Texas City Term. Ry. Co. v. American Equit. Assur. Co., Civ. A. No. 542.

• Decision Date: 25 April 1955
• Docket Number: Civ. A. No. 542.
• Parties: TEXAS CITY TERMINAL RAILWAY COMPANY, Plaintiff, v. AMERICAN EQUITABLE ASSURANCE COMPANY OF NEW YORK et al., Defendants.
• Court: U.S. District Court — Southern District of Texas

130 F. Supp. 843

TEXAS CITY TERMINAL RAILWAY COMPANY, Plaintiff, v. AMERICAN EQUITABLE ASSURANCE COMPANY OF NEW YORK et al., Defendants.

Civ. A. No. 542.

United States District Court S. D. Texas, Galveston Division.

April 25, 1955.

COPYRIGHT MATERIAL OMITTED

Wigley, McLeod, Mills & Shirley, Galveston, Tex., Preston Shirley, Galveston, Tex., for plaintiff Texas City Terminal Ry. Co.

Austin Y. Bryan, Jr., Houston, Tex., for defendants American Equitable Assurance Co. of New York and Colonial Assurance Co. of Philadelphia.

Thompson, Coe & Cousins, Dallas, Tex. (Will C. Thompson and R. B. Cousins, III), Dallas, Tex., for defendants Aetna Ins. Co., American Ins. Co., National Fire Ins. Co., Norwich Union Fire Ins. Society, Ltd., The Travelers Fire Ins. Co., and Yorkshire Ins. Co., Ltd.

Fulbright, Crooker, Freeman, Bates & Jaworski, Houston, Tex., Newton Gresham, Houston, Tex., for defendants Pacific Fire Ins. Co. and United States Fire Ins. Co.

INGRAHAM, District Judge.

The facts and circumstances under which this litigation arose may be briefly stated as follows:

Prior to April 16, 1947, the United States instituted a program of furnishing fertilizer to certain foreign countries. The fertilizer was shipped by rail from points in Nebraska and Iowa to Texas City, Texas, under Government bills of lading and was described on the bills of lading variously as fertilizing compounds, fertilizer compound or similar description. Plaintiff, Texas City Terminal Railway Company, hereinafter referred to as Terminal, was the switching carrier involved in these shipments receiving the commodity from the line haul carriers and moving it to the Terminal's own waterfront warehouses at which place the Terminal employees would unload it into warehouses owned and operated by the Terminal. All of the fertilizer involved in the explosions which is the subject of this suit was thus unloaded into Warehouse O of the Terminal and there kept by the Terminal awaiting further directions from the owners of the fertilizer. All of the fertilizer was consigned to the French Supply Council care of J. D. Latta. Latta as agent for the French Supply Council made the necessary arrangements for cargo space aboard ocean-going vessels to transport the fertilizer to overseas destination. While in the Terminal warehouses the fertilizer was stacked in separate piles in carload lots which were identified by car numbers. After the French Supply Council made the necessary arrangements for a ship to go to Texas City to take on the cargo, the French Supply Council through its agent Latta then would give an order to the steamship company to load a stated number of carloads of fertilizer and the exact car numbers would be listed on the statement. The ship which was to take the cargo would then berth at the docks of the Terminal at Texas City and the cargo was removed from the Terminal's warehouse by longshoremen employed by the ship's stevedore. These longshoremen trucked the fertilizer out of the Terminal's warehouse, placed it in either rope slings or wooden trays alongside ship and the slings or trays would be hoisted aboard ship and into the ship's hold and there unloaded by other longshoremen. The ship's gear was used to conduct this hoisting operation and was operated by the longshoremen. No Terminal employee handled the cargo after it was picked up on the warehouse floor by the longshoremen and the Terminal and its employees had nothing to do with the trucking of the commodity from inside the warehouse to shipside, the hoisting it aboard ship or unloading and stacking of the cargo in the hold of the ship. The Terminal had no right or power to control the longshoremen or the ship's stevedore and paid them nothing, their services being paid for by the steamship company. The longshoremen and stevedore were not employees of the Terminal but on the contrary were either employees of, or contractors for, the ship's agent. Likewise, the Terminal had no right or power to control the ship or its officers and crew. On April 10, 1947, the Steamship High Flyer, which was at all times owned, operated and controlled by Lykes Bros. Steamship Company, had berthed at Texas City adjacent to Pier O and using the manner above set forth approximately 961 tons of fertilizer had been loaded in Hold No. 3 aboard the High Flyer, this loading being completed on April 11, 1947. An on-board ocean bill of lading was issued by Lykes Bros. Steamship Company to cover this cargo, the bill of lading being dated April 11, 1947. After the loading of the fertilizer was completed, the High Flyer was moved from its berth at Pier O in the North slip to a berth adjacent to Pier A in the main slip. Warehouses O and A separated and were between the North and Main slips. After the High Flyer had been moved from Pier O and on April 11, 1947, the Steamship Grandcamp which was owned, operated and controlled by the French Government docked adjacent to Pier O. Fertilizer had been loaded in the same manner in Holds Numbers 2 and 4 of the Grandcamp on April 11, 12, 13, 14 and 15. Hold No. 4 of the Grandcamp was not worked the night of April 15th and the hatch covers on Hold No. 4 had been securely fastened at the time the longshoremen quit work on the afternoon of the 15th. Ocean bills of lading had been issued covering all of the fertilizer aboard the Grandcamp. On the morning of April 16, 1947, the longshoremen reported for work at 8:00 A.M. at Hold No. 4. They took off the hatch covers and went into Hold No. 4. After being in the hold some 10 minutes or more and prior to any fertilizer being loaded into No. 4, the longshoremen noticed a small wisp of smoke coming up from out of the fertilizer in the hold. The longshoremen and ship's crew used a jug or two of water and then under the direction of the ship's officers, fire extinguishers were used in an effort to put out the fire in No. 4 hold. These were unsuccessful and the captain of the ship then ordered the hatch covers placed back on Hold No. 4 and the injection of steam into that hold for the purpose of smothering the fire. This was also unsuccessful. In the meantime a fire alarm had been given. The City of Texas City had a volunteer fire department and within a short time after the giving of the fire alarm, the volunteer fire department of Texas City had its equipment and men present and commenced fighting the fire aboard the ship. The fire department's efforts to put out the fire in No. 4 were unsuccessful and at 9:12 A.M. on April 16, 1947, the fertilizer in Hold No. 4 of the Grandcamp exploded, causing practically the simultaneous explosion of the fertilizer in Hold No. 2 with the combined effect being to obliterate the Grandcamp and to cause a large amount of damage to the Terminal's properties as well as to other properties in Texas City. As above stated the Grandcamp was owned, operated and controlled by the French Government and its Master had the control of fire fighting aboard that ship. Upon arrival of the volunteer fire department, that department continued the fighting of the fire aboard the ship. Prior to the explosion on the Grandcamp, the fire had not spread to any building or facility owned by the Terminal. The waters adjacent to Pier O were navigable waters with a depth of approximately 34 feet but the land under the waters in the slip over which the Grandcamp was berthed were owned by the Terminal.

