Reishus v. Implement Dealers Mut. Ins. Co.

• Decision Date: 10 December 1962
• Docket Number: No. 8004,8004
• Citation: 118 N.W.2d 673
• Parties: Olaf REISHUS, d/b/a Reishus Construction Co., Plaintiff, Respondent and Cross-Appellant, v. IMPLEMENT DEALERS MUTUAL INSURANCE CO., a corporation, Defendant and Appellant, and Paul Boyle and City of Mohall, a municipal corporation, Defendants and Cross-Respondents.
• Court: North Dakota Supreme Court

Page 673

118 N.W.2d 673

Olaf REISHUS, d/b/a Reishus Construction Co., Plaintiff Respondent and Cross-Appellant, v. IMPLEMENT DEALERS MUTUAL INSURANCE CO., a corporation Defendant and Appellant, and Paul Boyle and City of Mohall, a municipal corporation Defendants and Cross-Respondents.

No. 8004.

Supreme Court of North Dakota.

Dec. 10, 1962.

Rehearing Denied Dec. 27, 1962.

Syllabus by the Court.

1. A preliminary oral contract for temporary insurance pending issuance of a written policy is valid and remains in force until it is superseded by the issuance of a regular policy, or until the risk is rejected by the insurer. The insurer is liable for any loss in the meanwhile.

2. Evidence reviewed and it is found that agent of defendant insurance company bound fire insurance on behalf of his principal.

3. Where a defense may be set forth as an affirmative defense or by way of a defense of failure to state a claim upon which relief can be granted, it is not waived under Rule 12(h), N.D.R.Civ.P., because it was not pleaded as an affirmative defense under Rule 8(c), N.D.R.Civ.P.

4. Section 26-14-13, N.D.C.C., providing if the premium on a policy of insurance issued by a mutual insurance company is not paid within 60 days in cash or in an unconditional note after the date of the issue of the policy voids the policy during the period of nonpayment of the premium, does not operate to void fire insurance bound by agent for his mutual company where the policy was not issued or rejected during the time and evidence discloses the insured, relying on agent's promises, did not procure insurance elsewhere and within the 60 day period insured had approached agent, inquired about payment of the premium and why he had not been billed for it, but was told by agent to wait as agent was too busy and that he would bill him later.

5. A person has an insurable interest in property by existence of which he will gain an advantage, or by the destruction of which he will suffer a loss, whether he has or has not any title in, or lien upon, or possession of the property. Section 26-02-06, N.D.C.C.

6. Where a City executes a contract to alter its community hall into a fire hall, builder's risk insurance may be carried in some solvent private company in an amount sufficient to protect the contractor. Section 48-01-03, N.D.C.C.

7. For reasons stated in the opinion, it is found builder's risk insurance covers builder's machinery, tools and equipment owned by the plaintiff, and similar property of others, for which plaintiff is legally liable and which is not otherwise covered by insurance.

Day, Stokes, Vaaler & Gillig, Grand Forks, for defendant and appellant Implement Dealers Mutual Insurance Co.

Ilvedson, Pringle, Herigstad & Meschke, Minot, for plaintiff, respondent and cross-appellant.

Palda, Palda, Peterson & Anderson, Minot, for defendant and cross-respondent Paul Boyle.

Bosard, McCutcheon & Coyne, Minot, for defendant and cross-respondent City of Mohall.

TEIGEN, Judge.

Plaintiff, Olaf Reishus, a contractor, and the defendant City of Mohall, a municipal corporation, entered into a contract whereby the plaintiff agreed to remodel a municipally owned building. While the work was in progress, the building was destroyed by fire. Thereafter, plaintiff sued the defendant City of Mohall and the defendant Implement Dealers Mutual Insurance Company, as plaintiff's insurer, in the alternative for the work performed remaining unpaid. In the same action it also sued the defendant Implement Dealers Mutual Insurance Company, as plaintiff's insurer, for plaintiff's loss of equipment, tools and machinery destroyed by the fire. As a second alternative, plaintiff sued the defendant Paul Boyle, agent of the defendant Implement Dealers Mutual Insurance Company, for negligence on both losses.

The action was tried to the court without a jury. Judgment was entered in favor of the plaintiff against the defendant Implement Dealers Mutual Insurance Company, and for a dismissal of plaintiff's complaint against the City of Mohall and Paul Boyle.

The defendant Implement Dealers Mutual Insurance Company appealed from the judgment against it demanding a trial de novo. The plaintiff, Olaf Reishus, cross-appealed from the judgment dismissing his complaint against the City of Mohall and Paul Boyle demanding a trial de novo.

