Court Opinion

ID: 9461432
Source: CourtListenerOpinion
Date Created: 2023-08-04 22:14:30.162946+00
Date Added: 2024-06-11T17:37:03.688986
License: Public Domain

PELL, Circuit Judge
(dissenting).
In my opinion the trial court committed basic and reversible error in submitting the fourth interrogatory to the jury thereby adding an improper issue for jury determination. The error, of course, was compounded by the district court treating the issue as dispositive of the case. Accordingly, I respectfully dissent.
I agree with the majority opinion that the wording of the policy issued by St. Paul cannot override statutory circumscription pertaining to insurance policies.
The key matter here, it appears to me, is one of the legislative wording of Section 515.102(8):
“To a change in the occupancy or use of the property insured, if such change or use makes the risk more hazardous
Both the district court and the majority opinion construe the words as follows:
“To a change in the occupancy or use of the property insured, if such change of occupancy or change of use makes the risk more hazardous . . . .”
Such a construction, in my opinion, does violence to the plain meaning of the *328words. If the legislature had so intended all that need to have been said was:
“To a change in the occupancy or use of the property insured, if such change makes the risk more hazardous tt
By using the combination of words it did, it appears clear to me that the legislature did not intend to modify “use” by “change.” A change in occupancy is frequently consistent with a potential increase of hazard. The use of a product in the manner in which it has theretofore been used is just as consistent with an increase of hazard as is a change of use. The district court in defining a change of use used the example of converting an ice cream plant to an anhydrous ammonia plant. On this hypothesis if a boiler was consistently overheated so as to result in an explosion there would be no change of use so as to bring to bear the excepting clause of 515.102(8). This strikes me as an improper narrowing of the plain words of the statute. The increase of hazard from a misuse can be every bit as perilous as from a change of use and I fail to find any logical reason for the legislature to have made one of them inferior to the other in determining what conditions will have the effect of suspending the coverage of a policy. I discern nothing violative of either the sense or spirit of the eighth clause in the construction which appears proper to me.
In writing insurance, the company must perforce look at its potential exposure or risk. The operative time for the suspension of coverage should be logically when the hazard is increased or the conditions upon which the policy was issued change, whether the change of conditions results from misuse or from change of use.
This is the prevailing view:
“It should be made clear that, since the clause is concerned with the area of risk or uncertainty, potential rather than actual causes of loss are relevant to this inquiry. It is true that there are statements in some early cases that a causal link between the changed condition and the actual loss is necessary to establish the defense of increased hazard, and a few states have statutes — denominated contribute-to-the-loss acts — which have the same effect. Yet there is now no dispute among the authorities that the meaning of increased hazard under the language of the standard policy does not turn on whether the changed condition in fact contributed to the particular fire loss. Note, The Increase of Hazard Clause in The Standard Fire Insurance Policy, 76 Harv.L.Rev. 1472, 1474 (1963).
Ordinarily we need not look at legislative history in the absence of ambiguity but may assume where clear and explicit language is used that the legislature meant what it plainly said. Since the present panel is not in agreement as to the proper construction of the statutory section in question it perhaps could be said arguably that the necessity for resort to legislative history is in order.
It appears to me that Section 1743 of the Iowa Code of 1897, quoted in the majority opinion, does support the construction which appears to me to be the correct one. Thus, “or to a change in the occupancy or use of the property insured, if such removal, change or use makes the risk more hazardous . shall not be changed or affected by this provision . . . ” (Emphasis added.)
I cannot as lightly as does the majority dismiss the opinion of District Judge Hanson, an Iowa lawyer, in Commercial Standard Insurance Company v. Haley, 282 F.Supp. 16 (S.D.Ia.1968). It is true that that case involved an automobile policy but Judge Hanson was addressing an underlying principle of Iowa insurance law. The case upon which the insured relied was Baird v. Kaskaskia Live Stock Ins. Co., 198 Iowa 905, 200 N.W. 575 (1924), a case not involving automobile insurance but concerned with an interpretation of Section 1743. The insured contended that “that a condition or stipulation in an insurance contract making the policy void before a loss occurs cannot prevent recovery unless it is *329shown that a violation of the condition contributed to the loss. The correct statement of the rule is that breach of a condition must be shown to have contributed to the loss or in fact made the risk more hazardous. Taylor v. National Livestock Co., 192 Iowa 1118, 185 N.W. 992; Kinney v. Farmers’ Mutual Fire & Ins. Soc. of Kiron, Iowa, 159 Iowa 490, 141 N.W. 706. There can be no doubt that Haley’s breach of the Limitation of Use Endorsement increased the risk for the Company. In the event the Court were to decide otherwise, a universally legal and valid fleet policy clause would be rendered nugatory.” (Emphasis added.) 282 F.Supp. at 24-25.
This case is one which would have lent itself ideally to a certification procedure. See Lillich & Mundy, Federal Courts Certification of Doubtful State Law Questions, 18 U.C.L.A.L.Rev. 888 (1971). Unfortunately, we must because of Iowa not having such procedure available embark upon a determination of what the Iowa legislature meant, and have reached unfortunately a result which I do not believe the Iowa courts would have.
As I read the law of Iowa since there was clearly an increase in the hazard it was immaterial- whether the increase caused or contributed to the explosion and judgment should have been entered for the defendant. In any event, even assuming arguendo that the district court’s requirement of cause of contribution was proper there should have been at the very least a new trial ordered on the issues.
The evidence in this case is overwhelming that there was leakage in the weep holes, that the vessel should have been shut down to determine the cause but that this was not done. The inference is clear that the plaintiff ignored warning signals because it was involved in the height of the manufacturing season. The eruption of gas into the atmosphere brought about the inevitable result, an explosion. From the record, it appears equally clear to me that the answer to the fourth interrogatory was inconsistent with the answers to the first three and therefore a new trial should have been ordered. 9 Wright & Miller, Federal Practice and Procedure: Civil § 2510 at 517-18 (1971).