Waterman Steamship Corporation v. Snow

• Decision Date: 27 September 1963
• Docket Number: Civ. No. 62-153.
• Parties: WATERMAN STEAMSHIP CORPORATION, Libelant, v. Marjorie M. SNOW and Fern Wilson, Executrices of the Last Will and Testament of Claude M. Snow, Deceased, D/B/A Snow Insecticide Company, Respondents. Marjorie M. SNOW and Fern Wilson, Executrices of the Last Will and Testament of Claude M. Snow, Deceased, D/B/A Snow Insecticide Company, Petitioners, v. GENERAL ACCIDENT FIRE AND LIFE ASSURANCE CORPORATION, Ltd., a corporation, Impleaded Respondent.
• Court: U.S. District Court — District of Oregon

222 F. Supp. 892

WATERMAN STEAMSHIP CORPORATION, Libelant, v. Marjorie M. SNOW and Fern Wilson, Executrices of the Last Will and Testament of Claude M. Snow, Deceased, D/B/A Snow Insecticide Company, Respondents.

Marjorie M. SNOW and Fern Wilson, Executrices of the Last Will and Testament of Claude M. Snow, Deceased, D/B/A Snow Insecticide Company, Petitioners, v. GENERAL ACCIDENT FIRE AND LIFE ASSURANCE CORPORATION, Ltd., a corporation, Impleaded Respondent.

Civ. No. 62-153.

United States District Court D. Oregon.

September 27, 1963.

Garry P. McMurry, of Krause, Lindsay & Nahstoll, Portland, Or., for libelant.

William F. White, of White, Sutherland & White, Portland, Or., for respondents and petitioners.

Kenneth E. Roberts, of Mautz, Souther, Spaulding, Kinsey & Williamson, Portland, Or., for impleaded respondent.

KILKENNY, District Judge.

This is an action over by petitioners against impleaded respondent on an insurance policy under which petitioners claim that impleaded respondent is liable for payment of the Judgment entered against respondent in the original libel.

In the original proceeding the Court found that Claude M. Snow, then living, was on the 24th day of September, 1960, engaged in the business of fumigating, spraying and applying insecticides and fumigants aboard vessels under the assumed business name of Snow Insecticide Company. On said day the libelant and Snow entered into a contract under which Snow agreed to spray, with an insecticide, number three hold and the number four deep tanks in a certain vessel, preparatory to loading bulk grain in those holds, under which contract Snow owed Waterman an implied in fact obligation to perform his work in a safe and workmanlike manner, and under which he impliedly warranted that his work would be done in accordance with this standard. On said day, Snow sprayed said hold and deep tanks. On the conclusion of the work Snow's employees left the vessel. In spraying the number three hold, Snow applied an insecticide of pure lindane mixed with kerosene, a formula capable of having a toxic and hazardous effect on human health. On that evening certain longshoremen went aboard the vessel to load grain and noticed an unusually strong, bitter and obnoxious odor emanating from hold number three and later one Theodore Meier, a longshoreman, between 1:30 A.M. and 2:00 A.M. on September 26th, with his partner, entered hold number three to line up a grain pan so that the wheat could be loaded into various corners of said hold. While performing this work Meier was exposed to and inhaled such noxious fumes and became nauseated and dizzy from contact with the same, as a consequence of which he became very ill. I there found the above facts and the further fact that Meier's illness was proximately caused by the noxious fumes in said hold, which in turn was caused by Snow's spraying operation. My finding was that the dangerous condition was caused by an overapplication or by an overconcentration of the particular spray prepared and used by Snow. I further found that Snow breached his warranty of workmanlike service and was negligent in the following particulars: (a) In using an excessive and unreasonable concentration of spray; (b) in using the spray in an excessive and unreasonable amount; and (c) in failing to warn longshoremen and Meier, in particular, of the dangers incident to entering said hold, in that, as he knew or should have known of such dangers. I further found that the vessel was unseaworthy as the result of said concentration of the noxious and dangerous fumes in such hold in which Meier was working. Additionally, I found that Snow had breached his obligation of workmanlike service and was negligent in expressly authorizing the use of the number three hold, in which the toxic spray had been applied, when he knew, or by the exercise of reasonable diligence should have known of the unsafe condition thereof following the excessive and unreasonable application of said spray.

