage of the church. Such a finding is implicit in the court's finding that the property was not abandoned for church purposes. Moreover, there is nothing in the record here which indicates circumstances giving rise to an increase in risk by reason of the presence of dangerous or inflammable materials on the premises such as fireworks and gasoline as dealt with in Betcher v. Capital Fire Ins. Co., 78 Minn. 240, 80 N.W. 971; Schaffer v. Hampton Farmers' Mutual Fire Ins. Co., 183 Minn. 101, 235 N.W. 618, 236 N.W. 327; 29 Am.Jur., Insurance, §§ 677, 679; Annotation, 26 A.L.R.2d 809. Under the circumstances before us the diminution in use of the property is not sufficient to constitute an increase in risk.

We held in Nathan v. St. Paul Mutual Ins. Co., 243 Minn. 430, 68 N.W.2d 385, that what constitutes an increase of risk is a factual question for the finder of fact unless the increase is obvious, and we will not reverse such a finding unless it is manifestly contrary to the evidence. The trial court in the present case realistically pointed...

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