Western Mut. Ins. Co. v. Baldwin, 51849

• Decision Date: 16 November 1965
• Docket Number: No. 51849,51849
• Parties: WESTERN MUTUAL INSURANCE COMPANY, Appellant, v. Milton BALDWIN and Chicago, Burlington & Quincy Railroad Company, Appellees.
• Court: Iowa Supreme Court

Page 918

137 N.W.2d 918

258 Iowa 460

WESTERN MUTUAL INSURANCE COMPANY, Appellant, v. Milton BALDWIN and Chicago, Burlington & Quincy Railroad Company, Appellees.

No. 51849.

Supreme Court of Iowa.

Nov. 16, 1965.

Bannister, Carpenter, Ahlers & Cooney, Des Moines, for appellant.

William H. Mecham, Omaha, Neb., and LaVon E. Billings, Red Oak, both for appellee Milton Baldwin.

Pryor, Riley, Jones & Walsh, Burlington, for appellee Chicago, Burlington & Quincy Railroad Co.

SNELL, Justice.

This is an action in equity for declaratory judgment wherein plaintiff insurance carrier seeks relief from contractual liability because of breach of policy conditions, lies and what the dictionary defines as bribery.

The trial court found and we agree that there is no substantial controversy in the evidence.

Plaintiff is a mutual insurance company authorized to do business in Iowa.

Defendant Baldwin is a resident of Red Oak. He owns a farm a short distance southwest of Red Oak. The right of way of defendant Chicago, Burlington & Quincy Railroad Company adjoins the Baldwin land on the north. Adjacent to the Baldwin land and as a part of the railroad right of way is a bridge spanning the Nishnabotna River.

In April 1962 plaintiff issued to defendant Baldwin its 'Farmer's Comprehensive Personal Liability Policy.' Coverage 'L' of this policy insured defendant Baldwin against personal legal liability up to $25,000 and contained the usual obligation to defend.

Condition 5 of the policy provided:

'Assistance and Cooperation of the Insured--Coverage L. The insured shall cooperate with the company and, upon the company's request, assist in making settlements, in the conduct of suits, and in enforcing any right of contribution or indemnity against any person or organization who may be liable to the insured because of bodily injury or property damage with respect to which insurance is afforded under this policy; and the insured shall attend hearings and trials and assist in securing and giving evidence and obtaining the attendance of witnesses. The insured shall not, except at his own cost, voluntarily make any payment, assume any obligation or incur any expense other than for such immediate medical and surgical relief to others as shall be imperative at the time of the accident.'

Condition 8 of the policy provided:

'Action Against Company--Coverage L. No action shall lie against the company unless, as a condition precedent thereto, the insured shall have fully complied with all the terms of this policy, nor until the amount of the insured's obligation to pay shall have been finally determined either by judgment against the insured after actual trial or by written agreement of the insured, the claimant and the company.

'Any person or organization or the legal representative thereof who has secured such judgment or written agreement shall thereafter be entitled to recover under this policy to the extent of the insurance afforded by this policy. No person or organization shall have any right under this policy to join the company as a party to any action against the insured to determine the insured's liability, nor shall the company be impleaded by the insured or his legal representative. Bankruptcy or insolvency of the insured or of the insured's estate shall not relieve the company of any of its obligations hereunder.'

It now appears from the testimony of defendant Baldwin, and accepted as a fact by all parties, that in the early afternoon on March 23, 1963 Baldwin went to his farm and started a fire to burn off weeds and trash so that it could be seeded. The fire was started in a sheltered area at the south end of the farm. Baldwin watched the fire for about two hours as it burned over the fields toward the northeast and to the railroad right of way. As the fire spread to the open field north of where it was started the rate of burning increased. Baldwin attempted to follow the fire in his car across his corn ground but became stuck. The house on the farm was occupied by Mr. Dale Meek. Baldwin walked to the house, sought and obtained Meek's help in freeing his car. Meek testified that Baldwin, during their conversation said 'Looks like I started quite a fire.'

Baldwin left to watch 'a tremendous flock of geese' on a neighbor's farm and then drove north to the railroad right of way where the fire was burning within 100 yards of the bridge. After watching five to ten minutes Baldwin returned to his store in Red Oak. Some time later he learned that the bridge was on fire. He returned to the fire, observed with consternation the damage, and then went to see Mr. Meek. Baldwin told Meek not to tell that he, Baldwin, was even at the farm. During plaintiff's subsequent investigation of the fire Meek, in a statement, followed Baldwin's instructions.

