*1 4A3 INS. v. NORTHWEST- PAC. CO. UNITED al. INS. CO. et ERN NAT.
No. 4085. Appeals Court of Circuit.
Tenth 13, 1950.
Nov.
Rehearing Dec. Denied Snow, H. Edgar C. Salt John Jensen Burns, City, (Robert
Lake A. Utah Salt Utah, brief), City, appel- Lake lant. City, Lake McCarthy, Salt
Dennis Hayes Ralph, (Leonard Zar E. and E. L. S. Schoenhals, City, Utah, Lake Salt brief), appellees. PHILLIPS, Judge, and Before Chief PICKETT, Judges. HUXMAN Circuit HUXMAN, Judge. Circuit declaratory judgment was a action This the United States District instituted District of Utah for the the United Court Company, appellant, Pacific herein called the insurance insured, others, Ogden, against Don and determine the liabilities to construe owner’s, an rights under land- lord’s, liability and tenant’s bodily injury liability damage arising property ownership, maintenance and use of at 118 situated North Richfield, Main Street in Utah. *2 ááá property, controversy operations and all dur- August occurring was issued policy period ing policy necessary is- the
It was a renewal of an identical which are * * parts pertinent August sued 1947. The incidental thereto policy of the are as follows: Appellant’s prayer for a declaration of Damage Property non-liability Liabil- predicated “Coverage on its asser- B.— policy all tions ity. pay only behalf of To on hazards operations obli- and arising sums the insured shall become liabilities out of the by gated pay im- of retail clothing wearing apparel reason and of business, posed upon by damages arising Sport Shop, him law for known as and Don’s property, injury Og- of of arising out to-or destruction not cover liabilities of out operations place of den’s including the loss use caused in the of a busi- same arising of de- ness the hazards carried on in name of and Sevier Val- ley Liquid Appliance Company. fined and covered the schedule Gas and of special provisions.” resulting and declarations fire loss arose out of the operation part follows: of the declarations read in latter business. “1. Don Og- The named insured is M. Ogden’s affirmative defense and cross Sport Shop. den d.b.a. Don’s demand were that covered both bodies ments is issued in relating to this insurance.” Retail. representations and reads: self statements of and method of erty.” property, North And the address of the “Stores— “0. With “Division b— “2. “6. Detail of insured (Here [*] Main, the named insured Post Office address Declarations— regard follows agreements existing exposures, in the [*] representations, Clothing reliance Richfield,Utah. to the Premises, Operations, declarations are his [*] premium purposes of use there- declarations By acceptance premises.) Wearing premises, [*] the truth of such paper. This this computation: agrees that this of between him- of its agents heaters, refrigerators, [*] Apparel— elevators, of this agree- Prop- [*] area em- tember, 1946, tion the name types, including sport clothing, and in addi- pany prior any ises and knew the facts also Street. entire officers issued operations; Company business; In the operation of a propane pleaded estoppel appliance handled visited and to the occurrence of the trial following pertinent summer He handled thereby court the intent of gas. agents business was carried Don’s paints, varnishes, business conducted thereon. inspected and are not This to this store at the insurance began of the and that the Sport in that he sporting butane operations business was carried premises. appeal. covering Ogden’s the insured handling facts were found Shop. insurance com- gas appliances challenged goods North Main alleged commenced fire, and wall In the Gas stoves, Ogden of all under prem- three Sep- gas Valley name under the Sevier special provisions part read: Liquid Appliance Company. Gas and Both “The hazards shown to be covered in the appeared on the names windows below, declarations this defined business, building. Under the latter subject agreements, to the conditions and engaged pro- filling of butane and policy: declarations containers, pane gas selling as well Definition of “1. Hazards: beginning oper- Division containers. At the of Premises, Operations ownership, ation, containers were from a filled 1— —The use, purposes maintenance or equipped owned stated truck declarations, purpose. in the of insured storage Later a large tank Emphasis supplied.
