Haun v. Guaranty Sec. Ins. Co.

• Decision Date: 26 September 1969
• Citation: 61 Tenn.App. 137,453 S.W.2d 84
• Parties: Cale P. HAUN, Complainant-Appellee, v. GUARANTY SECURITY INSURANCE COMPANY and Hartford Fire Insurance Company, Defendants-Appellants.
• Court: Tennessee Court of Appeals

Page 84

453 S.W.2d 84

61 Tenn.App. 137

Cale P. HAUN, Complainant-Appellee, v. GUARANTY SECURITY INSURANCE COMPANY and Hartford Fire Insurance Company, Defendants-Appellants.

Court of Appeals of Tennessee, Middle Section.

Sept. 26, 1969.

Rehearing Denied Oct. 31, 1969.

Certiorari Denied by Supreme Court April 6, 1970.

William Waller, of Waller, Lansden, Dortch & Davis, and Boult, Hunt, Cummings & Conners, Nashville, for complainant-appellee.

Dan E. McGugin, of Watkins, McGugin, Stewart, Finch & McNeilly, and David M. Keeble, of Hooker, Keeble, Dodson & Harris, Nashville, for defendants-appellants.

OPINION

PURYEAR, Judge.

This suit was originally filed by Cale P. Haun, who died while it was pending and it was revived by the executors of his will.

The defendants-appellants are successors in interest to Northwestern Fire and Marine Insurance Company, to which we will sometimes refer in this opinion as 'Northwestern.'

There is very little controversy about the determinative facts of the case and the issues presented upon this appeal are largely composed of questions regarding the legal conclusions based upon such facts.

The evidence in the record establishes the relevant facts of the case to be briefly, as follows:

On and prior to November 7, 1956, Haun was owner of a certain river Towboat named 'John Luchow.' Haun was also owner of Tennessee Towing Company, which was later liquidated, with the result that Haun became liable for its obligations. Haun and members of his family owned, either directly or indirectly, at least two other businesses, the insurance on all of which was usually carried by companies represented by the insurance agencies of C. M. Hunt Company and Richards, Scott and Lyle, of Nashville, Tennessee.

A policy covering the 'John Luchow' was R.P.I. 13622 naming West Tennessee Limestone Company as assured and it was issued by Northwestern as insurer for the period from October 1, 1956 to October 1, 1957. The letters 'R.P.I.' stand for 'River Protection and Indemnity.'

This policy, R.P.I. 13622, was issued as a renewal of R.P.I. 13604. Since one of the main issues involved in this appeal is the extent of the obligations of the insurer under said policy, the pertinent provisions will be quoted and discussed later.

The schedule attached and made a part thereof showed the limits of liability on the John Luchow to be $51,500.00, subject to a provision that the first $250.00 of loss was deductible.

On or about November 7, 1956, the Luchow was delivered to Nashville Bridge Company for installation of a new engine and remodeling and it remained in the Bridge Company's floating dock for that purpose until on or about December 21st or 22nd of 1956.

Although it was customary for the members of a vessel's crew not to remain on the vessel while it was docked for the purpose of having work done thereon by an independent contractor, such as Nashville Bridge Company, Haun desired to provide work on the vessel for such of the crew members thereof as desired to work during the period of repowering and remodeling of the vessel. Therefore, Haun arranged with Nashville Bridge Company to let these crew members do certain odd jobs that would have otherwise been done by Nashville Bridge Company's employees.

This work included cleaning and repainting surfaces that were made accessible by reason of the remodeling which was being done.

Some of the crew of the vessel went home, one of them quit and others stayed in Nashville to do the work which Haun had arranged with Nashville Bridge Company for them to do. Tennessee Towing Company, which was one of the businesses owned by Haun at the time, kept these crew members on the same payroll at the same weekly wages but instead of working normal six hour shifts with twenty days on duty and ten days off duty they would only work on day shifts and no one was on duty at night.

At the time the Luchow was delivered to Nashville Bridge Company, the Hunt Agency and Richards, Scott and Lyle were notified that it was being docked for the purpose of repowering and remodeling. This is a customary procedure when a vessel is docked for a period of time.

Upon being notified of such repowering and remodeling, the two above mentioned agencies suspended the coverage of R.P.I. 13622 and another policy not pertinent to this appeal and substituted in lieu thereof a builders' risk insurance certificate which provided for property damage coverage only and did not provide any protection to Haun for loss that might occur as a result of negligent injury to any of the crew members.

