This opinion will be unpublished and
                  may not be cited except as provided by
               Minn. Stat. § 480A.08, subd. 3 (1994)

                          State of Minnesota
                            in Court of Appeals

     Stark Farmers Mutual Insurance Company,
     Marcel Hoffmann, et al.,


Fred Rodriguez,


M & M Lounge Restaurant, Ltd., d/b/a The Barrel Inn,


The Getaway of New Ulm,


Holtan, Judge

Brown County District Court

File No. C394603

Mark G. McKeon, Willenbring, Dahl, Wocken & Zimmerman, Red River at Main,
P.O. Box 417, Cold Spring, MN 56320 (Respondent)

Dustan J. Cross, Gislason, Dosland, Hunter & Malecki, P.L.L.P., One South
State Street, P.O. Box 458, New Ulm, MN 56073 (for Appellants)

Timothy W. Waldeck, 2300 Metropolitan Centre, 333 South Seventh Street,
Minneapolis, MN 55402 (for Defendant M & M Lounge Restaurant, Ltd., d/b/a
The Barrell Inn)

Richard Scattergood, 2000 Metropolitan Centre, 333 South Seventh Street,
Minneapolis, MN 55402 (for Defendant The Getaway of New Ulm)

Considered and decided by Huspeni, Presiding Judge, Klaphake, Judge, and
Holtan, Judge.(1)
        [Footnote] (1)Retired judge of the district court,
        serving as judge of the Minnesota Court of Appeals
        by appointment pursuant to Minn. Const. art. VI,
        § 10.
                        Unpublished Opinion

HOLTAN, Judge (Hon. Terri J. Stoneburner, District Court Trial

Appellants challenge a trial court order allocating to respondent insurance
company 100 percent of a settlement obtained by appellants and respondent
from tortfeasors under the subrogation provisions of appellants' insurance
policy with respondent. We reverse.

Appellants Marcel, Brad, and Dean Hoffmann are father and sons who farm
together. In July 1993, Brad Hoffmann was driving his father's tractor and
pulling an herbicide sprayer belonging to the two brothers when he was hit
by a drunk driver. The tractor and sprayer were destroyed. Respondent,
insurer of both pieces of equipment, paid the Hoffmanns just over $20,000,
representing the equipment's actual value.(2)
        [Footnote] (2)Appellants' tractor and sprayer were
        insured separately under two policies. The
        subrogation clauses of both policies are identical;
        thus, for simplicity's sake we will refer to a
        single policy throughout this opinion.

Appellants and respondent filed a joint complaint against the intoxicated
driver and two bars that served him alcohol before the accident. Appellants
claimed that they sustained damages uncompensated by insurance, including
(1) $18,183.50 in extra herbicide costs incurred when appellants were
forced to delay herbicide spraying while securing a new tractor, and (2)

$11,635.95 in financing charges incurred when appellants purchased a
replacement tractor. Appellants and respondent entered into a settlement
agreement with the dram–shop defendants for $20,000.

Appellants and respondent were unable to agree on an allocation of the
settlement proceeds and filed cross-motions seeking a judicial division of
the amount. Appellants argued that they were entitled to the entire $20,000
because they had not been fully compensated for their loss by the insurance
payments. Respondent contended it was entitled to the entire $20,000 under
the subrogation provision of its policy with appellants. The trial court
awarded respondent the entire $20,000 under the terms of its subrogation
provision. This appeal followed.

The law in Minnesota is clear that where an insured has not been fully
compensated for a loss, his or her insurance company will not be reimbursed
for any payments made, even if the insured's policy contains a subrogation
clause, unless that clause clearly states that subrogation will lie before
full recovery. See Westendorf by Westendorf v. Stasson, 330 N.W.2d
699, 703 (Minn. 1983) (adopting the majority ``full recovery rule'' that
``absent express terms to the contrary, subrogation will not be allowed
where the insured's total recovery is less than the insured's actual
loss,'' and specifically rejecting the minority rule that ``a subrogation
clause ipso facto authorizes first priority recovery by the insurer'').
Appellants contend they have not been fully compensated by their insurance
proceeds, and respondent does not dispute this claim on appeal.

Respondent contends that its policy with appellants contains ``express
contract terms'' stating that respondent's subrogation rights stand even in
the event that appellants have not been fully compensated for a loss. We
disagree. The subrogation clause in appellants' policy provides:
        If we pay a loss to or on behalf of an insured and
        the insured recovers damages from another person for
        the same loss, the insured shall hold the amount
        recovered in trust for us and shall first reimburse
        us up to the full amount we have paid under this

(Emphasis omitted.) This clause does not explicitly override the full
recovery rule by stating that recovery will lie even if the insured has not
been fully compensated. Cf. MedCenters Health Care v. Ochs, 854 F.
Supp. 589, 592 (D. Minn. 1993) (``This Court believes that Minnesota's full
recovery rule requires that the subrogation clause must be explicit
regarding priority of payments and the plan's recovery regardless of full
recovery or the `full recovery rule' will bar subrogation.''), aff'd, 26
F.3d 865 (8th Cir. 1994); Hershey v. Physicians Health Plan of Minnesota,
Inc., 498 N.W.2d 519, 520-21 (Minn. App. 1993) (holding subrogation
clause effective despite insured's incomplete recovery in light of clause's
language: ``[Insurer] PHP may collect from the proceeds of any settlement
or judgment recovered from you or your legal representative regardless of
whether you have been fully compensated.'').

