Hood v. Fireman's Fund Ins. Co.

• Decision Date: 25 March 1976
• Docket Number: Civ. A. No. J75-63(N).
• Parties: Carroll HOOD, Plaintiff, v. FIREMAN'S FUND INSURANCE COMPANY and Mutual Insurance Agency, Defendants. FIREMAN'S FUND INSURANCE COMPANY, Third-Party Plaintiff, v. MUTUAL INSURANCE AGENCY, Third-Party Defendant.
• Court: U.S. District Court — Southern District of Mississippi

412 F. Supp. 846

Carroll HOOD, Plaintiff, v. FIREMAN'S FUND INSURANCE COMPANY and Mutual Insurance Agency, Defendants.

FIREMAN'S FUND INSURANCE COMPANY, Third-Party Plaintiff, v. MUTUAL INSURANCE AGENCY, Third-Party Defendant.

Civ. A. No. J75-63(N).

United States District Court, S. D. Mississippi, Jackson Division.

March 25, 1976.

James P. Cothren, Jackson, Miss., James E. Lever, Hazelhurst, Miss., for plaintiffs.

James L. Carroll, Richard M. Edmonson, Jackson, Miss., for defendants.

MEMORANDUM OPINION

NIXON, District Judge.

This suit was filed in the Chancery Court of Copiah County, Mississippi by way of Chancery attachment against a non-resident, by plaintiff, Carroll Hood, against the defendant, Fireman's Fund Insurance Company, on an insurance policy issued to the plaintiff by the defendant through Oliver W. Catchings, Jr. and C. Richard Hartung, d/b/a Mutual Insurance Agency (Mutual) pursuant to an agency agreement entered into between Mutual and Fireman's Fund (Ex. G-8). Fireman's Fund issued its policy number MSP-173 50 92 effective April 11, 1974, a binder having been issued by Mutual as of that date when the plaintiff applied to it for this policy in the amount of $50,000.00 covering 200 head of cattle valued at $250.00 each and located in Copiah County, Mississippi.

The defendant removed this case and thereafter joined Mutual¹ as a third party defendant. Subsequently, plaintiff amended and made Mutual an additional defendant herein. Although we herein award no relief based on the latter claim, as will be further discussed, we deem it appropriate to comment briefly on the jurisdictional aspects thereof.

Although plaintiff's Motion to Amend to name Mutual as a defendant was agreed to by all parties, this Court exercised its power to conduct a jurisdictional inquiry on its own initiative, inasmuch as there is no diversity between plaintiff and Mutual (Catchings and Hartung). Warren G. Kleban Engr. Corp. v. Caldwell, 490 F.2d 800 (5th Cir. 1974). The issue of whether an independent jurisdictional ground must exist in order for a diversity plaintiff to assert a claim directly against a non-diverse third-party defendant has never been decided by the Fifth Circuit, although it has in dicta pointed out that the vast weight of authority requires the existence of such grounds. Revere Copper & Brass, Inc. v. Aetna Cas. & Surety Co., 426 F.2d 709, 716 at n. 9 (5th Cir. 1970). Nevertheless, we have concluded that based upon United Mine Workers v. Gibbs, 383 U.S. 715, 86 S.Ct. 1130, 16 L.Ed.2d 218 (1966), as analyzed in Morgan v. Serro Travel Trailer Co., 69 F.R.D. 697, 44 U.S.L.W. 2334 (D.Kan., 1975), and in the interest of judicial economy and the avoidance of possibly varying and inconsistent results, the minority is the better reasoned rule on this issue, and this Court has ancillary jurisdiction to entertain plaintiff's claim against Mutual.

The principal issues are whether plaintiff has proved that 61 head of insured cattle were lost through drowning, an insured peril; if so, whether the plaintiff is precluded from recovering from Fireman's Fund because of failure to comply with the "written notice" and "proof of loss" requirements of the policy; if he is not entitled to recover from Fireman's Fund, whether he is entitled to recover from Mutual because of its failure to immediately notify Fireman's Fund of the alleged loss when plaintiff gave Mutual verbal notice thereof within approximately one week thereafter; and if plaintiff is entitled to recover against Fireman's Fund, whether it in turn is entitled to recover against Mutual for the amount of its damages for payment of the claim because of Mutual's above failure.

On April 11, 1974, the plaintiff applied to Mutual for a livestock floater policy of insurance to insure 200 head of cattle located on two different farms in Copiah County, Mississippi, the Templeton place and the Massey place. Mutual bound the coverage on the above date and submitted an application in due course to Fireman's Fund which issued its livestock floater policy in question on April 24, 1974, effective April 11, 1974, insuring the 200 head of cattle for the sum of $250.00 each, or $50,000.00. One of the perils insured against under the policy was death or destruction by drowning. The policy was mailed from New Orleans to Mutual about April 24, 1974 but was not delivered to the plaintiff by Mutual until sometime in the middle or latter part of May, 1974.

