Court Opinion

ID: 9709613
Source: CourtListenerOpinion
Date Created: 2023-08-26 03:52:11.773372+00
Date Added: 2024-06-11T18:22:50.530117
License: Public Domain

JUSTICE HEIPLE, dissenting: This case involves an insurance company which paid the insured landlord for fire loss to rental property. The insurance company, by way of subrogation, now seeks to recover from the tenant for his negligence in causing the fire. The trial court, in dismissing the insurance company’s complaint, determined that the landlord and tenant did not intend for the tenant to be liable for fire damage, ruling that the tenant was a co-insured with the landlord. The appellate court reversed and reinstated the complaint. The majority of this court reverses the appellate court and affirms the trial court. This case presents the question of whether a tenant is absolved from liability for his negligence in burning down the landlord’s premises. The majority holds that the tenant is absolved. The effect of this unfortunate decision is to make all tenants at any time and at any place co-insureds with their landlords. The only exception would be if the parties had a clear agreement to the contrary. I have two objections to the majority opinion. The first objection is that the opinion makes factual findings which are, simply put, not correct. My second objection is that the new rule of law which it announces is bad public policy. The majority opinion purports to find that the lease instrument, when read as a whole, contemplates that the tenant is a co-insured on the landlord’s fire policy. A reading of the lease discloses that this is not the case. Whether read in its individual particulars or as a whole, the lease is utterly silent in this regard. As the lease is set out in full in the majority opinion, it is not necessary to repeat it here. An examination of the lease, however, discloses that nothing in it gives any indication that the parties intended to absolve the tenant for his own negligent conduct or that the tenant was regarded as a co-insured with the landlord. The only exculpatory language of any kind is in favor of the landlord which provides in paragraph (E) that the tenant assumes the risk for his own personal property and that the landlord is not responsible for fire, wind or water damage. In arriving at its finding, the majority points out that “neither the landlord nor the tenant was a sophisticated real estate mogul.” (149 Ill. 2d at 321.) One may reasonably ask, If the parties had been sophisticated real estate moguls, would the result in this case be different? Would it matter if one were a greater mogul and the other a lesser mogul? Is this a useful concept? The majority concludes, “Under the particular facts of this case, the tenant, by payment of rent, had contributed to the payment of the insurance premium, thereby gaining the status of co-insured under the insurance policy.” Sad to say, there are no facts in this case, either particular or general, that would cause one to conclude that the tenant contributed to the payment of the insurance premium or expected to be treated as a co-insured. That assumption is as gratuitous as saying that the payment of rent included maid service and clean linens. It is also worth noting that fire insurance is, genetically speaking, casualty insurance. Since the landlord owns the building, he is the person at risk if the building burns down from whatever cause, be it lightning, faulty wiring, a bad furnace, or the negligent conduct of any person. Conceptually, liability insurance is different than casualty insurance. Liability insurance covers a person for his own negligent conduct. Regarding liability, the lease in this case clearly exculpated the landlord for liability for damage caused to the tenant’s personal property. No similar language exculpated the tenant for negligently damaging the landlord’s premises. The fire insurance contract contemplated that the insurance company, by way of subrogation, could recover the loss paid from any responsible party other than the insured. In other words, the insurance company in that regard would occupy the same position as the insured himself. There is nothing in law to require an insured to look either first or only to his insurance carrier for recovery of loss caused by another’s negligence. The landlord, in this case, could have sued the tenant directly. There is also nothing in law to require a landlord to carry fire insurance at all. How can it be said that a tenant is deemed to be a co-insured in a lease when the lease does not even mention or contemplate insurance? Suppose that the landlord in this case had not taken out an insurance policy. Would the majority say he was debarred from suing his tenant for negligently burning down the premises? That is