WOODROUGH, Circuit Judge.
This action was brought by Harry Goldman as plaintiff against General Mills, Inc., as defendant, to recover damages suffered by the owners of a manufacturing plant located on Hiawatha Avenue in Minneapolis through its destruction by fire on January IS, 1948. General Mills was in possession of and operating the plant as a tenant under a ten year lease at the time of the fire and the action was in tort based upon plaintiff’s claim that the fire and resultant damages were caused by defendant’s negligence. The defendant denied that the fire was caused by negligence on its part and pleaded that the terms of its lease excepted it from obliga[360] tion to the lessor in the event of “loss by fixe” of the plant and exonerated it from liability to the owners for the destruction of the property by the fire.1 The plaintiff stood in the shoes of the owners of the property in respect to the claim against the defendant for damages by virtue of assignments and there was federal jurisdiction on [361] account of diversity of citizenship. The law to be applied was that of Minnesota.
On the trial of the case the court determined as a matter of law that under the terms of the lease which except the tenant from obligation in the event of “loss by fire” of the leased plant the tenant was not excepted from liability for “loss by fire” if [362] the fire occasioning the loss was caused by negligence on the part of the tenant. Defendant’s position .was and is that it does not know what caused the fire, but there was evidence that the fire started when a man named Ojala, in the course of his work as an employee of defendant, placed a hot, freshly cast aluminum pot in the sump of a [363] Bullard machine for the purpose of cooling the casting. The sump contained a mixture of B-l and kerosene and plaintiff claimed that the act was negligent and caused the fire. The court submitted the issue as to whether negligence of defendant was a proximate cause of the fire to the jury, and the jury returned a verdict on that issue in favor of the plaintiff,2 which was sustained by the court over defendant’s motion to set it aside for want of evidence to support it. The parties in open court stipulated to the effect that if defendant was liable the amount of liability should be fixed at $142,500. The court, in pursuance of its own determination that defendant was not excepted from liability by the terms of the lease if defendant’s negligence caused the fire, the finding of the jury that defendant’s negligence was a proximate cause of the fire, and the stipulation of the parties as to the amount of damages, entered judgment for plaintiff against defendant for $142,500 and costs.
General Mills appeals and contends for reversal among other things, that the undisputed evidence established that the lease provisions were drawn and were agreed to in contemplation of the mutual understanding of the parties that the risk of loss by fire of the demised premises would be carried by a fire insurance company and not by either of the parties to the lease. That the amount of the rental of $15,000 a year plus taxes was agreed to on that basis and therefore included the cost of fire insurance. That the true intent and meaning of the contract of lease between the landlords and the tenant in force and effect at the time of the fire was that the tenant should not be liable to the landlords for the loss by fire of the leased premises and that the exoneration from liability for loss by fire mutually agreed upon was not limited expressly or by implication to fire occurring without negligence but extended to and included fire caused by negligence of an employee ■of the tenant engaged in the manufacturing for which the premises were demised. That such contract was valid and binding upon the parties under Minnesota law and that the court erred in its determination that the tenant was not thereby exonerated from liability in the action. That the court erred in refusing to enter judgment for defendant.
The considerations upon which the trial court determined that the general law of negligence was applicable to the action and that the lease provisions covering loss by fire did not except the defendant from liability for the loss by fire of the manufacturing plant if the fire was caused by negligence attributable to the defendant are set forth in the opinion of the court which accompanied its order denying defendant’s motion for judgment or in the alternative for new trial. In the opinion the court correctly stated the settled law in Minnesota that whether the lease provisions exempted defendant from loss by fire caused by its negligence depended upon the intent of the parties to the contract and that that intent was to be determined by reading the contract as a whole in the light of the subject matter, surrounding circumstances, the ob[364] jects and purposes and the natural meaning of the language used. The court also recognized, as the undisputed evidence conclusively showed, that “the understanding was that plaintiff assumed the responsibility for the insurance coverage on the building for fire * * * ” and that the landlords did take out the fire insurance and that on proof of the “loss by fire” the insurance company paid the full amount of the insurance in a sum exceeding the landlord’s total investment in the property. But the court noted and stressed the fact that “the lease does not require the lessor to carry any insurance” and that it contained no express agreement that the lessor would pay the fire insurance premiums out of the rentals. It concluded that “the insurance obligations of .the plaintiff do not aid defendant here” and it attached no significance favorable to defendant to any of the evidence in the record concerning the contemplated and executed coverage of the risk of “loss by fire” by' the fire insurance company. On the contrary, it approached the inquiry as to what was in the minds of these parties and what they meant in respect to the happening of loss by fire of the leased property from considerations of abstractly possible meanings of “loss by fire” in the paragraph of the lease where the words are found and of the public policy involved in contracting against obligation for one’s own' negligence and of whether the word “fire5’ in the lease ought to be strictly construed against or liberally construed in favor of the tenant. Through its approach and course of reasoning it came to the conclusion that the parties did not intend that the tenant should be relieved from liability for a loss by fire if the fire-occurred in the ordinary way in which fires in manufacturing plants occur3 but that they meant that the tenant should be so relieved only if the fire' occurred in some such extraordinary -way not illustrated by example as to present nothing on which a jury could find negligence as a cause thereof. The interpretation so put upon the covenant of the lease for exemption of the lessee from liability for loss by fire reduced the covenant for exemption as a practical matter to triviality so far as General Mills was concerned and the unfortunate destruction by fire led to an award to plaintiff of some $30,000 more than his predecessors in interest had invested in the property the year before.
