Wilson Warehouse Co. of Texas, Inc. v. Maryland Cas. Co.

• Citation: 269 So.2d 562
• Decision Date: 13 November 1972
• Docket Number: No. 9024,9024
• Parties: WILSON WAREHOUSE COMPANY OF TEXAS, INC. v. MARYLAND CASUALTY COMPANY et al.
• Court: Court of Appeal of Louisiana (US)

Page 562

269 So.2d 562

WILSON WAREHOUSE COMPANY OF TEXAS, INC. v. MARYLAND CASUALTY COMPANY et al.

No. 9024.

Court of Appeal of Louisiana, First Circuit.

Nov. 13, 1972.

John S. White, Jr., Kennon, White & Odom, Baton Rouge, for Maryland cas. co.

David W. Robinson, Watson, Blanche, Wilson, & Posner, Baton Rouge, for Wilson Warehouse Co. of Texas, Inc.

Chapman L. Sanford, Kizer, Cangelosi, Sanford & Mosely, Baton Rouge, for Ward & Cangelosi.

Before LOTTINGER, ELLIS and PETERS, JJ.

ELLIS, Judge:

Plaintiff, Wilson Warehouse Company of Texas, Inc., brings this suit against defendant Maryland Casualty Company and others for amounts allegedly due it under a certain policy of insurance issued by Maryland to Wilson. After trial on the merits, judgment was rendered in favor of plaintiff and defendant Maryland has appealed. Plaintiff has also appealed, asking for penalties and attorney's fees in addition to the amount awarded below.

The trial court rendered written reasons for judgment which fully dispose of the issues here presented, and which we adopt as our own:

'This is an action by Wilson Warehouse Company of Texas, Inc., hereinafter referred to as Wilson, to recover from its insurer, Maryland Casualty Company, hereinafter referred to as Maryland, or from its insurance agent, Ward & Cangelosi, Inc., hereinafter referred to as Ward, or from its previous insurer, The American Insurance Company, hereinafter referred to as American, the sum of $80,170.39 together with statutory penalties and attorneys fees paid by Wilson as result of the wrongful death of its employee, Wilbur Gressett.

'Wilson and E. I. duPont de Nemours & Co., hereinafter referred to as du Pont, entered into a written agreement on June 1, 1964, concerning premises owned by Wilson in Beaumont, Texas. (Plaintiff's Exhibit 1). On June 25, 1964, Wilson and du Pont entered into a supplemental agreement relative to the commencement of the prior agreement. (Plaintiff's Exhibit 2). When the above agreements were executed Wilson's liability insurer was American. The American policy was issued through American's agent, Ward. On December 1, 1964, American notified Ward that their agency contract was being cancelled and requested immediate cancellation of all its policies. As of December 1, 1964, and at all pertinent times thereafter, Ward was the agent of Maryland. Maryland through Ward issued a liability policy effective January 1, 1965, for a term of one year to Wilson, to replace the American policy.

'Wilbur C. Gressett, Wilson's employee, died on March 19, 1965, from inhalation of tetrachloride fumes emanating from du Pont's produce 'Hypalon' stored on the subject premises pursuant to the June 1st agreement. Gressett's widow, individually, and as guardian of their three minor children, filed suit August 20, 1965, in the United States District Court for the Eastern District of Texas, Beaumont Division, to recover damages for the wrongful death of her husband. DuPont answered and filed third party proceedings against Wilson under the hold harmless clause of the June 1st agreement. The insurance policy issued through Ward by Maryland to Wilson was in full force and effect at this time. Wilson called on Maryland to defend the third party proceedings. Maryland refused contending that its policy did not afford coverage for this exposure. Thereafter, a tentative settlement was reached whose terms and the issue of Wilson's liability to du Pont were submitted to the Texas court. The court rendered judgment against du Pont and in favor of Mrs. Gressett and her children, approving the settlement of $50,000.00 and awarding Maryland (as Wilson's workmen's compensation carrier) $11,928.20 on its intervention and against Wilson and in favor of du Pont holding Wilson liable to du Pont under the June 1st agreement and awarding du Pont judgment over Wilson.

'Wilson brings this action primarily against Maryland to recover under its insurance contract and alternatively, against Ward contending that if Maryland's policy does not afford Wilson coverage then Ward breached its duty to Wilson in failing to obtain such coverage, and alternatively, against American on the basis that American mishandled Wilson's business during the transfer of insurance coverage from American to Maryland.