In his complaint the plaintiff alleged that in November of 1957, he and the defendant City entered into a contract whereby the plaintiff agreed to furnish labor and materials for remodeling an existing community hall into a fire hall for the agreed sum of $15,037.50; that in December of 1957, plaintiff applied to the defendant Paul Boyle, an agent of the defendant Implement Dealers Mutual Insurance Company, for builder's risk, fire and extended coverage insurance covering the work, materials, tools and equipment which was accepted and bound by the said Paul Boyle; that the said Paul Boyle transmitted an application for the insurance to his principal, the defendant Implement Dealers Mutual Insurance Company, forthwith and that no policy was delivered to the plaintiff. The plaintiff undertook the remodeling work but on March 3, 1958, before it was completed, the building and the materials, tools and equipment at the site were totally destroyed by fire. Plaintiff alleges the work completed and materials furnished when the fire occurred were valued at $9,809.00 of which the defendant City of Mohall had paid to the plaintiff the sum of $4,623.75, leaving a balance due of $5,185.25. The machinery, tools and equipment destroyed on the premises were valued at $7,759.93 and plaintiff alleges that if the defendant Paul Boyle did not bind or procure the insurance applied for, he negligently failed to do so to the plaintiff's loss in both of the aforementioned amounts, to wit, $12,945.18.

The defendant Paul Boyle answering admits the allegations of the complaint, except he denies being negligent, and places the plaintiff on his proof as to the amount of the loss.

The defendant insurance company answering generally denies the allegations of the complaint and specifically denies that it agent, Paul Boyle, transmitted an application for the insurance in December of 1957 and alleges that at no time, prior to the loss, was any contract for insurance made or any application therefor submitted to it by any person. As a second defense, it alleges the contract between the plaintiff and defendant City of Mohall provides that fire insurance was to be carried by the defendant City of Mohall with the plaintiff designated as coinsured.

The defendant City of Mohall answered and counterclaimed. It admits the building contract, the commencement of the work and the total destruction of the building by fire. It does not deny or admit other matters pleaded in the complaint and places the plaintiff on his proof. It denies any balance due the plaintiff and sets up three counterclaims. The first one in tort alleging the plaintiff or his agent negligently set fire to the building. This was dismissed on stipulation during the trial. Second, in breach of contract alleging parol modification of the builder's contract to provide that plaintiff would furnish builder's risk insurance which he failed to do. Third, that plaintiff made the application for insurance alleged in the complaint at the special instance and request of the City and for its benefit. It also prays that it be subrogated to the rights of the plaintiff against the defendant insurance company and asks judgment against the defendant Boyle.

The trial court found on application of the plaintiff that on December 16, 1957, the defendant Paul Boyle, a duly authorized agent of the defendant Implement Dealers Mutual Insurance Company, insured the building, improvements and equipment by an insurance binder, against loss or damage by fire in the amount of $17,942.00 on behalf of his principal, defendant Implement Dealers Mutual Insurance Company; that the plaintiff relied on Boyle's promise to insure and therefore he did not procure insurance elsewhere; that the insurance binder became effective December 16, 1957, and was still in effect on March 3, 1958, the date of the fire. The trial court therefore ordered judgment against the defendant Implement Dealers Mutual Insurance Company.

The trial court also found the written contract between the plaintiff and the defendant City of Mohall had not been modified by parol and it dismissed the claim of the defendant City of Mohall that it was a coinsured. The court found that the plaintiff was entitled to no relief against the defendant Paul Boyle or the defendant City of Mohall.

The Implement Dealers Mutual Insurance Company appealed. In its appeal it named and served only the plaintiff as respondent. The plaintiff then appealed, naming and serving the remaining defendants as respondents. Trial de novo is demanded in both appeals.

The plaintiff's prayer for relief set forth in his complaint is in the alternative and he argues he has taken the cross-appeal to preserve his claim in the alternative, in the event the appeal taken by the defendant Implement Dealers Mutual Insurance Company should be decided in its favor.

We will first consider the appeal of the defendant Implement Dealers Mutual Insurance Company which will determine whether or not we must then consider plaintiff's cross-appeal. If the judgment is affirmed, the issues raised by the cross-appeal are moot.

The appellant, defendant Implement Dealers Mutual Insurance Company, a corporation, will hereafter be referred to as defendant insurance company for the sake of convenience. In its specifications of error, it merely specifies that the findings of the court against it are in error. In its brief and argument to this court, it has argued four points, as follows: (1) Insufficiency of the evidence to sustain the judgment; (2) Assuming the contract of insurance came into effect on December 16, 1957,...