This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (1998).


Francis F. Boyles, et al.,


Frederick N. Puzak,

Frederick N. Puzak,


Liberty Mutual Fire Insurance Company,

Francis F. Boyles, et al.,

Filed December 14, 1999
Affirmed in part, reversed in part
Crippen, Judge

Hennepin County District Court
File No. 974145

Dennis J. Dietzler, Suite 530, 6625 Lyndale Avenue South, Richfield, MN 55423 (for appellants)

Berry L. Blomquist, Jr., Blomquist & Espeset, Suite 255 Broadway Place East, 3433 Broadway Street Northeast, Minneapolis MN 55413 (for respondent Puzak)

Anthony Kane, Suite 220, 300 First Avenue North, Minneapolis, MN 55401 (for respondent Liberty Mutual)

Considered and decided by Crippen, Presiding Judge, Short, Judge, and Mulally, Judge.[*]

U N P U B L I S H E D   O P I N I O N


Appellants Francis F. Boyles, et al., contract for deed vendors, dispute the trial court's determination that they were not entitled to recover the proceeds of a fire insurance policy maintained by the contract vendee. Because we conclude that the appellants' claims lack merit, either under the insurance contract or on principles of equity, we affirm the substance of the trial court's decision. We reverse an award of fees to respondent.


In 1981, respondent Frederick Puzak assumed the vendee's interest in appellants' 1979 contract to sell a rooming house. Under the contract, a balloon payment was due in 1990, and the contract stated terms for amortizing the payments differently if refinancing was not available at the time this balloon payment was due. Respondent did not pay the 1990 balloon payment but has since made payments required by the contract. The contract required respondent to maintain fire insurance to be approved by the vendors and payable to them.[1] Respondent maintained a policy of insurance purchased from Liberty Mutual Fire Insurance Company, but the policy named himself, the vendee, as the principal named insured.

In 1996, the property was significantly damaged by a fire. The insurance company refused to release insurance proceeds to respondent without appellants' signatures. Appellants claimed an entitlement to the proceeds to the extent of the debt still owing under the contract. The parties do not dispute that the balance due on the contract after the October 1, 1996 payment was $56,738.45. Appellants filed an action seeking performance of the contract for deed, and respondent sought a judgment for the insurance proceeds in a suit against the insurer. The trial court granted appellants' motion to intervene in respondent's suit, and the parties agreed to consolidate the cases for trial. Subsequently, the court granted a summary judgment that appellants were not entitled to the insurance proceeds.


On appeal from a summary judgment, this court asks whether there are any genuine issues of material fact and whether the trial court erred in its application of the law. State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990). On appeal, the reviewing court must view the evidence in the light most favorable to the party against whom judgment was granted. Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn. 1993). This court is not bound by a district court's decision on a question of law. A.A. Metcalf Moving & Storage Co., Inc. v. North St. Paul-Maplewood Oakdale Schools, 587 N.W.2d 311, 314 (Minn. App. 1998).

I. Equitable Lien.

In the event they are not considered named insureds, appellants contend that they are entitled to relief under the equitable lien theory first announced in Ames v. Richardson, 29 Minn. 330, 333, 13 N.W. 137, 138 (1882). We conclude, consistent with the argument advanced by the respondent, that appellants are not entitled to this relief.[2]

It has long been settled that an agreement by the mortgagor to insure the property for the benefit of the mortgagee gives the mortgagee an equitable lien upon the proceeds of a policy taken out by the mortgagor without naming the mortgagee as an insured. Id. In these circumstances, equity will treat the insurance as effected under the agreement and will give the mortgagee a lien upon the insurance proceeds. Id. at 333, 13 N.W. at 138-39; see also Baughman v. Niagara Fire Ins. Co., 163 Minn. 300, 303, 204 N.W. 321, 323 (1925) (affirming decision that bank was entitled to receive from mortgagor any insurance proceeds received, due to mortgagor's agreement with bank to keep the buildings insured in the bank's favor); Mark v. Liverpool & London & Globe Ins. Co., Ltd., 159 Minn. 315, 321, 198 N.W. 1003, 1005 (1924) (plaintiff would be entitled to a lien in equity upon insurance proceeds upon a failure by the mortgagor to maintain policy payable to the mortgagee, as provided in agreement); Imperial Elevator Co. v. Bennett, 127 Minn. 256, 260, 149 N.W. 372, 373 (1914) (mortgagee entitled to an equitable lien on insurance proceeds under clause in mortgage by which mortgagor agreed to maintain insurance on property for mortgagee's benefit); Hebert v. Turgeon, 84 Minn. 34, 41, 86 N.W. 757, 760 (1901) (stating the rule from Ames).

Ames does not require an equitable lien upon the insurance proceeds in this case.[3] We first observe that in all of the cited cases, the subject property had been destroyed and the mortgagees were facing the loss of their security. The equity of Ames is unique to circumstances where the vendor's security is valueless in absence of recovery of the insurance proceeds. In this case, the property was only partially damaged, and the respondent repaired the damage and restored the property to its pre-fire condition. As such, the vendors still maintain their valuable security in the property and there is no equitable basis for a lien.

