Royal Indemnity Co. v. Factory Mutual Insurance Co.

Factory Mutual (defendant) inspected a warehouse for fire safety before Deere leased it, but failed to properly test the sprinkler system, which lacked sufficient water pressure to put out a fire that later destroyed Deere's stored equipment. Royal Indemnity (plaintiff), Deere's property insurer, paid the claim and sued Factory Mutual for negligence, arguing that a proper inspection would have led Deere not to lease the warehouse at all; the trial court directed a verdict for Factory Mutual for lack of proximate cause, and Royal appealed.