Lipshultz v. General Ins. Co. of America

• Decision Date: 29 May 1959
• Docket Number: No. 37699,37699
• Citation: 96 N.W.2d 880,256 Minn. 7
• Parties: Louis LIPSHULTZ and Joseph Dudovitz, d.b.a. Foodtown Supermarket, Respondents, v. GENERAL INSURANCE COMPANY OF AMERICA et al., Appellants.
• Court: Minnesota Supreme Court

Page 880

96 N.W.2d 880

256 Minn. 7

Louis LIPSHULTZ and Joseph Dudovitz, d.b.a. Foodtown

Supermarket, Respondents, v. GENERAL INSURANCE COMPANY OF AMERICA et al., Appellants.

No. 37699.

Supreme Court of Minnesota.

May 29, 1959.

Syllabus by the Court

1. If, under all the circumstances revealed by a stipulation of the facts, the parties could have reasonably foreseen that a complete interruption in the supply and distribution lines furnishing the necessary electric power for refrigeration purposes might occur and cause damage to the contents in plaintiffs' store in the manner and to the extent stipulated, such contingency was an element in the risk covered by insurance policies issued by defendants.

2. Since we have concluded from an examination of the policies issued that the word 'direct' as used in said policies means merely 'immediate' or 'proximate,' as distinguished from 'remote,' we are compelled to hold under the stipulation of fact, constituting the evidence in this case, that the cause of the damage was a question of fact and that the evidence clearly sustains the decision of the trial court.

3. Held that the loss which the plaintiffs suffered following the windstorm comes within the fair meaning of the term 'direct loss' in the insurance policies.

Carroll, Thorson, Anderson & Cronan and George S. Roth, Minneapolis, for appellants.

I. E. Krawetz, St. Paul, for respondent.

NELSON, Justice.

Prior to July 20, 1951, each defendant herein had issued a separate policy of insurance, substantially in the same form, insuring plaintiffs' stock in trade against direct loss by windstorm. The liability of each company was limited to the face amount of its policy, and each policy was in force at the time the loss and damage by windstorm here involved occurred. The General Insurance Company of America issued its policy in the amount of $14,000 and the other companies each in the amount of $10,000.

The following facts have been agreed to by stipulation of the parties:

'2. Prior to July 20, 1951, each defendant had issued to plaintiffs a separate policy of insurance, each of which was substantially in the same form, insuring the plaintiffs, among other things, against direct loss by windstorm to the contents of the premises occupied by the plaintiffs in the building located at 1546 Como Avenue, Saint Paul, Minnesota. The liability of each company was limited to the face amount of its policy, and each policy was in force on July 20, 1951. * * *

'4. At the time of the issuance of said policies of insurance and at the time of the happening of the loss and damage hereinafter mentioned, plaintiffs were the owners of certain merchandise and stock in trade contained and located in the premises at 1546 Como Avenue, Saint Paul, Minnesota. The merchandise and stock in trade consisted of both perishable and nonperishable foodstuffs including meats, fish, fruits, vegetables and dairy products. The perishable foodstuffs were refrigerated. The refrigeration equipment was powered by electricity furnished by Northern States Power Company.

'5. On the evening of July 20, 1951, a strong windstorm, accompanied by rain, struck the St. Paul area and caused considerable damage to the property throughout the city and disrupted the electric power supply to many sections of the city. The wind caused a break in the 13.8 kilovolt supply lines supplying the power company's Snelling substation located about one-half mile from the plaintiffs' store. The 4 kilovolt distribution lines serving the area in which the plaintiffs' store is located were also taken out of service by the storm. The power lines leading from the plaintiffs' store building to the power pole in the rear of the building were intact. The electrical lines and apparatus inside the building were intact.

'6. The breaks in the power lines resulted in complete interruption of the electric power supply to the insured premises from 9:18 o'clock P.M. on July 20, 1951, until at least 8:05 A.M. on July 22, 1951. The resulting interruption of power supplied to the refrigerating equipment on the insured premises caused spoilage and shrinkage of the insured stock in the amount of One Thousand Eighty and 02/100 Dollars ($1,080.02). Plaintiffs took all possible steps to minimize their loss.

'7. Plaintiffs have performed all conditions precedent on their part to be kept and performed, have given the defendants due notice of loss and have submitted to defendants proofs of loss as required by the policies.

