No. 12629
I N THE SUPREME C U T O THE STATE O M N A A
OR F F OTN
ALBERT L. RIEFFLIN e t a l . ,
P l a i n t i f f s and A p p e l l a n t s ,
THE HARTFORD STEAM BOILER
INSPECTION AND INSURANCE
COMPANY, a Corporation,
Defendant and Respondent.
Appeal from: D i s t r i c t Court of t h e Fourth J u d i c i a l D i s t r i c t ,
Honorable E. Gardner Brownlee, Judge p r e s i d i n g .
Counsel of Record:
For A p p e l l a n t s :
J u l i o K. Morales argued, Missoula, Montana
For Respondent :
G a r l i n g t o n , Lohn and Robinson, Missoula, Montana
Gary L. Graham argued, Missoula, Montana
Submitted: March 21, 1974
Decided :
F i l e d : APR e 5 1974
M r . J u s t i c e Gene B. Daly delivered the Opinion of the Court.
P l a i n t i f f s and appellants, Albert L., Robert L., and
Margaret A. Rief f l i n , d/b/a The Missoula Motel, h e r e i n a f t e r
r e f e r r e d t o as p l a i n t i f f s o r R i e f f l i n s , bring t h i s appeal
from a judgment of the d i s t r i c t court of Missoula County i n
t h e i r favor i n the amount of $1,332.48 against defendant and
respondent, The Hartford Steam Boiler Inspection and Insurance
Company, a Corporation, h e r e i n a f t e r r e f e r r e d t o a s Hartford.
The d i s t r i c t court judgment awarded c o s t s of s u i t amounting t o
$197.24 t o defendant Hartford.
This l i t i g a t i o n a r i s e s o u t of a c o n t r a c t of insurance
e x i s t i n g between these l i t i g a n t s which covered a c a s t i r o n
b o i l e r located i n the Missoula Motel, owned by the Rief f l i n s .
The b o i l e r consisted of ten center sections and two end sections
and was used t o heat the motel. O February 1, 1970, one of
n
the end sections cracked. Hartford performed an inspection of
the b o i l e r and paid a claim i n the amount of $440.43 f o r replace-
ment of the cracked section. B l e t t e r dated March 26, 1971,
y
Hartford advised the Rief f l i n s :
"In view of the amount of s c a l e i n t h e damaged section,
i t can be expected t h a t the remaining sections i n the
b o i l e r may a l s o contain excessive s c a l e and a r e subject
t o f u t u r e cracking i n a s i m i l a r fashion.
"Since t h i s b o i l e r has been i n s e r v i c e l e s s than 3 years,
the amount of i n t e r n a l s c a l e would i n d i c a t e to us t h a t
an excessive amount of make up water i s being required
t o maintain t h e water l e v e l . Excessive feedwater make
up w i l l r e s u l t i n rapid scaling; therefore, we strongly
reconnnend t h a t t h e e n t i r e heating system be investigated
f o r leakage o r o t h e r conditions t h a t a r e r e s u l t i n g i n
excessive o r l o s s of water i n the system.
"As a safeguard against possible cracking of a d d i t i o n a l
sections, w strongly advise t h a t the b o i l e r be opened
e
up e i t h e r by removing wash out plugs o r disconnecting
pipe connections t o observe t h e i n t e r n a l surfaces. We
a r e advising our Inspector t o contact you with regard
t o such an inspection sometime following the end of the
present heating season. I f excessive s c a l e i s detected,
i t may then be necessary to remove the deposits by
chemical means along with washing and flushing of the
individual sections I 1 .
During the summer of 1971 the R i e f f l i n s had the b o i l e r
chemically cleaned a t t h e i r expense i n the amount of $911.96.
Neither Hartford nor i t s inspector specified who would bear
the c o s t of t h i s cleaning.