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WOODROUGH, Circuit Judge.
This action was brought by Harry Goldman as plaintiff against General Mills, Inc., as defendant, to recover damages suffered by the owners of a manufacturing plant located on Hiawatha Avenue in Minneapolis through its destruction by fire on January IS, 1948. General Mills was in possession of and operating the plant as a tenant under a ten year lease at the time of the fire and the action was in tort based upon plaintiff’s claim that the fire and resultant damages were caused by defendant’s negligence. The defendant denied that the fire was caused by negligence on its part and pleaded that the terms of its lease excepted it from obliga[360] tion to the lessor in the event of “loss by fixe” of the plant and exonerated it from liability to the owners for the destruction of the property by the fire.1 The plaintiff stood in the shoes of the owners of the property in respect to the claim against the defendant for damages by virtue of assignments and there was federal jurisdiction on [361] account of diversity of citizenship. The law to be applied was that of Minnesota.
On the trial of the case the court determined as a matter of law that under the terms of the lease which except the tenant from obligation in the event of “loss by fire” of the leased plant the tenant was not excepted from liability for “loss by fire” if [362] the fire occasioning the loss was caused by negligence on the part of the tenant. Defendant’s position .was and is that it does not know what caused the fire, but there was evidence that the fire started when a man named Ojala, in the course of his work as an employee of defendant, placed a hot, freshly cast aluminum pot in the sump of a [363] Bullard machine for the purpose of cooling the casting. The sump contained a mixture of B-l and kerosene and plaintiff claimed that the act was negligent and caused the fire. The court submitted the issue as to whether negligence of defendant was a proximate cause of the fire to the jury, and the jury returned a verdict on that issue in favor of the plaintiff,2 which was sustained by the court over defendant’s motion to set it aside for want of evidence to support it. The parties in open court stipulated to the effect that if defendant was liable the amount of liability should be fixed at $142,500. The court, in pursuance of its own determination that defendant was not excepted from liability by the terms of the lease if defendant’s negligence caused the fire, the finding of the jury that defendant’s negligence was a proximate cause of the fire, and the stipulation of the parties as to the amount of damages, entered judgment for plaintiff against defendant for $142,500 and costs.
General Mills appeals and contends for reversal among other things, that the undisputed evidence established that the lease provisions were drawn and were agreed to in contemplation of the mutual understanding of the parties that the risk of loss by fire of the demised premises would be carried by a fire insurance company and not by either of the parties to the lease. That the amount of the rental of $15,000 a year plus taxes was agreed to on that basis and therefore included the cost of fire insurance. That the true intent and meaning of the contract of lease between the landlords and the tenant in force and effect at the time of the fire was that the tenant should not be liable to the landlords for the loss by fire of the leased premises and that the exoneration from liability for loss by fire mutually agreed upon was not limited expressly or by implication to fire occurring without negligence but extended to and included fire caused by negligence of an employee ■of the tenant engaged in the manufacturing for which the premises were demised. That such contract was valid and binding upon the parties under Minnesota law and that the court erred in its determination that the tenant was not thereby exonerated from liability in the action. That the court erred in refusing to enter judgment for defendant.
