UNITED STATES F. INS. CO. v. Gulf States Marine & Min. Co.

• Decision Date: 25 February 1959
• Docket Number: No. 17320.,17320.
• Citation: 262 F.2d 565
• Parties: UNITED STATES FIRE INSURANCE CO., Appellant, v. GULF STATES MARINE & MINING COMPANY et al., Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

262 F.2d 565 (1959)

UNITED STATES FIRE INSURANCE CO., Appellant, v. GULF STATES MARINE & MINING COMPANY et al., Appellee.

No. 17320.

United States Court of Appeals Fifth Circuit.

January 9, 1959.

Rehearing Denied February 25, 1959.

Robert Eikel, Houston, Tex., for appellant.

Robert O. Campbell, Butler, Binion, Rice & Cook, Houston, Tex., for appellee, Gulf States Marine & Mining Co.

Edward W. Watson, Lockhart, Watson & Peterson, Galveston, Tex., for appellee, Norwich Union Fire Ins. Soc., Limited.

Before HUTCHESON, Chief Judge, and CAMERON and WISDOM, Circuit Judges.

HUTCHESON, Chief Judge.

Brought as a declaratory judgment action by Gulf States Marine & Mining Company, which had been obliged to pay certain sums in satisfaction of claims arising out of the sinking of the Barge Sample and the loss onto the surrounding waters of large quantities of its crude oil cargo, against Norwich Union Fire Insurance Society, Ltd., and United States Fire Insurance Co., its insurers in marine policies, the suit sought a judgment declaring that either the defendant Norwich, under its policy, or the defendant United States Fire, under its policy is, or that both defendants are under their policies, liable for the sums paid out by plaintiff on account of the sinking of the Barge.

The cause was submitted to the court without a jury on a stipulation as to the facts, with exhibits¹ attached thereto and there was an opinion² stating the facts as agreed to and drawing the conclusion of law therefrom that, for the reasons stated in the opinion, Norwich was not, and United States Fire was, liable on its policy, followed by a judgment in accordance with these conclusions.

Appealing therefrom, United States Fire is here urging under two grounds of error³ that the conclusion of law and the judgment, that Norwich was not and the United States Fire was, liable under its policy, was erroneous, and arguing them with vigor and conviction.

Appellee Norwich, with an equal show of confidence, if not equal ground therefor, insists that the agreed facts support the conclusion and that the judgment based thereon must be affirmed.

We do not think so. On the contrary, for the reasons hereafter stated, we agree with the appellant that the sums paid were not within the coverage of the United States, but within that of the Norwich, policy.

Because the controlling facts are not in dispute and they are sufficiently set out in the opinion of the district judge, we will not undertake a general restatement of them, but, making general reference to them as they are stated in the opinion, will draw therefrom and state here only such of them as the argument from time to time makes necessary.

Because also the opinion of the district court has pinpointed the issue on which the case turned below and will turn here, — whose is the coverage?, it will not be necessary for us to set out the provisions of each policy on the basis of which coverage is claimed. It will be sufficient to set down here what the district judge regarded as controlling and to state as briefly as we may our reasons for thinking that in so holding he erred.

Agreeing, as he was of course obliged by the stipulation to do, that he was bound by the findings and conclusions of Judge Hannay in the Admiralty cause, in which the liability of the Tug Dispatch and the Barge Sample was determined, that "the crew of the Tug Dispatch which had the Barge Sample in tow was negligent and gravely at fault, and such faults were plain, substantial, contributing and statutory major faults", and that the Barge Sample was not unseaworthy, though he found and concluded that the Norwich policy on the Tug Dispatch, written in the Tug Syndicate form, was broader than the comparable policy on the Barge Sample No. 1, having added language in the collision clause to cover towers' liability, he nevertheless held neither of the losses here were within that coverage. He did this by basing his holding, that the Tug Dispatch, the vessel insured, did not as a vessel cause either the loss or the damage here concerned, and that the liability imposed upon the owner of the Dispatch, the insured in the policy, was imposed upon it not as owner of the insured vessel, upon which a liability in rem was imposed, but as an employer of negligent individuals who were found negligent in failing to properly see to the loading of the barge.

Distinguishing Bronx Towing Line, Inc. v. Continental Insurance Co., D.C., 108 F.Supp. 298; Id., 204 F.2d 512, from this case, because the loss there resulted from a fault of the tug directly connected with the towage obligation, while as stated by him "in the instant case there was no fault or neglect on the part of the tug in connection with the towage operation and the only fault was in the loading of the barge. The fact that the tankerman employed in that work was employed by Gulf States, would impose liability on Gulf States, but this liability would not be imposed by reason of ownership of the tug" but because of the fault of Gulf States servants, he, therefore found that the "coverage elsewhere" clause of the United States Fire policy was not applicable under the circumstances.

To show that this holding, under the undisputed facts, constituted the Achilles heel of the opinion and judgment, we cannot do better, we think, than to point to these controlling facts.

The appellee Gulf States had a contract to transport by its own tow cargoes of crude oil for Cities Service Refining Company from Houston to Lake Charles. On one of the voyages called for, Gulf States chartered the Barge Sample No. 1.

This charter provided that the owner would secure Hull and Protection and Indemnity policies of marine insurance and have the charterer Gulf States named as an assured.

The barge was chartered bareboat, i.e., without any crews. It had no crew accommodations and never at any time had any crew. At all times, and...