No. 12629 INTHE SUPREME COURT OF THE STATE OF MONTANA

ALBERT L. RIEFFLIN etal., Plaintiffs and Appellants,

THE HARTFORD STEAM BOILER INSPECTION AND INSURANCE COMPANY, a Corporation, Defendant and Respondent.

Appeal from: District Court of theFourth Judicial District, Honorable E. Gardner Brownlee, Judge presiding. Counsel of Record: For Appellants: JulioK. Morales argued, Missoula, Montana For Respondent : Garlington, Lohn and Robinson, Missoula, Montana Gary L. Graham argued, Missoula, Montana

Submitted: March 21, 1974

Filed:

## APR

# e51974 Decided:

### Mr. Justice Gene B. Daly delivered the Opinion of the Court. Plaintiffs and appellants, Albert L., Robert L., and Margaret A. Riefflin, d/b/a The MissoulaMotel, hereinafter referred to as plaintiffs or Riefflins, bring this appeal from ajudgment of the district court of Missoula County in their favor in the amount of $1,332.48 against defendant and respondent, The Hartford Steam Boiler Inspection and Insurance Company, a Corporation, hereinafter referred to asHartford. The district courtjudgment awarded costs of suit amounting to $197.24 to defendant Hartford. This litigation arises out of a contract of insurance existingbetween these litigantswhich covered a cast iron boiler located in theMissoula Motel, owned by the Riefflins. The boiler consisted of ten center sections and 

### two end sections and was used to heat the motel. 

### On February 

### 1, 1970, one of the end sections cracked. Hartford performed an inspection of the boiler and paid a claim in the amount of $440.43 for replacement of the cracked section. By letter dated March 26, 1971, Hartford advised the Riefflins

### : "In view of the amount of scale in the damaged section, it can be expected that the remaining sections in the boiler may also contain excessive scale and are subject to future cracking in a similar fashion. "Since this boiler has been in service less than 3 years, the amount of internal scalewould indicate to us that an excessive amount of make up water isbeing required to maintain the water level. Excessive feedwater make up willresult in rapid scaling; therefore, we strongly reconnnend that the entireheating system be investigated for leakage or other conditions that areresulting in excessive or loss of water in the system.

### "As a safeguard against possible cracking of additional sections, we strongly advise that the boiler be opened up eitherby removing wash out plugs or disconnecting pipe connections to observe the internal surfaces. We are advising our Inspector 

### to contact you with regard to such an inspection sometime following the end of the present heating season. If excessive scale 

### is detected, itmay then be necessary to remove the deposits by chemical means along with washing and flushingof the individual sections

# . I1 During the summer of 1971 the Riefflins had the boiler chemically cleaned attheir expense in the amount of $911.96. Neither Hartford nor itsinspector specified who would bear the cost of this cleaning. On or about October 18, 1971, an internal boiler section cracked. Again Hartford performed 

### an inspection and acknowledge liabilityin the amount of $818.49 for replacement of the cracked section. While the boiler was dismantled for repair, a third cracked section was discovered on November 30, 

### 1971. By letter dated December 

### 6, 1971, Hartford advised the Riefflins: "We are aware that the boiler had been dismantled during the Summer and the sections had been chemically treated to remove the scale; it isquite evident that the cleaning process was not successful and inview of the density of the deposits and their location in the sections, it 

### isdoubtful that the deposits can ever be removed. "Under the circumstances, we can only recommend the replacement of allintermediate sections containing scaleor that the entireboiler be replaced, depending on the expense involved. 

### It has been our experience that it

### willbe less expensive to replace the entire boiler. "The Inspector reports that a new boiler has been placed on order and that itwillbe installed to replace the present boiler when delivered. "In view of the trouble that has been experiencedwith thisboiler in the past year as the result of daily internal scaling, we again strongly advise that the

### entireheating systembe checked for leakage or loss of water from the system. Any leakage found should be repaired to minimize trouble of thisnature in the future. I1 

### The new boiler, ordered by the Riefflins prior to receipt of the above quoted letter, was installed in lateFebruary of 1972 ata cost to them of $4,815.00. Again neither Hartford

nor itsinspector specified who would bear the cost of this replacement. While Riefflinswere awaiting arrival and installation of theirnew boiler, the oldboiler continued inuse. It 

### appears that during thisperiod additional sections of the oldboiler cracked, leaving only eight operational sectionswhen theboiler

was replaced inFebruary. No proofs of losswere received by Hartford from Riefflinson any of these additional cracked sections. Riefflins

# ' complaint claimed damages of $4,500.OO 

### caused by frozen heating pipes and appliances and loss of $3,000 motel income during the period from October 1, 1971 to March 1, 1972. Riefflins also soughtjudgment from Hartford for $911.96, the cost of cleaning theboiler; $4,815.00, the cost of replacing the entireboiler; and $818.49, the cost of replacing the second cracked section. Hartford made an offer of judgment in the sum of $1,332.48 representing itsliability for replacement costs of the second cracked boiler section in the sum of $818.49 and the third cracked boiler section in the sum 

### of $513.99, which was based

on a plumber's estimate. The contract of insurance, introduced asplaintiffs' exhibit one, required writtennotfce and proof of loss to Hartford assoon aspracticable after an accident occurred. The policy defined "accident" for purposes of 

### itscoverage as: 

# "*** a sudden and accidental breakdown of the Object, or a par-r:thereof, which manifests itself atthe time of itsoccurrence by physical damage to the Object thatnecessitates repair orreplacement of the Object or a part thereof; but Accident shallnot mean (a) depletion, deterioration, corrosion, or erosion of material

# * **." The policy specificallyexcluded: 

### "*

# ** loss from delay or interruption of business ormanufacturing orprocess, (f) loss from lack of power, light, heat, steam or refrigeration and (g) loss from any other indirect result of an Accident." Plaintiffsbring this appeal from thejudgment and order of the district court, and from 

### itsdenial of their post trial motions, assigning the following issues: (1) Whether the trial court erred in denying (a larger) judgment to the plaintiffs and against the defendant. 