The considerations upon which the trial court determined that the general law of negligence was applicable to the action and that the lease provisions covering loss by fire did not except the defendant from liability for the loss by fire of the manufacturing plant if the fire was caused by negligence attributable to the defendant are set forth in the opinion of the court which accompanied its order denying defendant’s motion for judgment or in the alternative for new trial. In the opinion the court correctly stated the settled law in Minnesota that whether the lease provisions exempted defendant from loss by fire caused by its negligence depended upon the intent of the parties to the contract and that that intent was to be determined by reading the contract as a whole in the light of the subject matter, surrounding circumstances, the ob[364] jects and purposes and the natural meaning of the language used. The court also recognized, as the undisputed evidence conclusively showed, that “the understanding was that plaintiff assumed the responsibility for the insurance coverage on the building for fire * * * ” and that the landlords did take out the fire insurance and that on proof of the “loss by fire” the insurance company paid the full amount of the insurance in a sum exceeding the landlord’s total investment in the property. But the court noted and stressed the fact that “the lease does not require the lessor to carry any insurance” and that it contained no express agreement that the lessor would pay the fire insurance premiums out of the rentals. It concluded that “the insurance obligations of .the plaintiff do not aid defendant here” and it attached no significance favorable to defendant to any of the evidence in the record concerning the contemplated and executed coverage of the risk of “loss by fire” by' the fire insurance company. On the contrary, it approached the inquiry as to what was in the minds of these parties and what they meant in respect to the happening of loss by fire of the leased property from considerations of abstractly possible meanings of “loss by fire” in the paragraph of the lease where the words are found and of the public policy involved in contracting against obligation for one’s own' negligence and of whether the word “fire5’ in the lease ought to be strictly construed against or liberally construed in favor of the tenant. Through its approach and course of reasoning it came to the conclusion that the parties did not intend that the tenant should be relieved from liability for a loss by fire if the fire-occurred in the ordinary way in which fires in manufacturing plants occur3 but that they meant that the tenant should be so relieved only if the fire' occurred in some such extraordinary -way not illustrated by example as to present nothing on which a jury could find negligence as a cause thereof. The interpretation so put upon the covenant of the lease for exemption of the lessee from liability for loss by fire reduced the covenant for exemption as a practical matter to triviality so far as General Mills was concerned and the unfortunate destruction by fire led to an award to plaintiff of some $30,000 more than his predecessors in interest had invested in the property the year before.
But we think the court erred in attempting to ascribe an intent and meaning to the exception of loss by fire provision of this lease independent of the mutual understanding of the parties when the lease was entered into that loss by fire should be provided against by fire insurance coverage and that the conclusion and judgment the court arrived at were erroneous.
It may .be true that a covenant in a lease that the tenant shall be excepted from obligation to the landlord for loss by fire does not absolutely in all circumstances relieve the tenant from liability for fire caused by its negligence. Though the word “fire” in the phrase is unqualified and inclusive and therefore unambiguous, the courts may, as they have in instances cited in the court’s opinion and in the briefs, consider whether a contracting 'for exemption from liability for one’s ' own negligence should not be 'favored or enforced by courts or is contrary to public policy and they 'have by “strict construction” — that is, .by giving the word “fire” a narrower meaning than it has in common parlance, excluded negligently caused fires from such an exemption.
But there is no public policy in Minnesota inimical to resort to fire insurance covering loss by fire occurring with or without negligence and there is no reason for applying any “strict construction” to a lease entered into in contemplation of having a fully appreciated and guarded against fire risk carried by an insurance company. The undisputed evidence in this case presents exactly that situation. The [365] landlords here agreed that the tenant should not be liable to pay for “loss by fire” because it was understood between them that fire insurance would be taken out and a fire insurance company would be required to pay for any “loss by fire” occurring on the premises during the term of the lease. Such insurance company would be required to pay whether the “loss by fire” was caused by negligence or not as fire insurance universally covers loss by fire occurring from the kind of negligence here involved. The premiums to fire insurance companies are based on actuarial computations of fire losses so occuring. The policies are standardized and we are informed of no other kind of fire insurance in use in this country.
It resulted from the plan on which the lease document here was conceived and formulated to express the parties’ respective covenants and obligations that it was not necessary to and the parties did not incorporate in the lease itself any express obligation of the landlord to take out fire insurance nor any express obligation to apply part of the rental to fire insurance cost. All of the respective obligations which the landlord and the tenant assumed towards each other were set forth with meticulous care but the all important matter of “loss by fire”, in the forefront of the minds of the parties, was simply and effectively covered in the lease by squarely excepting the tenant from liability for “loss by fire” and as a reciprocal provision by specifically obligating the tenant not to use or to permit anything on the premises that will increase the rate of insurance thereon. The release of the tenant from obligation or liability for “loss by fire” removed all interest on the part of the tenant to exact specific obligations of the landlord in the lease in respect to fire insurance and the landlord was left free as it wanted to be to control the fire insurance as to amounts, terms and companies. The reciprocal obligations of the tenant to subordinate its use of the premises to the contemplated fire insurance requirements specifically referred to in the lease and the tenant’s obligation to pay a rental agreed to in view of the fire insurance cost to the landlord, considered with the release of the tenant from loss by fire, completely and unequivocally express the mutual intention to relieve the tenant from loss by fire regardless of negligence and the provisions fully preserved the relating of the lease to the mutual understanding that loss by fire would be covered by fire insurance.
