Aetna Ins. Co. v. Houston Oil & Transport Co.

• Decision Date: 21 April 1931
• Docket Number: No. 5812.,5812.
• Citation: 49 F.2d 121
• Court: U.S. Court of Appeals — Fifth Circuit
• Parties: ÆTNA INS. CO. v. HOUSTON OIL & TRANSPORT CO.

49 F.2d 121 (1931)

ÆTNA INS. CO. v. HOUSTON OIL & TRANSPORT CO.

No. 5812.

Circuit Court of Appeals, Fifth Circuit.

April 21, 1931.

J. Newton Rayzor, of Houston, Tex. (Royston & Rayzor, of Houston, Tex., on the brief), for appellant.

Carl G. Stearns, of Houston, Tex. (Fulbright, Crooker & Freeman, of Houston, Tex., on the brief), for appellee.

Before BRYAN and FOSTER, Circuit Judges, and DAWKINS, District Judge.

FOSTER, Circuit Judge.

Appellee, the Houston Oil & Transport Company, filed a libel in admiralty to recover on an insurance policy issued by appellant, the Ætna Insurance Company, covering the loss of the tug Minnie R. by fire to the amount of $7,500. The suit was brought on behalf of appellee, the Peden Iron & Steel Company, and the Guaranty Trust Company, mortgagees, named as payees in the policy of insurance, and on behalf of the City Bank & Trust Company, successor to the Guaranty Trust Company. A decree was entered in favor of appellee for the full value of the policy with interest. This appeal followed.

There is no material dispute as to the facts. The policy No. 61,660, on the A. I. A. inland form, was issued to the Houston Oil & Transport Company, with a clause stating simply, "On account of whom it may concern, loss, if any, payable to Peden Iron and Steel Co. and Guaranty Trust Co. or order." Of itself the policy covered any loss of the vessel from fire and the perils of harbors and other waters within the limits of navigation permitted, within one year from February 14, 1928. The policy contained a clause which, so far as material, was as follows: "Warranted by the assured that the said vessel shall at all times during the continuance of this policy * * * shall at all times have a competent watchman on board, except that when the vessel is laid up and out of commission she shall be in charge of a competent watchman."

And another clause, as follows: "It is understood and agreed that no custom, usage or waiver of any kind shall affect, control or void any warranty or condition of this policy, unless these insurers shall signify their consent thereto by endorsement hereon in writing."

Also, written into the policy was this clause: "Notwithstanding anything herein contained to the contrary, this insurance warranted covering the risk of fire only, as per form attached."

In conformity to the last-quoted clause, attached to the policy was a rider, rather complete in itself, limiting the policy to loss by fire only and limiting the vessel to the use and navigation of Texas Gulf coastwise waters and all inland tributaries thereto. Another rider was also attached which contained clauses permitting ten gallons of gasoline to be on board, permitting the charter of the vessel, and extending the policy to cover the expense of removal to a port of repair, in the event of damage by fire, and also containing the following printed clause: "All clauses and conditions in this policy to which this form is attached at variance with or in conflict with the above are hereby waived and declared void." Both riders contained the statement "attached to and made part of policy No. 61,660 of the Aetna Insurance Company."

A condition of the policy was that no petroleum or petroleum products or any explosive could be carried as cargo unless by special agreement in writing. Nothing was said in the policy relative to the right of the owner to charter the vessel.

In July, 1928, the tug was laid up in Irish Bend, 18 miles from the city of Houston, at a point about 500 feet from the Houston ship channel. Two barges and a launch belonging to appellee were also laid up at the same place. The tug was totally destroyed by fire which started on the morning of September 23, 1928, some time between 4 and 6 o'clock. On the day before the fire, Mr. Kelly, the president of the Houston Oil & Transport Company, visited the vessel. She had a watchman, who may be considered competent, on board, but he was granted permission by Kelly to absent himself and go to Houston to procure supplies and clothing. He left with Kelly about 4 o'clock in the afternoon of September 22 and did not return until 8 o'clock the following morning, by which time the tug had been entirely destroyed. Kelly understood that the watchman would return not later than 1 or 2 o'clock in the morning but did not give him any orders as to the time of returning. Testimony was offered to show that it was the general custom in the port of Houston for watchmen of laid-up vessels to absent themselves for the purpose of getting necessary supplies and clothing. The proof falls short of showing any such general custom of the port. The place where the tug was laid up was isolated with no telephone handy, no houses near by, and no one was in the vicinity when the fire occurred. The tug had several fire extinguishers, more than the usual number, in good order, on board, and the watchman habitually slept on her when he was there.

Appellant defended on the ground that the watchman warranty of the policy had been breached. Appellee denied any breach of the warranty and raised the points that the riders attached to the policy contained the whole contract and the watchman clause was not effective; that as the loss was payable to mortgagees, recovery could not be effected by any act of the owner; that the breach of warranty was waived by retention of the premium until after suit. The District Court, as appears by an opinion in the record, while discussing the questions raised, did not find it necessary to decide any of them except as to the breach of warranty. As to that he held that the warranty had not been breached.

It is well settled that an insurance contract may consist of several separate documents and if possible they must be construed together. But a clause written in, an indorsement, or a rider inconsistent with the provisions of the printed policy must prevail. And if any part of the contract is ambiguous, it must be construed strongly against the insurer. However, a contract of marine insurance must be interpreted in the light of practical, sound common sense. Peters v. Warren Ins. Co., 14 Pet. 99, 10 L. Ed. 371.

It is evident that in this case the policy and the two riders must be construed together to form one contract. The policy issued before the vessel was laid...