Kennedy Bros. v. Iowa State Insurance

Bishop, J.

i, inability of contract ing same: negligence, It seems clear that, had the policy in question been issued to, and this action brought in the name of, J. Kennedy & Co., there could have been no recovery, especially as it appears without much question in evidence and there being no contention in the argument, that the fire was caused from the dumping of live- coals from the fire box of a locomotive engine standing on an adjacent track, and belonging to the railroad company. Under Code, 1873, section 1289, re-enacted as section 2056 of the present Code, any corporation operating a railway “shall be liable for all damages sustained by any person on account of loss of or injury to his property occasioned by fire set out or caused by the operation of such, railway.” The fact of fire so caused being shown, a presumption of negligence, on the part of the railroad company follows without further proof. Engle v. Railway Co., 77 Iowa, 661 . A railroad company may contract, however, for exemption from liability for its negligence in causing fires to property permitted to be located upon its right of way. Griswold v. Railroad Co., 90 Iowa, 265 .

*33

2. same: Habitity of insuranee co.

*32 It is well settled that, in the absence of a contract to the contrary, the liability of a railroad company for *33 fires caused by its negligence is primary in character and the liability of an insurance company, . _, . carrying a policy covering che property burned, is secondary. In other words, a railroad company, under such circumstances, is charged as of an absolute fixed liability. The measure of responsibility of an insurance company is that of a surety, or one who indemnifies. A recovery from the railroad company, therefore, operates as a satisfaction of the indemnity afforded by the insurance policy. Allen v. Barrett, 100 Iowa, 16 ; Carstairs v. Insurance Co.,(C. C.)18 Fed. Rep. 473; Inman v. Railway Co.,129 U.S. 128 (9 Sup. Ct.Rep. 249, 32 L.Ed. 612 ).

3. subrogation; waiver of right by insured: liabiiity of inpany. Whether an insurance company, having paid a loss under a policy issued by it, is entitled by subrogation to recover the amount paid by it from the railway company, through whose negligence the fire occurred, .. . ' although no provision is made for it m the policy, we are not called upon to determine. It was competent for the parties to incorporate such a provision in the contract of insurance, and that was done in this instance. Now, of course, there can be no such thing as subrogation where the party insured has contracted away all right of recovery as against the railroad company, and it follows in reason and from authority that where it appears the insured has contracted away the right of the insurance company to subrogation without its knowledge and consent, he cannot recover, in case of loss upon the policy. Carstairs v. Insurance, (C. C.) 18 Fed. Rep. 473; Fayerweather v. Insurance Co., 118 N. Y. 324 (23 N. E. Rep. 192 6, L. R. A. 805); Sims v. Insurance Co. 101 Wis. 586 ( 77 N. W. Rep. 908 ); Dilling v. Draemel, (Com. Pl.) 9 N. Y. Supp. 497 .

Such being the law, and there being no dispute as to the provisions of the policy in suit, and no dispute as to the terms of the lease from the railroad company to J. *34 Kennedy & Co., the court below, in sustaining the motion of plaintiffs for a verdict and judgment, evidently held to the view that the written lease entered into between the railroad company and J. Kennedy & Co. was not binding in respect of its covenants and conditions upon the plaintiff firm. The correctness of this holding is, therefore, the real question in the case before us for determination. We think the question may be fairly stated thus: Could the railroad company, relying upon the provisions of the lease, successfully resist an action for damages on account of the fire brought against it by plaintiffs, or by another claiming by through or under them? If this question is to be answered in the affirmative, then it follows that the judgment of the court below was based upon error. If a negative view is to be taken, then, leaving out oí view other questions made, the judgment should stand.

