Pan American Insurance Co. v. Cooper Butane Co.

• Decision Date: 03 April 1957
• Docket Number: No. A-5961,A-5961
• Citation: 157 Tex. 102,300 S.W.2d 651
• Parties: PAN AMERICAN INSURANCE COMPANY, Petitioner, v. COOPER BUTANE COMPANY et al., Respondents.
• Court: Texas Supreme Court

Page 651

300 S.W.2d 651

157 Tex. 102

PAN AMERICAN INSURANCE COMPANY, Petitioner, v. COOPER BUTANE COMPANY et al., Respondents.

No. A-5961.

Supreme Court of Texas.

April 3, 1957.

Allen Clark, Greenvill, Graves, Dougherty & Greenhill, Austin, for petitioner.

B. Truman Ratliff, Cooper, Hardy Moore, Paris, McKinney & McKinney, Cooper, for respondents.

CALVERT, Justice.

This is a suit by Pan American Insurance Company, petitioner, for a declaratory judgment. Its purpose is to establish that a policy of insurance sold and issued to respondent, Cooper Butane Company, does not obligate petitioner to pay a judgment for damages if one is obtained against Cooper Butane Company by the other respondents who are the statutory wrongful death beneficiaries of Carolyn Ann McCombs and Elmer McCombs, both deceased.

The trial court rendered a declaratory judgment absolving petitioner of liability. The Court of Civil Appeals reversed the judgment of the trial court and rendered judgment that petitioner take nothing by its suit. 290 S.W.2d 919. The holding of the Court of Civil Appeals is that under the terms and provisions of the insurance policy petitioner is obligated to pay on behalf of the insured any sums, within the limits of the policy, which the other respondents may recover in suits for damages now on file against the insured. We reverse the judgment of the Court of Civil Appeals and affirm the judgment of the trial court.

(1) The insurance contract was written on a 'Manufacturers' and Contractors' Schedule Liability Policy' form. The form contained two 'Coverages', 'A. Bodily Injury Liability' and 'B. Property Damage Liability', either or both of which could be purchased against any one or all of five 'Hazards', i. e., '1. Premises-Operations', '2. Elevators,' '3. Independent Contractors,' '4. Products', and '5. Contractual.' Cooper Butane Company purchased both coverages against the single hazard 'Premises-Operations.' Only Coverage A is involved in this case.

By Coverage A petitioner agreed to pay on behalf of Cooper Butane Company all sums it became obligated to pay by reason of liability imposed upon it by law as damages 'because of bodily injury, sickness or disease, including death at any time resulting therefrom, sustained by any person or persons, caused by accident and arising out of the hazards' defined. The hazard, 'Premises-Operations', against which the coverage was purchased is defined as follows: 'The ownership, maintenance or use of the premises, and all operations which are necessary or incidental thereto.' Other policy definitions and provisions include within the hazard, 'Premises-Operations', the property of others while used by the insured for carrying on its business of installing, servicing and repairing liquefied petroleum gas systems. Still other policy provisions limit liability under the 'Premises-Operations' hazard to damages for injuries resulting from accidents occurring before operations are completed. If the insured had wished coverage for liability for damages growing out of accidents occurring after operations had 'been completed or abandoned at the place of occurrence thereof and away from premises owned, rented or controlled by the insured' it should have purchased coverage against hazard No. 4, 'Products.' It did not do so.

Cooper Butane Company is a partnership with R. C. Harber as the managing partner. The partnership was in the liquefied petroleum gas distribution business, including the business of installing, servicing and repairing liquefied petroleum gas systems, piping and equipment. One of its regular customers was one John McCombs. On May 11, 1954 Leonard Allen, a Cooper Butane Company employee, filed the butane tank at the residence of John McCombs. He discovered that the filter valve on the tank was out of repair, permitting the escape of gas, and he sought to repair it by 'jiggling' it, but failed. On June 24th Allen again filled the tank and on this occasion replaced the valve. A few days later McCombs reported to Allen that the gas was still escaping and Allen inserted a bushing and replaced the valve when he filled the tank on July 26th. The new valve stopped the leak and no further repairs were needed. Allen's repair work had not been inspected by Harber at the time the events next related transpired.

On July 30, 1954 Carolyn Ann McCombs, minor daughter of John McCombs, was lowered by a rope into a cistern on the property of John McCombs for the purpose of cleaning out the cistern. When she reached the bottom of the citern she fell forward and died. A few minutes later Elmer McCombs, uncle of Carolyn Ann, was lowered by a rope into the cistern to recover her body. As he reached the bottom he died immediately. After the filing of this suit the statutory wrongful death beneficiaries of Carolyn Ann and Elmer McCombs filed suits against Cooper Butane Company and the individual members of the partnership seeking a recovery of damages upon allegations of negligence on the part of an employee which permitted butane gas to escape from the tank on the McCombs premises, which gas, it is alleged, accumulated in the bottom of the cistern and caused the deaths of Carolyn Ann and Elmer McCombs.

The policy provisions above analyzed and the events just related pose the ultimate question to be decided: At the time of the deaths of Carolyn Ann and Elmer McCombs on July 30th, were operations by Cooper Butane Company on the McCombs premises completed? It they were not completed petitioner will be obligated under the terms of its policy to pay any damages recovered against Cooper Butane Company. If they were completed petitioner will not be obligated to pay such damages because the policy does not provide coverage in that event. The answer to the stated question must turn on the answer to a subsidiary question: Was an inspection by Harber of Allen's work, unmade at the time of the accident, essential to the completion of the repair operation?

Allen and Harber were the only witnesses whose testimony was offered on the trial of the case. Allen testified that when he left the McCombs premises on July 26th the filter valve on the butane tank was perfectly and permanently fixed and was working all right, and that the job had been completed. Harber testified that it was his custom and practice to inspect all repair work done by his employees and that on August 2nd, a few days after the fatal accidents, he did, in fact, make an inspection of the repair work done by Allen on July 26th. He further testified that his inspection disclosed that the valve was working entirely satisfactorily, that the work done by Allen was wholly complete and that nothing remained to be done.

In response to a request by Cooper Butane Company the trial judge filed findings of fact and conclusions of law. He found that Allen, on July 26th, 'properly and permanently repaired the valve and the tank'; that 'there was no necessity for him (Allen) or any other person connected with Cooper Butane Company, Ltd., to return to the premises of John McCombs for any purpose'; that the repairs made by Allen 'were properly and permanently made and that nothing more remained to be done to the tank'; that when Allen completed the repairs he 'made an inspection and found that there were no leaks in the filter valve and that no further inspection was needed or...