Welders Supply, Inc. v. AMERICAN EMPLOYERS'INSURANCE CO.

• Decision Date: 31 March 1966
• Docket Number: No. 15512.,15512.
• Citation: 358 F.2d 593
• Parties: WELDERS SUPPLY, INC., Plaintiff-Appellee, v. AMERICAN EMPLOYERS' INSURANCE COMPANY, Defendant-Appellant.
• Court: U.S. Court of Appeals — Sixth Circuit

358 F.2d 593 (1966)

WELDERS SUPPLY, INC., Plaintiff-Appellee, v. AMERICAN EMPLOYERS' INSURANCE COMPANY, Defendant-Appellant.

No. 15512.

United States Court of Appeals Sixth Circuit.

March 31, 1966.

Edward D. Crocker, Thomas V. Koykka, Arter, Hadden, Wykoff & Van Duzer, Cleveland, Ohio, for appellant.

Stuard Wegener, Covington, Ky., for appellee.

Before EDWARDS, Circuit Judge, CECIL, Senior Circuit Judge, and McCREE, District Judge.

EDWARDS, Circuit Judge.

The fundamental issues bearing on liability in this case were dealt with extensively in Welders Supply, Inc. v. American Employers' Insurance Company, 342 F.2d 972 (C.A. 6, 1965).

Subsequently a motion for rehearing was filed which indicated a factual error in the court's opinion in dealing with the evidence bearing on damages. Rehearing was granted limited to the issue of damages, and reargument has now been had.

The gross facts against which the damage issue must be considered are these:

An acetylene gas manufacturing plant owned and operated by plaintiff, Welders Supply, Inc., was completely destroyed by explosion and fire on December 14, 1960.

Exhibit 18 shows the plant before December 14, 1960.

PLAINTIFF'S EXHIBIT 18

Exhibit 17 shows the plant on the afternoon of December 14, 1960.

PLAINTIFF'S EXHIBIT 17

There were proofs at trial from which the jury could have found total loss from all causes (excluding depreciation and salvage) to be $111,978.23.

There were ten insurance policies on the risk.

Nine of these insurance policies were for fire and extended coverage on the building and its contents — totaling between them $81,000.

Prior to trial of this case the insurance companies which issued the policies just referred to settled plaintiff's claims against them by paying $56,988.43. The settlement agreement was between all of the insurance companies and plaintiff, Welders Supply, and payment was not allocated to any item or class of damage.

Defendant was the tenth insurance company. It insured plaintiff's property from damage resulting directly from any contained explosion in a number of named pieces of machinery, but not against subsequent (or concomitant) non-contained explosions and fires. Its maximum liability was fixed at $100,000.

At trial plaintiff presented evidence from which the jury could have found total damage due to explosion alone of $83,194.10.

The trial judge carefully charged the jury that under defendant's policy it could find the defendant liable only for damage resulting from the specific risk defendant undertook to insure.

"Under the terms of the insurance policy, this Defendant agreed, subject to the declarations, to the limit per accident of $100,000.00 specified in the policy, and further subject to the exclusions and conditions, to other terms of the policy, and to the schedules and endorsements issued to form a part thereof, to pay Plaintiff for loss on Plaintiff\'s property directly damaged by an `accident,\' as that term is defined in the policy.

"Now, we are about to give you the definition of `accident\' as the policy defines it. The policy defines an accident to mean a sudden and accidental tearing asunder of an insured object, or any part thereof, caused by pressure of contents therein, but cracking shall not constitute a sudden and accidental tearing asunder. The policy further provides that `accident\' shall not mean the tearing asunder of any safety disk, rupture diaphragm or fusible plug, nor leakage at any valve, fitting, joint or connection.

* * * * * *

"The policy does not apply to loss on the property of the Plaintiff:

"From fire concomitant with or following an accident or from the use of water or other means to extinguish fire; or — this is No. 2:

"From an accident caused directly or indirectly by fire or from the use of water or other means to extinguish fire; or — this is No. 3:

"From a combustion explosion outside the insured objects concomitant with or following an accident; * * *