Turning, for a moment to a consideration of the facts in the case, we think it clear that while a term of one year only is provided for in terms in the lease, yet a more extended period of occupancy was contemplated by the parties thereto. J. Kennedy & Co. were buyers and shippers of grain and dealers in agricultural implements, and in the lease it is provided that they shall erect on the demised premises an elevator and corncrib, and shall conduct a grain business, shipping over the line of the railway company. The rent reserved is a nominal sum, and in fact was never demanded or paid, indicating clearly that the object was to secure a shipping business, rather than a rental income. This view is further emphasized by the fact that no attention whatever was paid to the expiration of the period provided for in terms in the lease. Under such circumstances there can be no doubt but that all the provisions of the lease, its covenants and agreements, were in force and binding at least during the continuance of the tenancy of the firm executing the same. Conceding that under section 2991 of the Code a tenant holding over *35 after the expiration of the lease becomes a tenant at will, as contended for by appellee, the conclusion as stated, above remains. In German State Bank v. Herron, 111 Iowa, 25 , we said: “There is no reason, however, for extending the statute beyond its terms. Under the law as it formerly stood, a tenancy from year to year, or for a ■ less time, when definitely fixed as the term of the lease, was implied from the tenant holding over with the assent of the landlord; and this, under the same conditions as specified in the contract, in so far as applicable to thenew situation. This doctrine has even been extended to leases void as against the statute of frauds, where evidence may be introduced to establish them. The contract creating the relation of tenancy is implied in every respect as before, save that of duration. ” See, also, Lumber Co. v Kimball, 111 Iowa, 48 ; Newall v. Sanford, 13 Iowa, 191 ; Bra d ley v. Slater, 50 Neb., 682 ( 70 N. W. Rep. 258 ; Taylor, Landlord & Tenant (2d Ed.) section 525.

4 DBASE- ex_ imsTmuIS™ ees^Rolamg flver' On behalf of appellant it is urged in argument that the plaintiff firm is bound as the original lessee, inasmuch as the several members thereof were members of the firm executing the lease. It is pointed out that the only change was a dissolution of the firm occasioned by the retirement of J. Kennedy, the father, and in the name of the firm, the new firm taking over all the property, and thereafter continuing the business without change. The argument is not without merit; but holding, as we do, that the covenant for indemnity T^as a covenant running with the land, we think the plaintiffs are bound by it. They were not trespassers upon the land, or in possession without leave or right. The several members of the firm testify that the old firm assigned all its intersts to the new firm, and surely this included whatever of right the old firm had in the property covered by the lease. Evidently the several members of the new firm so understood it. The instru *36 ment of lease itself passed into their possession, and they must be held to know of its provisions, one of which was that the covenants and conditions thereof should be binding, not only upon the lessees, but their assigns. The new firm could not enter into possession of the property by virtue of the lease, retaining the right to repudiate such of its provisions as imposed duties and obligations. It appears that the railroad company knew of the change in the name of the firm, and, in view of the fact that no new contract or arrangement was demanded, it may well be presumed a continuance of possession was permitted in the belief that all the covenants and conditions of the lease would be observed by the new firm. Under the circumstances presented, we do not think the plaintiff firm could be heard to deny the binding force of the covenants and conditions of the lease, and to assert a claim for damages arising out of a fire loss against the railroad company.

Our attention has not been called to any cases presenting a state of facts similar to that we have before us. Our conclusion, however, finds support in Railway Co. v. McClure 9 N.D., 73 ( 81 N. W. Rep. 52 47 L. R. A. 149). There a lease containing substantially the same provisions appearing in the one before us was involved. The lease was executed by the Northern Pacific Bailroad Company, and some time before the fire that company transferred all its property to the Northern Pacific Bailway Company. The question in the case was whether or not the covenant in the lease exempting the railroad company from all damages caused by fire by its negligence was a covenant running with the land, and as such protected the assignee of the original lessor from liability. It was held that the covenant in question passed to the grantee, and invested it with the same rights thereunder which the old corporation had. In the course of its opinion the court says: “We have not been able to find an adjudication upon the question whether this particular kind of a covenant *37 runs with the land, and passes to the assigns' of the lessor. Our conclusion, however, is, for the reasons stated, that this covenant passed to the plaintiff, and invested it with the same right of protection against losses by it, and to the same extent and in the same manner as the lessor might have asserted had there been no assignment of the lease.” In Wood, Landlord & Tenant, section 335, it is said that “an assignee assumes all the liability of the lessee running with the land, whether he goes in under voluntary assignment or under an- assignment by operation of law, and succeeds to all the rights and obligations under such covenant so long as he stands in the relation of assignee.” We reach the conclusion that upon the record presented the plaintiffs are without right of recovery, and the motion of defendant for a verdict and judgment should have been sustained.

The cause is remanded for judgment in accordance with this opinion. — Reversed. ,