Before entering the hold Meier had been in good health and had a normal voice. As a result of being exposed to said odors and fumes Meier sustained injury and damage to his throat and larynx which I found was of a permanent nature. Such injuries were proximately caused by Snow's breaches of workmanlike service and his negligent acts. Furthermore, I found that Waterman was not guilty of any contact which was the proximate cause of any of the injuries and that the unseaworthiness of the vessel was caused by the improper conduct of Snow. Subsequent to his injury Meier commenced an action in a court of general jurisdiction in the State of Oregon in which action Waterman tendered the defense to Snow. Snow refused to defend the action. After securing the benefit of medical reports and after depositions had been taken, Waterman effected a settlement of that cause for the sum of $7,500.00. Prior to the settlement Waterman notified Snow of its negotiations and the settlement proposal, but Snow refused to consent or contribute to the settlement. In April, 1962, Waterman paid the sum of $7,500.00 to Meier in full compromise and settlement of that claim. It was my finding that Waterman was faced with a serious personal injury action in said Court, that the settlement of the action was fully justified and that the settlement in the sum of $7,500.00 paid to Meier by Waterman was a reasonable settlement under all of the facts and circumstances of the case. Further, that in defending such action and in negotiating and concluding the settlement that Waterman 06.80, which was a reasonable sum and was necessarily incurred. Based on said findings, I concluded that Waterman was entitled to a decree against Snow for the sum of $10,206.87 with interest at the rate of 6% per annum from April 4, 1962, and on May 2, 1963, signed a decree awarding Waterman a judgment against Snow for said sum and interest, together with costs in the sum of $124.44. In such decree, I retained jurisdiction for the purpose of deciding the issues here presented between Snow, the petitioner, and the impleaded respondent.

The insurance policy issued by General to Snow is designated in capital letters, COMBINED COMPREHENSIVE LIABILITY POLICY, and specifically covers automobile and other liability for personal injury. GENERAL fully understood the nature of Snow's business and that type of business is expressly indicated in the policy. The parties are in agreement that the policy would cover the bodily injury damage to Meier, unless that coverage is excluded by the Products Hazard endorsement¹ to the policy. The phrase "Products Hazard" is defined in the policy as follows:

"Products Hazard. The term "products hazard" means

(1) goods or products manufactured, sold, handled or distributed by the named insured or by other trading under his name, if the accident occurs after possession of such goods or products has been relinquished to others by the named insured or by others trading under his name and if such accident occurs away from premises owned, rented or controlled by the named insured or on premises for which the classification stated in division (a) of the declarations excludes any part of the foregoing; provided, such goods or products shall be deemed to include any container thereof, other than a vehicle, but shall not include any vending machine or any property, other than such container, rented to or located for use of others but not sold;

(2) operations, if the accident occurs after such operations have been completed or abandoned and occurs away from premises owned, rented or controlled by the named insured; provided, operations shall not be deemed incomplete because improperly or defectively performed or because further operations may be required pursuant to an agreement; provided further, the following shall not be deemed to be "operations" within the meaning of this paragraph: (a) pickup or delivery, except from or onto a railroad car, (b) the maintenance of vehicles owned or used by or in behalf of the insured, (c) the existence of tools, uninstalled equipment and abandoned or unused materials and (d) operations for which the classification stated in division (a) of the declarations specifically includes completed operations."

Waterman's longshoremen, including Meier, came aboard the vessel between 6:30 and 7:00 P.M. and at that time found the odors in hold number three so strong and obnoxious that they would not work in the hold without a certificate being furnished by Snow that the hold was safe. Snow furnished that certificate about 11:00 P.M. on that evening. The spraying had been completed approximately fourteen hours before Meier and his partner descended into the hold and that the vessel's blowers had been turned on in the hold for the purpose of clearing the air some four hours before the entry of said men. Consequently, we have a case where the assured had actually completed his operation many hours before the particular accident, but the over-application or over-concentration of the spray caused the noxious fumes to permeate the air so that Meier was injured many hours after completion of the spraying operation.

At the time of the arguments the petitioners abandoned any claim to a reformation of the insurance policy and at the same time expressly abandoned any claim of estoppel or waiver. The principal trust of the petitioners' claim is that the insurance policy and the exclusion, when read as a whole, is ambiguous, should be construed against the insurance company, and, when so construed, creates liability on the insurance company for the judgment in question.

Without doubt, the language of the policy must be liberally construed in favor of the assured. Kaifer v. Georgia Casualty Co., 67 F.2d 309 (9 Cir. 1933); Yoshida v. Security Insurance Co. of New Haven, Conn., 145 Or. 325, 26 P.2d 1082; Roberts v. Union Insurance Society of Canton, 215 Or. 183, 332 P.2d 600. Where there is an ambiguity in the...