The instant clause is materially indistinguishable from a subrogation
clause that this court found not to be a sufficiently clear rejection of
the full recovery rule to allow reimbursement of the insurer before full
recovery by the insured. See Allum v. MedCenter Health Care, 371
N.W.2d 557, 558, 560-61 (Minn. App. 1985) (rejecting insurer's argument
that its subrogation clause, providing that subrogation rights ``shall be
considered as the first priority claim against any such third party to be
paid before any other claims for general damages by such individual,''
expressly gave the insurer the right to settlement proceeds before full
recovery). Like the clause in Allum, respondent's subrogation clause
does not ``plainly provide'' that respondent may enforce its subrogation
rights even if the insureds have not been fully compensated. See

Hershey, 498 N.W.2d at 520 (observing that language there did plainly
provide such rights). Thus, the trial court erred in enforcing the
subrogation provision before appellants have been fully compensated for
their loss.

More importantly, the subrogation clause does not apply to the settlement
proceedings, because the proceedings are not payments ``for the same loss''
as that for which respondent paid appellants, that is, the actual value of
the destroyed equipment. The subrogation clause, again, provides:
        If we pay a loss to or on behalf of an insured and
        the insured recovers damages from another person
        for the same loss, the insured shall hold the
        amount recovered in trust for us, and shall first
        reimburse us up to the full amount we have paid
        under this policy.

(Emphasis added.) (Other emphasis omitted.)

Respondent asserts that the term ``loss'' in the subrogation clause means
``all of the items of damage suffered by an insured because of * * * [a]
tort,'' relying on case law prohibiting the splitting of a single cause of
action into different suits based on different items of damages. See
Myhra v. Park, 193 Minn. 290, 292-96, 258 N.W. 515, 516-18 (1935)
(where plaintiff's cause of action was founded on ``one negligent act,''
plaintiff could not bring several suits against the tortfeasor based on
various damages). Myhra is inapplicable in this insurance setting;
it does not proscribe distinguishing between ``insured loss'' and
``uninsured loss'' within an insurance policy.

The natural meaning of ``loss'' in respondent's subrogation clause is
``insured loss.'' Because the herbicide and financing losses for which the
parties obtained settlement proceeds were not insured losses, the proceeds
do not represent damages recovered ``for the same loss,'' and the
subrogation clause is inapplicable.

Respondent essentially contends that it ought to be permitted to insure
only a specific loss, such as the actual value of appellants' property, and
then be reimbursed for any payments made for that loss under their
subrogation clauses as soon as any money is recovered from the tortfeasors
for the remaining, uninsured portions of appellants' loss. This scheme
leaves respondent, which paid $20,000 on the original claims, fully
compensated while appellants suffer an $18,000 to $20,000 loss. But the
case law stresses that insurance companies rather than insureds should bear
the losses from third-party negligence when a tortfeasor's contribution is
inadequate to compensate both. See Westendorf, 330 N.W.2d at 704,
703 (holding that where ``the enrollee has paid for comprehensive health
care,'' she should recover fully before the insurance company is
reimbursed: ``equitable principles apply to all instances of subrogation
except when modified by specific provisions in the contract''); Garrity
v. Rural Mut. Ins. Co., 253 N.W.2d 512, 514 (Wis. 1977) (``[W]here
either the insurer or the insured must to some extent go unpaid, the loss
must be borne by the insurer for that is a risk the insured has paid it to
assume.''), cited in Westendorf, 330 N.W.2d at 703 n.1). Subrogation
is an equitable doctrine designed to prevent double recovery by insureds
and otherwise ``compel[] the payment of a debt by him who ought in equity
to pay it.'' Westendorf, 330 N.W.2d at 703 (quoting Northern
Trust Co. v. Consolidated Elevator Co., 142 Minn. 132, 138, 171 N.W.
265, 268 (1919) ). Because the loss recovered here is not the same loss as
that paid by respondent, there is no double recovery and, absent explicit
language to the contrary, subrogation would prevent the insureds from
making a full recovery.

Respondent has not contested on appeal appellants' claim that they require
$18,183.50 in herbicide costs to fully recover their losses from the July
1993 accident; finding no indication that the herbicide expense is not a

legitimate loss, we order $18,183.50 of the settlement proceeds to
appellants. Moreover, we note that the trial court found the $11,365 to
represent not a legitimate loss but appellants' decision to buy an
extremely expensive replacement tractor. Appellants, however, need only
show $1,816.50 in legitimate financing charges to be entitled to the entire
$20,000 settlement. Respondent makes no answer to appellants' contention
that at least $1,816.50 of the financing is legitimate, and we are
persuaded that even electing a much less expensive replacement tractor,
appellants' financing would exceed $1,816.50. Thus, we now award the entire
$20,000 settlement proceeds to appellants.