* * * * * *

"On the other hand, if the Plaintiff proves by the necessary degree of proof, which I shall describe to you in a moment, that a loss has occurred on its property as a direct result of an explosion inside one or more of the insured objects, then the Plaintiff would be entitled to recover in this action for such loss in accordance with the instructions we are about to give you. Further, if you find from the evidence and the instructions we give you, that some property of the Plaintiff has been directly damaged by an explosion occurring inside one or more of the five insured objects, while other property of the Plaintiff has been damaged as a result of fire occurring at the same time or following the explosion or from the use of water or other means to extinguish fire, or from an accident caused directly or indirectly by fire, or from the use of water or other means to extinguish fire, or that the property of the Plaintiff has been damaged as the result of a combustion explosion outside any of the insured objects, occurring at the same time or following an explosion inside the insured objects, or from any other indirect result of an accident; then, and in such event, the Plaintiff would be entitled to be compensated only for that part of the loss due to the damage to its property occurring directly as the result of the explosion inside one or more of the insured objects, and the Plaintiff would not be entitled to be paid for any of the other losses which we have mentioned."

The trial judge also referred to a computation which took into account depreciation, salvage, and the damage payment by the other insurance companies and stated plaintiff's maximum claim as $59,112.84. No exception was taken to this charge.

The jury found for plaintiff in the sum of $40,953.70.

At reargument, as we understood appellant's contentions, they were:

1) That the jury damage award cannot stand unless the record contains item by item proofs defining specifically just how much damage was done by the initial explosion as opposed to subsequent explosions and fire.

2) That the jury could not under the testimony take into account any damage to the inventory machinery.

3) That the record compelled the jury to accept defendant's evidence and conclusions as to how the $56,988.43 paid by the other insurance companies should be allocated.

As to the allocation problem, we believe that when the trial judge limited jury consideration to a maximum recovery by plaintiff of $59,112.84, he thereby specifically excluded the possibility that the jury might award plaintiff damages which had already been paid for by the other insurance policies. Defendant did not then object to this instruction. Having enjoyed the benefit of the instruction at trial, he is not now, in our opinion, entitled to argue the allocation question on appeal — particularly in view of the fact already noted, that the settlement agreement itself did not undertake to allocate the sum paid to any particular class of damages.

As to the first and second arguments, as a matter of law plaintiff is entitled to have us view the conflicting evidence from the point of view favorable to the plaintiff, which the jury obviously took. It is also entitled to such fair inferences from such favorable view of the evidence as the jury might reasonably have drawn. Miller v. Chattanooga Auto Parts, 350 F.2d 851 (C.A. 6, 1965); Stevens v. Continental Can Co., 308 F.2d 100 (C.A. 6, 1962), cert. denied, 374 U.S. 810, 83 S.Ct. 1702, 10 L.Ed.2d 1034 (1963); American Steel & Wire Co. v. Sieraski, 119 F.2d 709 (C.A. 6, 1941).

The basic conflict in evidence pertains to the violence of the first explosion. We have previously held that the jury could properly have viewed the first explosion as being covered by defendant's insurance policy, along with all damage directly resulting therefrom to any of defendant's property.

As we noted previously, the problem we deal with is one of overkill. Clearly the destruction for which plaintiff seeks recovery occurred to a degree which not only destroyed the economic value of the building, its machinery and contents, and the inventory machinery, but ultimately left all of these in a heap of fire-charred rubble. It is the separation of the damage which may properly be attributed to the first contained explosion from that occasioned by the second and many subsequent explosions and the fire that occasions our difficulty with the damage question.

Appellant would have us believe that the first explosion was a relatively minor one. There is indeed evidence from which the jury could have found that the first explosion was less violent than the second. On the other hand, that evidence is by no means undisputed, and when the jury has found for the plaintiff under the instruction of the court on this issue, it is clear that we are required on appeal to take the disputed facts as the jury must have seen them.

The facts favorable to the plaintiff in relation to the damage wrought by the first explosion may be summarized in these eye witness accounts of that first explosion:

THE FIRST EXPLOSION

a) From inside the building. There were two men inside the plant when the first explosion occurred. Meffen, who was seriously injured by the blast, testified:

"Q Now, at the instant that the explosion occurred, tell the jury from that second, or right previous to that second and shortly thereafter, what is your best recollection as to what occurred, insofar as you remember?

"A As far as I remember, I felt as though I was immediately thrown into the air. I was then totally without sight because, after that, I seen nothing. It seemed as though I landed on the floor, and that\'s where I was getting up from, and I made an attempt to get out of there. * * *"

Honecy, who was standing near the southeast corner of the building, testified:

"Q Now, while you were standing in that position, right at the moment of the occurrence, will you tell the jury what you heard, what you

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