Catts Co. v. Gulf Ins. Co., 81-1711
| Decision Date | 30 December 1983 |
| Docket Number | No. 81-1711,81-1711 |
| Citation | 723 F.2d 1494 |
| Parties | The CATTS COMPANY, an Oklahoma Corporation, Appellant, v. GULF INSURANCE COMPANY, a Foreign Insurance Corporation, Appellee. |
| Court | U.S. Court of Appeals — Tenth Circuit |
Paul F. McTighe, Jr., Tulsa, Okl., for appellant.
Richard D. Wagner of Knight, Wagner, Stuart, Wilkerson & Lieber, Tulsa, Okl., for appellee.
Before SETH, Chief Judge, and BARRETT and McKAY, Circuit Judges.
The Catts Company (Catts), a Tulsa, Oklahoma, corporation engaged in the business of manufacturing and installing (or providing for installation) fabricated steel, appeals from a judgment upon directed verdict following a jury trial conducted by a Special Master. The District Court, upon review, upheld the findings and conclusions of the Special Master and entered judgment in favor of Gulf Insurance Company (Gulf). Catts sued on the claim that it had sustained a loss of certain fabricated steel which was, at the time of the loss, insured by Gulf under an Installation Floater Policy. Gulf defended successfully on its denial that the loss was insured under the policy.
On or about November 1, 1971, Gulf, at the request of the Guy Landes Insurance Agency (Landes) which had insured Catts for some years, issued to Catts a Standard Installation Floater Policy for a term from November 1, 1971, through November 1, 1974. It was one of a "package" of policies issued to Catts through the Landes Agency. The general purpose of the Installation Floater Policy was to insure fabricated steel in the Catts yard prior to delivery to a construction site or after delivery but before installation by Catts or a third party. Before referring specifically to the terms of the Floater Policy here involved, we believe that certain facts evidenced by the trial record, disputed or undisputed, should be noted in order to place the legal issue in proper focus.
Normally, Catts received a contract to fabricate and install steel in buildings in accord with plans, specifications and architectural drawings. On occasions, such as in this case, Catts prepared the fabricated steel and delivered it to the job site for installation by a third party, here the Larry Morris Company (Morris Company). Following final delivery in May, 1973, Catts billed Morris Company by invoices. The steel was apparently stolen or otherwise removed from the job site. The steel was never paid for by Morris Company. The property wherein the steel was to be installed was foreclosed upon, a receiver was appointed, and Catts thereafter filed a mechanics lien and materialman's lien against the real property. Henry Perry Catts, Jr., president of Catts, testified that he attempted to locate the steel without success. He wished to recover it for its value to his corporation. Thereafter, Catts made claim upon Gulf under the Floater Policy for the value of the steel delivered at the job site to the Morris Company. Gulf refused to tender payment on the claim.
The Installation Floater Policy with which we are here concerned, provides, in material part:
"1. PROPERTY INSURED:
(a) Materials, fixtures supplies and equipment, being property of the Assured for which they may be liable, intended for installation in connection with the repair, completion, erection or improvement of property (except as hereinafter provided) in the conduct of the Assured's business as
Iron, Steel, aluminum, brass or bronze erection and fabrication.
"2. THIS POLICY ATTACHES:
From the time such property becomes at the risk of the Assured and covers continuously thereafter during transit, while awaiting installation, during installation and until the interest of the Assured ceases, or until expiration of this policy, whichever may first occur.
"3. PROPERTY NOT INSURED:
* * *
* * *
(b) Accounts, bills, deeds, currency, money, notes, or securities;
Against All Risks of Direct Physical Loss of or Damage to the property covered from any external cause.
"5. THIS POLICY DOES NOT INSURE AGAINST:
(a) Loss or damage caused by or resulting from wear or tear, gradual deterioration, mechanical breakdown, nor loss of market or delay or other consequential loss;
* * *
* * *
(d) Loss or damage caused by or resulting from infidelity or dishonesty, either or both, by the Assured or by any person or persons in the regular employment or service of the Assured, whether during the regular hours of employment or not:
(e) Any unexplained loss, mysterious disappearance, or loss or shortage disclosed on taking inventory:
(a) The assured agrees to keep an accurate record of all installations covered hereunder showing the accumulated values of each installation site, including labor, transportation and other accrued charges thereon covered hereunder.
