United States v. Trinity Universal Insurance Co.
| Decision Date | 31 March 1972 |
| Docket Number | No. 71-1301.,71-1301. |
| Citation | 457 F.2d 950 |
| Parties | UNITED STATES of America for the Use and Benefit of CONTRACTORS EQUIPMENT COMPANY and Contractors Equipment Company, Plaintiffs, Travelers Insurance Company, Subrogee to Plaintiff, Hertz Equipment Rental Corporation, Plaintiff-Appellant, v. TRINITY UNIVERSAL INSURANCE COMPANY et al., Defendants-Appellees. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Thomas S. Terrell, Paul Nimmons, Jr., Houston, Tex., for plaintiff-appellant.
Tom Alexander, Fred Collins, Houston, Tex., for defendants-appellees.
St. John Garwood, Jr., Houston, Tex., for Hertz Equipment Rental Corp.
Before JOHN R. BROWN, Chief Judge, and TUTTLE and RONEY, Circuit Judges.
This appeal poses two principal questions which, after nearly ten years of litigation, are far removed from the issue originally presented when the predecessors of Hertz filed a Miller bond suit against Carlton and his Falcon Construction Company, Inc. for rental payments alleged to be due for the lease of a heavy crane. Through a history revealing changes in parties, satisfaction of certain claims under the Miller Act Bond, and settlements between other parties, the appeal still presents these issues: (1) Is Trinity Universal Insurance Company liable to Hertz, as successor to Contractors Equipment Company, which admittedly leased the Manitowoc Crawler Crane for use on the government contract, for damage to the boom of the crane when it collapsed while lifting one of the gates of the lock about which it was engaged. The answer to this question depends upon whether the insuring agreement covered this loss for the benefit of the insured, Carlton, and the additional insured, Contractors Equipment Company.1 The second question is whether the trial court properly disposed of the contention of the plaintiff, Hertz, that, regardless of whether Trinity Universal was liable on its policy, defendants Carlton, Carlton d/b/a Falcon Construction Company or a third party, Falcon Construction Company, Inc., which company admitted actually operating the crane at the time of the failure, were, one or all, liable for damages to the boom by reason of their negligence in its operation.
We carve out of the mass of suits, counter-claims, cross complaints, Miller Act claims, and ordinary suits for damage to bailed property the essential facts in order properly to decide the issues we have here to consider.
On September 24, 1962, a Manitowoc Crane, owned by the original plaintiff, Contractors Equipment Company and rented by defendant, Carlton d/b/a Falcon Construction Company and/or Falcon Construction Company, Inc. was mounted upon a barge near the mouth of the Colorado river in Texas. Carlton and his companies had a contract with the U. S. Government to raise and renovate certain sections of the canal locks. While in the process of raising one of these gate sectors, the boom of the crane collapsed causing the damage to the crane that is here sued for.
At the time of this occurrence, Falcon had in effect what may be known as an inland marine all-risk contractors equipment policy obtained from Trinity. This policy was originally issued on January 12, 1961 and renewed on the 12th day of January, 1962. This policy, by its terms, covered four scheduled items of heavy construction equipment. Three of these items were cranes, two of which had booms much like the Manitowoc crane, later acquired. The fourth of the original items was a "drag line" which had a 60 foot boom.
Attached to the original policy, and bearing the same date, is an endorsement which states:
The foregoing language appears in typewritten form and it is on an endorsement form at the bottom of which appears the following printed language: "All other terms and conditions of this policy remain unchanged."
It later became necessary for Falcon to acquire a different crane for the work covered by this particular contract, and the Manitowoc Crane was leased in August, 1962. At that time there was issued an endorsement as follows:
The foregoing was typewritten on the endorsement form which also contains at the bottom thereof, the language: "All other terms and conditions of this policy remain unchanged."
At some later time Contractors Equipment Co. obtained what may be called a "floating all-risk" policy from Travelers Insurance Company about whose coverage of this loss there has been no question.2
To make the general picture complete it must be noted that each of the two insurers undertook to avoid payment if other valid insurance existed on the equipment. The Travelers policy contained the following language:
"In case other valid and collectible insurance exists on any property hereby insured at the time and place of loss, the insurance under this policy shall be considered as excess insurance and shall not apply or contribute to the payment of any loss until the amount of such other insurance shall have been exhausted . . ."
The Trinity policy read as follows:
Liability under its policy was denied by Trinity on two grounds —first that the jury's finding that an internal defect caused this collapse brought into play one or more exclusions enumerated in the policy; second, that the Trinity "other insurance" clause kept it from being operative. The trial court carefully analyzed the Trinity policy and concluded that a proper construction of the policy and riders excused the insuror from liability. Having concluded that the insuring agreement did not cover this loss it was, of course, not necessary for the court to resolve the "other insurance" issue.
Moreover, the court, as explained below, did not permit the jury to pass on the question of tort liability by some of the defendants.
Although we agree that Trinity is not liable on its policy, we reach this result for different reasons than did the trial court. Nevertheless, we think it necessary to pose this coverage issue as it was dealt with by the trial court. We shall deal hereafter with the "other insurance" issue.
Referring back to the policy itself, the first paragraph provides:
"This policy covers on the property described below at the time this represented the four items of equipment mentioned above, and later the added Manitowoc crane or in schedule attached, to not exceeding the amount specified in respect of each of the machines described, against loss or damage thereto, directly caused by the risks and perils insured against." (emphasis added)
Following a list of the property we then find on page two the following pertinent language:
Thus, to recapitulate, we have an inland marine policy protecting the insured against direct loss or damage resulting from any external cause except as modified by any inconsistencies with the printed policy or by any exclusions that were not eliminated by the "boom collapse" endorsement, and also subject to any special conditions which were not eliminated by the "boom" endorsement.
We thus come right down to the simple question whether the inclusion as part of the original policy3 of the so called "boom" endorsement eliminates the requirement that to recover it must be shown that the damage to the boom (1) resulted from an external cause; (2) was not occasioned "by the weight of a load exceeding the registered lifting or supporting capacity of the crane; (3) that the loss or damage was not loss by reason of "wear, tear and gradual deterioration; breakage and/or rust"; and (4) that the article insured was "in sound condition at the time of attachment of this insurance."
The appellant, Travelers, contends that the attachment of the "boom collapse" rider meant that the owner was protected in case of damage to, or caused to other insured property, by the collapse of a boom, no matter how brought about. In other words, it contends that such collapse need not result from "external cause", and it would still be covered though not designed for the lift of 90 tons, was not in sound condition at time the policy attached, or was caused by any of the excluded causes enumerated in exclusion Number 7 quoted above.
Trinity replies that although the boom indorsement extended coverage to both external and internal causes; all exclusions and...
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