Kennedy v. Iowa State Ins. Co.

• Decision Date: 16 October 1902
• Citation: 91 N.W. 831,119 Iowa 29
• Parties: KENNEDY BROTHERS, Appellees, v. IOWA STATE INSURANCE COMPANY, Appellants
• Court: Iowa Supreme Court

91 N.W. 831

119 Iowa 29

KENNEDY BROTHERS, Appellees, v. IOWA STATE INSURANCE COMPANY, Appellants

Supreme Court of Iowa, Des Moines

October 16, 1902

Appeal from Pocahontas District Court.--HON. F. H. HELSELL, Judge.

ACTION at law to recover upon a policy of fire insurance. The policy bears date May 27, 1899, and was issued to the plaintiff firm. The following among other conditions appear therein "This entire policy shall be void if the insured shall make any misrepresentations or concealments concerning the subject-matter of the property insured under this policy, * * * or if the insured shall make or have any contract or understanding whereby any person or corporation shall not be liable for any act or neglect in causing the fire. * * * If this company shall claim that the fire was caused by the act or neglect of any person or corporation, this company shall on the payment of the loss, be subrogated to all the rights of the insured against such wrongdoer, and shall be entitled to maintain an action therefor against such wrongdoer in its own name."

In the written application for the policy, signed by Kennedy Bros. the following question and answer appear: "What kind of a title have you to the land upon which the property to be insured is situated? Ans. Leased of the Illinois Central Railroad Company."

It appears that the land upon which the property destroyed by the fire in question was situated at the time thereof forms part of the station grounds of the Illinois Central Railroad Company at Fonda, Iowa. On March 1, 1897, an agreement of lease in writing was entered into between said railroad company, as lessor, and J. Kennedy & Co., as lessees, having reference to said land, the material provisions of which are as follows: "The lessor, for and in consideration of the covenants and conditions mentioned in the lease, to be kept and performed by the lessees and their assigns, hath demised and leased the premises in question to the said lessees their heirs and assigns, to have and to hold the same for one year; the rent to be one dollar per annum, payable in advance; the land to be used for an elevator and corncribs, and all grain to be shipped over the line of lessor's railway; that the lessees will exercise, at all times during the continuance of the tenancy such care as will adequately protect the buildings and personal property on said premises against all danger to which they may be exposed from fire by reason of the proximity of said premises to the railroad operated by lessor and the movement or use of locomotive engines and cars upon its tracks,--the risk of all loss, injury, and damages by fire, however caused, being assumed by the said lessees, who, in consideration of the leasing of said premises, agree to indemnify and save the said lessor harmless from all liability for damage by fire, however the same may originate."

The firm of J. Kennedy & Co. was composed of Joseph Kennedy and his three sons, Thomas, John, and Alexander. In October, 1898, the three sons bought out the interest of their father in the business, whereupon the firm name was changed to Kennedy Bros., and this new firm, by transfer and assignment, took over all the property, rights, and interests of the old firm, and thereafter carried on the business in which the old firm had been engaged. It does not appear that in respect of the occupancy of the premises any formal notice was ever taken of the expiration of the period fixed in the lease, nor of the change in the name and membership of the firm. The old firm occupied the premises after the expiration of the one-year period down to the time of dissolution for the same purpose and in the same way as before, and the new firm, after its organization, continued in the same way. During the existence of the firm of J. Kennedy & Co., a large double corncrib was built upon the premises, and this, with a quantity of ear corn and some agricultural implements stored therein, were in terms covered by the policy in suit and destroyed by the fire in question. Such other facts as are material to a determination of the case are referred to in the opinion. At the close of all the evidence the defendant moved for an instructed verdict, which was overruled. Thereupon the plaintiffs moved for an instructed verdict, and this motion was sustained. The jury, under direction of the court, returned a verdict for $ 1,022.51, and a judgment for that sum and costs was entered against defendant by the court. The defendant appeals.

Reversed.

James C. Davis and H. Scott Howell & Son for appellant.

Botsford, Healy & Healy for appellees.

OPINION

BISHOP, J.

It seems clear that, had the policy in question been issued to, and this action brought in the name of, J. Kennedy & Co., there could have been no recovery, especially as it appears without much question in evidence and there being no contention in the argument, that the fire was caused from the dumping of live coals from the fire box of a locomotive engine standing on an adjacent track, and belonging to the railroad company. Under Code, 1873, section 1289, re-enacted as section 2056 of the present Code, any corporation operating a railway "shall be liable for all damages sustained by any person on account of loss of or injury to his property occasioned by fire set out or caused by the operation of such railway." The fact of fire so caused being shown, a presumption of negligence on the part of the railroad company follows without further proof. Engle v. Railway Co., 77 Iowa 661. A railroad company may contract, however, for exemption from liability for its negligence in causing fires to property permitted to be located upon its right of way. Griswold v. Railroad Co., 90 Iowa 265.

It is well settled that, in the absence of a contract to the contrary, the liability of a railroad company for fires caused by its negligence is primary in character and the liability of an insurance company, carrying a policy covering the property burned, is secondary. In other words, a railroad company, under such circumstances, is charged as of an absolute fixed liability. The measure of responsibility of an insurance company is that of a surety, or one who indemnifies. A recovery from the railroad company, therefore, operates as a satisfaction of the indemnity afforded by the insurance policy. Allen v. Barrett, 100 Iowa 16, 69 N.W. 272; Carstairs v. Insurance Co., (C. C.) 18 F. 473; Inman v. Railway Co., 129 U.S. 128 (9 S.Ct. 249, 32 L.Ed. 612).

Whether an insurance company, having paid a loss under a policy issued by it, is entitled by subrogation to...