Maurice Pincoffs Co. v. St. Paul Fire & Marine Ins. Co.

• Decision Date: 14 September 1971
• Docket Number: No. 30760 Summary Calendar.,30760 Summary Calendar.
• Citation: 447 F.2d 204
• Parties: MAURICE PINCOFFS COMPANY, Plaintiff, v. ST. PAUL FIRE AND MARINE INSURANCE COMPANY, Defendant-Appellee, American Home Assurance Company, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

447 F.2d 204 (1971)

MAURICE PINCOFFS COMPANY, Plaintiff, v. ST. PAUL FIRE AND MARINE INSURANCE COMPANY, Defendant-Appellee American Home Assurance Company, Defendant-Appellant.

No. 30760 Summary Calendar.^*

United States Court of Appeals, Fifth Circuit.

July 19, 1971.

Rehearing Denied September 14, 1971.

J. P. Forney, Jr., Houston, Tex., for defendant-appellant; Eastham, Watson, Dale & Forney, Houston, Tex., of counsel.

James E. Ross, Houston, Tex., for plaintiff.

Sam W. Cruse, Houston, Tex., for defendant-appellee; Fullbright, Crooker, Freeman, Bates & Jaworski, Houston, Tex., of counsel.

Before JOHN R. BROWN, Chief Judge, and INGRAHAM and RONEY, Circuit Judges.

RONEY, Circuit Judge:

In this declaratory judgment action, the district court was called upon to determine the meaning of the word "occurrence" in an insurance contract. The court found only a single occurrence 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 reverse.

Since the case was submitted below on a stipulation, there is no dispute as to the material facts.

In January, 1968, Maurice Pincoffs Company imported 110,000 pounds of canary seed from Argentina. The seed, in 110-pound bags, was unloaded in Houston on January 21 and 22. Between January 24 and February 2 the seed was sold, still in its original bags, to eight different feed and grain dealers in Texas and Oklahoma. These dealers sold the seed to owners of birds. The seed was apparently contaminated with Aldrin, a chemical insecticide toxic to birds, and many birds were killed. The owners of the poisoned birds made claims against the dealers. The dealers, in turn, made claims against Pincoffs.

Pincoffs had two liability insurance policies in effect at this time, and except for the controversy herein, it is admitted that both policies otherwise afforded protection to Pincoffs against the aforesaid claims. Primary coverage was afforded by a St. Paul Fire and Marine Insurance Company policy with a single occurrence limit of $50,000, and an aggregate limit of $100,000. A so-called umbrella liability policy, issued by American Home Assurance Company, provided coverage for excess liability after exhaustion of the limits of the St. Paul policy.

St. Paul compromised and settled with forty-six claimants, paying out a total of $50,000. There still remain outstanding claims of a number of parties which total in excess of another $50,000. St. Paul has taken the position that its policy limits are exhausted, because there was but a single occurrence under the terms of its policy. American has taken the position that there were multiple occurrences, and that its policy does not take over until St. Paul has paid out another $50,000, to total exhaustion of the $100,000 limits under its multiple occurrence coverage. To resolve the conflict, Pincoffs brought this action for declaratory relief against both companies, and takes no position on this appeal.

This is a diversity case controlled by Texas law. The fundamental issue is whether there was one "occurrence" of liability or more than one "occurrence" under St. Paul's policy.¹ The definition in the policy provides as follows:

"`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 district court thought that it was the contamination of the seed that was the occurrence to which the policy referred, because it was the contaminated seed that caused the damage. There being no evidence of multiple incidents of contamination, then the court concluded that the contamination was the result of one occurrence.

We think that the "occurrence" to which the policy must refer is the occurrence of the events or incidents for which Pincoffs is liable. It was the sale of the contaminated seed for which Pincoffs was liable. Although the cause of the contamination is not clear, it seems apparent that Pincoffs received the seed in a contaminated condition and did not itself contaminate the seed. However, it was not the act of contamination which subjected Pincoffs to liability. If Pincoffs had destroyed the seed before sale, for instance, there would be no occurrence at all for which the insured would be liable. But once a sale was made there would be liability for any resulting damages. It was the sale that created the exposure to "a condition which resulted in property damage neither expected nor intended from the standpoint of the insured," under the definition of the policy. And for each of the eight sales made by Pincoffs, there was a new exposure and another occurrence. O. M. Franklin Serum Co. v. C. A. Hoover, 410 S.W.2d 272 (Tex.Civ.App.1966), writ of error refused, n. r. e., 418 S.W.2d 482 (Tex.1967).

Under the reasoning urged upon us by St....