HARTFORD STEAM BOIL. INSP. & I. CO. v. Schwartzman Pack. Co.

• Decision Date: 06 April 1970
• Docket Number: No. 9990.,9990.
• Citation: 423 F.2d 1170
• Parties: The HARTFORD STEAM BOILER INSPECTION AND INSURANCE COMPANY, a Stock Insurance Company, Appellant, v. SCHWARTZMAN PACKING COMPANY, a New Mexico Corporation, Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

423 F.2d 1170 (1970)

The HARTFORD STEAM BOILER INSPECTION AND INSURANCE COMPANY, a Stock Insurance Company, Appellant, v. SCHWARTZMAN PACKING COMPANY, a New Mexico Corporation, Appellee.

No. 9990.

United States Court of Appeals, Tenth Circuit.

April 6, 1970.

William C. Briggs, Albuquerque, N. M. (Robert M. St. John and Rodey, Dickason, Sloan, Akin & Robb, Albuquerque, N. M., were with him on the brief), for appellant.

James A. Parker, Albuquerque, N. M. (George T. Harris, Jr., and Modrall, Seymour, Sperling, Roehl & Harris, Albuquerque, N. M., were with him on the brief), for appellee.

Before MURRAH, Chief Judge, and PICKETT and HOLLOWAY, Circuit Judges.

HOLLOWAY, Circuit Judge.

This appeal involves an action on an insurance policy issued by appellant Hartford Steam Boiler Inspection and Insurance Company (Hartford) to a New Mexico corporation, appellee Schwartzman Packing Company (Schwartzman) which was engaged in the meat packing business in New Mexico. Schwartzman recovered judgment for $90,707.69, which was the undisputed amount of property damage and loss from interference with the company's business resulting from an explosion in a tank in the steam boiler system at the packing plant, just south of Albuquerque. The action originated in the New Mexico courts but was removed on diversity grounds. Hartford appeals from the adverse judgment entered on a jury verdict.

The Schwartzman plant had three boilers which produced steam that was piped into the rendering plant. From the main pipe or "header" the steam was piped into jackets surrounding three cookers that were used to cook down the inedible portions of the animals. At the lower part of each of the jackets the condensate, water formed from the steam, was eliminated by impulse traps operated by differential pressure. The traps allowed the accumulated condensate together with some steam to be discharged from one side of the trap and the remaining steam stayed under pressure in the line on the other. The condensate and steam eliminated by the traps under the three cookers then flowed into a single condensate line and then into a single tank, which was the place where the explosion occurred.

This tank was approximately three feet in diameter and seven or eight feet in height. The steam going into the tank was under very little pressure. The steam which did not condense in the tank was vented through an opening in the top of the tank, where there was no pressure and a pipe from this opening then led down to discharge on the ground; there was no pressure on the tank at any time. The condensate collected in the bottom portion of the tank. From one side of the bottom of the tank a line led off to a high pressure pump. The pump was operated periodically to pump the collected condensate back to the boilers. For this pump to operate properly it was necessary for the steam to have been eliminated before the condensate flowed into the pump.

The explosion occurred at the tank, described above, in June, 1966, causing losses in the undisputed amounts by property damage and interference with operation of the plant. It is also undisputed that a Hartford policy issued in June, 1964, was in force at the time of the explosion. Among other things it insured against loss by property damage and by prevention of business operations. The section of the policy dealing with boilers and fired vessels contained provisions set out in the margin defining the covered "Object."¹ This controversy centers primarily around the provision bringing within the covered "Object" "* * * any piping on the premises of the assured, or between the parts of such premises, with valves, fittings, traps and separators thereon * * *" Schwartzman contends that the vessel in question as it functioned was a condensate trap or separator or pipe or fitting within the definition of "Object." Hartford argues that the vessel was a condensate return tank not within the coverage, having no function as a trap or separator. These contentions made up the question submitted to the jury, which found for Schwartzman. Hartford's appeal seeks reversal and a new trial on three grounds, to which we now turn.

First Hartford argues that the policy provision was clear and unambiguous and that the trial court erred in admitting parol and extrinsic evidence without finding that the policy was ambiguous. The proof objected to was testimony of the insurance broker who was agent for Hartford, two prior insurance policies of Hartford issued to Schwartzman, a letter from Hartford to its agents describing policy changes and a letter from Hartford to Schwartzman giving a breakdown of premiums and showing deleted items such as air tanks, pneumatic tanks, rendering tanks and a jacketed cooker. Hartford objected to all such proof on the ground that the policy in question was said to be clear and unambiguous so that the parol and extrinsic evidence could not come in.

The trial court heard arguments on the objections and admitted the parol evidence for light it might throw on the meaning of the policy. Hartford complains first that the record shows no formal finding of an ambiguity. However no such formal finding is required by the authorities relied on. We view the record as showing sufficiently that the trial court carefully considered the objections and concluded that he should admit the evidence because of the uncertainty of the policy terms. The ruling that uncertainty existed as to the meaning of the policy as applied to these facts was for the court,² and we agree with the trial court's view that uncertainty existed as to the terms involved and the coverage intended.

The exhibits showed that Hartford's earlier policies had used general definitions, as in connection with boiler piping, and then made specific exclusions of items not covered, such as any receiver-separator, accumulators and the like. Also they showed specific deletions requested by Schwartzman. In short the proof tended to show the pattern of how the parties had used more general definitions and specific exclusions in connection with the boilers and the piping apparatus.³ We agree with the trial court that the evidence was relevant and admissible under the circumstances to help the jury decide whether the facts brought this vessel, as it functioned, within the coverage intended.⁴

Secondly Hartford contends that the trial court erred in one portion of the instructions. In substance the challenged instruction was that where there is a choice of interpretation of the words used, the policy should be construed in favor of the insured and in favor of coverage, and also that where more than one reasonable interpretation is possible the policy should be strictly construed against the company preparing the policy forms. Again Hartford's position rests on its argument that the policy is clear and unambiguous — a contention with which we do not agree. We conclude that there was uncertainty...