St. Paul Fire & Marine Ins. Co. v. Kaufman Compress Co.

• Decision Date: 08 December 1937
• Docket Number: No. 8322.,8322.
• Citation: 93 F.2d 156
• Parties: ST. PAUL FIRE & MARINE INS. CO. v. KAUFMAN COMPRESS CO.
• Court: U.S. Court of Appeals — Fifth Circuit

93 F.2d 156 (1937)

ST. PAUL FIRE & MARINE INS. CO. v. KAUFMAN COMPRESS CO.^*

No. 8322.

Circuit Court of Appeals, Fifth Circuit.

December 8, 1937.

L. E. Elliott and O. D. Brundidge, both of Dallas, Tex., for appellant.

Dan MacDougald, of Atlanta, Ga., and Austin Y. Bryan, Jr., of Houston, Tex., for appellee.

Before SIBLEY, HUTCHESON, and HOLMES, Circuit Judges.

HUTCHESON, Circuit Judge.

The suit was on a fire policy issued by defendant, appellant, as insurer, to plaintiff, appellee, as assured. It covered cotton in bales owned or held by the assured in trust or on commission, or on storage for the account of customers while contained in appellee's warehouse. The claim was that, while so covered, many bales of cotton were, on September 18, 1935, destroyed by fire.

Defendant admitted making the contract. Its defense was breach by (1) violation of the "no other insurance" clause; (2) the failure to keep the records the contract required. In addition, it put plaintiff upon proof of the value of the destroyed cotton.¹

Tried to a jury upon voluminous pleadings and testimony and a comprehensive general charge, there was a verdict for plaintiff.

This appeal brings the proceedings up for review, and reversal of the judgment, not, however, upon grounds put forward in the trial, and called to the attention of the trial judge, but, except as to the amount of recovery, upon grounds wholly new, presented and urged for the first time in this court. The first of these grounds is, that clause 12, the "Record Warranty Clause" limited the coverage to cotton as to which "the assured has specifically assumed liability in case of loss or damage by fire * * * and prior to the occurrence of any loss or damage for which claim is made under this policy, has issued to the owner of the property a written receipt or certificate assuming such liability"; that plaintiff had not assumed nor issued a receipt assuming liability for loss or damage by fire as to the cotton in question, but, on the contrary, had issued a printed warehouse receipt providing "the Kaufman Compress Company is not responsible for loss or damage by fire * * * no insurance of any kind is carried on this bale by the insured" with an indorsement stamped on the bottom of it "insurance on the goods covered by this receipt will be delivered to the party named, or to his order or bearer," which was wholly insufficient to effect an assumption.

The second ground it presents is that if the stamped indorsement operated to give appellee any insurance, it was not insurance on cotton, but insurance against its liability for failing to effect insurance on the cotton covered by the stamped receipts, and, Commodity Credit having effected insurance on the same cotton with the Hartford Insurance Company, there was no loss for which the Compress Company could be held liable.

The third ground, and this is ancillary to the second, is that Commodity Credit and Hartford, having agreed to hold appellee harmless in consideration of its permitting Hartford to prosecute this suit in its name, appellee was thereby discharged of liability for failing to effect insurance, and, there being no loss on account of the risk the policy insured against, there could be no recovery on the policy, except for premiums paid, and these were not sued for.

The fourth ground is, that the only evidence as to the weights of the cotton recovered for, was the warehouse receipts, and that therefore the weights of the cotton, on which the damages were based, were insufficiently proven to support the verdict.

All of these grounds are put forward here under the claim that either the general demurrer, which was overruled, or the motion for instructed verdict, which was denied, raised and saved them.

The claim on the general demurrer is that, though the pleading charged generally that there was an assumption of liability by the Compress as to the bales in question, bringing them within the coverage, the receipt stamped "insured" on which the general allegations were based did not accomplish an assumption, and therefore there was a failure, except by way of conclusion, to plead what under the policy was essential to recovery, that there had been an express assumption.

The primary claim on the denial of the motion for instructed verdict is that, while there was a great deal of evidence as to what the company intended, and as to what its agents did and said in connection with the issuance of the policy, the stamped warehouse receipt on which the plaintiff's claim was ultimately based showed not the required assumption of liability, but the exact contrary, and because it did, a verdict should have been directed.

The subordinate claim on the denial of the motion is that, if any insurance was effected by the issuance of the stamped receipts, it was not insurance on the cotton, but only against liability for failing to insure, and that in view of the insurance effected by the Commodity Credit Corporation with Hartford, and the agreement of those companies to hold appellees harmless, the Compress was under no liability for failing to insure, and there could be no recovery on the St. Paul policy.

The final point on the denial of the motion is the point against the sufficiency of the evidence as to the cotton weights.

Appellee meets all of these grounds, except the last, that of the insufficiency of the evidence on weights, with the sweeping claim that appellant, having tried the case throughout on the assumption that the cotton in suit was covered by its policy, it may not now be heard, by urging these grounds against the judgment, to put forward an entirely contrary contention.

Insisting that appellant could have accepted, as full compliance with its policy, the warehouse receipts which bore the stamp its agent had devised to effect the coverage, and that it did accept them, not only in the issuance of the policy, and in the negotiations following the loss, but throughout the trial itself, the claim of no liability made there, being based entirely upon other grounds, it argues that appellant may not now, for the first time in the appellate court, deny that the cotton was effectively covered by its...