áá5 business, it did desire to write this city and edge of erected surance and -him to another com- On referred tank. from this filled were containers might pany where it be obtained. com- customers some occasion *3 pany’s reply made to letter was at Carr’s gas containers empty small leave Ogden. known to filled. having of them purpose for store storage tank to would be taken These July, Ogden In or Carr and June filled, some When they filled. were where discussed a owner’s landlord’s and to the customers delivered be of them would liability coverage Ogden’s all tenant’s for to be returned truck, by and others operations Main As a at North Street. by for the customers. to called store original policies result the and renewal were kept at the propane ,gas was No butane Ogden he issued. that told Carr testified con- gas filling the purpose of for the store he wanted a which would cover tainers. Street, operations at 118 North Main A fire resulted and that 'Carr container defective a leak a proposed which he would cover all such storage plant and filled had been at operations, and it was then delivery premises for brought to the insured policy. Carr authorized to obtain the Carr in extensive This resulted to the customer. testified it was his and also as as well building, damage to the insured operations Ogden’s to cover all at intention buildings. adjoining 'business, to place including handling gas filled containers. material, herein During all times Carr, agent for the soliciting Ogden Ray was is conceded that furnished the E. information, in- company, Sport well as for other Ogden “Don d.b.a. Don’s insurance such, companies. As he solicited Shop,” Clothing Wearing surance “Stores — company. He Apparel Retail,” on behalf the dec- into insurance — by accepted authority classify risks and that to laration Carr selected the classifi- had countersign policies cation, of insurance appellant, “Retail policies, deliver by issued held that The trial court insurance in- premiums, and in some instances collect challenge could not classifica compensation vestigate He received losses. by risk inserted in the tion of the a commission basis. on Carr made the classification with Carr since material full facts original Prior to the issuance misrepresentation any conceal without had Ogden some discus- policy, Carr and part Ogden. The court Ogden’s ment on the trial liability policy on sions about Company concluded that the Insurance operations. As a result on butane pay his behalf all sums obligated to com- May Carr wrote the insurance by obligated pay he had become to get pany, as “Please me informa- follows: liability imposed upon him reason of writing partner- a CLP for a tion relative to adjoining propane any damages buildings, to ship handling gas and law butane Ogden brought They large 6,000 defend actions appliances. gal.— and to have — thereof. storage fill small for indi- reason tank and tanks appliances.” viduals sell appellant liable found that The court attorney’s view for ser- replied by Ogden letter fees $500.00 to experiences by Ogden’s attorney previous with such rendered in an disastrous vices Ogden issues, friendly to wanted to 2. While not he was decisive worthy prior Mm recover. note that the contro- see versy between and the Insurance respect finding with 3. The trial court’s Company, given In- of Northwestern National the claims stating that was not written statement Company and Yernon Erick- J. surance gas intention cover business fire is reason of loss in- son and that ho was convinced that appeal and reference there- volved not cover understood that did omitted. therefore to is operations. He also testified that such M6 iby
action (brought partner. him Monarch written into Company application Fire Richfield declaration verbatim as Bank, an Savings furnished Commercial and them and carried was thus attorney’s additional fee of for ser- forward into All that Carr $500.00 attorney vices by Ogden’s rendered in the was add 135.” the classification “NOC declaratory 135” judgment action. “NOC a classification in the used designate oth- surance manual stores This is not a case which the insurance erwise classified therein. . company seeks to avoid manual consid- contains the ground that the *4 spe- erable number distinct not of businesses premises purposes or for which the cifically by separate designated classifica- used were were misstated sured tion number. Some of classifications these fully or not in the declaration. set out appearing in the manual are: liability company’sposition that it has no fire because the caused the Laundries, N.O.C. 135 “Stores-— arising