This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (2002).






Gerald Swanson, et al.,





Minnesota FAIR Plan, et al.,



Filed November 25, 2003

Klaphake, Judge


Hennepin County District Court

File No. CT-00-017403


Clarance E. Hagglund, Britton D. Weimer, William C. Weeding, Blackwell Igbanugo, 3601 West 76th Street, Suite 250, Minneapolis, MN  55435 (for appellants)


Bradley J. Ayers, Lori D. Semke, Flynn, Gaskins & Bennett, L.L.P., 333 South Seventh Street, Suite 2900, Minneapolis, MN  55402 (for respondents)


            Considered and decided by Klaphake, Presiding Judge, Hudson, Judge, and Poritsky, Judge.*

U N P U B L I S H E D   O P I N I O N


            Appellants Gerald and Eleanor Swanson brought this breach of contract action against respondents Minnesota FAIR Plan and Ross Farmer, d/b/a Minnesota Property Insurance Placement Facility (FAIR Plan), seeking to recover the proceeds under the terms of an insurance policy covering real property that the Swansons were in the process of repurchasing.  The Swansons alleged that they were entitled to the proceeds under the terms of an amended assignment from the named insured, James Byron, the person from whom the Swansons were repurchasing the property.

            The district court granted summary judgment to FAIR Plan, and the Swansons appealed.  In May 2002, this court reversed and remanded, determining that several fact issues remained.  Swanson v. Minn. FAIR Plan, CX-01-1994, 2002 WL 859859 (Minn. App. May 7, 2002).

            Following a one-day bench trial, the district court issued detailed findings and conclusions, and granted judgment to FAIR Plan.  On appeal from the judgment, the Swansons challenge the district court’s determinations that (1) FAIR Plan did not waive its right to deny coverage under the policy by retaining the premiums paid by Byron; (2) Byron had no insurable interest in the property at the time of the fire and thus assigned no rights to the Swansons; and (3) Byron made material misrepresentations to FAIR Plan at the time he applied for the policy and after the loss, and he did so with intent to defraud FAIR Plan.  The Swansons also claim that FAIR Plan improperly raised defenses and allegations of fraud that are outside the scope of its coverage denial letters and pleadings, and they challenge the district court’s determination that they failed to prove damages.

            Because the district court did not clearly err in finding that no waiver occurred by the retention of premiums and that Byron had no insurable interest in the property on the date of the fire, we affirm the judgment entered against the Swansons and in favor of FAIR Plan.  Given our decision on these issues, we need not determine whether Byron committed fraud or misrepresentation, whether FAIR Plan raised allegations outside the scope of its pleadings, or whether the Swansons successfully proved damages.


            On appeal from a judgment in a bench trial, we consider whether the evidence sustains the district court’s findings and whether those findings, in turn, support the court’s conclusions of law and judgment.  Doan v. Medtronic, Inc., 560 N.W.2d 100, 104 (Minn. App. 1997), review denied (Minn. May 13, 1997).  A district court’s findings “shall not be set aside unless clearly erroneous, and due regard shall be given to the opportunity of the [district] court to judge the credibility of the witnesses.”  Minn. R. Civ. P. 52.01.

            In applying rule 52.01, “we view the record in the light most favorable to the judgment.”  Rogers v. Moore, 603 N.W.2d 650, 656 (Minn. 1999).  “Findings of fact are clearly erroneous only if the reviewing court is left with the definite and firm conviction that a mistake has been made.”  Fletcher v. St. Paul Pioneer Press, 589 N.W.2d 96, 101 (Minn. 1999) (quotation omitted).  “If there is reasonable evidence to support the district court’s findings, we will not disturb them.”  Rogers, 603 N.W.2d at 656.


            The Swansons argue that FAIR Plan waived its right to void the policy because it chose to retain premiums that Byron had paid for coverage through July 18, 1999, two weeks after the July 5, 1999 fire.  There is, however, no automatic waiver of policy defenses for failure to return premiums, when the facts giving rise to the defenses are unknown at the time the premiums are received and when the insured fails to claim a refund.  See Tollefson v. Am. Family Ins. Co., 302 Minn. 1, 6, 226 N.W.2d 280, 284 (1974).

