Gordon

Plaintiff-appellants (Gordons) are the owners of Marysville store premises. Those premises were leased from the Gordons by defendant-respondent J. C. Penney Company (Penney). The written lease was drawn by Penney. On July 9, 1964, the premises were damaged by fire. The agreed insured loss was $174,645.52. Gordons filed an action against Penney to recover those and other losses. The complaint alleged that the damage was due to Penney’s negligence. Penney’s answer included an affirmative defense. It asserted the release of liability of Penney under the “damage” and “insurance” clauses of the written lease.

The “damage” clause was an agreement by Gordons to “repair and/or rebuild” the leased premises in the event of any loss from fire or any other cause regardless of the extent of such loss.

The “insurance” clause obligated Gordons to keep the leased premises fully insured against loss or damage by fire “and it is agreed that such insurance shall be carried for the mutual benefit of Landlord and Tenant ...

After the execution of the lease, and in accordance with its terms, Gordons obtained fire insurance. Gulf Insurance Company (Gulf) was its insurer. Gulf paid to Gordons…