On o r about October 18, 1971, an i n t e r n a l b o i l e r section
cracked. Again Hartford performed an inspection and acknowledge
l i a b i l i t y i n the amount of $818.49 f o r replacement of the cracked
section. While the b o i l e r was dismantled f o r r e p a i r , a t h i r d
cracked section was discovered on November 30, 1971. B letter
y
dated December 6, 1971, Hartford advised the R i e f f l i n s :
"We a r e aware t h a t t h e b o i l e r had been dismantled
during the Summer and t h e sections had been chemically
t r e a t e d t o remove the s c a l e ; i t i s q u i t e evident t h a t
the cleaning process was not successful and i n view
of t h e density of t h e deposits and t h e i r location i n
the sections, i t i s doubtful t h a t t h e deposits can
ever be removed.
"Under t h e circumstances, w can only recommend t h e
e
replacement of a l l intermediate sections containing
s c a l e o r t h a t the e n t i r e b o i l e r be replaced, depending
on t h e expense involved. It has been our experience
t h a t i t w i l l be l e s s expensive t o replace the e n t i r e
boiler.
"The Inspector r e p o r t s t h a t a new b o i l e r has been placed
on order and t h a t i t w i l l be i n s t a l l e d t o replace the
present b o i l e r when delivered.
"In view of the trouble t h a t has been experienced with
t h i s b o i l e r i n the p a s t year a s the r e s u l t of d a i l y
i n t e r n a l scaling, w again strongly advise t h a t t h e
e
e n t i r e heating system be checked f o r leakage o r l o s s
of water from the system. Any leakage found should
be repaired t o minimize trouble of t h i s n a t u r e i n the
future. I 1
The new b o i l e r , ordered by the R i e f f l i n s p r i o r t o r e c e i p t
of the above quoted l e t t e r , was i n s t a l l e d i n l a t e February of
1972 a t a c o s t t o them of $4,815.00. Again n e i t h e r Hartford
nor i t s inspector specified who would bear the c o s t of t h i s
replacement.
While R i e f f l i n s were awaiting a r r i v a l and i n s t a l l a t i o n of
t h e i r new b o i l e r , the o l d b o i l e r continued i n use. It appears
t h a t during t h i s period additional sections of the o l d b o i l e r
cracked, leaving only e i g h t operational sections when the b o i l e r
was replaced i n February. N proofs of l o s s were received by
o
Hartford from R i e f f l i n s on any of these a d d i t i o n a l cracked sections.
Rief f l i n s ' complaint claimed damages of $4,500 .OO caused
by frozen heating pipes and appliances and l o s s of $3,000 motel
income during the period from October 1, 1971 to March 1, 1972.
R i e f f l i n s also sought judgment from Hartford f o r $911.96, the
c o s t of cleaning the b o i l e r ; $4,815.00, t h e c o s t of replacing
the e n t i r e b o i l e r ; and $818.49, the c o s t of replacing the second
cracked section.
Hartford made an o f f e r of judgment i n the sum of $1,332.48
representing i t s l i a b i l i t y f o r replacement c o s t s of the second
cracked b o i l e r section i n the sum of $818.49 and the t h i r d
cracked b o i l e r section i n the s m of $513.99, which was based
u
on a plumber's estimate.
The contract of insurance, introduced a s p l a i n t i f f s ' e x h i b i t
one, required w r i t t e n n o t f c e and proof of l o s s t o Hartford as
soon a s p r a c t i c a b l e a f t e r an accident occurred. The policy
defined "accident" f o r purposes of i t s coverage as:
"* * * a sudden and accidental breakdown of the
Object, o r a par-r: thereof, which manifests i t s e l f
a t the time of i t s occurrence by physical damage
t o the Object t h a t n e c e s s i t a t e s r e p a i r o r replace-
ment of the Object o r a p a r t thereof; but Accident
s h a l l n o t mean (a) depletion, d e t e r i o r a t i o n , cor-
rosion, o r erosion of material * * *."
The policy s p e c i f i c a l l y excluded:
"* ** l o s s from delay o r i n t e r r u p t i o n of business
o r manufacturing o r process, ( f ) l o s s from lack of
power, l i g h t , heat, steam o r r e f r i g e r a t i o n and (g)
l o s s from any o t h e r i n d i r e c t r e s u l t of an Accident."