            Here, the district court found that Byron failed to claim a refund of his premiums, which were estimated to be $20 to $25, and that “there is no evidence that the FAIR Plan did not stand ready to pay the refund.”  The evidence further supports the conclusion that the facts giving rise to FAIR Plan’s defenses were not discovered until some time after the loss occurred.  The district court’s findings, which are reasonably supported by the evidence, are not clearly erroneous and support the court’s determination that FAIR Plan did not waive its right to void the policy or otherwise deny coverage by retaining Bryon’s premiums.   


            The Swansons challenge the district court’s determination that because Byron had no insurable interest in the property at the time of the July 5, 1999 fire, his assignment to them of the proceeds under the policy was ineffective.  The district court found that by July 1, 1999, “all steps necessary to transfer the property back to Eleanor Swanson and for Byron to eliminate all interests he had in the [property] were completed.”  The district court further found that the parties’ conduct, which included Eleanor Swanson’s possession of the keys, mowing the grass, and hiring someone to board up the house after the fire, supported the finding that she was the owner and that the transfer took place prior to the fire.

            The Swansons challenge the district court’s findings and insist that “the unrebutted testimony of Byron and [Steven Pihlaja, his attorney at the time,] was that the closing on the property was not complete until after the fire, and that the deed for the property was not transferred until after the fire.”  We disagree with the Swansons’ characterization of the evidence presented at trial.

            All of the documents related to the property transfer were dated June 30 or July 1, 1999, including a quitclaim deed, cancellation of purchase agreements, assumption of mortgage, and a check for $1,050 from the Swansons to Byron.  Byron admitted at trial that he signed the documents on July 1 or earlier, and that he cashed the check on July 2.  Byron further acknowledged that he intended to have nothing more to do with the property after that.  Although Pihlaja testified on direct that he believed the property closing did not take place until July 9, he was unable to produce any evidence to support this claim and admitted on cross-examination that he had no direct knowledge of when the quitclaim deed was physically delivered to the Swansons.  The Swansons testified that they did not remember when they actually received the deed. 

            The documents and testimony related to the property transfer fully support the finding that Byron surrendered control and intended to convey title as of July 1, 1999.  Absent any evidence to the contrary, we cannot conclude that the district court clearly erred in finding that title to the property transferred to the Swansons prior to the fire and that Byron had no ownership interest in the property at the time of the fire.  See Slawik v. Loseth, 207 Minn. 137, 139, 290 N.W. 228, 229 (1940) (stating that delivery is accomplished when grantor surrenders control and intends to convey title); Mollico v. Mollico, 628 N.W.2d 637, 641 (Minn. App. 2001) (stating that transaction occurs with present unconditional intent to transfer ownership, not physical delivery or recording of deed). 

            Nevertheless, an insured is not required to own property in order to have an insurable interest.  “[A] person has an insurable interest when he has such a relation or concern with the subject matter insured that he will derive pecuniary benefit or advantage from its preservation or suffer pecuniary loss or damage from its destruction.”  Lumbermens Mut. Ins. Co. v. Edmister, 412 F.2d 351, 353 (8th Cir. 1969); see Crowell v. Delafield Farmers Mut. Fire Ins. Co., 453 N.W.2d 724, 726 (Minn. App. 1990) (stating that insurable interest exists if, by destruction of property, person will suffer substantial and real loss).

            The Swansons claim that Byron had a financial interest in the property because the “standard purchase agreement in Minnesota” places the risk of loss before closing on the seller.  But the Swansons never produced a purchase agreement for this particular transaction and appear to rely on the purchase agreement that they entered in April 1999, when Byron first purchased the property from them.  In addition, a “closing” occurs at the “final transaction between the buyer and seller, whereby the conveyancing documents are concluded and the money and property [are] transferred.”  Black’s Law Dictionary 248 (7th ed. 1999).  Here, because the evidence fully supports the district court’s finding that the transfer of the property to the Swansons was completed as of July 1, 1999, the “closing” also occurred as of that date.  Absent any other evidence that Byron retained some pecuniary interest in the property after July 1, 1999, we cannot conclude that he retained an insurable interest.

            Because Byron had no insurable interest in the property as of the date of the fire on July 5, 1999, he and his assignees, the Swansons, had no rights under the policy.  We therefore affirm the judgment in favor of FAIR Plan.



* Retired judge of the district court, serving as judge of the Minnesota Court of Appeals by appointment pursuant to Minn. Const. art. VI, § 10.