Ebert v. Grain Dealers Mut. Ins. Co.

Decision Date31 October 1973
Docket NumberNo. 3--273A17,3--273A17
Citation158 Ind.App. 379,303 N.E.2d 693
CourtIndiana Appellate Court
PartiesCarl J. EBERT, Appellant (Plaintiff Below), v. GRAIN DEALERS MUTUAL INSURANCE COMPANY, Appellee (Defendant Below).

Winslow Van Horne, Auburn, for appellant (plaintiff below).

William H. Husselman, Auburn, William J. Wood and John Q. Herrin, Schortemeier, Eby & Wood, Indianapolis, for appellee (defendant below).

STATON, Judge.

I. STATEMENT ON THE APPEAL

Carl J. Ebert owned and operated the Waterloo Grain Company which consisted of a grain elevator and a feed store at different locations in Waterloo, Indiana. He entered into an oral contract for the sale of his company with Carl Feller who had been with him as an employee for eleven and one-half years. Feller purchased the inventory and the right to operate the business until he could obtain financing to purchase the balance of the grain business which consisted of buildings and business equipment. Feller had the right to all income from the sale of the inventory which he purchased for Twelve Thousand Dollars ($12,000.00). Shortly after this inventory was purchased in early October, 1968, a fire destroyed the feed store building and the inventory kept there. Feller received the money from his insurance claim for the destroyed inventory, and Ebert received money for his insurance claim on the building and equipment. In addition to the standard policy coverage, Ebert had a business interruption endorsement which entitled him to recover lost income during the period necessary to restore business operations. Ebert made a claim under this endorsement which was denied by Grain Dealers Mutual Insurance Company. Later, Ebert sold what remained of his Waterloo Grain Company to third parties for Twenty Thousand Dollars ($20,000.00). The estimated value of his original grain business was Seventy Thousand Dollars ($70,000.00).

Ebert brought an action to recover Twelve Thousand Five Hundred Dollars ($12,500.00) of interruption income under the business interruption endorsement of his policy. Grain Dealers and Ebert both filed a motion for summary judgment with affidavits attached under Rule TR. 56, IC 1971, 34--5--1--1 of the Indiana Rules of Trial Procedure. The trial court sustained Grain Dealers' motion for summary judgment.

Ebert's motion to correct errors raises the question of whether there were any genuine issues of material fact or a genuine disagreement concerning the inferences to be drawn from the material facts. Our opinion will examine the material facts and the inferences therefrom which reflect upon these issues decided by the trial court:

ISSUE ONE: Did Ebert have an insurable interest covered by the business interruption endorsement?

ISSUE TWO: Did Ebert waive his income interruption claim when he failed to file his claim within the sixty (60) day proof of loss provision of the policy?

ISSUE THREE: Did Ebert release Grain Dealers from any further liability when he signed his check for the loss of the store building which indicated that the payment was being made in 'Full Settlement of Fire Loss'?

Our opinion concludes that the conditional nature of Feller's interest in the

business is an issue which reflects upon Ebert's insurable interest under the policy. Under Issue Two, a genuine disagreement concerning the inferences to be drawn from Grain Dealers' invitation to submit additional proof of loss and Grain Dealers intention as to compliance by Ebert existed. A genuine issue of material fact exists as to whether Grain Dealers is estopped now to require compliance with the sixty (60) day proof of loss provision. There is no evidence to support the trial court's determination of Issue Three. The evidence is to the contrary. We reverse the trial court's judgment sustaining Grain Dealers' motion for summary judgment.

II. STATEMENT OF THE FACTS

Ebert purchased an insurance policy from Grain Dealers in July, 1966. This policy had an endorsement which provided coverage of business interruption income loss. In early October, 1968, Ebert and Feller entered into an oral contract for Feller to purchase Waterloo Grain Company from Ebert. Feller had been an employee of the company for eleven and one-half years. He paid Twelve Thousand Dollars ($12,000.00) for the stock inventory. Until he could obtain a firm financial commitment to purchase the remaining assets of the business, which consisted of the elevator and store buildings plus equipment, Feller was permitted to operate the store portion of the business. This arrangement gave Feller the right to all income resulting from the sale of the inventory. A fire destroyed the store building and the inventory on October 23, 1968. Grain Dealers paid Feller's loss claim on the inventory and Ebert's loss claim on the building. Ebert was advised by the Grain Dealers' adjusters that they had no authority to settle the business interruption endorsement provision of his insurance policy. A clause in the policy provided that proof of loss must be provided within sixty (60) days. Ebert accepted Twenty One Thousand Two Hundred and Twelve Dollars ($21,212.00) for the loss of his store building and equipment. The elevator and its inventory were at a different location and they were not affected by the fire.

