Hane v. Hallock Farmers Mut. Ins. Co., 47026

• Decision Date: 23 September 1977
• Docket Number: No. 47026,47026
• Parties: James HANE, Appellant, v. HALLOCK FARMERS MUTUAL INSURANCE COMPANY, Respondent.
• Court: Minnesota Supreme Court

Page 779

258 N.W.2d 779

James HANE, Appellant, v. HALLOCK FARMERS MUTUAL INSURANCE COMPANY, Respondent.

No. 47026.

Supreme Court of Minnesota.

Sept. 23, 1977.

Syllabus by the Court

The facts presented in this case support the jury determination that the appellant did not possess an insurable interest in certain farm property on the date of its destruction by fire.

Richard C. Smith and Larry Meuwissen, Minneapolis, for appellant.

Brink, Sobolik, Severson & Vroom and Ronald C. Vroom Hallock, for respondent.

Heard before TODD, YETKA, and PLUNKETT, JJ., and considered and decided by the court en banc.

TODD, Justice.

James Hane purchased a farm from Paul Fish in December 1969 under a contract for deed. Pursuant to the contract, Hane procured fire insurance on the house and buildings, in addition to insurance covering his personal property. On April 17, 1972, due to financial reverses and a pending cancellation of the contract for deed for nonpayment, Hane assigned his vendee's interest in the contract to Walter Braget in exchange for Braget's making a payment to Fish under the contract. At the same time, an informal understanding was apparently reached allowing Hane to participate in the operation of the farm with Braget and also affording him an opportunity to repurchase the property at a later date. On April 26, 1972, the farmhouse was destroyed by fire and Hane subsequently brought an action to recover for the loss of the home under his fire insurance policy. There was conflicting evidence introduced at trial concerning whether Hane had effectively canceled his insurance coverage on the farmhouse prior to its destruction by fire. The jury returned a special verdict finding that Hane had canceled his insurance coverage prior to the date of the fire and that he did not possess an insurable interest in the home after the assignment of his interest under the contract to Braget. We affirm.

In December 1969, James Hane purchased a 1,000-acre farm including all its buildings near Halma, Minnesota, from Paul Fish under a contract for deed. Under the contract for deed, Hane made a $10,000 downpayment against the total purchase price of $86,000. The provisions of the contract required Hane to pay Fish approximately $5,600 on December 15 each year for a period of 20 years. Also, in accordance with the terms of the contract, Hane secured a fire insurance policy from Hallock Farmers Mutual Fire Insurance Company ¹ covering the house and other buildings on the property. With the same policy, he included coverage for his personal property and certain equipment and machinery used in the operation of the farm. The farmhouse was originally insured against loss for $20,000, which amount was subsequently increased to $25,000. The loss-payable clause named Paul Fish as the mortgagee of the buildings and designated that any loss was payable to him to the extent of his interest.

Hane utilized the property as a farm almost from the date of purchase. Unfortunately, Hane's farming operation was anything but a success, as he incurred financial setbacks almost from its inception. Due to his poor financial condition, Hane worked out an agreement with Fish to make only the interest payment on the contract for deed in 1970, with the principal payment to be delayed until the following year. However, as Hane entered the winter of 1971-1972, his financial situation had worsened and he was unable to make the December 1971 payment on the contract.

Finally, on March 17, 1972, Fish served a cancellation notice on Hane, allowing him 30 days to make the delinquent payment on the contract or suffer a forfeiture of the property. At this point, Hane commenced a vigorous solicitation of friends and associates in an effort to obtain the necessary financing to avoid cancellation of the contract. He eventually secured an agreement from the Braget brothers, Richard, Walter, and Kenneth, to assist him in avoiding cancellation. Although the proposed arrangement between Hane and the Braget brothers was not reduced to writing and was just "in the planning stages," the discussions included the possibility of forming a type of joint venture between the parties in the operation of a cattle feeding business.

On April 17, 1972, Hane and the Bragets met in his attorney's office where Hane executed an assignment of his vendee's interest in the farm and property under the contract in exchange for the Bragets' paying Fish approximately $7,000 to avoid cancellation of the contract. At this meeting, there was also an informal discussion and agreement reached between the parties allowing Hane to remain in the home until the school session was completed in June. It was also agreed that Hane would have the opportunity to repurchase the property from the Bragets in the future if he so desired.

On April 24, 1972, Walter Braget filed an application with Hallock Farmers Mutual for insurance coverage on the farmhouse in the amount of $15,000, which was acceptable to Fish, the contract-vendor. Mrs. Elwood Carlson, an employee of Hallock Farmers Mutual, testified...