At the time of the explosion on the Grandcamp, the High Flyer was berthed adjacent to Pier A in the main slip and as a result of the Grandcamp's explosion, was severely damaged with its hatch covers being blown off and with the exception one line was completely blown loose from its moorings. Shortly after the explosion of the Grandcamp, this remaining line was thrown off by the ship's crew. The High Flyer then drifted over across the main slip to a point alongside the steamship Wilson B. Keene which was berthed at Pier B. The Wilson B. Keene was between the High Flyer and Pier B dock. The High Flyer at all times material hereto was owned, operated and controlled by Lykes Bros. Steamship Company.

It is not entirely clear as to when fire was first observed aboard the High Flyer but some time during the late afternoon or early evening of April 16th smoke was observed coming from that ship. Late the night of the 16th an effort was made to remove the High Flyer by tugs employed by the ship's owner but was unsuccessful. Some 10 or 15 minutes before the explosion on the High Flyer, large balls of fire described by witnesses as resembling Roman candles were observed shooting out of the ship and at 1:10 A.M., April 17, 1947, an explosion occurred aboard the Steamship High Flyer which obliterated that ship and caused further damage to Terminal's properties. In answer to a Special Interrogatory the jury found that the origin of the fire aboard the High Flyer was fire directly communicated from the explosion of the Grandcamp as opposed to sparks originating from fires of and on the Terminal's properties during the day of the 16th after the explosion on the Grandcamp.

On April 16, 1947, the Terminal had in full force and effect one blanket policy of insurance covering its properties against the risk of explosion, one fire insurance policy covering specifically certain of the Terminal's properties and eight other blanket fire insurance policies covering jointly the remaining properties of the Terminal.

The explosion policy No. R 35-7509 was for the face amount of $2,300,000 and was issued by the defendant, Colonial Assurance Company of Philadelphia. By endorsement the defendant, American Equitable Assurance Company of New York assumed the liability of Colonial Assurance Company of Philadelphia on this policy. The validity of the Colonial Assurance Company of Philadelphia's explosion policy and the assumption of liability by American Equitable Assurance Company of New York has been stipulated. For brevity, Colonial Assurance Company of...