Although Haun knew some changes in the insurance coverage were made at the time, he and the Hunt Agency have insisted at all times that neither he nor Hunt ever intended to suspend the coverage which he had against loss or damage by reason of negligent injury to any of the members of the Luchow crew. A member of the vessel's crew at the time it was docked at Nashville Bridge Company was one Clyde Keymon.

The work done by Nashville Bridge Company took approximately forty-four days. During that period of time, O. E. Brown, who was the captain of the vessel, remained in charge of those crew members who elected to stay in Nashville and do the day work and he assigned certain tasks to them.

Keymon did some work on the vessel between November 10th and November 14th, 1956, on which latter date he and another man left Nashville to take another boat called the 'Big Boy' to Helena, Arkansas. They arrived there on December 7th, on which date Keymon proceeded to return to his home at Milan, Tennessee. He later returned to Nashville and did some work on the vessel on both December 21 and 22, on the latter of which dates he went back to Milan because his wife was sick. He subsequently rejoined the vessel at Smithland, Tennessee. On January 11, 1957, at Savannah, Tennessee, Keymon left the vessel and went home sick and later entered the United States Public. Health Hospital in Memphis, Tennessee, known as the Marine Hospital.

By endorsement effective January 8, 1957, the indemnity coverage of R.P.I. Policy 13622 was reinstated and increased to a maximum of $112,000.00.

On or about January 10, 1958, Keymon filed suit against Haun and Tennessee Towing Company in the United States District Court at Nashville, alleging in his complaint, that while the John Luchow was at Nashville to be repowered and remodelled, it was discovered upon removal of the old engine that the wall and floors or hold were covered with an accumulation of grease and dirt; that he was ordered by Brown to clean the engine room and hold, using a substance known as Oakite; that in doing this work, his trousers became wet with Oakite solution; that he began to feel a stinging and burning sensation in the area of his groin and his private parts, as a result of having his clothes thus saturated with said strong chemical solution and that as a result thereof he sustained severe and disabling permanent injury.

In Keymon's suit against Haun and the Tennessee Towing Company, he sought recovery of damages against them on the grounds of negligence in failing to provide him with protective clothes or to warn him of the danger of using Oakite and also sought recovery against Haun, the owner of the vessel, on the ground of unseaworthiness.

Keymon subsequently filed an amendment to his complaint seeking additional recovery for maintenance and cure but this is not pertinent to the issues raised on this appeal.

The trial of the Keymon case in the United States District Court finally resulted in a judgment in his favor for $78,700.00, based upon negligence and unseaworthiness, and $4,300.00 for maintenance and cure, or a total of $83,000.00. This judgment was later affirmed by the United States Sixth Circuit Court of Appeals, and was paid by Haun, 296 F.2d 785.

As soon as Haun became aware that Keymon was making a claim against him, he notified the Hunt Agency of the pendency of such claim and when suit was filed in United States District Court, he sent a copy of the complaint to the Hunt Agency.

By that time, the defendants, Guaranty Security Insurance Company and Hartford Fire Insurance Company, had become successors in interest to Northwestern Fire and Marine Insurance Company.

It is admitted in the answer filed by the defendants that there was an agreement whereby Hartford reinsured Northwestern and therefore, if there is any liability in this case, it is the liability of Hartford only and therefore, Hartford Fire Insurance Company is the real defendant in this case.

When Hartford received notice that suit had been filed by Keymon, it retained Mr. John L. Quinlan, a New York attorney, and Mr. Norman Minick, a Nashville attorney, to investigate the matter.

This preliminary investigation, which took about four or five days, was made by Mr. Minick and when he made his report, Hartford denied liability upon the grounds that Haun and Tennessee Towing Company were not named assureds and that the River Protection and Indemnity policy was not in effect at the time of the alleged injury to Keymon.

Upon Hartford denying coverage, Mr. Quinlan and Mr. Minick withdrew from the case, and Haun employed the law firm of Waller, Lansden and Davis of Nashville, Tennessee, to represent him in United States District Court.

These attorneys retained by Haun were in complete charge of conducting his defense to the Keymon suit, although within a few days after Mr. Quinlan withdrew from the case, he was again retained by Hartford to advise and assist Haun's attorneys in defending the Keymon suit in United States District Court.

The case was tried in District Court beginning on July 25, 1960 and was concluded on July 29, 1960, resulting in a verdict and judgment in favor of Keymon, against Haun and Tennessee Towing Company for $83,000.00 as aforesaid.

On February 7, 1961, Haun wrote the Hunt Agency the following letter:

'February 7, 1961

C. M. Hunt Company

Nashville...