to say, would the loss be shifted away from the negligent tenant and onto the guiltless landlord? Other jurisdictions have also addressed the issue of when a tenant will be relieved from liability for negligently causing a fire in leased premises. The decisions from various jurisdictions can be divided into three categories: (1) absent an express agreement to the contrary the tenant is treated as a co-insured of the landlord and is not liable for negligently causing a fire; (2) absent an express agreement to the contrary the tenant is liable for negligently causing a fire; and (3) an express agreement is not required and the determination of whether to hold the tenant liable for negligently causing a fire must be ascertained from the lease as a whole. The lead case which determined that a tenant should be treated as a co-insured, absent an express agreement to the contrary, is Sutton v. Jondahl (Okla. App. 1975), 532 P.2d 478. The reasons expressed for reaching this conclusion were that: (1) an insurance policy protects all property interest and both the tenant and landlord have insurable interests in the premises; (2) in reality the tenant pays for part of the insurance premium through the. payment of rent; (3) the reasonable expectations of tenants is for the landlord to provide fire insurance which will cover them; and (4) equity calls for placing the risk of fire loss upon the insurer which has collected premiums for the risk, rather than upon the tenant, which is a party in privity with the landlord. Sutton, 532 P.2d at 482. Several jurisdictions have followed Sutton. Alaska Insurance Co. v. RCA Alaska Communications, Inc. (Alaska 1981), 623 P.2d 1216; Safeco Insurance Co. v. Weisgerber (1989), 115 Idaho 428, 767 P.2d 271; Reeder v. Reeder (1984), 217 Neb. 120, 348 N.W.2d 832; Safeco Insurance Co. v. Capri (1985), 101 Nev. 429, 705 P.2d 659; Monterey Corp. v. Hart (1976), 216 Va. 843, 224 S.E.2d 142; Liberty Mutual Fire Insurance Co. v. Auto Spring Supply Co. (1976), 59 Cal. App. 3d 860, 131 Cal. Rptr. 211; New Hampshire Insurance Group v. Labombard (1986), 155 Mich. App. 369, 399 N.W.2d 527; Fashion Place Investments, Ltd. v. Salt Lake County/Salt Lake County Mental Health (Utah App. 1989), 776 P.2d 941; Cascade Trailer Court v. Beeson (1988), 50 Wash. App. 678, 749 P.2d 761. The Supreme Court of Kentucky in Britton v. Wooten (Ky. 1991), 817 S.W.2d 443, recently addressed whether a tenant will be held liable for negligently causing a fire. In Britton, the court held that in order for a tenant to be exonerated from liability for.negligently causing a fire, the lease must contain a clear and unequivocal expression stating such intent. In reaching this conclusion the Britton court noted that public policy disapproves of exculpatory agreements in derogation of tort liability and such an agreement should be found only if it is explicit. Similar conclusions were also reached in Sears, Roebuck & Co. v. Poling (1957), 248 Iowa 582, 81 N.W.2d 462; Winkler v. Appalachian Amusement Co. (1953), 238 N.C. 589, 79 S.E.2d 185; Zoppi v. Traurig (1990), 251 N.J. Super. 283, 598 A.2d 19; and Galante v. Hathaway Bakeries, Inc. (1958), 6 A.D.2d 142, 176 N.Y.S.2d 87. But cf. Fireman’s Insurance Co. v. Wheeler (1991), 165 A.D.2d 141, 566 N.Y.S.2d 692. Falling between these two views are the jurisdictions which do not require an express agreement to be in the lease. These jurisdictions determine whether or not a tenant is liable for his own negligence in causing a fire based upon the intent of the parties as evidenced from a reading of the lease as a whole. If the intent of the parties is unable to be ascertained, the common law rule placing liability upon the tenant for his negligent conduct is enforced. This court, prior to today’s decision, clearly fell within this classification. (Cerny-Pickas & Co. v. C.R. Jahn Co. (1955), 7 Ill. 2d 393.) Other jurisdictions which have endorsed this view include Neubauer v. Hostetter (Iowa 1992), 485 N.W.2d 87; Acquisto v. Hahn Enterprises, Inc. (1980), 95 N.M. 193, 619 P.2d 1237; Page v. Scott (1978), 263 Ark. 684, 567 S.W.2d 101; and Rock Springs Realty, Inc. v. Waid (Mo. 1965), 392 S.W.2d 270. In general, I believe that the public is better served if negligent actors are held responsible for the damage or injury they cause. While I would agree that parties to a lease may agree to exculpate a tenant for negligent conduct which damages the premises and that a lease may be drawn so as to regard the tenant as a co-insured, I cannot agree that the lease in this case contemplated any such thing. Further, I cannot agree that the mere payment of rent in the absence of other language should operate to exculpate a tenant who negligently causes damage to the premises. For the reasons given, I respectfully dissent.