Connecticut Fire Ins. Co. v. Reliance Ins. Co. of Madison, Wis.

• Decision Date: 22 August 1962
• Docket Number: Civ. A. No. W-2308.
• Citation: 208 F. Supp. 20
• Parties: The CONNECTICUT FIRE INSURANCE COMPANY, a corporation, Plaintiff, v. RELIANCE INSURANCE COMPANY OF MADISON, WISCONSIN, a corporation, Jesse Scott, Jr., and Ronald J. Scott, Defendants.
• Court: U.S. District Court — District of Kansas

208 F. Supp. 20

The CONNECTICUT FIRE INSURANCE COMPANY, a corporation, Plaintiff, v. RELIANCE INSURANCE COMPANY OF MADISON, WISCONSIN, a corporation, Jesse Scott, Jr., and Ronald J. Scott, Defendants.

Civ. A. No. W-2308.

United States District Court D. Kansas.

August 22, 1962.

Robert E. Foulston of Foulston, Siefkin, Power Smith & Eberhardt, Wichita, Kan., for plaintiff.

Daniel R. Hopkins, of Calihan, Green, Hopkins & Calihan, Garden City, Kan., for defendants Reliance Ins. Co. and Jesse Scott, Jr.

Bert J. Vance, of Fleming, Fleming & Vance, Garden City, Kan., for defendant Ronald Scott.

TEMPLAR, District Judge.

The above entitled cause came on regularly for trial, and the Court having duly considered the evidence and being fully advised in the premises now finds the following:

FINDINGS OF FACT

1. The plaintiff is a corporation organized under and by virtue of the laws of the state of Connecticut, with its principal place of business in Connecticut and not in the state of Kansas, but being authorized to do business in the state of Kansas.

2. The defendant Reliance Insurance Company is an insurance company organized under the laws of the state of Wisconsin, with its principal place of business at Madison, Wisconsin and not in the state of Connecticut. The defendants Jesse Scott, Jr. and Ronald J. Scott are residents of Finney County, Kansas.

3. The value of the matter in controversy is in excess of Ten Thousand Dollars ($10,000.00) exclusive of interest and costs, and diversity of citizenship exists between the plaintiff and each of the defendants. The Court has jurisdiction of the parties and subject matter of this action.

4. On or about April 27, 1956, the plaintiff issued to Ronald J. Scott its farmers comprehensive liability policy, number FCC5 32 02 for a period of three (3) years from the date of issue to April 27, 1959.

5. The policy of insurance contained certain insuring agreements, exclusions, and conditions. Among others, the policy contained the following:

INSURING AGREEMENT—

"Coverage A—Liability. To pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages * * * because of injury to or destruction of property. * * *"

EXCLUSIONS—

"This policy does not apply; * * (f) under coverage A, to injury or destruction of property used by, rented to, or in the care, custody or control of the insured."

CONDITIONS—

"The insured shall cooperate with the company, and, upon the company's request, shall attend hearings and trials and shall assist in effecting settlements, securing and giving evidence, obtaining the attendance of witnesses and in the conduct of suits. The insured shall not, except at his own cost, voluntarily make any payment, assume any obligation or incur any expense other than for such immediate medical and surgical relief to others as shall be imperative at the time of the accident."

6. That on or about November 7, 1958, a fire occurred in Section Twenty-Seven, Township Twenty-two South, Range Thirty-one West of the Sixth P.M. in Finney County, Kansas, on property owned by the defendant Jesse Scott, Jr. Said fire destroyed certain out-buildings, granaries, and other property belonging to the defendant Jesse Scott, Jr.

7. The defendant, Jesse Scott, Jr., was the owner of approximately 1120 acres of farm land located in Finney County, Kansas, which he leased to his brother, Ronald J. Scott, on the usual oral farm lease providing for one-third of the crops to the landlord, and two-thirds to the tenant. On this land there was a farm house in which the defendant, Jesse Scott, Jr., and his family lived, and adjacent thereto there were certain out-buildings, including a granary, a shed or barn, corrals and other farm buildings. None of these buildings were included in the lease to Ronald Scott, but were retained for the use of Jesse, and Jesse exercised the use, care, custody and control over them. In the shed Jesse maintained some farm tools, machinery and equipment which he had used in farming activities some years before when he was engaged in the farming business, and which he still owned. Defendant Ronald J. Scott owned, adjacent to the land of Jesse, approximately 920 acres which he farmed in addition to the land leased to him by Jesse. Ronald lived approximately two miles south of Jesse.