On April 13, 1974, a creek or bayou known as Bayou Pierre which formed one of the boundaries of the plaintiff's "Templeton Place" severely flooded as a result of heavy rains, causing the water to rise above its 50 foot high cliff banks inundating approximately 99% of plaintiff's land on which 107 head of the insured cattle (cows) as well as three uninsured charolois bulls were located. This flooded condition existed for several days thereafter.

Bayou Pierre, a body of water which varies in width between 15 and 40 feet, is approximately 3 to 5 feet deep at its normal stage, emptying into the Mississippi River. When it flooded on the date in question its current moved very rapidly and forcefully. Upon being informed of the fact that it was beginning to flood the Templeton place, located approximately 8 to 12 miles from Hazelhurst, Mississippi, and which consists of 227 acres of fenced delta type land bordering Bayou Pierre for a distance of approximately one mile, plaintiff went onto the land on April 13, found the water rising and heard some of his cows "blowing". He swam a smaller creek which traversed his land and cut a barbed wire fence between his place and the higher adjoining land of S. E. Templeton in order to permit his cattle onto the latter land to avoid drowning.

Mr. Hood attempted to reenter the land some three or four days later but was unable to do so because it was still flooded, and he was unable to get onto the land for approximately six or seven days subsequent to April 13 at which time he saw several drowned cows, the number of which he did not count, and was unable to determine the exact extent of his loss because of the flooded conditions that still existed.

Within approximately one week after April 13, Hood called his insurance agent and brother-in-law, Oliver W. Catchings, one of the partners who owned and operated Mutual, and verbally informed him that he had probably sustained a loss of cattle on the Templeton place as a result of flooding but that he did not know the exact extent of his loss at that time. When this phone call was made, the policy in question had not been delivered to the plaintiff, and Catchings told him that he should "give him a number" of cows lost as a result of the flood as soon as he could do so. At this time, Catchings (Mutual) knew that the policy which would be issued would contain the following clause, which it does contain in paragraph 2 of "Conditions" (Ex. G-1):

"2. Notice of Loss. The Insured shall as soon as practicable report in writing to the Company or its agent every loss, damage or occurrence which may give rise to a claim under this policy and shall also file with the Company or its agent within ninety (90) days from date of discovery of such loss, damage or occurrence, a detailed sworn proof of loss."

However, Catchings did not at that time nor at any subsequent time inform Hood of either of these two requirements despite several subsequent conversations with him concerning the reported loss nor did he ever furnish the plaintiff with a proof of loss form although there were some in Mutual's office. Furthermore, Catchings at no time informed Hood of any requirement concerning the way in which his loss should be evidenced or designated when ascertained.

Approximately two or three weeks subsequent to April 13, Hood and some of his hired help rode horseback onto the Templeton place after the flood waters had receded, and plaintiff noticed some few dead cows thereon but did not count the number. With the help of his employees and Mr. Templeton's son, Hood drove his cattle back onto his place from the adjoining property of Mr. Templeton, which was completely enclosed with barbed wire fencing, none of which had been cut or washed away, with the exception of the one place which plaintiff had cut in order to permit the cattle access thereto. Plaintiff's cows were easily identifiable with a brand "H" as well as tags in their ears. Mr. Templeton had only 20 cows, all of which were accounted for after the flood. After herding his cattle back onto his land, Hood repaired or replaced the cut fence. None of the other fencing around plaintiff's land had been damaged or cut with the exception of some located near Bayou Pierre, and plaintiff and his hired hands conducted a search in the general area but have never been able to find or recover more than 46 of the mixed-breed cows and 2 bulls. The fair market value of each of the cows at the time of the flooding was at least $275.00.

In January, 1974, the Bank of Hazelhurst had loaned the plaintiff $50,000.00 for his business operations and took as security for payment his Templeton place and the cattle located thereon. In order to ascertain the number of cattle located on the place, an inventory was taken by John M. Hall, then vice president of the bank, after the cattle had been "gotten up" and put in a catch pen thereon. This inventory revealed 107 head of mixed breed cattle and 3 bulls, and none were lost or removed prior to the flood of April 13. Approximately two or three weeks subsequent to the flood Hood notified Hall that he had had "a severe loss of cattle" on the Templeton place as a result of the flood, and Hall informed him to let him know when he "got the cattle up" so that he could inventory them to determine the number lost, which the plaintiff did on August 24 or 25, 1974. Hall again inventoried the cattle in the catch pen which totaled 46 cows and 2 bulls, and is all of the cattle that Mr. Hood has...