Peacock & Peacock, Inc. v. Stuyvesant Insurance Company

• Decision Date: 08 June 1964
• Docket Number: No. 17355.,17355.
• Parties: PEACOCK & PEACOCK, INC., Appellant, v. STUYVESANT INSURANCE COMPANY, Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

332 F.2d 499 (1964)

PEACOCK & PEACOCK, INC., Appellant, v. STUYVESANT INSURANCE COMPANY, Appellee.

No. 17355.

United States Court of Appeals Eighth Circuit.

June 8, 1964.

Boyce R. Love, Little Rock, Ark., made argument for appellant and filed brief with Ben Allen, Little Rock, Ark.

James I. Teague, of McMillen, Teague & Bramhall, Little Rock, Ark., made argument and filed brief for appellee.

Before VAN OOSTERHOUT and BLACKMUN, Circuit Judges, and DAVIES, District Judge.

BLACKMUN, Circuit Judge.

In this diversity case, removed from state court, Peacock & Peacock, Inc., claims coverage for a March 1961 poultry loss under a policy issued by Stuyvesant Insurance Company to General Mills, Inc. The case was tried to the court. Judgment in favor of the defendant was entered.

Many of the facts are stipulated. Peacock was engaged in the production and marketing of eggs and raised its own layers. General Mills was in the business of selling poultry feed and supplies. It distributed its products through dealers and by sales direct to producers. Much of this portion of its business was done on credit; it also lent money to customers to finance their purchase of chicks.

On August 9, 1960, Stuyvesant and General Mills had outstanding an agreement constituting a "master policy of insurance". By this agreement Stuyvesant insured "the interest, if any, of GENERAL MILLS, INC. and such Poultry Feed Dealers of GENERAL MILLS, INC. as may be endorsed hereon as additional Assured(s), in flocks or houses of live chicks owned by such Dealer's and raised by Grower(s) under contracts or Growing Agreements approved by GENERAL MILLS, INC." The protected hazards included death of chicks resulting from tornado. Excluded from coverage, with an excess exception, was any loss to which other insurance was applicable.

Altman-Singleton Co. was a general agent for Stuyvesant. It supplied General Mills with printed forms. One of these was a monthly report form. Another was an "Advice of Insurance" form. A letter of instruction from Altman-Singleton to General Mills stated that the advice forms "are given to growers to confirm coverage". The report form called for information as to the name and address "of Grower", date placed, term, rate, number of poultry, and premiums. The advice form was one designed for use by General Mills to report to the "Raiser" that "we have obtained insurance, under the above policy, on the above indicated type of Chickens, during their growing period, for what ever term we report to the Insurance Company on our monthly report of placement of Chickens on your premises". The coverage, including tornado, and the exclusions, including loss covered by other insurance, were outlined in the form; it also contained a recital that "the Raiser Assured agrees to immediately, within 24 hours of loss, report such loss to the Insurance Company or its duly authorized Agency".

By August 9, 1960, Peacock had purchased and owned 9,000 pullets. This purchase and the chicks' feeding and medical program were financed by General Mills. The pullets were initially located on a broiler farm near Trumann, Arkansas, while Peacock was constructing housing facilities near Hickory Ridge. On August 9, at Peacock's request, General Mills delivered to Altman-Singleton its check for the insurance premium on the 9,000 birds and forwarded its advice form to Peacock. This placement was noted by General Mills on its monthly report form sent in to Altman-Singleton. General Mills charged the amount of the premium to Peacock's account.

On August 22 General Mills' regional credit manager advised Altman-Singleton that Peacock had lost 60 pullets in a windstorm two days before. The claim form for this was sent to Peacock.

About October 25, 1960, the 9,000 pullets with their unconsumed feed and medicine were moved from Trumann to Peacock's Hickory Ridge farm and commingled with other layers owned by Peacock. This was with the knowledge and permission of General Mills.

On October 25 Peacock obtained a "Scheduled Property Floater Policy" with Boston Insurance Company. This afforded coverage against loss by death due to tornado of all birds owned by Peacock including the 9,000 to which the Stuyvesant policy had application. It did not cover loss of unconsumed feed and medicine. It contained an exclusion-excess clause with respect to other insurance. Boston's liability, in the event of loss, was to be measured by a percentage, dependent upon age, of a limit of $2 per bird. Thus, after October 25, both policies had presumptive application to the 9,000 pullets. Altman-Singleton apparently was not aware, until after the loss, of the issuance of the Boston policy, of the additional birds owned by Peacock, of the commingling, or of the move from Trumann.

A tornado struck Hickory Ridge on March 12, 1961. This resulted in 14,168 dead layers and an agreed amount of loss of unconsumed feed and medicine. Both insurers were advised. Each employed the same adjustment bureau to investigate. Stuyvesant eventually denied liability. Boston paid out $23,802.24 on its contract by a check drawn to Peacock, its attorneys and General Mills, and took from Peacock a loan receipt reciting that this amount was to be repaid only to the extent that Peacock effected recovery elsewhere. Boston's payment, after the attorney's fee, was applied by General Mills on Peacock's account.

