Diehl owned some land on which she planned to have a house built that would be suitable for her retirement the following year. She made a contract with Summers, a building contractor, to build a house for $80 000, the price to be paid in full on completion. The contract contained an unqualified promise by the contractor to complete the house at that price. When the house was about three-quarters finished, Diehl stored some expensive furniture in a completed part and took out a $20 000 fire insurance policy on the furniture.

Two weeks later, before the house was completed, lightning caused a serious fire that did considerable damage to both the building and the furniture. Summers learned that Diehl would receive about $16 000 in insurance money. When Diehl asked him to go ahead and complete the house, Summers said, I believe Im no longer bound to go on, and if you do not pay me the insurance money, I will ask a court to declare that the contract has been frustrated. Im willing to compromise if you pay me the insurance money. Diehl protested that she had lost considerably from the destruction of her furniture but finally said, All right, go ahead and do the work.

When the house was completed, Diehl paid Summers $80 000 but refused to pay anything more. Summers sued her for $16 000 on the grounds that he had been led to believe he would receive this additional sum and would not otherwise have completed the contract.

At the trial, evidence was submitted that in contracts of this kind, builders frequently require an undertaking by the owner to insure the building during its construction against loss by fire and have the insurance company include a clause agreeing that, in the event of a claim, it would pay the insurance money first to the builder insofar as his interest may appear. A copy of the written contract between Summers and Diehl was produced and showed that the contract did not include a term of this kind. The parties testified that neither of them had insured the building itself, as distinct from the contents. It was acknowledged that the contractor, Summers, would have had an insurable interest and could have insured the house himself to the value of the contract.

Develop the arguments for the plaintiff and the defendant, and offer an opinion about whether the action should succeed.