Pearl Assur. Co. v. Hartford Fire Ins. Co. of Hartford, Conn.

Decision Date28 March 1940
Docket Number6 Div. 593.
Citation239 Ala. 515,195 So. 747
PartiesPEARL ASSUR. CO., LIMITED, v. HARTFORD FIRE INS. CO. OF HARTFORD, CONN., ET AL.
CourtAlabama Supreme Court

Rehearing Denied May 9, 1940.

Appeal from Circuit Court, Jefferson County; J. Russell McElroy Judge.

Bill for declaratory judgment by the Pearl Assurance Company Limited, against the Hartford Fire Insurance Company of Hartford, Conn., The Commercial Union Fire Insurance Company Boaz Mill & Gin Company, and Boaz Warehouse Company. From an adverse decree, complainant appeals.

Affirmed.

Leader, Hill, Tenenbaum & Seedman, of Birmingham, for appellant.

Dan MacDougald, of Atlanta, Ga., D. K. McKamy, of Birmingham, MacDougald, Troutman & Arkwright, of Atlanta, Ga., and Benners, Burr, McKamy & Forman of Birmingham, for appellees.

FOSTER Justice.

The questions here involved relate to the fact of liability by appellant under the terms of its policy for the fire loss of certain cotton; and, second, if such liability exists when its policy is considered in the light of the facts surrounding the parties and known to them, a proper apportionment of the loss so far as appellant is concerned, considered in the light of the existence of other insurance in that connection.

A bill in equity was filed by appellant, which we will sometimes refer to as "Pearl," seeking a declaratory judgment to determine the questions which we have above broadly stated. It makes parties (with others) Boaz Warehouse Company, a corporation, to which we will sometimes refer as the warehouse company, also Boaz Mill and Gin Company, a corporation, to which we will sometimes refer as the mill and gin company. It is in three phases, separately asserted and argued. The first and second question the fact of liability at all by Pearl, and the third is in the alternative and is predicated upon a possible holding that Pearl's policy is liable in some amount.

First Phase.

The coverage of Pearl's policy is as follows: "1. This insurance covers on cotton in bales in the legal custody of the assured, but only on cotton for which insured receipts have been issued, prior to loss, and are outstanding during the life of this policy, under the terms of which receipts the assured agrees to indemnify the owner of the cotton against loss or damage, only while such cotton is contained in any of the buildings, sheds, platforms, and/or yards of the hereinafter described premises of the assured, except as hereinafter provided."

The coverage does not include cotton for whose loss the warehouseman has not agreed in terms to indemnify the owner. The assureds are the two Boaz companies engaged in a warehouse business for the storage of cotton at the same warehouse, each issuing separate receipts for its separate customers, and where each of said receipts so far as we are here concerned had endorsed on it that the cotton was insured. It was all cotton for which "insured receipts" had been issued. The receipts issued by the Boaz Mill and Gin Company contain this statement: "This said bale of cotton is fully insured by the undersigned warehouseman against loss by fire or lightning." It further contained the word "insured" stamped on the receipt. It further contained the statement in the left-hand corner, as required by law, that among the charges made against the owner of the cotton was "insurance per month * * * ten cents (10¢)." The receipt issued by the Boaz Warehouse Company was in a slightly different form. It read: "The said bale of cotton is not insured by the undersigned warehouseman against loss by fire or lightning unless otherwise stated herein." But it was otherwise stated therein by stamping thereon the word "insured." It also contained the statement that among the charges was "insurance per month."

Appellant cites cases in which the policies have a clause whereby they cover insured's interest and legal liability, and which hold that unless the warehouseman is legally responsible for the fire, or has an interest in the cotton to be protected, the coverage does not apply. Wexler v. National Ben Franklin Ins. Co., 156 Misc. 755, 281 N.Y.S. 949; Orient Ins. Co. v. Skellet Co., 8 Cir., 28 F.2d 968; Tubize Chatillon Corporation v. White Transportation Co., D.C., 11 F.Supp. 91.

Whereas if he insures for the benefit of the owners of the goods intrusted to him as well as for his own benefit, he will be entitled to recover the full value of the property insured, to the extent of the insurance, holding any balance above his own interest as trustee for the owners. Richards on Insurance 66.

In the instant case the coverage was not on his interest nor to indemnify him against liability, so far as its terms indicate. Home Ins. Co. of New York v. Peoria, etc., R. Co., 178 Ill. 64, 52 N.E. 862. But it is upon cotton in bales, a further description of which is that it is only cotton for which insured receipts had been issued containing terms by which assured agreed to indemnify the owner against loss or damage.

The inquiry in this connection is whether the cotton lost was such as is there described. Insured receipts had been issued, but did they in terms require the warehouseman to indemnify the owner against loss? The receipts themselves are in such terms as seem to mean that the warehouseman was obligated to insure the property for the benefit of the owners. St. Paul Fire & Marine Ins. Co. v. Kaufman Compress Co., 5 Cir., 93 F.2d 156; Home Ins. Co. v. Peoria, etc., Rwy. Co., supra; Rice Oil Co. v. Atlas Ass'r. Co., 9 Cir., 102 F.2d 561 (14 and 15), page 574. When so, a failure in that respect would cast on the warehouseman liability to indemnify the owner for a loss which may occur by fire. Alabama Red Cedar Co. v. Tenn. Valley Bank, 200 Ala. 622, 76 So. 980; Wade v. Robinson, 216 Ala. 383, 113 So. 246; 26 Corpus Juris 43, section 32.

