Staple Cotton Co-Operative Ass'n v. Yazoo & M. V. R. Co

• Decision Date: 30 September 1940
• Docket Number: 34224
• Citation: 197 So. 828,189 Miss. 387
• Parties: STAPLE COTTON CO-OPERATIVE ASS'N v. YAZOO & M. V. R. CO
• Court: Mississippi Supreme Court

197 So. 828

189 Miss. 387

STAPLE COTTON CO-OPERATIVE ASS'N v. YAZOO & M. V. R. CO

No. 34224

Supreme Court of Mississippi, Division A

September 30, 1940

APPEAL from the circuit court of Coahoma county, HON. WM. A. ALCORN JR., Judge.

Action by the Staple Cotton Co-Operative Association against the Yazoo & Mississippi Valley Railroad Company for the value of cotton which was destroyed by fire while in the possession of the defendant. From a judgment for the defendant, the plaintiff appeals. Reversed and remanded.

Reversed and remanded.

Watkins & Eager, of Jackson, and Brewer & Sisson, of Clarksdale, for appellant.

The undisputed proof in this case shows that on August 1st, 1938 the North British & Mercantile Insurance Company, Ltd. issued its policy to the appellant, the policy being a blanket fire policy covering the cotton of insured in various locations. By the terms of the policy cotton shipped under a bill of lading containing a stipulation that the carrier may have the benefit of any insurance thereon was expressly excluded from the coverage of the policy. The policy also expressly excluded coverage of any cotton in the possession of any carrier or other bailee who may be liable for any loss or damage thereto.

The undisputed testimony is that appellant was not paid by the North British & Mercantile Insurance Company, Ltd., but that appellant had been loaned the value of the cotton under the provisions of the policy.

The appellee and the lower court took the position that since appellant had received the value of the cotton it was an unconditional payment of the loss by the insurance company under a policy of insurance. Both disregarded the plain provisions of the policy. The first provision to the effect that there was no coverage on the cotton in question; the second provision of the policy providing for the loan which was made.

The only case relied upon by appellee in the lower court was that of Y. & M. V. R. R. Company v. Blum, 124 Miss. 318 86 So. 805. Appellant has no fault to find with the holdings in this ease. The court will notice that in the Blum case the court did not have before it for consideration a loan provision. The provision in the bill of lading there, as here, gave the carrier the benefit of insurance which may have been effected on the property covered by the bill of lading. The provisions there, as in the instant case, also provided that such is true only "so far as this shall not avoid the policies or contracts of insurance." In the present case, as soon as the bill of lading was issued, the blanket policy ceased to cover the cotton in question. The court in the Blum case, in upholding the validity of the provisions in the bill of lading, stated, "The provisions of the bill of lading that the carrier shall have the full benefit of any insurance that may have been effected upon, or on account of, said property is valid, in the absence of fraud, or of any contract to the contrary with the insurer." The proof in the case at bar reveals a contract to the contrary with the insurer.

The leading case upholding the provision of a loan as in the case at bar is that of Luckenbach v. McCahan Sugar Ref. Co., 248 U.S. 139, 39 S.Ct. 53, 63 L.Ed. 170, 1 A. L. R. 1522. The carrier in the Luckenbach case made the same contentions as the appellee made in the case at bar. The court in the Luckenbach case had before it for construction both a provision in the bill of lading giving the carrier the benefit of any insurance, and a provision in the policy excluding coverage for goods shipped under a bill of lading giving the carrier the benefit of insurance, and a loan provision.

Mr. Justice Brandeis, in upholding the payment as a loan, most clearly covered the contention of the appellant in the present case.

In no jurisdiction, so far as appellant has been able to determine, has the loan provision been held invalid. In every jurisdiction where the courts have passed on the loan provision, they have held that the carrier was not relieved of liability, nor was the carrier entitled to offset any payment made by an insurance company by way of a loan. The courts have universally held that payment under such provisions was a conditional payment or loan; and such a payment does not deprive an insurance company nor the insured of any rights they had prior to the payment.

Luckenbach v. McCahan Sugar Ref. Co., 248 U.S. 139, 39 S.Ct. 53, 63 L.Ed. 170; DeJean v. La. Western R. Co., 167 La. 111, 118 So. 822; Automatic Sprinkler Corp. of America v. Robinson-Slagle Lbr. Co. (La.), 147 So. 542; Graysonia N. & A. R. Co. v. Newberger Cotton Co., 170 Ark. 1056, 282 S.W. 982; Clark Cotton Co. v. Jones, 121 S.E. 519; Southard v. Minn., etc., Ry. Co., 60 Minn. 382, 62 N.W. 442; Sorenson et al. v. Boston Ins. Co. (4 C. C. A.), 20 F.2d 640; Frederick Leyland & Co., Ltd., v. Hornblower (1 C. C. A.), 256 F. 289; The Turret Crown, 282 F. 763; Inman v. S. C. Ry. Co., 129 U.S. 128, 9 S.Ct. 249, 32 L.Ed. 612; Couch on Insurance, sec. 2004.

The Supreme Court, in the case of Y. & M. V. R. R. Co. v. Levy & Sons, 141 Miss. 199, 160 So. 525, in passing on the question of the burden of proof as to whether to give effect to the provision of the bill of lading providing that the carrier should have the benefit of any insurance if such did not avoid the contract of insurance, would avoid the insurance policy, held that the burden was on the carrier since by its plea it set up such provision as a defense. The court thereby recognizes that the bill of lading cannot alter the insurance contract. The court recognizes that the insurance contract may provide against coverage where such a provision in a bill of lading exists. This is exactly what was done in the present case.

Fred H. Montgomery, of Clarksdale, for appellee.

Under the provisions of Sections 6072 and 6091 of the Code, considered in connection with the terms of the bill of lading, defendant had the right to pay plaintiff a sum equal to the amount of the premium charged for the policy of insurance, and thereby became the insured pursuant to the provisions of the bill of lading under which the shipment moved.

Y. & M. V. R. R. Co. v. Blum, 124 Miss. 318, 86 So. 805.

It is true there are cases decided in other jurisdictions which are opposed to the holding in the Blum case; but this fact does not affect the holding here. No question involving interstate commerce is present. The shipment was consigned from Deeson to Greenvillee--wholly within the State of Mississippi. The movement is controlled wholly by regulation of local authorities. Decisions based on regulation of foreign jurisdictions are inapplicable.

It is undeniable on the record that the shipper was protected from fire insurance against loss due by fire while in transit. The policy so provides; notwithstanding it has already received a loan, as it is termed, covering the amount of the loss resulting from the fire. Why call a payment a loan?

But the railroad company, by virtue of Sec. 2, paragraph (c) of the bill of lading had previously acquired a vested right to pay the amount of the premuim incurred to effect fire insurance on the shipment of cotton and receive the proceeds of the fire policy. No legerdemain can deprive defendant of this right. Its right to effect insurance arose the moment the cotton was delivered for shipment by virtue of a written contract. The amount of money due plaintiff by the insurance company has been paid to plaintif...