(b) The Assured further agrees to report to this Company on or before the 15th day of each month the total of all such values at risk hereunder including insured values in transit, as of the last day of the preceding month;
(c) The Assured further agrees to pay premium on said reported values at the rate of .08 per $100.00;
(3) In the event of loss or damage to property insured hereunder, this Company shall be liable for no greater proportion of such loss or damage than the total values last reported by the Assured prior to the loss or damage bears to the actual total values at risk hereunder as of the date for which such report was made;"
Henry Perry Catts, Jr., testified that: the steel sold to Morris Company was sold for installation by that company and "It was sold FOB Truck job site" or sold at "Point of delivery." [R., Vol. II, p. 56]; his company had no responsibility and/or liability for the steel delivered to the job site with the exception of its obligation to repair or replace any improperly fabricated material. [R., Vol. II, p. 60]; after delivery of the steel to the job site as requested by the Morris Company, Catts Company had completed its contract [R., Vol. II, p. 62]. On cross-examination, the following questions were answered by Catts relative to the subject policy:
Q. So there won't be any misunderstanding, sir, are you aware of the distinction between a monthly reporting form policy and a standard term or fixed term policy.
A. Yes, I am.
Q. And in business a monthly reporting form policy is a standard or, it is not unusual in a business; is that correct, sir?
A. That is correct.
Q. Under this monthly reporting form policy as I understood it, and I believe there was a stipulation heretofore entered, but the only month that the steel that we are involved with here was ever reported on a monthly reporting form was in May of 1973; is that correct?
A. I cannot state the specific month and time, no, sir.
Q. All right. Well, it would have been at the time that the steel was invoiced; is that correct?
A. That is correct, yes, sir.
Q. And just for the record so we won't have any misunderstanding, can you give me the date that this steel we are concerned with here in this lawsuit was invoiced?
A. We have two invoices: One May the 25th, '73, one June 25th, '73.
Catts also testified that under Catts' contracts with Morris Company, Catts retained the right to pick up the steel and material at the job site and return it to the Catts plant until it was paid for. [R., Vol. II, p. 76].
Gale Reynolds, head bookkeeper and office manager for the Catts Company, testified that: he had undertaken work with regard to the Floatation Policy issued by Gulf to Catts in that he made up the monthly reports, including forms filled out monthly for the amount of invoices billed that month, which were sent to Gulf; the forms were completed and submitted so that Gulf "would know what to bill us as far as premium was concerned for a floater policy." [R., Vol. II, p. 119]; the forms showed dates of sale, invoice numbers and total value of the sales; agent Guy Landes had stated that coverage under the reporting forms included material fabricated and delivered at a job site "and until such time that the material was paid for," [R., Vol. II, p. 121], and that Landes notified him to list each invoice separately each month. [R., Vol. II, p. 122]; the invoices covering the May, 1973, sales to the Morris Company were included in Catts' report for that month but not thereafter; they were not included thereafter because Mr. Landes did not instruct him to report the billings-sales more than one time [R., Vol. II, p. 124], and that "he said that the material would be insured from the time it left our shop until it reached the job site and was installed and we were paid for it." [R., Vol. II, p. 126]; with regard to premium payments, Catts was obligated to pay premiums of 7 cents per $100.00 worth of materials invoiced each month [R., Vol. II, p. 131], but the premium for a particular monthly invoice continued coverage "until the material was paid for." [R., Vol. II, p. 132]. Reynolds attributed this view to the statement he claimed Landes made that the material sold need only be reported the month it was sold. [R., Vol. II, p. 132]. Thus, according to Reynolds' understanding, Gulf's liability under the policy continued until the materials reported had been paid, regardless of the time period involved:
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