P l a i n t i f f s bring t h i s appeal from the judgment and order
of t h e d i s t r i c t c o u r t , and from i t s d e n i a l of t h e i r post t r i a l
motions, assigning the following issues:
(1) Whether the t r i a l court erred i n denying (a l a r g e r )
judgment t o the p l a i n t i f f s and against the defendant.
(2) Whether t h e t r i a l court erred i n denying p l a i n t i f f s '
motion t o amend and make additional findings of f a c t and con-
clusions of law.
(3) Whether t h e t r i a l court e r r e d i n denying p l a i n t i f f s '
motion f o r a new t r i a l on the ground the evidence did n o t j u s t i f y
the v e r d i c t .
(4) Whether t h e t r i a l court erred i n f a i l i n g t o grant
the m t i o n f o r a new t r i a l on the grounds t h a t e r r o r was com-
mitted during t r i a l by denying p l a i n t i f f s ' presentation of
evidence regarding cracking of b o i l e r sections which took place
subsequent t o October 31, 1971.
The arguments propounded by p l a i n t i f f s i n support of these
i s s u e s concern p r i m a r i l y t h e l e g a l o p e r a t i o n of t h e insurance
c o n t r a c t between t h e l i t i g a n t s and c o l l a t e r a l l y t h e e f f e c t of
a l l e g e d negligence by Hartford i n i t s performance of t h e b o i l e r
i n s p e c t i o n s and proposed a p p l i c a t i o n of t h e d o c t r i n e of e q u i t a b l e
estoppel a g a i n s t Hartford.
Regarding t h e primary argument, t h e t r i a l c o u r t found
t h a t t h e buildup of s c a l e w i t h i n t h e b o i l e r was n o t "sudden
and a c c i d e n t a l " and was n o t a "breakdown o f t h e o b j e c t " which
w a s manifested a t t h e time of t h e accident "by physical damage
to t h e o b j e c t t h a t n e c e s s i t a t e s r e p a i r o r replacement of t h e
o b j e c t " and hence was n o t an "accident" under t h e terms o f t h e
policy. Consequently, t h e t r i a l c o u r t r u l e d t h e r e w a s no coverage
under t h e p o l i c y of t h e R i e f f l i n s ' expenses of $911.96 f o r t h e
b o i l e r cleaning done during t h e summer of 1971 o r of t h e i r
expenses o f $4,815.00 f o r t h e b o i l e r replacement done i n
February o f 1972.
Based upon t h e record b e f o r e u s , we concur with t h e s e
r u l i n g s of t h e t r i a l c o u r t . Both t h e s e a c t i o n s were undertaken
by t h e R i e f f l i n s i n an attempt t o remedy t h e i n t e r n a l s c a l i n g
problem. I n i n t e r p r e t i n g and applying insurance c o n t r a c t s , t h e
Montana r u l e has been t o u s e t h e common r a t h e r than some t e c h n i c a l
usage o r meaning of d e f i n i t i o n a l terms i n t h e policy, W i l l s v.
Midland Nat. L. Ins. Co., 108 Mont. 536, 91 P.2d 695. The
i n t e r n a l b o i l e r s c a l i n g problem was n o t an accident under t h e
u s u a l meaning of t h e term as defined i n t h e insurance p o l i c y
i s s u e d by Hartford.