In addition, appellants' equity is diminished by their failure to act on respondent's agreement to purchase proper insurance. The facts, when viewed most favorably to appellants, indicate that the vendee's alleged breach occurred not later than 1990, when appellants demanded but did not receive a copy of the insurance policy maintained by respondent.[4] Appellants did not take action for many years to enforce their right to a fire insurance policy naming them as loss payees. Equity "aids the vigilant, not those who sleep upon their rights." In Re Jordan's Estate, 199 Minn. 53, 63, 271 N.W. 104, 108 (1937). Although appellants claim they never received the policy, their action on this breach was confined to personal complaints to the buyer. In spite of respondent's evident breach of its contractual obligations, appellants do not have the equitable stature of the plaintiffs in Ames and its progeny. They are not entitled to an equitable lien upon the insurance proceeds.

II. Insurance Policy.

Appellants also contend that they are named insureds in the Liberty Mutual policy by reason of an endorsement that includes them among stated additional insureds.

An insurance policy "must be construed as a whole, and unambiguous language must be given its plain and ordinary meaning." Henning Nelson Constr. Co. v. Fireman's Fund American Life Ins. Co., 383 N.W.2d 645, 652 (Minn. 1986) (citation omitted). Interpretation of an insurance policy's language is a question of law. Meadowbrook, Inc. v. Tower Ins. Co., 559 N.W.2d 411, 415 (Minn. 1997). Whether policy language is ambiguous is a question of law, which this court reviews de novo. Christie v. Illinois Farmers Ins. Co., 580 N.W.2d 507, 508 (Minn. App. 1998).

The policy in this case is titled a "Businessowners Policy" and on the declarations page the respondent is the only insured listed. The policy is divided into two sections, one portion on property coverage and another on liability coverage. Endorsement 5 of the policy lists the appellants' name at the top of the page, and section A of Endorsement 5 then directs that the appellants' names be added as insureds under the liability-coverage portion of the policy. Section A of Endorsement 5 is implementing language for the endorsement, directing the placement of appellants' names into the liability coverage portion of the policy. Appellants point to language, in the heading of the endorsement, that the endorsement "changes the policy," but there is no merit to appellants' suggestion that the listing of additional insureds in the endorsement has any force and effect beyond its implementing language. Giving this language its plain meaning, appellants were named insureds only under the liability coverage portion of the insurance policy.

III. Balloon Payment.

Finally, appellants contend that they are entitled to immediate payment of the contract balance under the clause of the contract that demanded a balloon payment in 1990, unless refinancing was "unavailable." Appellants did not meet their burden to demonstrate a genuine issue of material fact on the vendee's insistence that refinancing was unavailable for this property. The fact that respondent made repairs on the property demonstrates the availability of short-term credit to finance the repairs but does not show the availability of funds for refinancing.

IV. Payments.

Appellants refused to accept respondent's payments after November 1996 because respondent stated he considered his costs of financing repairs to be deductions in the principal due under the contract. The trial court ordered respondent to begin payments immediately but without regard for the period of approximately two years when the payments were refused. Respondent has not articulated the extent to which he disputes, if at all, his obligation to pay the principal and interest still due under the contract. This problem, the effects of non-payment of installments for two years, was not addressed by the trial court and there is no evidence it was ever raised. As such it is not before this court. Thiele v. Stich, 425 N.W.2d 580, 582 (Minn. 1988).

V. Attorney Fees.

Attorney fees generally are not recoverable absent authorization by a statute or a contract. Barr/Nelson, Inc. v. Tonto's, Inc., 336 N.W.2d 46, 53 (Minn. 1983); Glarner v. Time Ins. Co, 465 N.W.2d 591, 597 (Minn. App. 1991). If attorney fees were available, the reviewing court will only reverse an award when the trial court has abused its discretion. Becker v. Alloy Hardfacing & Eng'g Co., 401 N.W.2d 655, 661 (Minn. 1987). The trial court awarded $2000 in attorney fees to respondent, with no statement of the legal basis or the circumstances justifying the award. Appellants' claims, while not successful, involved legitimate questions of law and fact. Because it was an abuse of discretion to award fees under these circumstances, the award is reversed. Respondent is not entitled to relief on its request for a further award of attorney fees.

Affirmed in part, reversed in part.

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

[1] The contract language required respondent

at their own expense, to keep the buildings on said premises at all times insured in some reliable insurance company or companies, to be approved by the [appellant], against loss by fire for at least the sum of -- to cover indebtedness - - * * * payable to [appellants], their heirs or assigns * * *.

[2] The contract for deed form used in this case is no longer in general use. The parties acknowledge that the equities of parties in similar circumstances are different under more modern forms that make provisions permitting or inducing the restoration of damaged property.

[3] The trial court suggested that the respondent did not breach the contract, stating in the Order entered September 16, 1998, that the requirement was for insurance to protect the property. This conclusion was erroneous; the contract language specifically required that fire insurance payable to the appellants be maintained.

[4] Viewing the facts most favorably to respondent, the breach was evident as early as 1981, when respondent provided a copy of the policy at the time he assumed the contract.