Maurice Pincoffs Co. v. St. Paul Fire & Marine Ins. Co.
| Decision Date | 14 August 1970 |
| Docket Number | Civ. A. No. 68-H-518. |
| Parties | MAURICE PINCOFFS CO. v. ST. PAUL FIRE & MARINE INSURANCE COMPANY and American Home Assurance Company. |
| Court | U.S. District Court — Southern District of Texas |
James E. Ross, Blades, Crain, Slator & Ross, Houston, Tex., for plaintiff.
Sam Hood, Fulbright, Crooker, Freeman, Bates & Jaworski, Houston, Tex., for defendant St. Paul.
J. P. Forney, Eastham, Watson, Dale & Forney, Houston, Tex., for defendant American Home.
Memorandum and Order
This is an action for a declaratory judgment as authorized by 28 U.S.C. § 2201 (1959). Jurisdiction is predicated on diversity of citizenship. 28 U.S.C. § 1332 (1962). The instant case involves construction of a contract of insurance. The parties have submitted the insurance policy in question to the Court for its consideration and have stipulated to the facts involved. This Court shall treat this submission as cross motions for summary judgment pursuant to Rule 56, Federal Rules of Civil Procedure.
Plaintiff, Maurice Pincoffs Co., imported a thousand bags of Argentine Canary Seed into the United States. The seed arrived at Houston, Texas, via the S/S NOPAL STAR. The bags of seed were stored in a transit shed at the dock. Over a period of about ten days the bags of seed were sold to eight different seed and feed dealers.
Thereafter, the various dealers sold the seed, either whole or mixed with other grains, to their customers, various bird owners. These bird owners contend that the Argentine Canary Seed which was discharged from the S/S NOPAL STAR was contaminated and had a poisonous effect when fed to birds. Over one hundred bird owners, whose birds have died, have made claims against the dealers from whom they purchased the seed and against plaintiff. The dealers, in turn, have made claims against plaintiff for the claims of their customers. It is claimed that the bags of seed were contaminated with Aldrin, a chemical insecticide.
During the period in question, plaintiff had two policies of liability insurance — one with each of the defendants. The primary policy was the comprehensive general liability policy of defendant St. Paul Fire & Marine Co. (hereinafter referred to as St. Paul). This policy provides limits of liability for "Property Damage — each occurrence $50,000," and for "Property Damage — aggregate $100,000."
Section III of this policy, entitled "Limits of Liability" provides, in part, as follows:
"Regardless of the number of (1) insureds under this policy (2) persons or organizations who sustain bodily injury or property damage, or (3) claims made or suits brought on account of bodily injury or property damage, the Company's liability is limited as follows:"
The Section further provides:
"Coverage B — The total liability of the Company for all damages because of all property damage sustained by one or more persons or organizations as the result of any one occurrence shall not exceed the limits of Property Damage stated in the Declarations as applicable to `each occurrence'."
It is further provided in the same section of the same policy:
"Coverages A and B — For the purpose of determining the limit of the Company's liability, all bodily injury and property damage arising out of continuous or repeated exposure to substantially the same general conditions shall be considered as arising out of one occurrence."
In that portion of the policy entitled "Definitions" it is provided:
"`Occurrence' means an accident, including injurious exposure to conditions, which results, during the policy period, in bodily injury or property damage neither expected nor intended from the standpoint of the Insured;"
The other liability policy in effect at the time was that issued by the other defendant, American Home Assurance Co. (hereinafter referred to as American). This policy was termed an "Umbrella Liability Policy" and provided coverage for plaintiff's liability after the exhaustion of the underlying limits of insurance provided by St. Paul's policy.
St. Paul contends that under the policy it issued to plaintiff, plaintiff's liability stems from only one occurrence, i. e., the contamination of the bird seed. Thus, according to St. Paul the applicable limit of liability is for "Property Damage — each occurrence $50,000." Consistent with this contention, St. Paul has compromised and settled with forty-six claimants and has paid out a total of fifty thousand dollars. There remain outstanding claims in excess of fifty thousand dollars, which St. Paul contends it is not liable for under its policy. On the other hand, American contends that the one hundred thousand dollar "aggregate" limit of the St. Paul policy applies. Since the underlying policy has not been exhausted, American contends that it is not liable under the insurance policy it issued to plaintiff.
