New England Gas & Elec. Ass'n v. Ocean Acc. & Guarantee Corp.

• Decision Date: 15 December 1953
• Citation: 116 N.E.2d 671,330 Mass. 640
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court
• Parties: NEW ENGLAND GAS & ELEC. ASS'N et al. v. OCEAN ACCIDENT & GUARANTEE CORP.

Page 671

116 N.E.2d 671

330 Mass. 640

NEW ENGLAND GAS & ELEC. ASS'N et al. v. OCEAN ACCIDENT & GUARANTEE CORP.

Supreme Judicial Court of Massachusetts, Suffolk.

Argued May 7, 1953.

Decided Dec. 15, 1953.

Edward C. Park, Boston, Charles C. Worth, Boston, for plaintiffs.

George B. Rowell, Boston, Martin J. Dever, New York City, and Franklin N. Cunningham, Gloucester, for defendant.

Before QUA, C. J., and LUMMUS, RONAN, SPALDING, and COUNIHAN, JJ.

RONAN, Justice.

This is an action of contract upon a machinery and boiler policy issued as of April 9, 1947, which had attached thereto a use and occupancy indorsement for the payment of a daily indemnity, so called, for each day the insured were prevented totally or partially from conducting their business by reason of the happening of an event which was insured against in the policy. The action was referred to an auditor whose findings of fact were final. He found for the defendant. The plaintiffs excepted to the denial of their motion to recommit the report, to the allowance of the defendant's motion to overrule the plaintiffs' objections to the report and that the report 'be confirmed,' ¹ and to the granting of the defendant's motion for judgment. The defendant excepted to the denial of its motion to strike out portions of the report, to the order overruling its objections to the report, and to the order confirming the report in so far as the court confirmed certain portions of the report to which the defendant had objected. The exceptions arising out of these rulings are brought here by a consolidated bill of exceptions.

The insured named in the policy were the New England Gas and Electric Association and twelve affiliated and subsidiary companies or corporations including the New Bedford Gas & Edison Light Company, hereinafter called New Bedford, the Cape & Vineyard Electric Company, hereinafter called Cape, and the Plymouth County Electric Company, hereinafter called Plymouth. The New England Gas and Electic Association, hereinafter called New England, was a voluntary association under a written declaration of trust. It owned all the capital stock of Cape and Plymouth and 97% of the stock of New Bedford. It was a public utility holding company engaged in supervising the business of its operating subsidiaries. New Bedford produced, distributed, and sold electricity to its customers in the southeastern part of the Commonwealth. Plymouth purchased the greater part of its electricity in bulk from New Bedford and the remainder from Brockton Edison Company. It generated no electricity. Cape purchased all of its electricity from New Bedford except that during the summer it operated a small plant having a capacity of 1,360 kilowatts on Martha's Vineyard for distribution of electric current on that island. These three corporations really formed an integrated system, with New Bedford as the principal source of supply.

The shaft of spindle of one of the turbines at the New Bedford plant was so badly cracked that it became necessary to shut the turbine down and to replace the spindle by a new one. The liability of the defendant to pay the damage arising from the cracking of the spindle and to pay daily indemnities depends on whether that event came within the provisions of the policy. One provision, in so far as now pertinent, reads: 'To Pay the Assured for loss on the property of the Assured directly damaged by such Accident (or, if the Company so elects, to repair or replace such damaged property),' excluding losses from various sources not here involved. Another provision, in so far as material, reads as follows: 'If the word 'Breakdown' is so entered, ² 'Accident' shall mean a sudden and accidental breaking, deforming, burning out or rupturing of the Object or any part thereof, which immediately impairs the functions of the Object and necessitates repair or replacement before its functions can be restored * * *.' The first question is whether the cracking ³ of the spindle in the circumstances disclosed by the auditor's report was an accident ⁴ within the property damage clause.