Hartford has paid o r i s now o b l i g a t e d t o pay, under t h e
d i s t r i c t c o u r t ' s judgment, the replacement c o s t of three cracked
b o i l e r sections. The t r i a l court found t h a t f a i l u r e of the
R i e f f l i n s t o submit n o t i f i c a t i o n s of accident and proof of l o s s
a s soon a s p r a c t i c a b l e , a s required by the policy, barred any
claims f o r reimbursement f o r sections which may have cracked
subsequent t o these f i r s t three. Appellants r e l y on the case
of Staggers v. U . S . F . & G. Co., 159 Mont. 254, 496 P.2d 1161, i n
which t h i s Court held t h a t "substantial compliancef1by insured
i n furnishing i n s u r e r with proof of l o s s a s required f o r recovery
under a f i r e insurance policy was s u f f i c i e n t . The existence of
"substantial compliance" i n Staggers was predicated upon the f a c t
t h a t the insureds f i l l e d out and submitted statement of l o s s forms
which the i n s u r e r did n o t o b j e c t t o f o r almost two years. In the
i n s t a n t case the insureds f i l e d nothing f o r n e a r l y two years con-
cerning the cracked b o i l e r sections i n question. However, the
R i e f f l i n s contend t h a t t h e i r i n s u r e r knew of the p r i o r s c a l e
accumulation problem and of the three b o i l e r sections which had
cracked previously and therefore should have a n t i c i p a t e d t h e l a t e r
cracking of b o i l e r sections. To i n t e r p r e t the concept of sub-
s t a n t i a l compliance t h i s broadly would eliminate the need f o r
any compliance with insurance policy provisions. W find that
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the t r i a l court was c o r r e c t i n i t s r u l i n g t h a t the R i e f f l i n s
f a i l e d t o comply with the proof of l o s s requirements f o r any
except the f i r s t t h r e e cracked b o i l e r sections.
The t r i a l court a l s o found, and w concur, t h a t the insur-
e
ance s p e c i f i c a l l y excluded from coverage the i n c i d e n t a l damages
from frozen pipes claimed i n the amount of $4,500 and from
i n t e r r u p t i o n of business l o s s e s claimed i n the amount of $3,000.
The record before us does n o t support a p p e l l a n t s ' allega-
t i o n s of negligence on the p a r t of Hartford i n conducting the
inspections of the b o i l e r . Under the terms of t h e insurance
contract Hartford reserved t h e r i g h t but did n o t assume the
duty t o inspect. A s a general p r i n c i p l e of our law of t o r t s ,
however, once Hartford undertook to inspect the b o i l e r and make
recommendations, they were obliged to do so i n a nonnegligent
manner. The hereinabove quoted passages of l e t t e r s from
Hartford t o R i e f f l i n s recommend the "excessive feedwater"
problem be remedied i n order t o c o r r e c t t h e scaling. There i s
no evidence i n the record t h a t these recommendations were followed
u n t i l i t became necessary t o replace the e n t i r e b o i l e r . The
plumbing contractor who i n s t a l l e d the new b o i l e r t e s t i f i e d t h a t
he used a water softener and chemical a d d i t i v e s i n the new feed-
water system, t o help r e l i e v e scaling. There i s no testimony
t h a t these i n s t a l l a t i o n s would have corrected the s c a l i n g con-
d i t i o n e x i s t i n g i n t h e o l d b o i l e r , o r t h a t a b o i l e r n o t using
excessive amounts of feedwater would r e q u i r e them.
The appellants contention concerning application of equitable
estoppel i s defective i n t h e f i r s t instance through t h e i r f a i l u r e
to r a i s e the i s s u e before t h e t r i a l c o u r t , S t a t e Highway Comm.
v. Voyich, 142 Mont. 355, 384 P.2d 765, and i n t h e second instance
the record discloses no statement o r conduct on the p a r t of
Hartford anmunting t o a misrepresentation, Mundt v. Mallon,
106Mont. 242, 76 P.2d 326.
F i n a l l y , concerning the t r i a l court ' s r u l i n g assessing
c o s t s against p l a i n t i f f s and appellants R i e f f l i n s , Rule 68,
M.R.Civ.P. provides i n p e r t i n e n t p a r t :
"* * * I f the judgment f i n a l l y obtained by the of f e r e e
i s n o t more favorable than the o f f e r (of judgment),
the o f f e r e e must pay the c o s t s incurred a f t e r t h e
making of the o f f e r . * * *"
W f i n d Rule 68, M.R.Civ.P.
e c l e a r l y applicable and
c o r r e c t l y applied by the t r i a l court.
W f i n d no e r r o r i n the judgment of the d i s t r i c t c o u r t ,
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and i t i s hereby affirmed.
Justice
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