Stuyvesant defended the action on the grounds that (a) there was a fatal defect of parties defendant (General Mills and Boston); (b) Peacock was not an assured under Stuyvesant's policy; (c) even if Peacock were an assured, there was no coverage because of the commingling and the removal of the birds from their Trumann location; and (d) the presence of the other insurance-exclusion clause relieved it of liability. Judge Henley rested his decision for the defendant on his conclusion that Peacock was not an assured. Peacock's appeal is confined to this issue.

Initially, and even on our own initiative, we must be sure that the $10,000 minimum, now required by 28 U.S.C. § 1332 for federal court diversity jurisdiction, is in controversy. Mitchell v. Maurer, 293 U.S. 237, 244, 55 S.Ct. 162, 79 L.Ed. 338 (1934); Texaco-Cities Service Pipe Line Co. v. Aetna Cas. & Sur. Co., 283 F.2d 144, 145 (8 Cir. 1960); Rule 12(h), F.R.Civ.P. Peacock, by its original complaint filed in state court, sought judgment, exclusive of interest and costs, for $8,709.10 (the amended complaint, filed in federal court, claims $8,539.22) plus "a 12% penalty thereon" and "a reasonable attorneys' fee", both "as provided by law". This latter reference apparently is to Ark.Stat. § 66-3238^* (successor, in 1959, to § 66-514). Neither the complaints nor Stuyvesant's removal petition contain any specific allegation as to what a reasonable attorneys' fee here would be. The petition, however, does assert, "all of which aggregates more than $10,000.00". It is obvious that the basic amount plus the 12% produce a figure less than $10,000, and that, for federal jurisdiction to attach, both the 12% and the attorneys' fee must qualify as part of the "matter in controversy" and that the fee must be greater than the difference between $10,000 and the basic claim increased by 12%.

The decided cases provide an affirmative answer as to includability. That the 12% damages addition, although called a penalty in the complaints (see, as to this, Life & Cas. Ins. Co. of Tennessee v. McCray, 291 U.S. 566, 572-573, 54 S. Ct. 482, 78 L.Ed. 987 (1934)), is includable in computing the amount in controversy, and is not to be relegated to the category of costs excludable by the very terms of § 1332, is apparent from Mutual Life Ins. Co. of New York v. Marsh, 185 Ark. 332, 47 S.W.2d 585, 586 (1932); Pacific Mut. Life Ins. Co. v. Bierman, 188 Ark. 703, 67 S.W.2d 577 (1934); and State Farm Mut. Auto. Ins. Co. v. Pennington, 215 F.Supp. 784, 786, footnote 1 (E.D.Ark.1963), aff'd 324 F.2d 340 (8 Cir.). See Lydon v. New York Life Ins. Co., 89 F.2d 78, 79 (8 Cir. 1937), cert. denied 302 U.S. 703, 58 S.Ct. 23, 82 L.Ed. 543, and American United Life Ins. Co. of Indianapolis, Ind. v. Franklin, 97 F.2d 76, 77 (8 Cir. 1938).

And Missouri State Life Ins. Co. v. Jones, 290 U.S. 199, 54 S.Ct. 133, 78 L. Ed. 267 (1933), an Arkansas case, is flatly to the effect that, despite the Arkansas statute's provision that the attorneys' fee is "to be taxed up as a part of the costs" and "collected as other costs", the fee is to be included in determining jurisdictional amount. To the same general effect are Mutual Benefit Health & Acc. Ass'n v. Bowman, 96 F.2d 7, 9 (8 Cir. 1938), additional opinion 99 F.2d 856, cert. denied 306 U.S. 637, 59 S.Ct. 485, 83 L.Ed. 1038; Crescent Lumber & Shingle Co. v. Rotherum, 218 F.2d 638, 639 (5 Cir. 1955); Stokes v. Reeves, 245 F.2d 700, 702 (9 Cir. 1957); Pacific Mut. Life Ins. Co. v. Bierman, supra, p. 578 of 67 S.W.2d. See Lydon v. New York Life Ins. Co., supra, p. 79 of 89 F.2d, and American United Life Ins. Co. of Indianapolis, Ind. v. Franklin, supra, p. 77 of 97 F.2d.

Although we are not here favored with a definite allegation as to the amount of the attorneys' fee and the pleadings in this respect therefore fall short of desirable specificity, we are satisfied that the general assertion in the petition for removal as to aggregate amount is sufficient. In this connection, we note with interest both Pacific Mut. Life Ins. Co. v. Bierman, supra, p. 578 of 67 S.W.2d, and Catalogue Direct Sales, Inc. v. United States Fire Ins. Co., 163 F.Supp. 308, 309 (E.D.Mo.1958).

We consequently conclude that federal jurisdiction is established.

This brings us finally to the sole issue on the merits, that is, whether Peacock was an assured under the agreement between Stuyvesant and General Mills.

Peacock asserts and stresses (a) that the insuring clause covered not only the interest of General Mills but, as well, the interest of any poultry feed dealer "as...