Commercial Union Ins. Co. v. Advance Coating Co.
| Decision Date | 14 November 1977 |
| Docket Number | No. 59749,59749 |
| Citation | 351 So.2d 1183 |
| Parties | COMMERCIAL UNION INSURANCE CO. v. ADVANCE COATING CO. et al. |
| Court | Louisiana Supreme Court |
Peter T. Dazzio, Minos D. Miller, III, Watson, Blanche, Wilson & Posner, Baton Rouge, for defendant-applicant.
Dan Edward West and H. Evans Scobee, Durrett, Hardin, Hunter, Dameron & Fritchie, Baton Rouge, for plaintiff-respondents.
Barouco, Inc., leased to Advance Coating, Inc., an air compressor, a sandblasting machine, fifty feet of air hose and two hundred feet of sandblasting hose. By the terms of the lease Advance expressly agreed to indemnify Barouco, Commercial Union Insurance Company's insured, for any and all loss or damage occurring to the leased equipment.
On or about August 16, 1974, while Advance was in possession of the leased equipment, a barge afloat on the Mississippi River on which the equipment had been placed sank adjacent or near to the Cargill Grain Elevator Dock. As a result the leased equipment was destroyed and Barouco sustained damage thereby to the extent of $12,515.
Commercial Union Insurance Company paid its insured, Barouco, the owner of the destroyed equipment, its full value. Commercial was, under the terms of its policy, subrogated to Barouco's rights and claims against Advance and its liability insurers, Reliance Insurance Company and Hartford Accident and Indemnity Company, and against the owners of the barge, Baton Rouge Marine Contractors, Inc., and its insurer, for claims arising out of the alleged negligent destruction of the leased equipment. Accordingly, Commercial filed suit against Advance and its insurers and Baton Rouge Marine Contractors, Inc. and its insurer. Advance answered Commercial's petition by general denial. Alternatively, Advance alleged that Reliance and Hartford were its liability insurers and made them third party defendants. Hartford denied coverage under its policy insuring Advance.
Reliance filed an exception to Commercial's petition alleging that the loss occasioned by the alleged neglect of Advance occurred "while the property was water-borne" and such a loss was not covered under its policy because of the following exclusion clause:
The trial court sustained the exception as to Reliance, and Commercial appealed to the First Circuit, where the judgment was vacated and set aside and the case was remanded for further proceedings. 343 So.2d 299, La.App. Certiorari was granted on Reliance's application. 345 So.2d 906 La.
By consent of the parties the judgment under review is to be considered by this Court as a ruling on a motion for summary judgment.
On the basis of the record before us it may reasonably be inferred that the barge upon which the leased equipment was located was alongside a dock or wharf. Further, that the sandblasting equipment was placed aboard the barge in order that it could be used to sandblast vessels moored at that location. On this inference it is concluded that the barge was afloat, but was not then utilized in transporting the equipment.
Undoubtedly the barge and its burden were water-borne. The problem arises, however, when Commercial contends that the word "water-borne" has two meanings, one being "floated or floating upon the water; supported by water so as not to sink or to touch bottom," and the other, "conveyed by water and esp. by boat (traffic)." Webster's Third New International Unabridged Dictionary (1961). A word with double meanings is ambiguous, according to this contention. And if an insurance policy is so drawn as to be ambiguous and, for that reason, susceptible of two or more interpretations, either one being reasonable and sensible, the interpretation most favorable to the insured should be adopted.
Based on these propositions Commercial argues that the equipment was insured because the water-borne exclusion only applied to the equipment while it was being transported on water. Therefore, the equipment afloat alongside the dock, not being transported, was covered.
Commercial's position is not well-taken. In our view the property was not insured under the policy while it was water-borne, whether it was afloat on a barge at a dock or was being transported on a vessel afloat.
Rules of construction require that words of a contract are to be understood, like those of a law, in their common and usual signification, without attending so much to grammatical rules, as to the general and popular use. La. Civil Code...
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