Howard v. Federal Crop Insurance Corp.

Facts

In 1973 the Federal Crop Insurance Corporation (FCIC), an agency of the United States, issued three policies to the Howards. The policies insured their tobacco crops, grown on six farms, against weather damage and other hazards. The Howards alleged that heavy rains badly damaged their 1973 crop and caused a gross loss to the three plaintiffs in excess of $35,000. They harvested and sold the depleted crop and filed notice and proof of loss on time. Before the FCIC adjuster inspected, though, they plowed or disked under the tobacco fields to prepare them for sowing a cover crop of rye, which would preserve the soil. When the adjuster later inspected, the stalks were largely obscured or obliterated. He denied the claims, apparently because the policy's tobacco endorsement, in subparagraph 5(f), says that the tobacco stalks on any acreage with respect to which a loss is claimed shall not be destroyed until the Corporation makes an inspection. Another subparagraph, 5(b), expressly calls certain requirements a condition precedent (something that must happen before payment is owed). The Howards pointed out that 5(f) does not use that term.

Issues

1. Does subparagraph 5(f) of the tobacco endorsement, which says the stalks shall not be destroyed until the Corporation inspects, create a condition precedent whose breach forfeits the insured's coverage?
2. If 5(f) is not a condition precedent, are the insured farmers entitled to summary judgment, or must other questions be decided on remand?

Holding

The district court erred in holding, on the motion for summary judgment, that subparagraph 5(f) was a condition precedent whose breach forfeited coverage. The court's narrow holding is that merely plowing or disking under the stalks does not of itself forfeit coverage, so summary judgment for FCIC on that ground was error.