Gerlach v. Grain Shippers' Mut. Fire Ins. Ass'n
Decision Date | 08 June 1912 |
Citation | 136 N.W. 691,156 Iowa 333 |
Parties | WM. GERLACH, v. GRAIN SHIPPERS MUTUAL FIRE INSURANCE ASSOCIATION, Appellant |
Court | Iowa Supreme Court |
Appeal from Taylor District Court.--HON. H. M. TOWNER, JUDGE.
ACTION on two insurance policies resulted in judgment as prayed. The defendant appeals.
Affirmed.
Johnston Bros. and Frank Wisdom, for appellant.
W. M Jackson, and J. M. Junkin, for appellee.
Plaintiff became a member of the defendant, a mutual assessment insurance association organized under the laws of Iowa and received from it two policies of insurance covering the same property, one April 26, 1909, for $ 3,000 and the other November 22d of the same year, for $ 2,000. This property burned April 6, 1910, during the life of the policies and it was conceded on the trial that the loss exceeded the amount of both, and that timely proofs of loss in due form were furnished the defendant; that insured's property was on ground along the tracks of the Chicago, Burlington & Quincy Railroad Company leased by that company to the plaintiff, the lease containing the following stipulation: "The lessee further agrees to cause during the continuance of this lease, and any extension thereof, the policies of fire insurance on the said grain elevator, corncribs and coal sheds and other improvements upon the demised premises, and upon contents thereof to be so written that in the event of any destruction or damage by fire, no insurance company shall have recourse against the railroad company." The written application for insurance disclosed that the property was on leased ground, but not the terms of the lease, and each policy provided that:
The plaintiff sued on the two policies, and also based his claim for judgment on an alleged adjustment of the loss. The defendant denied liability, for, as it alleged, the fire which consumed the property was set out by the above named railroad company, and plaintiff, by the clause in the lease quoted, had breached the condition of the policy set out before the loss; and also defendant had tendered the full amount of the policies on "condition plaintiff would assign to defendant a right of action against said railroad company," which plaintiff was unable to do because of having released it from liability. Subsequently plaintiff offered in writing a written assignment of any cause of action he had against the railroad company, but this was not accepted. The trial court found:
As a matter of law, the defendant company was bound by the terms and conditions of the lease at the time that it accepted the application and issued the policies of insurance. Knowing that the said property was upon leased ground and held by leasehold right, it made no investigation as to what were the terms of the lease, and accepted the application and issued the policies without making further investigation. Under these circumstances, in law, it ought to be bound by the terms of the lease. The right of subrogation is not a right that insures the recovery upon any claim that may be made, but is merely the right to substitute the defendant for the plaintiff, as to the rights that he might have in and to the claim for damages against the railroad company occasioned by their negligence. There being no proof that the fire was occasioned by the railroad company's negligence, that there would have been a right of recovery if prosecuted, and the defendant having failed to comply with the conditions which are conditions precedent to their right of subrogation, namely, the payment of the loss, and the plaintiff having at all times held himself in readiness to grant them every right which he might have had against the railroad company in accordance with the provisions of the said contract of insurance, there is no forfeiture of the plaintiff's right of recovery as against the defendant upon the said policies of insurance. The claim and loss for insurance, having been fully settled and adjusted by the parties upon a written agreement which was entered into by them, consisted of a proposition by the defendant and an acceptance by the plaintiff, is binding upon the association, and the plaintiff is entitled to recover thereon.
There was considerable parley as to plaintiff prosecuting an action against the railroad company, but no agreement was reached, and subsequently defendant, with knowledge of the clause in the lease, made written tender in words following:
To William Gerlach: Whereas you are the holder of policy 35186 of the Grain Shippers' Mutual Fire Insurance Company and 31998 for five thousand dollars ($ 5,000) covering property at Sharpsburg, Iowa said property being elevator and grain and lawn swing factory, and whereas you sustained a loss on said property which the insurance company are claiming was caused by the C. B. & Q. Railroad, through negligence and allowing sparks from their engine to come in contact with the property, and whereas under the terms of the policies above referred to the company upon making such claim is entitled to subrogation of your right to recover against the railroad up to the amount of insurance paid, whereas subrogation is to be due upon the payment of the loss: We hereby tender to you the sum of five thousand dollars ($ 5,000), the amount due on the policies above referred to, and demand subrogation of you to your right of recovery against the C. B. & Q. Railroad for negligently setting the fire. Grain Shippers' Mutual Fire Insurance Association, by Johnston Bros.
On the next day, this offer was accepted in a letter addressed to defendant, saying:
Had the property been consumed by a fire set out by the railroad company, its liability would have been primary, and the liability of the insurance company in the nature of that of a surety. Upon payment of indemnity by the latter, it would be entitled to all the remedies of the insured. This May on Ins. section 454.
Even in the absence of any provision such as...
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