It also appears from the testimony of Mr. Elrod, as it appears in the agreed statement of facts, that Pearl's agent was informed that most of the cotton in this compartment would be government loaned cotton, and indicating that the protection to be accorded was for the benefit of the government agency.

We have reached the conclusion that the cotton involved in the fire was that on which Pearl's coverage extended within the terms of the policy considered in connection with concurrent events and conditions, so that it is not necessary to consider the effect on the question of the regulations of the State Board of Agriculture imposing certain duties on warehousemen issuing receipts for insured cotton.

Second Phase.

The two assureds were warehousemen and had issued respectively "insured receipts" for the cotton damaged by fire, each for different bales of the cotton. All such cotton had been pledged by its owners and receipt holders to the Commodity Credit Corporation, a government lending agency, as security for loans made by it to such owners, respectively. The Commodity Credit Corporation had procured a policy of insurance on the cotton from the respondent Hartford Fire Insurance Company, then in full force and effect, and there was no excess in value of the property included over the amount of the Hartford Fire Insurance Company's policy.

Paragraph 17 of the Pearl policy provides: "This insurance does not cover any cotton on which the owner has other insurance covering the same location, except on the value, if any, in excess of such other insurance." The Pearl policy also provides (line ninety-six to one hundred): "This company shall not be liable under this policy for a greater proportion of any loss on the described property, or for loss by and expense of removal from premises endangered by fire, than the amount hereby insured shall bear to the whole insurance, whether valid or not, or by solvent or insolvent insurers, covering such property, and the extent of the application of the insurance under this policy or of the contribution to be made by the company in case of loss, may be provided for by agreement or condition written hereon, or attached or appended hereto. Liability for reinsurance shall be as specifically agreed hereon."

The Hartford policy provides: "This policy covers the claim of Commodity Credit Corporation (including principal, accrued interest and accumulated charges, as provided in the loan agreement) as of the time of payment, in each and every bale of cotton represented by warehouse receipts pledged as security to Producers' Notes on 1934-35 C.C.C. Cotton Form A, etc." The pertinent provisions of paragraphs 5 and 6 of the Hartford policy are:

"5. It is understood and agreed that it is the intent of this contract in the event of loss or damage by fire or lightning to cotton represented by insured warehouse receipts, to protect and indemnify the assured against failure of the warehouseman, through the said errors, omissions, or violations as described in paragraph No. 4, to account to the assured as the holder of such insured warehouse receipts for insurance upon the cotton represented thereby to the full extent of such loss or damage. This insurance, being of the nature of excess insurance, shall not contribute with any other insurance.
"6. As to loss occasioned by tidal waves and/or overflowing rivers this is direct or primary insurance, so far as the interest of the assured is concerned, and insures the interest of the assured in cotton represented by warehouse receipts held by them as collateral pledged to secure their loans."

Hartford's policy, as clause 5, supra, shows, is in the main one of "errors and omissions," and excess insurance. Its direct coverage is only under six, supra, not here applicable.

Pearl claims that since its policy is excess under clause 17 supra, (except as to specific insurance, see amended 6, hereinafter copied...

To continue reading

Request your trial
9 cases
  • U.S. Fire Ins. Co. v. Hodges
    • United States
    • Alabama Supreme Court
    • May 30, 1963
    ...of co-insurance has not been presented directly to this court prior to this case. There is dicta in Pearl Assurance Co. v. Hartford Fire Insurance Co., 239 Ala. 515, 195 So. 747, but it is not applicable to the question here It will be noted that each of the co-insurance provisions in the t......
  • Ben-Hur Mfg. Co. v. Firemen's Ins. Co. of N.J.
    • United States
    • Wisconsin Supreme Court
    • November 27, 1962
    ...to and it must be affirmed. Judgment affirmed. 1 Meigs v. London Assur. Co. (C.C.Pa., 1904), 126 F. 781; Pearl Assur. Co. v. Hartford F. Ins. Co. (1940), 239 Ala. 515, 195 So. 747; Cromie v. Kentucky & L. Mut. Ins. Co. (1854), 15 B.Mon. 432; Angelrodt v. Delaware Mut. Ins. Co. (1982), 31 Mo......
  • Dubuque Fire & Marine Ins. Co. v. Reynolds Co.
    • United States
    • U.S. Court of Appeals — Fifth Circuit
    • June 30, 1942
    ...3 Cir., 94 F.2d 710; St. Paul F. & M. Ins. Co. v. Garza County Warehouse & M. Ass'n, 5 Cir., 93 F.2d 590; Pearl Assurance Co. v. Hartford Fire Ins. Co., 239 Ala. 515, 195 So. 747. The trial court correctly entered judgment for the full amount of the loss against Dubuque Fire & Marine Insura......
  • Inter-Ocean Ins. Co. v. Richardson
    • United States
    • Alabama Court of Appeals
    • October 3, 1950
    ...227 Ala. 410, 150 So. 318, 89 A.L.R. 1459; Equitable Life Assur. Soc. v. Hill, 230 Ala. 505, 161 So. 800; Pearl Assur. Co. v. Hartford Fire Ins. Co., 239 Ala. 515, 195 So. 747. The tendencies of the evidence submitted by the plaintiff below were in our opinion entirely sufficient, if believ......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT