## Facts

- The Federal Crop Insurance Corporation (FCIC) issued three insurance policies to North Carolina tobacco farmers (the Howards) covering tobacco crops on six farms against weather damage and other hazards.
- The Howards alleged heavy rains extensively damaged their tobacco, causing gross losses exceeding $35,000.
- After harvesting and selling the remaining crop, the Howards timely submitted notice and proof of loss to FCIC.
- Before FCIC inspected the fields, the Howards plowed or disked under the tobacco fields to plant a rye cover crop.
- When an FCIC adjuster later inspected, the stalks were largely obscured or destroyed; FCIC denied coverage based on a policy clause stating tobacco stalks on acreage for which a loss is claimed “shall not be destroyed until the Corporation makes an inspection.”
- Another policy clause expressly provided that it “shall be a condition precedent” to payment that the insured establish production and that the loss was directly caused by an insured hazard.

## Issues

1. Whether the policy provision requiring stalks not be destroyed before FCIC inspection created an express condition precedent to recovery such that noncompliance automatically forfeited coverage.
2. Whether summary judgment for FCIC was proper when factual questions remained regarding production, causation, and loss, and the effect of the stalk destruction.

## Decision

- The Fourth Circuit vacated the summary judgment for FCIC and remanded.
- The court held the stalk-destruction clause was not an express condition precedent to coverage, but a contractual promise by the insured.
- Because the clause did not clearly state forfeiture or nonpayment as a consequence of breach, noncompliance did not, by itself, eliminate the insureds’ right to recover.
- The court limited its ruling to construction of the policy and did not reach other procedural questions.

## Legal Principles

- When policy language is doubtful as to whether it creates a promise or an express condition, it is construed as a promise rather than a condition.
- Insurance provisions alleged to work a forfeiture must be stated clearly; courts prefer interpretations that avoid forfeiture when the text reasonably permits.
- Ambiguities in insurance contracts are construed against the drafter/insurer.
- Use of explicit “condition precedent” language in one policy clause, and its absence in another, supports the inference that the latter was not intended as a condition precedent.
- A breach of a policy covenant regulating the insured’s conduct may have consequences (including potential evidentiary effects) without automatically voiding coverage absent clear forfeiture language.

## Conclusion

The Fourth Circuit held that the policy’s pre-inspection stalk-destruction restriction was a covenant rather than an express condition precedent, so plowing or disking the stalks did not automatically forfeit coverage; the case was remanded to resolve the remaining factual and merits questions under the policies.


Howard v. Fed. Crop Ins. Corp., 540 F.2d 695 (4th Cir. 1976)