was not one out of the de- hazards Auction, N.O.C. “Stores— fined in and of covered schedule Delicatessen, N.O.C. 135.” “Stores— It can provisions, special declarations and seen thus be that the extent of liability therefore fire for the coverage be cannot determined from the liability damage Coverage was within not a classification number NOC alone. B. significance is also of some manual that the is, question then propane what is the contains classification of coverage The butane insurance contract? dealer as follows: rule of law that in absence of fraud or petroleum liquified (retail deal- “Gases— mistake, mutual unless the written terms 10,000 er) 180s.” lbs. parol ambiguous, contract testi propane “This classification includes mony prior of what occurred to or contem butanes or mixture thereof.” poraneous with the execution the con vary tract will be not received the terms It would seem that if it had been instrument, applies of the written with the op intended to cover retail butane same force to insurance contracts as to con erations, this classification been would have generally.4 tracts selected. entirety, pro Construed its visions of the contract dealing cover with There is no contention here that there age only can mean that the was fraud in the execution of the contract damages resulting oper liable for from the uncertainty ambiguity and we find no sports ation shop store, of a retail selling provisions policy. the terms or of the wearing apparel, clothing or and such other legal must, therefore, effect thereof de- be usually merchandise as handled therein. termined from a consideration itself. Furthermore, Ogden will not be heard to “Don say business covered was M. Ogden agreement that the between him and Sport d.b.a. Don’s Shop Clothing Carr coverage was for a broader than was —Stores— By Wearing Apparel Ogden, into the contract. his over —Retail imagination no stretch signature, agreed of the can own that the statements construed selling to include business at representations. the declarations were his propane gasoline. retail or butane The The issued in reliance thereon. description the business expressly as written into It embodied all agreements the insurance contract was furnished between the in the written contract. Co., Northern Assur. Co. v. Grand View Shawnee Fire Ins. 16 Okl. P. Bldg. Ass’n, L.R.A.,N.S., U.S. S.Ct. Guaranty Fidelity 46 L.Ed. Lumber Underwriters & Co. v. Town of Rife, Comanche, 237 U.S. 35 S.Ct. 59 L. 114 Okl. 246 P. Ed. Home Insurance Co. v. Bal York Ostroff v. New Life timore Warehouse 93 U.S. F.2d 986. 868; Leming L.Ed. Investment Co. v. occupation, was not it an extra-hazardous By provisions the written preferred risk limited the insurance res- company sought to avoid coverage set hazards defined ponding liability on to its the basis provisions. special the declaration coverage policy on the it wrote into the escape ef can Neither insured, application ground the in his for having read provisions not fects these policy, misrepresentations amount- made him and delivered to when was But, ing to held that warranties. the court con failing to thus discover correctly the insured had stated the nature he now the broad tain who, agent, to the with full 'business duty read the contends. knowledge of the selected nature and he is to him it was delivered when classification, there- provisions, charged its fore, liability, escape because the could notwithstanding his to do so. failure agent, authority who had the clas- select strong placed busi- reliance sification from the The trial court insurance, given by applicant Co. Snow ness Mutual Pacific *5 Acci den, Cir., New York had selected the hazardous classifica- 8 58 F. and less Cir., above, Clayton, pointed 8 59 no such tion. As here v. dent here, present. already But, distinguishable facts are But as these cases F. 559. stated, case, in the furnished the facts. In the Snowden on the correctly in- cattle his which engaged in the business. business was sured was coverage 90-day for to the and applied for a determined the ITe full, complete $10,000. and cor thereof. made He a operations com to the disclosure his rect Ogden seeks to extend such cover he oc including the fact that pany’s agent, beyond provisions age the clear terms and accompanied casionally cattle to market. ground of the on the of waiver complete and full He he wanted stated estoppel. He these on makes contentions placed coverage. the ground the that and Carr stated agent, classifying a manual
