Queen Ins. Co. of America v. Kaiser

• Decision Date: 01 June 1965
• Citation: 27 Wis.2d 571,135 N.W.2d 247
• Parties: The QUEEN INSURANCE CO. OF AMERICA, Appellant, v. Oscar KAISER et al., d/b/a Kaiser Building Managment Co., Respondents.
• Court: Wisconsin Supreme Court

Page 247

135 N.W.2d 247

27 Wis.2d 571

The QUEEN INSURANCE CO. OF AMERICA, Appellant, v. Oscar KAISER et al., d/b/a Kaiser Building Managment Co., Respondents.

Supreme Court of Wisconsin.

June 1, 1965.

Kivett & Kasdorf, Milwaukee, James G. Forester, Milwaukee, of counsel, for appellant.

Kenneth M. Kenney, Wolfe, O'Leary, Kenney & Wolfe, Milwaukee, for respondents.

BEILFUSS, Justice.

The issue is,--do the terms of the exculpatory clause of the lease exonerate the lessor from liability for damages sustained by the lessee and caused by the negligence of the lessor.

It is conceded that the plaintiff insurer cannot recover under its subrogation agreement unless its insured (tenant Bruner) had a right to recovery. Frederick v. Great Northern Railway Co. (1932), 207 Wis. 234, 240 N.W. 387, 241 N.W. 363, 80 A.L.R. 984.

The legality of an exculpatory clause has not been challenged by the plaintiff.

'The basis upon which the courts have upheld the validity of exculpatory clauses in lease contracts has been the broad ground of public policy and the freedom of contract guaranteed by the federal and state constitutions. More specifically, it has been held that the landlord and tenant relationship is not a matter of public interest, but relates exclusively to the private affairs of the parties concerned and that the two parties stand upon equal terms, * * *.' Anno. 175 A.L.R. 8, 86, 87. See also, in general, Annos. 84 A.L.R. 654; 26 A.L.R.2d 1044, secs. 11, 13, 14, 15.

The plaintiff-appellant contends the exculpatory clause should be strictly construed against non-liability and thus construed, the terms of the lease do not exonerate the lessor from liability under the facts of the case. The argument is that the water pipes froze and burst in an area not leased by Bruner and over which Bruner had no control, and that the parties did not intend that the lessor should be relieved from liability caused by the negligent acts of the employees of the lessor.

In Johnson v. Prange-Geussenhainer Co. (1942), 240 Wis. 363, 375, 2 N.W.2d 723, 728, it is stated:

'* * * the rule of strict construction cannot be used as an instrument for defeating the clear intention of the parties. * * *'

It is clear that this exculpatory clause was intended to limit the liability of the lessor. Clauses of this kind are not uncommon and are a proper subject of the bargain of the parties.

As stated in Lernar v. Heicklen (1926), 89 Pa.Super. 234:

'It is not unreasonable to assume that the consideration that induces a tenant to enter into such a covenant is the fixing of a lower rental for the demised property than would otherwise be demanded by the lessor. Upon this matter the parties may bargain freely and agree upon their own terms. The covenant in question contravenes no policy of the law. * * *'

The clause may be broken down to four parts: (1) 'Lessor shall not be liable for any damage occasioned by failure to keep the premises in repair;' (2) 'and shall not be liable for any damage done or occasioned by or from plumbing, gas, water, steam or other pipes, or sewerage, or the bursting, leaking or running of any cistern, tank, wash-stand, water-closet, or wastepipe in, above, upon or about said building or premises;' (3) 'nor for damages occasioned by water, snow or ice being upon or coming through the roof, skylight, trap door or otherwise;' (4) 'or for any damage arising from the acts or neglect of co-tenants or other occupants of the same building.'

The clause read as a whole expresses a broad intention to limit the liability of the lessor. The second part contains the most significant limitation under the facts of this case. This portion of the clause provides that the lessor shall not be liable for damage caused by or from plumbing, water, or other pipes 'in, above, upon or about said building or premises.' The language 'in, above, upon or about said building or premises' is very broad and inclusive. We conclude that the parties did not intend to limit exculpation from liability to damage originating within the physical limits of building 1-A. The fact that Bruner obtained insurance to protect itself against...