Howard v. Federal Crop Ins.
Corp.
540
F.2d 695.
Facts: The Howards grew tobacco
and insured it with federal crop insurance.
One year, their crop was damaged by heavy rains and they claim to have
lost $35,000. The plaintiffs filed a
claim with the insurance adjuster, but before the adjuster arrived, the plaintiffs
plowed under the fields so that they could plant rye to cover and preserve the
soil. The adjuster denied the claim on
the basis that the plaintiffs had violated a condition in their insurance
policy that said that no stalks may be destroyed until they are inspected by
the insurer. The plaintiffs sued to
recover their claim. The trial court granted
summary judgment for the defendants, and the plaintiffs appealed.
Issue: Does the act of plowing
under the tobacco stalks forfeit coverage under the crop insurance policy? In particular, was the condition that “tobacco
stalks shall not be destroyed” until inspected a condition precedent
resulting in forfeiture of the coverage?
Rule: There are several “guidelines”
given:
1. Forfeitures are frowned upon
as a matter of law.
2. Insurance policies are
construed against the insurer.
3. Contract provisions will not
be construed as conditions precedent unless the contract explicitly says so.
Analysis: The words “condition
precedent” are found in paragraph 5(b), but not in 5(f). This suggests that the words do not apply to
5(f), which contains the provision saying the insured party mustn’t destroy the
stalks before inspection. Therefore, the
court says, the policy is not forfeited, but the defendants may be able to
maintain a counterclaim to recover for any damages caused by the stalks being
plowed under.
Conclusion: The court holds that
plowing under the stalks does not, in itself, operate to forfeit insurance
coverage under this policy. The grant of
summary judgment is reversed and the case is remanded for trial.