### (2) Whether the trial court erred in denying plaintiffs' motion to amend and make additional findings of fact and conclusions of law. 

### (3) Whether the trial court erred in denying plaintiffs' motion for a new trialon the ground the evidence didnot justify the verdict. 

### (4) Whether the trial court erred in failing to grant the mtion for a new trial on the grounds that error was committed during trial by denying plaintiffs' presentation of evidence regarding crackingof boiler sections which took place subsequent to October 31, 1971. The arguments propounded by plaintiffs in support of theseissues concern primarily the legaloperation of the insurance contractbetween the litigants and collaterally the effect of allegednegligence by Hartford in 

### itsperformance of the boiler inspections and proposed application of the doctrineof equitable estoppel against Hartford. Regarding the primary argument, the trialcourt found that thebuildup of scalewithin the boiler was not "sudden and accidental" and was not a "breakdown of the object" which



### wasmanifested 

### at the time of the accident "by physical damage to the object thatnecessitates repair orreplacement of the object" and hence was not an "accident" under the terms of the policy. Consequently, the trialcourt ruled there

### wasno coverage under the policy of the Riefflins' expenses of $911.96 for the boiler cleaning done during the summer of 1971orof their expenses of $4,815.00 for theboiler replacement done in February of 1972. Based upon the record beforeus, we concur with these rulings of the 

### trial court. Both these actions were undertaken by theRiefflins in an attempt to remedy the internal scaling problem. In interpreting and applying insurance contracts, the Montana rulehas been to use the common rather than some technical usage ormeaning of definitional terms in the policy, 

### Willsv. Midland Nat. 

### L. Ins. Co., 108Mont. 

### 536, 91P.2d 

### 695. The internal boiler scalingproblem was not an accident under the usual meaning of the term 

### as defined in the insurance policy issuedby Hartford. Hartford has paid or 

### isnow obligated to pay, under thedistrict court's judgment, the replacement cost of three cracked boiler sections. The trial court found that failureof the Riefflins to submit notifications of accident and proof of loss

as soon aspracticable, asrequired by the policy, barred any claims for reimbursement for sections which may have cracked subsequent to these first three. Appellants rely on the case of Staggers v. U.S.F.& G. 

### Co., 159Mont. 

### 254, 496 P.2d 

### 1161, in which this Court held that "substantial compliancef1 by insured in furnishing insurer with proof of loss as required for recovery under a fireinsurance policy was sufficient. The existence of "substantial compliance" in Staggers was predicated upon the fact that the insureds filledout and submitted statement of loss forms which the insurer didnot object to for almost two years. 

### In the instant case the insureds filednothing fornearly two years concerning the cracked boiler sections inquestion. However, the Riefflins contend that their insurer knew of the prior scale accumulation problem and of the three boiler sections which had cracked previously and therefore should have anticipated the later cracking of boiler sections. To interpret the concept of substantialcompliance this broadly would eliminate the need for any compliance with insurance policy provisions. We find that the trial court was correct initsruling that the Riefflins failed to comply with the proof of loss requirements for any except the first three cracked boiler sections. The trial court also found, and we concur, that the insurance specificallyexcluded from coverage the incidental damages

### from frozen pipes claimed in the amount of $4,500 and from interruption of business losses claimed in the amount of $3,000. The record before us does not support appellants' allegations of negligence on the part of Hartford in conducting the inspections of the boiler. Under the terms of the insurance contract Hartford reserved the right but didnot assume the duty to inspect. As 

### a general principle of our law of torts, however, once Hartford undertook to inspect theboiler and make recommendations, they were obliged to do 

### so in a nonnegligent

manner. The hereinabove quoted passages of letters from Hartford to Riefflins recommend the "excessive feedwater" problem be remedied inorder to correct the scaling. There is

no evidence inthe record that these recommendations were followed until it

### became necessary to replace the entireboiler. The plumbing contractor who installed the new boiler testified that he used a water softener and chemical additives in thenew feedwater system, to help relieve scaling. There isno testimony that these installationswould have corrected the scalingcondition existing in the oldboiler, or that a boiler not using excessive amounts of feedwater would require them. The appellants contention concerning application of equitable estoppel is

### defective inthe firstinstance through their failure to raise the issuebefore the trialcourt, StateHighway Comm.

v. Voyich, 142Mont. 355, 384 P.2d 765, and in the second instance the record discloses no statement or conduct on the part of Hartford anmunting to a misrepresentation, Mundt v. Mallon, 106Mont. 242, 

### 76 P.2d 326.

### Finally, concerning the trialcourt

## 's ruling assessing costs against plaintiffs and appellants Riefflins, Rule 68, M.R.Civ.P. provides inpertinent part: 

# "** * If 

### thejudgment finallyobtained by the offeree isnot more favorable than the offer (of judgment), the offereemust pay the costs incurred after the making of the offer.

# **

# *" We findRule 68, M.R.Civ.P. clearly applicable and correctly appliedby the trial court. We findno error inthejudgment of the districtcourt, and it 

### is

### hereby affirmed.

Justice We goncur: :. ,-

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