Tischendorf v. Lynn Mut. Fire Ins. Co.

• Decision Date: 11 May 1926
• Citation: 190 Wis. 33,208 N.W. 917
• Parties: TISCHENDORF v. LYNN MUT. FIRE INS. CO.
• Court: Wisconsin Supreme Court

190 Wis. 33

208 N.W. 917

TISCHENDORF

v.LYNN MUT. FIRE INS. CO.

Supreme Court of Wisconsin.

May 11, 1926.

Appeal from Circuit Court, Clark County; Emery W. Crosby, Judge.

Action by Gust Tischendorf against the Lynn Mutual Fire Insurance Company. From a judgment of dismissal, plaintiff appeals. Affirmed.

On the 30th day of April, 1924, the plaintiff, being the owner of a 90-acre farm in the town of Mayville, in Clark county, executed a lease of said farm to one Luloff for a period of three years, the lessee agreeing to pay to the plaintiff as rental the sum of $500 per year. The lease, among other things, contained the following provision:

“The rent is to be paid when the party of the second part sells the hay which must be sold on or before March 1st of each year; * * * and the party of the second part does promise and agree to pay said rent at the time and manner aforesaid, during the continuance of said term. * * * If the party of the second part shall fail to pay the rent aforesaid, at the times expressed in this lease, then the party of the first part may enter on and expel the party of the second part from said premises, and said party of the second part shall be held to have forfeited such rent as he shall have paid hereunder and shall be liable to said party of the first part for such payment or payments of rent hereunder which are then due and unpaid, and it is stipulated that in case the premises should be sold during said term, then in that case the party of the first part may terminate and cancel this lease by giving a notice of thirty days to party of second part, who shall thereupon vacate the premises according to such notice, after party of the first part makes satisfactory settlement as to crops.”

On the 23d day of September, 1923, the plaintiff procured a policy of insurance in the defendant company, for three years, for the sum of $8,500, $1,000 of which amount being insurance on hay, grain, and fodder in buildings and stacks on premises. Immediately upon the execution of the lease, the tenant, Luloff, went into possession of the premises and on the 26th day of September, 1924, some of the buildings were destroyed by fire, and also a quantity of hay, of a value in excess of $500. After the fire, the plaintiff, with the consent of the tenant had inserted the following provision in the lease: “The rent shall be paid out of the first hay sold, and the first party shall have title thereto as security until paid.”

On the trial of the action the plaintiff prayed, among other things, for a reformation of the lease, that the lease as executed did not fully or properly express the intention of the parties and that it was understood by them when the lease was executed that a provision like the one inserted after the fire had been included therein. The plaintiff testified, among other things, as follows:

“We (meaning the witness and the tenant) later agreed that the first hay sold belonged to me for the rent. If that was not actually written in the lease, I didn't know it; I can't read it; I surely thought that was in there; we agreed to that.”

He also testified that it was agreed that he was to hold the hay as security for the rent until the rent was paid. He also testified adversely, before the trial, that Luloff and his wife had come to his farm and asked him how much rent he wanted, and that they came to an agreement that the farm was to be rented for three years at $500 a year; that at no time prior to the fire, although he had met Mr. Steinwand, the agent of the insurance company, had he informed him that he claimed a lien on the hay to secure his rent. Plaintiff also testified that he was to get his $500 first, and that no hay could be sold until he had his $500 rent.

Luloff, among other things, testified that the hay belonged to the plaintiff until the $500 was paid out of it. One Sorenson, the banker who drew the lease, testified that the lease was written in accordance with instructions given him by Luloff, after a conference with the plaintiff, and he interpreted the lease in the form in which it was drawn to the effect that the rent was to be paid out of the proceeds of the hay. Not all of the hay raised was destroyed by the fire, and it appears from the undisputed evidence that, of the remaining hay, $69 worth was sold by the tenant, and that he retained the proceeds, and that no request was made of him by the plaintiff for the amount so realized. It also appears from the evidence that during the negotiations between the parties prior to the execution of the lease nothing whatever was said with respect to insurance, or that a destruction of the hay by fire was even contemplated.

The court, upon the trial, ruled liberally in favor of the plaintiff, and admitted all of his offered testimony, and the testimony of his witnesses, in order to form the basis for a reformation. It further appears that the tenant had no means out of which to pay the rent excepting what he derived from the crops raised on the farm.

At the conclusion of the trial, in an opinion rendered and filed by the learned trial judge, he found that the testimony of both the plaintiff and Luloff on the subject of the proposed reformation was an afterthought, and devised in order to strengthen plaintiff's case. He based his opinion, in part, upon the failure of the plaintiff to make any claim upon his adverse examination, to the effect that he either retained the title to the hay until the rent was paid, or that he had a lien upon the hay, that the parties at the time of entering into the lease did not discuss the subject of the destruction of the hay by fire, or the subject of insurance, and that the matter was not in contemplation of the parties at that time, that after the fire a large quantity of hay which had not been burned was sold by the tenant, who collected the proceeds and did not account for the same to the plaintiff, and that such proceeds were retained with the knowledge and consent of the plaintiff, thus showing by the conduct of the parties that the matters involved in the issue as to the reformation were an afterthought. He also held that when the lease was executed the plaintiff surrendered the farm to the lessee, and that the hay crop raised thereon belonged to the lessee absolutely, and that the plaintiff retained no title or interest therein, that the plaintiff depended solely upon the promise of the tenant, as contained in the lease, to pay the rent at the time stipulated therein, and that the provision in the lease which provided for the payment of the rent at the time when the hay should be sold, and not later than the 1st day of March in each year, merely fixed a time when rent should become due and payable.

Appropriate findings were thereupon made and filed, and upon such findings judgment was rendered in defendant's favor as above indicated, from which judgment the plaintiff has prosecuted this appeal.

Herman Leicht, of Medford, for appellant.

Rush & Devos, of Neillsville, for respondent.

DOERFLER, J. (after stating the facts as above).

[1][2] At the time the lease was executed, the plaintiff, under the fire insurance policy from the defendant, had a coverage of $1,000 on the hay. Had he at that time sold the hay then upon the farm, or the hay to be raised in the future, the same would then cease to be covered by the policy on account of the change in ownership. It is the established rule that where an owner of a farm executes a lease of the same for a period of years, there being no reservations or limitations in the lease as to the title to the crops, the lessee takes an absolute title, with the result that the owner also parts with an insurable interest in such crops. Layng v. Stout, 155 Wis. 553, 556, 145 N. W. 227, 228. The landlord, however, may by an agreement in the lease, express or implied, retain the title to the crops or an interest in the crops, or a lien thereon, for the payment of the rent to become due. Andrew v. Newcomb, 32 N. Y. 417;Smith v. Atkins, 18 Vt. 461; Whitcomb v. Tower, 12 Metc. (Mass.) 487. And, as is said in the Layng Case, “The rule announced in these decisions is approved in Lanyon v. Woodward, 55 Wis. 652, 656, 13 N. W. 863; and in Rowlands v. Voechting, 115 Wis. 352, 356, 91 N. W. 990.”

[3] The question therefore arises in the instant case whether the plaintiff, in leasing his farm, retained either the title to the crops, an interest therein, or a lien upon the same, so that it might be said that he had at the time of the fire an insurable interest in the hay. In 14 R. C. L. 910, 911, it is said:

“It may be said generally that any one has an insurable interest in property who derives a benefit from its existence or would suffer loss from its destruction. It is not necessary, to constitute an insurable interest, that the interest is such that the event insured against would necessarily subject the insured to loss; it is sufficient that...