The railroad's claim for damage to its bridge was $53,790.

Baldwin reported the fire to plaintiff's insurance agent. An employee of plaintiff investigated and Baldwin gave him a written statement reading as follows:

'March 27th 1963

'Red Oak, Iowa

'On Sat March 23--1963--I came out to my farm and first noticed some fire over South & East from my buildings, over in the timber area. This was about 1:30 PM.

'I originally came to the farm to see if my lot was dry enough to shell corn.

'This 40 to 50 acres was seeded down in spring 1962--that burnt.

'I then walked out to the timber area and saw it was burning fairly slow and at that time did not believe the fire to cause any damage--because the river was on the east & to the north the high Railroad Right of fairly (was bare) MB (sic) some 30 ft. high.

'In had my car stuck and after getting it out the fire had burnt to the railroad and apparently was out.

'Before 3 PM I had walked down towards the bridge and from all appearance the fire was out.

'When I first came out to the fire I would estimate the wind at 20 to 25 MPH and blowing from the almost due south, at least the smoke later from the bridge was going straight north.

'After the railroad men were to see me I went out to try and find where the fire had started, after following sough where it was burnt, the burnt area went south over into railroad land. There is an area of 2 to 3 acres on south of my land that was burnt.

'Fire apparently started south of my property.

'The railroad land south of my property is in the area of over 20 acres.

'About 10 acres located on the (north side) MB (sic) of the river where from all appearance the fire started.

'No way of knowing just how the fire could of started in the brush of mostly willow and undergrowth.

'My timber land being only about 1/2 mile from town it is quite common for people to hunt and fish without having any trouble.

'I have read the above statement from page #1 & page #2 and it is true as to the bast of my knowledge.

'Milton Baldwin

'2116 Eastern Ave.

'Red Oak, Iowa'

Further investigation was assigned to Walter Heitzman, a lawyer and adjuster experienced in handling serious claims. Heitzman and the adjuster who took the first statement contacted Baldwin on April 1 or April 2, 1963. The adjusters and Baldwin went over the farm and burned area. While there Baldwin claimed that the fire started on land south of his farm. He reaffirmed his prior statement and indicated that he had a claim for fire losses in his seeded area. Heitzman accepted Baldwin's story and had a local realtor view the premises to appraise the damage and a photographer take pictures to preserve the record that the fire started south of the Baldwin land.

On March 25, 1963 Baldwin gave a written statement to a special agent of the railroad company. In it he said: '* * * On March 23, 1963 I had a fire on my land which burned a number of acres and also burned some Railroad Property. I had gone down to my farm at 1:30 P.M. on March 23, 1963 and at that time there was a fire burning on my land naxt to the River Bank and in a timber area. * * * I did not start any fire on my property and I do not know who did * * *.'

Some time later two investigators for the railroad called on Baldwin. In a subsequent statement reported in question and answer form by a court reporter Baldwin gave this version of their conversation.

'Q. What was their purpose of seeing you? A. To talk to me about the origin of that fire.

'Q. Did they do this at your office? A. Yes.

'Q. Upon one occasion or more? A. I believe they were in twice in the period that they were here.

'Q. Did they take a signed statement? A. No.

'Q. What did you tell them as to the origin of the fire? A. I had not changed my story at that time about the origin of the fire.

'Q. What was their attitude as a result of their investigation? A. Special investigator said, I fell that we know the source of the fire; that our investigation points definitely to you and that we would like to clean this thing up here and now. He further stated this, he says, if you did set that fire and we can clear this thing up, I think I can get the Burlington Railroad to settle this case--not settle, but to agree to not assess me over the $25,000 damages that I had liability insurance on.

'Q. How did this representative know your policy limits? A. I have shown them my policy. The first investigator was in there; I had shown our policy 'cause I had got it out and looked it over to see what I did have.

'Q. You had shown the policy to the original investigator from the CB&Q, and, at the same time, however, you were denying knowledge of the origin of the fire? A. That is right.

'Q. Now, the second representative who you mentioned to be from Burlington-- to repeat you here--stated that he felt that the CB&Q would accept settlement or agree to a settlement of your policy limits upon what qualifications, sir? A. He said if, and, repeating myself, if you did set that fire and we can conclude this case, that he thought that he could get the officials of the Burlington Railroad to agree to a settlement not over the policy...