Howard v. Federal Crop Ins. Corp.
540 F.2d 695 (4th Cir. 1976)
- The Howards grew tobacco and insured it with Federal crop insurance. Their crop was damaged in a storm and they claimed to have lost $35k. Howard filed a claim with the FCIC, but before the adjuster arrived, Howard plowed under the fields so that they could plant rye to cover and preserve the soil.
- There was a clause in the insurance contract that tobacco stalks shall not be destroyed until inspected or coverage will be forfeited.
- This type of provision is a called a condition.
- The adjuster denied the claim on the basis that Howard had violated a condition in their insurance policy that said that no stalks may be destroyed until they are inspected by the insurer. Howard sued for breach of contract.
- The Trial Court granted summary judgment for FCIC, Howard appealed.
- The Appellate Court reversed the decision and remanded the case for trial.
- The Appellate Court found that plowing under the stalks does not, in itself, operate to forfeit insurance coverage under this policy.
- This was not a condition, since there were other ways for FCIC to assure that the crop had actually been damaged.
- Provisions that are not conditions are promises (which is not the same as a naked promise though). Breaching a promise is indeed a breach of a contract, but it does not excuse performance of the other party. The other party still must perform, although they can sue for damages due to the breach.
- In this case, FCIC could claim that they had to do a special analysis to determine what the damages were, and that analysis cost more money than a visual inspection, therefore, they should be able to recover that money.
- When a provision in a contract is a condition, then breaching that provision excuses the other party from performance of their end of the contract.