hands of its oper to him the covered all its that agent make authorizing and risks However, ations. it is well established risk, of the the classification coverage may be ex that not authorities In the premium was then determined. 6 by estoppel. tended waiver or broker, not tender manual a cattle dealer is drover, Neither further conten farm ranch classified shipper estopped and tion is preferred A cattle that a risk. as deny lialbility by representations classified extra-haz Carr’s in transit was tender higher premium. covered all a delivered his ardous and carried place helpful operations his information at of business upon true and correct Based gave no applicant, him. statement constitutes agent Such given him the classification, interpretation of the cov preferred risk more than Carr’s a Snowden company. erage. general agent. was insured Carr not and as he such gener necessary to is not decide whether while in transit with a load of He was hurt rep agent company by al bind his could and denied to market cattle legal resentations as effect ground should have say inter is sufficient to clas in the extra-hazardous been classified preting contracts of insurance not within sification, injury since resulted from Fidelity Corp. Sup., Guaranty Co., & Fire v. Bil- Prudential 5. Madsen v. quist, Cir., F.2d C. Han E. Carnes v. John N.Y.S.2d Minsker Employers Liability Co., & Co. Assur. Life 254 N.Y. Mutual cock Taylor Cir., 101 F.2d cases cited 173 N.E. A.L.R. Liability F.2d therein. American Aetna Ins. Co. Rinker v. Hartford, A. 82. Pa. special agent company scope authority is not bound to defend action pol- such within falling as Carr. icy. upon predicated Error is also the court’s attorney’s judgment fees allowance accordingly reversed company. Prior to institution of this in toto cause remanded to enter action, Company judgment Monarch Insurance appellant in favor of Savings Richfield Commercial brought against Ogden Bank an action PICKETT, Judge (dissenting). Circuit Appellant question. based fire plaintiff’s trial court found ac- declined a tender of the defense of that Carr, solicited business behalf Ogden. tion trial court entered risks, plaintiff, classified insurance judgment legal for services $500.00 countersigned policies, and delivered col- case, by Ogden curred and an addi- premiums, investigated claims, lected legal tional in this services case. $500.00 paid basis; on a commission that in Carr, negotiations between attorney’s right recover fees stated that he desired part action cost of an operations would cover In the exist at common law. absence store; type Carr advised him that the purely an agreement, the right thereto is proposed give which he statutory.8 complete such that at the time coverage; Appellant makes the statement that there negotiations of these had full knowl- authorizing attorneys’ is no Utah Statute edge Og- of all the conducted fees as costs cases as these. This such *6 den bu- at his store the fact that including by is taken refer statement us to to actions there; fully tane was handled that Carr was necessarily on insurance and not contracts procedure by empty aware of the declaratory to a judgment action. This gas cylinders by were left at store cus- the by appellees. challenged statement is not filled; brought tomers and were back when Our search has failed reveal a Utah to Ogden that Carr intended that attorneys’ dealing Statute in in- fees policy opera- should cover the of these risk surance cases. tions; pursuant understanding, that to this right Ogden attorney’s The to purchase policy; agreed to that depends upon fees then of in contract plaintiff’s Carr forwarded to the office provides surance. contract that: “As Utah, City, Salt Lake a memorandum set- respects by such insurance as is afforded ting type forth to be issued the other terms of including upon classification the risk (a) shall: defend in name and behalf based; premium which the rate was any alleging suit the insured such by was selected classification risk injury seeking damages or destruction and company’s Carr manual of rate ¡his if account even such is suit and risk classifications own * * false, groundless, or fraudulent knowledge itiative and with full of the busi- .by such Ogden; ness conducted classi- provisions, rule such under fication was without the of or only is .bound defend suits Ogden; consultation with that Carr re- alleging .brings a cause of action quested Owners’, an to issue policy. case coverage within Refining Burk, Cir., ElDorado Fidelity Co. v. 7. Union Life Ins. Co. 10 v. 198, Guaranty Co., 235; & Kan. 157 169 Anderson v. Aetna Life F.2d 369, 371; Mfg. Ky. 322, 781; 139 P.2d Waste United 303 197 S.W.2d Maryland Casualty Co., Co. Co., Sup., v. 85 Misc. Prudential Madsen 35 539, 852, App. 148 N.Y.S. affirmed 169 N.Y.S.2d 1148; 906, N.Y.S. Div. Pickens v. 38; C.J.S., Costs, § 8. 