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.