Examination of the lease reveals a studied effort to state in detail every one of the1 very numerous obligations imposed on the tenant and to impose specific liability and accord remedy to the landlord for each and every breach regardless of negligence. But in respect to the all important matter of loss by fire of the manufacturing plant which was ever present in the minds of the parties, no obligation was imposed and nothing was said about it except that the tenant was relieved from liability. Considering the minute particularity in specifying every liability of the tenant, it is not credible that liability for negligence causing loss by fire would not have been specified if there had been any intention that there should be such liability.
The lease also provides under the caption “Destruction by Fire” that in case of a fire totally destroying the building the lessor had the option to terminate the lease or to rebuild. It appears that at the time General Mills signed the lease plaintiff’s predecessors in interest did not own the property and General Mills signed on condition that “it be executed [within a certain time] by a Lessor then having, in the opinion of Counsel for Tenant, good and merchantable title to the premises”. The landlords executed the lease within the time and bought the property subject to the lease for investment for income purposes. They paid $110,000 for it, of which they raised $80,000 “by mortgage”. The fire insurance rate on the plant leased for “general manufacturing, warehouse and office purposes”, was high because the fire risk was great. The reservation on the part of the landlords of the privilege to rebuild at their own expense without requiring contribution from the tenant (whether it had been negligent or not) is further strong indication of the mutual intention that the risk of the loss by fire should be carried as it was carried by a [366] fire insurance company and that the tenant had no obligation in the event of loss by fire. Having borrowed most of the money, to acquire the property the landlords contemplated rebuilding or restoring minor fire damage out of insurance money.
The circumstances also indicate the intention that the cost of the insurance would be taken out of the rentals. The investing for income purposes of their own and the borrowed money by the plaintiff’s predecessors necessarily involved computing the rentals promised in the lease and deducting the cost of fire insurance at the applicable high rate. They could not estimate the income without considering both factors. They necessarily consciously figured on the rentals to be paid by the tenant as the source o.f the fire insurance premiums and intended that the cost of insurance was to come from the tenants. In practical effect the tenant paid the cost of the fire insurance.
It is very clear in the light of all the provisions of the lease, the circumstances of its execution and the understanding about fire insurance coverage to which t-he lease was related that by the provision that on termination of the lease the tenant should return the property in good condition “loss by fire * * * excepted” the parties meant a loss by fire such as is always meant when men are talking about or figuring, on the. risk of it in business dealings — i. e., the “loss by fire” which always is insured against in ordinary course and against which the landlords here intended to and did take out insurance in an amount greater than the owners’ investment.
When the lease here is so read and understood the agreement of the lease is simple, normal and reasonable and such as intelligent men would be expected to agree upon. The fire which occurred and the consequent loss were within the contemplation of the parties and was covered as they meant that it should be by the fire insurance.
When we turn to the Minnesota law we find nothing to impugn the validity and binding effect of the contract to release the tenant. On the contrary, the highest public policy is found in the enforcement of the contract as it was actually made. Santa Fe Railway v. Grant Bros., 228 U.S. 177, 188, 33 S.Ct. 474, 57 L.Ed. 787. We find the following Minnesota decisions fully support a contract between private parties relating to their private relationships to relieve one of such parties from liability for his own negligence: Pettit Grain Co. v. Northern Pacific Ry. Co., 227 Minn. 225, at page 230, 35 N.W.2d 127, at page 130; Weirick v. Hamm Realty Co., 179 Minn. 25, at page 28, 228 N.W. 175, at page 176; Commercial Union Assurance Co. v. Foley Bros., 141 Minn. 258, at page 261, 169 N.W. 793, at page 794; James Quirk Milling Co. v. Minneapolis & St. Louis R. Co., 98 Minn. 22, 107 N.W. 742, 116 Am.St.Rep. 336; Michigan Millers Mutual Fire Ins. Co. v. Canadian Nor. R. Co., D.C., 58 F.Supp. 326, affirmed, 8 Cir., 152 F.2d 292.
In all standard fire insurance contracts there is the same contracting against “loss by fire” through negligence as appears in this lease but there is no decision in Minnesota that questions its validity or asserts any public policy against it.
It is concluded that the judgment was erroneous and that the court erred in refusing to enter judgment for defendant and the judgment is accordingly reversed and the case remanded with direction to enter judgment for defendant at plaintiff’s cost.
The Intervention. The Indiana Lumbermen’s Mutual Insurance Company of Indianapolis is the fire insurance company which issued the fire insurance policies covering the loss by fire of the leased premises here involved and paid the loss. It intervened in the action and participated in the trial seeking recovery of its payment from defendant. But after hearing, the trial court refused its request to be made a party to the judgment and it acquiesced. It has participated through counsel, as it had a right to do, in defending the judgment on this appeal and has been heard and its contentions considered. No order is here entered in respect to it.