Ebert contacted the Grain Dealers' home office on December 21, 1968 concerning his claim under the endorsement portion of his policy. This was the fifty-ninth day after the fire. His inquiry was answered by Grain Dealers on January 2, 1969. This answer disputed his claim, but it invited Ebert to submit proof of loss if he disagreed. He responded by submitting his claim in the form of an invoice on January 13, 1969. To this response, Grain Dealers advised Ebert that his proof of loss was insufficient and requested a more detailed accounting. Ebert complied with this request by Grain Dealers and submitted his more detailed accounting on March 13, 1969.

Ebert sold the entire, unrestored Waterloo Grain Company business to third parties in January, 1969 for Twenty Thousand Dollars ($20,000.00). The business originally had an estimated value of Seventy Thousand Dollars ($70,000.00). His action against Grain Dealers upon the insurance policy endorsement for Twelve Thousand Five Hundred Dollars ($12,500.00) in lost business interruption income was filed on June 19, 1969. Both Grain Dealers and Ebert filed motions for summary judgment under Rule TR. 56 of the Indiana Rules of Trial Procedure with affidavits attached. The trial court sustained Grain Dealers' motion for summary judgment. Ebert's motion to correct errors raises the issues set forth below in our 'Statement of the Issues.'

III. STATEMENT OF THE ISSUES

Our primary examination of the record is to determine whether there is a genuine issue of material fact or a genuine disagreement concerning the inferences to be ISSUE ONE: Did Ebert have an insurable interest covered by the business interruption endorsement?

drawn from the material facts upon any of these issues:

ISSUE TWO: Did Ebert waive his income interruption claim when he failed to file his claim within the sixty (60) day proof of loss provision of the policy?

ISSUE THREE: Did Ebert release Grain Dealers from any further liability when he signed his check for the loss of the store building which indicated that the payment was being made in 'Full Settlement of Fire Loss'?

IV. STATEMENT ON THE LAW

The burden to show that no material issue of fact exists is upon the movant, Grain Dealers. All doubt is to be resolved in favor of the respondent, Ebert. Newcomb v. Cassidy (1969), 144 Ind.App. 315, 245 N.E.2d 846. 1 Even where the material facts are not in dispute, there may be a material issue of fact requiring the denial of a motion for summary judgment if a genuine disagreement concerning the inferences to be drawn from those material facts has been established. Rembold Motors, Inc. v. Bonfield (1973), Ind.App., 293 N.E.2d 210. Cross-motions for summary judgment do not compel the entry of judgment for either party since each motion is to be considered separately. Fisher v. Kaylor (1969), 145 Ind.App. 148, 250 N.E.2d 19.

Motions for summary judgment in insurance contract actions present a different approach than in negligence actions. In Ross v. Farmers Insurance Exchange (1971), Ind.App., 277 N.E.2d 29, 37, this Court noted the difference as follows:

'Unlike negligence case, the undisputed facts are not juxtaposed against the standard of a reasonable man, but rather such facts are interpreted against a specific policy provision, and there are certain situations which clearly show that the insured has not brought himself within the confines of the policy.' (Our emphasis)

ISSUE ONE: Ebert's Insurable Interest.

Anyone has an insurable interest in property who derives a benefit from its existence or would suffer a loss from its destruction whether or not he has title or a secured interest in the property. A right of property is not essential. Any limited or qualified interest or any expectancy of advantage is sufficient. Parks v. Federal Crops Insurance Corporation (7th Cir. 1969), 416 F.2d 833; 4 Appleman On Insurance § 2123 (1969); 43 Am.Jur.2d Insurance § 466. On the other hand, an absolute sale of the business property after obtaining insurance may take away the insurable interest of the seller and create a bar to his right of action under the policy provisions unless the insurable interest is preserved by the terms of the sale or the acts of the parties. See 4 Appleman On Insurance § 2241, supra.

What insurable interest does Ebert's business interruption endorsement cover? Generally, such insurance endorsements are designed to do for the insured what the business itself would have done had no interruption occurred. The interest protected is the right to income generated by an operating business enterprise. A business interruption endorsement protects...

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