The case was heard by an auditor whose findings of fact were to be final. His report was in effect a case stated. Merrimac Chemical Co. v. Moore, 279 Mass. 147, 181 N.E. 219; Monaghan v. Monaghan, 320 Mass. 367, 69 N.E.2d 476. The report, construed in accordance with the governing principles of law, furnished the sole basis for determining the correct order for judgment that should be entered in the case. In reviewing the action of the trial judge in entering an order for judgment for the defendant we have before us all that he had, and consequently we are in the same position as to both law and fact that he was. The auditor has stated very properly that his ultimate findings of fact rest upon his subsidiary findings, all of which are contained in the report. All of his findings which are not inconsistent with each other or which do not appear to be tainted with error of law must stand. His ultimate conclusions, however, which rest solely by way of inferences upon his subsidiary findings, are open to review here as matter of fact. In this respect, we are not bound by the action of the judge below as to the inferences he drew from the facts found. We must use our own judgment and determine what ultimate conclusions should flow from the subsidiary findings. United States Fidelity & Guaranty Co. v. English Construction Co., 303 Mass. 105, 109-112, 20 N.E.2d 939; Galluzzi v. City of Beverly, 309 Mass. 135, 34 N.E.2d 492; Wilkie v. Randolph Trust Co., 316 Mass. 267, 268, 55 N.E.2d 466; Benjamin Foster Co. v. Commonwealth, 318 Mass. 190, 193, 61 N.E.2d 147, 166 A.L.R. 925; Union Old Lowell National Bank v. Paine, 318 Mass. 313, 315-316, 61 N.E.2d 666. Where the findings by way of inferences from the subsidiary facts were not warranted, and where, if the proper inferences were drawn, an order for judgment different from that entered by the trial judge was required as matter of law we have reversed the judge's order and directed the entry of the correct one. Avery v. R. E. Guerin Trucking Co., Inc., 304 Mass. 500, 506, 24 N.E.2d 330; Galante v. City of Brockton, 305 Mass. 480, 26 N.E.2d 341; Galluzzi v. City of Beverly, 309 Mass. 135, 138, 34 N.E.2d 492; Lewis v. Conrad & Co., Inc., 311 Mass. 541, 546, 42 N.E.2d 732; Mahoney v. C & R Construction Co., 311 Mass. 558, 559, 42 N.E.2d 255; Howes v. Warren, 321 Mass. 475, 73 N.E.2d 834.

Property Damage Insurance.

New Bedford purchased from Westinghouse Electric & Manufacturing Company, hereinafter called Westinghouse, a 20,000 kilowatt condensing turbine generator, hereinafter referred to as No. 1 turbine. The installation of this turbine began in January, 1946, and it was completely assembled except for generator leads and safety devices by Westinghouse on January 16, 1947. The spindle of the turbine was made of very high alloy steel from a single forging. It varied in diameter from a little less than nine inches to two feet. A boring three or four inches wide ran through its center. Blades were attached to the outside of the spindle so as to cause it to revolve from the impact with superheated steam which was discharged against them. Stationary blades were attached to the inside of the cover or shell of the turbine evidently to channelize the flow of the steam against the blades of the spindle. Outside of this shell was insulating material covered by a sheet metal casing. The spindle rested horizontally on two bearings, one where the steam was let in, and the second one, hereinafter called the No. 2 bearing, near the exhaust and where the steam was let out into the condenser. The spindle was coupled to the generator near this second bearing, so that the spindle and generator revolved at the same speed, which in normal operation was 3,600 revolutions a minute.

The condenser, the function of which was to cool and convert the steam, after it had been utilized in the propulsion of the spindle, into water which was returned to the boilers where it was reheated and used again, was purchased from and set up by C. H. Wheeler Manufacturing Company, hereinafter called Wheeler. A part of its weight was supported by a flange firmly attached to the casing near the exhaust end of the turbine, and the remainder of its weight was supported by four legs each of which rested upon a metal plate supported by a bank of eight steel springs which in turn rested on the top of a concrete pier. Each of these banks of springs had a device for setting their tension. The condenser was originally designed with an eccentric setting showing its center of gravity to be 16.6 inches off the center line of the turbine exhaust and during the normal operation of the condenser a turning moment would be created about the longitudinal center line of the turbine of about 330,000 foot pounds. It was to counterbalance this designed moment that the spring settings were devised. Due to an error the condenser was set up by Wheeler with its center of gravity 32.5 inches off the center of the turbine exhaust which greatly increased the turning moment. In April, 1946, Wheeler tightened up the springs to such an extent that they supported more than the weight of the condenser and resulted in lifting the turbine off the 'chairs' upon which it rested. In June, 1946, the springs were adjusted so that the turbine was let down to rest on its foundation. A conference was held between Westinghouse employees and Wheeler employees, and the latter in July, 1946, again set the springs. This setting did not agree with the drawings and instead of compensating for 330,000 foot pounds an actual turning moment of 584,000 foot pounds was created. Indeed, the hydraulic effect during the subsequent operation of the condenser created a turning moment which varied from 635,000 to 679,800 foot pounds depending on whether one or two pumps were used.

The turbine was first started in January, 1947. It...