Stoes Bros., Inc. v. Freudenthal

• Decision Date: 19 December 1969
• Docket Number: No. 346,346
• Citation: 1969 NMCA 124,81 N.M. 61,463 P.2d 37
• Parties: STOES BROTHERS, INC., Plaintiff-Appellant, v. L. E. FREUDENTHAL and Max A. Freudenthal, d/b/a Valley Insurance Agency, Defendants-Appellees.
• Court: Court of Appeals of New Mexico

Page 37

463 P.2d 37

81 N.M. 61

STOES BROTHERS, INC., Plaintiff-Appellant, v. L. E. FREUDENTHAL and Max A. Freudenthal, d/b/a Valley Insurance Agency, Defendants-Appellees.

No. 346.

Court of Appeals of New Mexico.

Dec. 19, 1969.

[81 NM 61] T. K. Campbell, Las Cruces, for plaintiff-appellant.

Paul A. Cooter, John W. Bassett, Jr., Atwood, Malone, Mann & Cooter, Roswell, for defendants-appellees.

OPINION

SPIESS, Chief, Judge.

The plaintiff (appellant) brought this suit in tort against its insurance broker (appellee); charging him with negligence in failing to obtain business interruption insurance. Plaintiff claims that it sustained substantial damage through loss of business occasioned by fire damage to its place of business.

This appeal is from a judgment entered pursuant to a jury verdict dismissing plaintiff's cause of action as to the defendant, Max A. Freudenthal. The defendant, L. E. Freudenthal, was dismissed at the close of plaintiff's case and this dismissal is not an issue here. Plaintiff contends here that the trial court erred in instructing the jury as it did on the issue of contributory negligence and it further erred in refusing to give a contrary instruction tendered by plaintiff.

Plaintiff acquired a going business which was engaged in the purchase, sale and processing of livestock feed, together with the sale of other commodities utilized in farming and ranching. It secured the services of defendant, a licensed insurance broker, to review the insurance coverage which had been maintained by the business and to recommend such other and additional coverage as he considered essential to adequately protect plaintiff against losses it might sustain.

Defendant prepared and submitted a brochure to plaintiff embodying his findings as to coverage which had previously been carried by the business, together with his recommendations relating to coverage which should be maintained. The brochure expressly included a recommendation that plaintiff maintain business interruption insurance. It appears from the record that defendant did write certain of the recommended policies, but did not write business interruption insurance and was not specifically directed by plaintiff to obtain business interruption coverage.

It is plaintiff's position that it had an oral agreement with defendant under which he agreed to write all of the insurance necessary to adequately protect plaintiff's property and business. The agreement, although not specifying the type of coverage to be written, contemplated the writing of business interruption insurance in that such insurance was essential in securing adequate protection for a business of the kind operated by plaintiff. Plaintiff further asserts, as we have stated, that defendant negligently failed to write or procure business interruption insurance coverage.

Plaintiff says that 'it relied solely upon the recommendations of the defendant in writing the insurance protection against losses in the operation of the business, and that any prudent and skillful insurance agent would have written a business interruption policy for the type of business in which plaintiff was engaged.'

Evidence is conflicting as to the extent of defendant's obligations under the agreement; that is, whether he was obligated to write all insurance necessary to adequately protect plaintiff or only coverage requested by plaintiff and within a cost which plaintiff could meet. Evidence is also conflicting concerning plaintiff's reliance solely upon the advice of defendant, as well as the opportunity of plaintiff's officers to read the insurance policies which defendant had written and maintained for plaintiff.

It appears to be undisputed that a number of policies of insurance were in plaintiff's possession from the date of the acquisition of the business on or about August 1, 1967, until the date of the fire, October 21, 1967. The instructions which are the subject of the claims of error are:

'8. You are instructed that in connection with the defense of contributory negligence, you are instructed that should you find that the plaintiff, by its agents Richard Stoes and Phillip Stoes, failed to read the policies in its possession or to request or obtain insurance coverage which would have protected plaintiff for the losses of the type alleged in the complaint to have been suffered by the plaintiff, then you may consider such to determine whether or not the plaintiff was contributorily negligent, as such term is defined herein.'

'9. In determining the issues of negligence and contributory negligence, you are not to consider whether the plaintiff was more or less negligent than the defendant. New Mexico law does not permit you to compare negligence. The plaintiff cannot recover if he was negligent and that negligence was a proximate cause of the loss and alleged damages, even though you believe that the defendant may have been more negligent.'

The instruction tendered, and which the trial court refused follows:

'5. You are instructed that where an insurance agent or broker undertakes to review the insurance program of a customer and advise him of his insurance needs and where the customer relied upon and believed that the agent had fulfilled his undertaking to provide the coverage necessary for his protection, that the customer is not thereafter obligated to examine the policies and read them to ascertain the coverage which he has.'

In view of the issues presented to the jury it is impossible for us to determine whether the verdict was based upon a finding that defendant was not negligent or that plaintiff...