Opinion ID: 2224408
Heading Depth: 1
Heading Rank: 4

Heading: Rowley's Negligence Claims.

Text: The finding of estoppel as to the contract claim is not, however, as both the district court and court of appeals concluded, an affirmative defense to a claim based in negligence. We base our decision of this issue on two related theories from cases in which negligence results in the destruction of property. In support of this conclusion we analyze by way of analogy. We treat the oral representation that Rowley would carry physical damage coverage on its trailer as part of the agreement between the owner and carrier. The agreement would then require that Rowley furnish physical damage insurance coverage for the trailer while Humiston furnish liability coverage. Humiston would however be responsible for any and all loss to the trailer occurring because of negligence. In similar situations, the courts have concluded that such insurance provisions do not preclude a suit premised on negligence. We find the circumstances in Sears, Roebuck and Co. v. Poling, 248 Iowa 582, 81 N.W.2d 462 (1957), to be analogous. Sears leased a structure pursuant to the terms of a written lease. Id. at 584, 81 N.W.2d at 463. The lease provided that Poling was to provide insurance coverage for the building Sears was leasing. Id. at 586, 81 N.W.2d at 464. Due to Sears' negligence, the building was destroyed by fire. Id. Sears sued Poling for damages. Poling counterclaimed that Sears was negligent and was thus responsible for the loss of the building. Sears defended the counterclaim on the grounds that the lease relieved it from liability for the fire irrespective of whether [the fire] was caused by its negligence. Id. at 584-85, 81 N.W.2d at 463. Alternatively, Sears argued that Poling was estopped from asserting the negligence claim because Poling had obtained insurance (although not for the full value of the building) and recovered from the insurer. Id. We first held that the provisions of the contract did not preclude a negligence action against Sears. Id. at 587-93, 81 N.W.2d 462. Secondly, and more importantly, we held that Poling was not estopped from asserting a negligence claim against Sears notwithstanding Poling's acquisition and recovery of insurance. Id. at 593-94, 81 N.W.2d at 468-69. Similar decisions have been reached in motor vehicle lease arrangements. See Farmbest Inc. v. Martin, 353 F.2d 278 (8th Cir.1965) (applying Iowa law); Annotation, Construction and Effect of Motor Vehicle Leasing Contracts, 43 A.L.R.3rd 1283, § 12 (1972). In Farmbest, the facts were similar to those presented here: Plaintiff leased a truck trailer unit to defendant pursuant to the terms of a written lease prepared by the latter. A few days after defendant lessee took possession, the vehicle suffered substantial damage in an accident occurring in Utah. The parties agreed that the casualty and resulting damage were attributable to the sole negligence of defendant's employee driver, and that the cost of restoring the vehicle was $14,377.06. They disagree, however, as to which must bear the expense. Farmbest, 353 F.2d at 279. At the center of the controversy was a lease provision which the lessee claimed obligated the lessor to bear the expense of repairs. Id. at 280. This provision also contained specific language regarding insurance coverage. Id. The plaintiff, on the other hand, maintained that the agreement was ambiguous. Id. The Federal District Court for the Northern District of Iowa concluded that the provision failed to express a clear intent to exonerate the defendant lessee from liability for its own negligence. Id. Relying in part on Sears, the Eighth Circuit affirmed. Sears argued that these provisions clearly cast the risk of loss by fire upon the lessor. The Iowa court was not persuaded, finding the agreement ambiguous.... The provisions requiring the lessor to bear the expense of rebuilding in the Sears case are parallel to the provisions in paragraph four requiring the lessor to repair the vehicle leased in this case. We think that decision is controlling here and requires that the judgment be affirmed. Id. at 281. In the case before us, rather than any ambiguity, there is a specific provision in the agreement that Humiston is responsible for loss due to its negligence. There is no exoneration; rather, by the terms of the agreement, the loss is placed squarely on Humiston. It matters not whether there was a physical damage coverage provision in the agreement. The finding that Rowley is estopped to deny it agreed to provide physical damage coverage on its trailer does not preclude an action against Humiston for its negligence. Because the facts as to the issues of negligence and damage are stipulated, we reverse and remand for entry of a judgment of $32,000 in favor of Rowley upon its claim of negligence against Humiston. We affirm the $8,633.91 judgment in favor of Humiston upon its claim for the rental fees against Rowley. We remand for further proceedings involving Humiston's third-party action against Earnest; due to our decision today it is no longer moot. DECISION OF COURT OF APPEALS VACATED; DISTRICT COURT JUDGMENT AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.