Security National Insurance Co. v. Sequoyah Marina

• Citation: 246 F.2d 830
• Decision Date: 12 June 1957
• Docket Number: No. 5530.,5530.
• Parties: SECURITY NATIONAL INSURANCE COMPANY, a foreign corporation, and Charles R. Freeman, Appellants, v. SEQUOYAH MARINA, Inc., a corporation, Powell Cobb, Pauline Gatewood, Roswell Susman, Fred Lorenz, W. L. Sawyer, W. G. Hudson, Homer Moore and Ralph Aggars, Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (10th Circuit)

246 F.2d 830 (1957)

SECURITY NATIONAL INSURANCE COMPANY, a foreign corporation, and Charles R. Freeman, Appellants, v. SEQUOYAH MARINA, Inc., a corporation, Powell Cobb, Pauline Gatewood, Roswell Susman, Fred Lorenz, W. L. Sawyer, W. G. Hudson, Homer Moore and Ralph Aggars, Appellees.

No. 5530.

United States Court of Appeals Tenth Circuit.

June 12, 1957.

Duke Duvall, Oklahoma City, Okl. (Bryan W. Tabor, Tulsa, Okl., was with him on the brief), for appellants.

Julian B. Fite, Muskogee, Okl. (Kay Wilson, Muskogee, Okl., Bassman & Gordon, Claremore, Okl., Hughey Baker, Tulsa, Okl., Douglas Garrett, Muskogee, Okl., and Hugh Bland and Paul E. Gutensohn, Ft. Smith, Ark., Anthis & Gotcher, Thomas L. Gibson and A. Carl Robinson, Muskogee, Okl., were with him on the brief), for appellees.

Before PHILLIPS, PICKETT and LEWIS, Circuit Judges.

PHILLIPS, Circuit Judge.

This is an appeal from a judgment in a declaratory judgment action adjudging that one Fred Lowrance was within the coverage of a liability insurance policy issued to Charles R. Freeman by Security National Insurance Company.¹

The action was brought by the Insurance Company and Freeman against Sequoyah Marina, Inc., Powell Cobb, Pauline Gatewood, Roswell Susman, Fred Lowrance, W. L. Sawyer, W. G. Hudson, Homer Moore and Ralph Aggars.

The facts are not in dispute. Freeman was the owner of a Matthews Custom-Bilt Inboard Motor Boat, which he kept on Fort Gibson Lake in Oklahoma, and which he docked at a private dock rented by him from Sequoyah Marina and used for non-business pursuits.

Shortly prior to August 13, 1955, Freeman requested Lowrance, a mechanic, to repair the motor in the boat, which was then located at the dock. On that date Lowrance went to the boat and checked the starter. He had the keys to the boat, including the ignition key. He found that the motor was out of oil and the cylinders had no lubricant. He reported that condition to Mr. Freeman and advised him that he would return to the boat and put in oil and lubricate the cylinders. On the morning of August 14, 1955, Lowrance returned to the boat, put three quarts of oil in the crank case, and put Marvel oil in the spark plug holes to lubricate the cylinders. He then replaced the spark plugs and touched the starter button. Immediately thereupon an explosion occurred, resulting in property damage to Sequoyah Marina, W. L. Sawyer, W. G. Hudson, Homer Moore, Ralph Aggars and Roswell Susman.

At the time of the commencement of the declaratory judgment action, Moore, Cobb, Gatewood and Hudson had commenced actions against Freeman to recover the property damages alleged to have been suffered by them as a result of the alleged negligence of Lowrance. Cobb and Gatewood filed answers and counterclaims against Freeman, the Insurance Company, Lowrance and Sequoyah Marina, Moore, Sawyer, Susman, Aggars, Sequoyah Marina and Hudson filed answers and cross-claims or counterclaims against Freeman, Lowrance and the Insurance Company.

The court found that Lowrance was acting as an independent contractor at the time of the accident.

The policy was issued on July 8, 1954, and was in full force and effect at the time of the accident. The pertinent provisions of the policy read as follows:

"Security National Insurance Company (A Stock Insurance Company, herein called the Company)

"Agrees with the insured, named * * *

"Insuring Agreements

"I Coverage H — Liability

"To pay on behalf of the insured all sums which the insured shall become legally obligated to pay * * as damages because of injury to or destruction of property, including the loss of use thereof.

"* * * * *

"III. Definition of insured

"The unqualified word `insured\' includes (a) the named insured, * * * (c) with respect to animals and watercraft owned by an insured, any person or organization legally responsible therefor, * * *.

"* * * * *

"Exclusions

"This policy does not apply:

"(a) to any business pursuits of an insured, other than activities therein which are ordinarily incident to non-business pursuits; * * *;"

A rider attached to the policy read, in part, as follows:

"Watercraft Coverage

"(For Use with Comprehensive Personal Liability Policies * * *)

"It is agreed that such insurance as is afforded by the policy under Coverages H * * * applies with respect to the ownership, maintenance or use, including loading and unloading, of the watercraft designated in the schedule below.

"This insurance does not apply:

"* * * * *

"2. while said watercraft is used to carry persons for a charge or is rented to others.

                                                    "Schedule
                  ----------------------------------------------------------------------------
                                            Designation of Watercraft
                  ----------------------------------------------------------------------------
                  Type     | Name and Identification |  Overall  |   Rated Speed     | Premium
                  (Motor   |        Number           |  Length   |  Miles Per Hour   |
                  or Sail) |                         | (In Feet) | (Motorboats Only) |
                  ---------|-------------------------|-----------|-------------------|--------
                  Inboard  | Matthews Custom         |   33 ft.  |     16 to 30      |  56.93
                  Motor    | Built                   |           |                   |
                           | Model FVZD              |           |                   |
                           | Motor #F-3047           |           |                   |       "
                  ----------------------------------------------------------------------------
                

The trial court, having decided by final judgment the issue of coverage, reserved for further adjudication the negligence claims, under Rule 54(b) of the Federal Rules of Civil Procedure, 28 U.S. C.A.

The first question presented is whether Lowrance was "legally responsible" for the boat at the time of the explosion. We think "responsible" as here used means under a duty to use or operate the boat or the power plant and equipment thereof properly and liable and answerable for a failure so to do. It may be implied from physical possession of the boat by Lowrance and his authority and power to act with respect thereto.² Lowrance was in possession, charge and control of the boat for the purpose of servicing it and putting it in operating condition and doing whatever was incident to accomplishing that purpose. He was authorized to exercise his independent judgment with respect to what was necessary to be done. He had implied authority to make a test run after the servicing was completed. He testified that it was his practice to do so in repairing boats at the dock. The fact that he did not reach the point of making a test run is not material....