Property insurance carried on various properties owned by a building partnership contained a relatively standard provision identified as "Transfer of Rights of Recovery Against Others to Us," quoted as follows: "If any person or organization to or for whom we make payment under this insurance has rights to recover damages from another, those rights are transferred to us. That person or organization must do everything necessary to secure our rights and must do nothing after 'loss' to impair them."

A salvage company contracted with the insured for demolition work inside one of the buildings. The contract included the following provision, in pertinent part: "The owner and contractor waive all rights against .... each other and any of their subcontractors, sub-subcontractors, agents and employees, each of the other....for damages caused by fire or other perils to the extent covered by property insurance ... waiver of subrogation shall be effective as to a person or entity even though that person or entity would otherwise have a duty of indemnification ...."

Fire, attributed to the salvage company's negligence, damaged the building. The building insurer paid its insured and, by way of subrogation, sued the contractor to recover the amount paid. The contractor sought summary judgment based on the subrogation waiver clause in its contract. The trial court was persuaded that the waiver was not enforceable because the building owner had not informed its insurer of the waiver. Judgment was entered on behalf of the insurance company.

On appeal, the court found that the fire loss occurred after the mutual waiver of subrogation agreement was effective and before loss payment was made to the insured. Accordingly, the court concluded that the provision in the policy entitled "Transfer of Rights of Recovery Against Others to Us" was not violated. The insured no longer had rights against the contractor. Therefore, its insurer had none.

The judgment of the trial court was reversed in favor of the contractor and against the insurance company.

(CONTINENTAL CASUALTY CO., Plaintiff-Respondent v. HOMONTOWSKI DBA D & J SALVAGE AND WRECKING ET AL., Defendants-Appellants. Wisconsin Court of Appeals. No. 93-0362-FT. December 14, 1993. CCH 1993-94 Fire and Casualty Cases, Paragraph 4624.)