Plaintiff contends that either St. Paul or American is obligated on these claims and asks the Court to determine which one is liable. It is clear that an actual controversy exists between the parties to this action relative to the interpretation of the insurance policy issued by St. Paul. See State Farm Mutual Automobile Ins. Co. v. Mossey, 195 F.2d 56 (7th Cir. 1952); Anchor Casualty Co. v. McCaleb, 178 F.2d 322 (5th Cir. 1949); Denham v. La Salle-Madison Hotel Co., 168 F.2d 576 (7th Cir. 1948); Elston-Richards Storage Co. v. Indemnity Insurance Co., 194 F.Supp. 673 (W.D. Mich. 1960).
In Anchor Casualty Co. v. McCaleb, 178 F.2d 322 (5th Cir. 1949), the insured's oil well blew out and for a period of approximately fifty hours, due to the effect of shifting winds, blew oil on several surrounding properties. An insurance policy was in effect which limited liability to $5,000 for each accident and $25,000 for aggregate damage. In holding that the aggregate limits applied, the United States Court of Appeals for the Fifth Circuit said:
178 F.2d at 324-325.
In St. Paul-Mercury Indemnity Co. v. Rutland, 225 F.2d 689 (5th Cir. 1955), the Fifth Circuit was again called upon to construe the phrase "each accident." In Rutland, the insured's truck collided with a freight train causing the derailment of sixteen cars. The railroad cars belonged to fourteen separate owners. The insurance policy on the truck provided coverage in the amount of $5,000 for each accident. The policy did not specify any limit for aggregate damage to property resulting from the truck collision. The damages far exceeded $5,000. The insured contended that there was a separate accident as to each owner of property damaged in the collision and that the insurer was legally liable to pay up to the sum of $5,000 to each owner whose property was damaged.
In ruling that the collision constituted only one accident, the Court said:
225 F.2d at 692.
And then the Court went on to distinguish Rutland from the previous decision handed down in Anchor. The Rutland Court emphasized the fact that in Anchor the oil was spread on surrounding property through the action of the shifting wind. Thus, the Court reasoned, Anchor involved a series of events, whereas Rutland involved a single, sudden collision.1 In addition, the Court acknowledged that the insurance policy in Anchor provided for aggregate coverage, whereas the policy in Rutland had no such provision. To apply the Anchor rationale to the insurance policy in Rutland would result in virtually unlimited liability for the insuror. Thus, the Rutland Court ignored the language in Anchor which spoke of an accident occurring to the property of each owner when that property was damaged.
Other cases have also considered the question posed by the present case. See Barrett v. Iowa National Mutual Ins. Co., 264 F.2d 224 (9th Cir. 1959); Denham v. La Salle-Madison Hotel Co., 168 F.2d 576 (7th Cir.), cert. denied, 335 U. S. 871, 69 S.Ct. 167, 93 L.Ed. 415 (1948); Elston-Richards Storage Co. v. Indemnity Insurance Co., 194 F.Supp. 673 (W.D.Mich.1960); Tri-State Roofing Co. v. New Amsterdam Casualty Co., 139 F.Supp. 193 (W.D.Pa.1955); Allied Grand Doll Mfg. Co. v. Globe Indemnity Co., 15 A.D.2d 901, 225 N.Y.S.2d 595 (1962).
In Barrett, the insured's building caught fire and was destroyed, as was the personal property of seven tenants who leased portions of the building. Without much discussion, the Court noted that there was but one fire and that it constituted a single accident within the meaning of the insurance policy.
In La Salle-Madison, the insured's hotel caught fire, requiring that it be evacuated for a period of seventeen hours. Upon returning to the hotel,...
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Maurice Pincoffs Co. v. St. Paul Fire & Marine Ins. Co.
...under the policy in certain sales of bird seed, which was contaminated at one source prior to sales to several different buyers, 315 F.Supp. 964. We hold that there were several occurrences and Since the case was submitted below on a stipulation, there is no dispute as to the material facts......