'The basic issue before the court is whether Maryland's insurance policy provides liability coverage to Wilson for the wrongful death of its employee. Maryland asserts two theories of non-coverage under its policy, as follows: (1) that the hold harmless clause of the June 1st agreement is a separate obligation from the remainder of the agreement and is not, in itself, a lease; therefore, there is no coverage under the policy because of the exclusion of the policy at page 2, Section IV(a); and (2) that if the liability asserted against Wilson by du Pont depends upon a construction of the entire agreement, then it is a warehouse agreement, not a lease, and there is no coverage because of the policy exclusions.

This court finds Maryland's first contention without merit. The hold harmless clause is but one part of the entire agreement. The provisions of an agreement may be severable but the need for severability arises only where a portion of a contract is unenforceable or illegal. Courts sever the illegal and unenforceable provisions from the remainder of the contract rather than declare the entire contract void in order to avoid inequities. This situation does not exist here. The hold harmless clause was held valid and enforceable by judgment of the Texas court. Therefore, this court concludes that Maryland's liability under its insurance policy depends upon the classification of the entire Wilson du Pont agreement.

'The parties hereto have stipulated that the Court should apply the law of Texas in interpreting the agreement between Wilson and du Pont.

][2-5] The basic rule to be ovserved in the construction of contracts is to ascertain and give effect, whenever possible, to the real intention of the parties, as that intention is revealed by the language used in the agreement. (13 Tex.Jur.2d Sec. 122). In ascertaining such intention it is a cardinal rule of construction that the instrument as a whole must be considered. (Whittington v. Cameron Compress Co., 268 S.W. 216 (Tex.App., 1925--on rehearing); 13 Tex.Jur.2d Sec. 113). Where a contract as a whole discloses the intention of the parties, and certain words or clauses, if taken literally, would defeat such intention, it is the duty of the courts to construe them, if possible, in such manner as to be consistent with and to effectuate the general intent of the parties. (13 Tex.Jur.2d Secs. 122, 123). Where possible a construction should be placed on the agreement that will give effect to all its provisions, so as to avoid the adoption of a construction that would render any provisions meaningless. (13 Tex.Jur.2d Sec. 113).

A lease is defined as a contract by which one party, lessor, transfers to another, lessee, the right to possession, use and enjoyment of land, buildings, etc. for a definite period of time. (Webster's New World Dictionary, College Edition). The Texas Supreme Court defines a lease a grant of an estate in land for a limited term, with conditions attached. (Holcombe v. (Lorino) Sorino, 124 Tex. 446, 79 S.W.2d 307, 310 (1935). Texas courts have used two interconnected tests to determine whether a landlord-tenant relationship is created by a specific contract. First, determine the intent of the parties as revealed by their written contract. (35 Tex .Jur.2d, Landlord and Tenant, Sec. 21). Second, determine which party has the right of possession of the premises. (35 Tex.Jur.2d, Landlord and Tenant, Sec. 21).

'A. Intent of the parties.

The cardinal principle in the construction of contracts is to give effect to the intent of the parties as expressed in their written contract. For example in Johnson v. Murray Co., 90 S.W.2d 920 (Tex.Civ.App.--Austin, 1936, writ dism'd), plaintiff in a suit for personal injuries contended that a landlord-tenant relationship was not created between the owner of a gin and its operator, the plaintiff's employer. In disposing of the contention, the court looked no further than the written agreement between the parties, stating as follows:

"The contract expressly stated that it was a lease and used the term 'lessors' and 'lessees' to define the relationship of the parties. The language used in the contract is plain and unambiguous. The rental provided was for a definite sum, payable in a definite manner and at a definite time; the amount being measured by the number of bails of cotton ginned during the leased term.' * * *

'The language of the contract is plain and unambiguous, and is a lease creating the relation of landlord and tenant between the parties. The relation of landlord and tenant is established where the owner of the land or tenement for compensation, 'consents to the occupancy thereof by another and the latter holds in recognition or insubordination to the title of the former'.' (at page 923).'

'The case of Durrett & Co. v. Iley, 434 S.W.2d 367 (Tex.Civ.App., Dallas, 1968, writ refused) illustrates the controlling effect of particular words used by parties to describe their relationship. In Durrett the parties entered into an agreement which was entitled 'Sand Pit and Gravel Lease Agreement.' The agreement generally described the land involved and stated...