'8. If the loss sustained by the plaintiffs came within the benefits or coverages extended by the policies described in the complaint, then plaintiffs' loss was One Thousand Eighty and 02/100 Dollars ($1,080.02), and plaintiff would be entitled to judgment against the defendants in the sum of One Thousand Eighty and 02/100 Dollars ($1,080.02), with interest at the rate of six per cent (6%) per annum from July 20, 1951, and their costs and disbursements herein, of which defendant General Insurance Company of America would be liable for 14/44ths, defendant Industrial Insurance Company would be liable for 10/44ths, defendant Underwriters Insurance Company would be liable for 10/44 and defendant Premier Insurance Company would be liable for 10/44ths.'

The perils covered by the insurance policies read 'FIRE & EXTENDED COVERAGE.' The extended coverage endorsement (perils of windstorm, hail, explosion, riot, riot attending a strike, civil commotion, aircraft, vehicles, smoke, except as thereinafter provided) reads in part as follows:

'In consideration of $ incl. premium, and subject to provisions and stipulations (hereinafter referred to as 'provisions') herein and in the policy to which this endorsement is attached, including riders and endorsements thereon, the coverage of this policy is extended to include direct loss by WINDSTORM, HAIL, EXPLOSION, RIOT, RIOT ATTENDING A STRIKE, CIVIL COMMOTION, AIRCRAFT, VEHICLES, AND SMOKE.'

The district court granted plaintiffs' motion for summary judgment. Judgments were entered pursuant thereto from which this appeal was taken.

The insuring agreement insures the plaintiffs against Direct loss by windstorm to the contents of the store occupied by the plaintiffs at the time in question. The sole question is whether the loss described in the stipulation of facts constitutes a direct loss by windstorm. The court below in granting summary judgment answered that question in the affirmative.

The contracts of insurance here involved do not appear to define the phrase 'direct loss.' Plaintiffs contend that under the facts presented there is a direct loss by windstorm as that term is used in the policies. They say that the entire community, including plaintiffs' premises, was subjected to a strong windstorm; that the wind knocked out the power company's Snelling substation and took out of service the distribution lines serving the immediate area; and that the interruption of power to the refrigerating equipment caused the loss through spoilage and shrinkage of their insured stock. Plaintiffs cite the following cases as controlling: Ermentrout v. Girard F. & M. Ins. Co., 63 Minn. 305, 65 N.W. 635, 30 L.R.A. 346; Russell v. German Fire Ins. Co., 100 Minn. 528, 111 N.W. 400, 10 L.R.A.,N.S., 326; Mork v. Eureka-Security F. & M. Ins. Co., 230 Minn. 382, 42 N.W.2d 33, 28 A.L.R.2d 987.

The Ermentrout case involved a fire loss. The insured building was located adjacent to another building in which the fire occurred. There was a partition wall between them. No part of the insured building was actually ignited or consumed by fire. The adjoining building, however, fell as a result of the fire, tearing down with it the partition wall and a part of the insured premises. This court, speaking through Mr. Justice Mitchell, said (63 Minn. 308, 65 N.W. 636) '* * * To render the fire the immediate or proximate cause of the loss or damage, it is not necessary that any part of the insured property actually ignited or was consumed by fire. This is so well settled that the citation of authorities in support of the proposition is unnecessary. The question is, was fire the efficient and proximate cause of the loss or damage? * * * The word 'direct,' in the policy, means merely 'immediate,' or 'proximate,' as distinguished from 'remote."

The court therefore held the loss to be a direct loss by fire despite the fact that there was no ignition on the insured premises. Plaintiff strongly urge that the Ermentrout case is authority for their contention that the damage which they sustained was a direct loss by windstorm.

In the Russell case the building of the insured adjoined the building which was consumed by fire. Fire consumed the entire adjacent building but left standing intact a wall on the side closest to the insured building. A few days later, after the fire had been extinguished, a strong wind blew the wall over upon the insured building. This court held that the fire was the proximate cause of the damage. It said that it has been clearly settled by a long line of decisions that what is meant by proximate cause is not that which is last in time or place, not merely that which was in activity at the consummation of the injury, but that which is the procuring and efficient cause. It further held that it is not necessary under policies of the character involved in that case (fire policy) that the damage should be occasioned by direct contact with the fire since, to render the fire the immediate or proximate cause of the loss or damage, it is not necessary that any part of the insured property actually ignited or was consumed by fire. It was also pointed out that the inquiry must always be whether there was any intermediate cause disconnected from the primary fault, constituting a self-supporting cause, which produced the injury.

In the Mork case the court was concerned with a policy of insurance on a dwelling which covered, among other things, direct loss or damage by...