8. With the implied permission of Jesse, Ronald would occasionally operate some of Jesse's tools and use supplies at the shed on Jesse's premises when he happened to be in the vicinity, and was in need of such items for the repair of his equipment. On several occasions Ronald parked over-night some of his vehicles in the shed on Jesse's premises. He also had stored in Jesse's shed four planter attachments which he had used during the preceding season in farming activities on Jesse's farm. The large building or shed which was destroyed by the fire was divided into three sections —a machine shop, a storage area and a lean-to storage area. Ronald had never had the care, custody or control of, nor had he made any use of the lean-to section. At the time of the fire he had no care, custody and control of and was making no use of the machine shop section of the building. At the time of the fire he had in the storage section of the building a truck, a disabled tractor, a portable welder and four planter attachments.

9. In harvest season during the years 1957 and 1958, Ronald had rented from Jesse a one and one-half ton Ford truck for the transportation of wheat and milo to the elevator during harvest, for which he paid Jesse an amount per bushel hauled from the farm to the elevator. When the vehicle was not being so used, Ronald would return it to Jesse's shed. This vehicle was taken out by Ronald on November 6, 1958 in preparation for harvest, but was returned to the shed in the evening. No payment was to be made for such use except the hauling of the grain. During that day, the vehicle was neither loaded nor used and was returned to the shed in the evening empty. No rent was earned during that day since no grain was hauled.

10. On the 6th day of November, 1958, two of Ronald's hired hands, at his direction, were burning weeds on the farm land leased by Ronald from Jesse adjacent to the farmstead of Jesse. The farm hands negligently failed to extinguish the fire, and at approximately twelve o'clock that night the wind from the southeast caused the nonextinguished fire to blaze and to spread to the out-buildings and shed belonging to Jesse, destroying the out-buildings, the equipment, tools and supplies located in them and the corrals, fences, lumber and other property located on the farmstead. The fire was caused by the negligence of Ronald's farm hands for which negligence Ronald was responsible and liable. Some of the property destroyed by the fire and owned by Jesse was covered by a fire insurance policy of Reliance Insurance Company and Jesse was paid the sum of $8,519.40 by that company on such loss. The Ford 1½-ton truck which was destroyed in the fire was covered by a fire insurance policy issued to Jesse by the plaintiff here, which coverage amounted to the sum of $1,080.00 which sum Jesse was paid by plaintiff.

11. Claim was made against the plaintiff herein by Jesse Scott for the items of property destroyed by the fire which claim was denied by the plaintiff by letter dated April 23, 1959, addressed to Jesse Scott in which the plaintiff states:

"After having made a thorough examination of the loss and claim which you have made against your brother arising out of the fire on November 7, 1958, and particularly reviewing the question of coverage and having submitted all of this information to the company for a final decision, we now wish to advise that the coverage in this claim is being denied for the reason that the company feels, and we are inclined to agree that, in this case the property for which damage was claimed was in the care, custody and control of the insured and particularly that the property was used by the insured as the term is defined in the policy.

"A copy of this letter is being sent to your brother, Ronald Scott, our insured, advising him that any liability which he may have incurred by the reason of this accident is not covered by this policy. It is our intention to close our file on this claim herewith."

12. On or about the 1st day of November, 1960, an action was commenced in the District Court of Finney County, Kansas, entitled "Jesse Scott, Jr., Plaintiff, v. Ronald J. Scott, Defendant", being Case No. 10923 in that court. A copy of the Petition filed in that case appears in the record and is attached to the Answer of Jesse Scott, Jr., filed herein. In this Petition Jesse sought to recover from Ronald the total sum of $29,723.24 for losses sustained in the fire. Summons was issued and served on Ronald. Immediately upon receipt of service of summons, Ronald consulted his attorney, Bert J. Vance, who advised him to notify his insurance company of the suit and to send to the company a copy of the summons. This Ronald did and the insurance company received the notice and obtained a copy of the Petition filed in the District Court of Finney County, Kansas, well in advance of the date on which an Answer was required to be filed. Thereafter, the plaintiff, by letter dated November 15, 1960, notified Ronald:

"This will serve to acknowledge receipt of your correspondence dated November 9, 1960 with enclosures.

"Please be advised that we cannot defend you in this matter as your policy did not provide coverage for this loss."

13. At the time the property of Jesse Scott, Jr., was destroyed by the fire set by Ronald Scott's employees, none of the property belonging to Jesse and destroyed by the fire was in the custody, care or control of Ronald J. Scott.

14. The statement of plaintiff to Ronald J. Scott that his policy did not provide coverage for the loss sustained by Jesse was the only reason advanced to Ronald by the...