Kershaw v. Maryland Cas. Co.
| Decision Date | 22 July 1959 |
| Court | California Court of Appeals Court of Appeals |
| Parties | C. H. KERSHAW, Richard Kershaw, C. H. Kershaw, Jr., and Kershaw & Sons, Inc., a corporation, Plaintiffs and Respondents, v. MARYLAND CASUALTY COMPANY, a corporation, Defendant and Appellant. Civ. 5874. |
Dickenson, Sattinger & McKee, El Centro, for appellant.
Horton, Knox & Carter, El Centro, for respondents.
This is an action brought against the defendant Maryland Casualty Company, a corporation, for damages for breach of a contract to insure. A jury trial resulted in a verdict against the defendant casualty company and it appeals from the judgment.
In 1952 a large quantity of sugar beet pulp was partially destroyed in a fire occurring at the Holly Sugar Plant near Brawley, California. Imperial Feeds Inc., a corporation, purchased the damaged beet pulp at the plant for the purpose of processing it for cattle feed. On August 28, 1952, Imperial Feeds entered into a contract in writing with Kershaw & Sons, Inc., wherein Imperial Feeds agreed to pay Kershaw & Sons $2 per ton for the handling and processing of the entire job, this sum to be paid by Imperial Feeds on outturn weights when and as the pulp was processed and delivered. It was agreed that Kershaw & Sons were to supervise all operations; that all labor and materials and other costs connected with the job were to be paid by Imperial Feeds. It was agreed that the material would be moved to an airstrip in Holtville, which Imperial Feeds had leased from the county of Imperial on August 22, 1952, for the purpose of drying, spreading and processing the pulp. The beet pulp, which had been sacked, was transported from the Holly Sugar Plant to the airstrip by W. W. Topham & Sons, a trucking firm, and spread out on the runways to dry. Thereafter tractors equipped with scraper blades arranged the beet pulp into windrows. The specially constructed 'shakers', which had been constructed by local welding firms, were pulled by tractors along the windrows and utilized to separate the desirable pulp from the paper, metal and large lumps of pulp contained in it. The useable pulp was then sacked and left on the airstrip to be picked up and transported therefrom by Imperial Feeds. The supervision of the processing by Kershaw & Sons ended when the beet pulp had been sacked and left to be picked up by Imperial Feeds and Kershaw & Sons had nothing to do with it after it was sacked.
On or about January 14, 1953, a fire occurred on the strip, destroying almost all of the beet pulp, sacked and unsacked. At that time there were approximately 2,000 tons of sacked material, valued at $40 per ton, and between 200 and 600 tons of material, valued at $20 per ton, yet to be processed and sacked. The bulk of the sacked material was to the east of the unsacked material. The wind was from the west to the east and the fire started in the beet pulp that had not been processed and was spread out on the airstrip. Apparently the fire was caused by a spark from welding equipment brought to the strip by one W. E. Maring and being used by him to repair one of the 'shaker' machines which had broken down.
The workmen employed to do the work in processing the material were employed by Imperial Feeds and at the time they were employed were told that they were to be employees of Imperial Feeds. A Mr. Franco was one of the foremen employed by Imperial Feeds and, at his request, Marking, the welder, took his equipment to the strip to repair the 'shaker' machine. The record shows that Kershaw & Sons made out checks to all of the workmen so that they could be paid every Saturday and Kershaw & Sons was reimbursed immediately by Imperial Feeds with the exact amount. The workmen were not carried on the payroll of Kershaw & Sons.
John R. Kershaw, who acted for Kershaw & Sons, testified that while he was at the airstrip on the morning of the fire, he was not there when the fire started and that, as far as he knew, neither he nor anyone else connected with Kershaw & Sons had anything to do with the fire; that when it occurred he notified Carey Bros., plaintiffs' insurance agent, of the occurrence of the fire and 'placed them on notice.'
On or about January 14, 1955, Imperial Feeds instituted an action against Kershaw & Sons and others to recover damages for the destruction of 2,678 tons of damaged beet pulp, alleging that the negligence of the defendants caused the loss and destruction of the beet pulp, to their damage in the sum of $120,510.
It is admitted by Maryland Casualty Company that Kershaw & Sons 'gave prompt notice to the defendant Maryland Casualty Company that the said civil action had been duly filed and served upon them; that plaintiffs tendered the summons and complaint to said defendant Maryland Casualty Company and notified the said defendant casualty company that plaintiffs looked to said defendant to defend said action and to pay all costs and expenses incident thereto, and any judgment rendered against plaintiffs in said action; * * * that the defendant Maryland Casualty Company failed and refused to defend said action on behalf of the plaintiffs and denied liability under said policy.'
On January 12, 1956, there was filed in the action brought by Imperial Feeds an amended complaint in which Imperial Feeds sought damages against Kershaw & Sons, et al., as the result of their alleged negligence in processing the beet pulp involved. Apparently, this amended complaint was never served on Maryland Casualty Company. Thereafter plaintiffs Kershaw & Sons notified the casualty company that the action instituted by Imperial Feeds could in all probability be settled for a sum between $10,000 and $15,000 and that plaintiffs felt that, considering the liability and potential judgment in said action, it would be prudent to settle said action for an amount not to exceed $15,000. The casualty company refused to make any settlement on behalf of the plaintiffs and advised them that they were free to take any action they desired regarding settlement as there was no coverage under their policy. Plaintiffs then entered into an agreement and covenant with Imperial Feeds wherein Imperial Feeds agreed to dismiss their said action against plaintiffs and not to bring any further action against them arising out of said loss. In consideration of this agreement plaintiffs paid Imperial Feeds the sum of $12,000 and in addition thereto attorneys' fees and costs in the sum of $1,417.15. The present action was filed by plaintiffs to recover the damages alleged to have been sustained by them as a result of the breach of contract to insure.
At the time of the fire there was in full force and effect a comprehensive liability insurance policy issued by the Maryland Casualty Company to C. H. Kershaw, et al. * * * Partnerships and Individuals. The policy provides, inter alia, as follows:
* * *
'(f) Under coverage C, to injury to or destruction of (1) property owned, occupied or used by or rented to the insured, or (2) except with respect to liability assumed under sidetrack agreements and the use of elevators or escalators, property in the care, custody or control of the insured, or (3) any goods or products manufactured, sold, handled or distributed or premises alienated by the named insured, or work completed by or for the named insured, out of which the accident arises.'
The first contention of appellant is that the evidence shows as a matter of law that plaintiffs failed to comply with the conditions precedent in the insurance policy prior to bringing suit. The argument advanced in this connection is that no written notice was given to appellant as required by paragraph numbered 9 of the conditions of said policy, which reads as follows:
The insurance policy involved was countersigned by Carey Bros., by R. H. Carey as authorized agent of the company and there is substantial evidence that John R. Kershaw, acting for Kershaw & Sons, notified Carey Bros. of the fire immediately after it occurred and there is no evidence in the record that Carey Bros. required any further or different notice.
Section 554 of the Insurance Code provides as follows:
'Delay in the presentation to an insurer of notice or proof of loss is waived, if caused by an act of his, or if he omits to make objection...
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