14 Am.Jur. Maryland Casualty Company, Neb., 2 N. pp. 456, 458. W.2d 593. Fidelity Deerfield 9. American Co. v. Val F.Supp. ley Co., D.C., Grain pany liability obtained the Landlords’ and Tenants’ of hazard “Approx. 25 shown on describing as the risk as Clothing “Stores — 135,”; plaintiff Wearing Apparel x 100 Retail NOC. —Retail accepted policy, risk delivered if Carr’s classification of the construed claimed company, nego- issued the which was counter- not the contract tiated; permit signed Ogden. and delivered to after incurred, supported loss been findings These evi- avoid dence. constitute constructive fraud or inequitable at least conduct. general is a rule when a Where to an insurance is issued the terms set forth instrument intend to accomplish particular object, constitute the contract between the and because parties. Ordinarily parol will misunderstanding evidence mutual mistake or such purpose vary accomplished, equity may be admitted to the terms of the re Rife, 605, form Lumber 237 U. S. the instrument Underwriters v. to effectuate int equity 59 L.Ed. Northern ention. In S.Ct. such cases courts of Building will Assurance Co. v. Grand View not alter the of a in terms Association, 308, 321, required U.S. S.Ct. strument unless to do clear so 133, 46 and convincing L.Ed. Field v. Missouri State evidence. Columbian Na Black, supra; tional Life 290 P. Ins. Co. v. Shell Corp. Corn, supra. 982. Neither is doubt that the Pet. there That strict re coverage quirement any policy cannot extended is met here as the evidence is estoppel. waiver or & v. uncontradicted Carnes what Employers’ Corp., agent Liability intended. fact Assurance Carew, carry higher F.2d Shaw & claimed would Casualty Co., premium prevent Bernasconi v. General would not reformation in Wash. 65 P.2d seems to absence of collusion or Plain fraud. me, book; however, that we have a tiff’s different situ had a rate the rates were exclusively ation than in knowledge; this case those cited above within he knew *7 upon plaintiff. and others relied what the risk and made the selection Here fixed negotiated contract and which the rate he and advised the in purchased not the one delivered to the sured that the covered the business purchaser. dispute is and without had accepted the premiums. desired a Casualty that would his cover entire In Ohio Ins. Co. v. Carr, Callaway, rep Cir., 790, at his store 788, and that 10 134 F.2d resenting writing intended to a policy deliver court said: “Knie was n agent, coverage. for such The and as actual such was authorized to enter contract intended coverage. was for such into insurance behalf contracts and on company’s agent and appellant, insured and his statements and con thought accomplished. this had been duct binding connection therewith are requested upon the company principal. Casualty to his “write Commercial Connellee, OL&T for approx. Company 170, the above 156 Ins. v. Okl. 9 50/100/50 — 1 952; 25 100 x retail. NOC. and Company P.2d Home Insurance $19.55” 135— “represented himto York getting Machinery 'he was New Com v. Sullivan complete coverage operations.” pany, Cir., 765; on all 10 64 F.2d Westchester Company record does not disclose where the Fire Insurance com- v. Federal Na meaning 1177; 1. Hazard, NOC “Not Otherwise Classi- Ed. v. 141 Griswold U. 260, selling 283, 972, 678; fied” and referred to S. stores mis- S.Ct. 11 35 L.Ed. Corp. Corn, Cir., cellaneous items Pet. which couldn’t classi- Shell v. 10 54 F. heading. 766, 769; fied under one 2d Columbian Nat. Life Ins. Cir., Black, 571, 573, v. Co. 10 35 F.2d Restatement, Contracts, 504; Sec. Wil 2. 128; 71 A.L.R. v. Russell Shell Pet. Contracts, 3, 1585; liston on Vol. Sec. Corp., 864, 866; 10 F.2d 66 Dietrich Philippine Sugar Development Estates Retailers’ Fire v . Kan. 137 Islands, Government of the v. Phil. 800, 533, 21 P.2d 385, 389, 513, 247 U.S. 38 S.Ct. 62 L. 450 891; 889, 47, attorney expert, consult an Bank, 273 cases 135 Okl. P. other tional request Company information Casualty from the Commercial office, 141, 16 Varner, United home to 'his re 160 P.2d determine Okl.
v.
gardless
what
Company of New
of what he ordered or
States Fire Insurance
271,
Arneberg
Rayburn,
ing, liability, policies, its
policy respecting other another there was ground
on the ques- property time the one was issued.”
tion fixed judgment
I affirm the plaintiff. BOARD LABOR RELATIONS
NATIONAL CO. v. STOCKER MFG. 1
No. 0262. Appeals Court ot Circuit. Third
Argued 20, 1950. Oct.
Decided Nov.