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GOOD CANNING CO. v. LONDON GUARANTEE & ACCIDENT CO.

February 17, 1955

GOOD CANNING COMPANY, PLAINTIFF,
v.
LONDON GUARANTEE AND ACCIDENT COMPANY, LTD., DEFENDANT.



The opinion of the court was delivered by: John E. Miller, District Judge.

  On August 27, 1954, plaintiff filed its complaint against the defendant alleging that it had entered into a contract of insurance with the defendant whereby defendant insured it against loss resulting from accident to certain property owned by plaintiff, including a certain fire tube boiler; that while said policy was in full force and effect an accident occurred causing damage to the boiler in the sum of $8,630.49 (this sum was subsequently reduced to $7,615.14), and causing prevention of plaintiff's business for a length of time resulting in loss to plaintiff in the sum of $1,680.85 (this sum was subsequently raised to $1,850.48); that notice was given defendant but defendant refused to pay plaintiff as provided in the contract of insurance. Plaintiff prayed judgment for its damages, plus penalty, attorney's fee and costs.

On September 18, 1954, defendant filed its answer admitting the issuance of the policy of insurance, but denying liability thereon. On December 7, 1954, defendant amended its answer by alleging that the accident was caused directly or indirectly by fire and as such was expressly excluded from the coverage of the policy of insurance in question.

Prior to the trial the parties on January 3, 1955, filed a stipulation concerning the execution of the policy in question, and relating to the testimony of Harry D. Burns, Chief Technical Assistant in the office of the Chief Inspector of the Boiler Inspection Division of the Department of Labor of the State of Arkansas. Also, prior to the trial, upon stipulation of the parties the Judge of the Court, in company with the attorneys for both parties and under the guidance of Mr. Harold Claypool, plaintiff's superintendent, viewed the damaged boiler at its then location on the premises of plaintiff for the purpose of aiding the Court in following and understanding the testimony introduced at the trial.

The cause was tried to the Court, without a jury, on January 12, 1955, and at the conclusion of the trial the Court took the case under advisement, pending receipt from the parties of briefs supporting their respective contentions. The briefs have been received, and now the Court, having considered the pleadings, stipulations, ore tenus testimony of witnesses, exhibits, and briefs of the parties, makes and files herein its findings of fact and conclusions of law, separately stated.

Findings of Fact

1.

The plaintiff, Good Canning Company, is an Arkansas corporation having its principal office and place of business in the Fort Smith Division of the Western District of Arkansas. The defendant, London Guarantee and Accident Company, Ltd., is a foreign corporation of London, England, and is authorized to do and is doing business in the Western District of Arkansas. The amount in controversy, exclusive of interest and costs, exceeds the sum of $3,000.

2.

On November 28, 1952, defendant issued to plaintiff a policy of insurance insuring plaintiff, for a period of three years from said date, against loss resulting from accident, as defined in the contract of insurance, to certain objects owned by plaintiff, including the boiler in question. The insurance contract also insured plaintiff against loss resulting from total or partial prevention of business on the premises caused by an accident to an insured object. More specifically, the insurance contract contained the following provisions:

"Insuring Agreement

    "In consideration of the Premium, the Company
  agrees with the Assured respecting loss from an
  Accident, as defined, herein, occurring during the
  Policy Period, to an Object, as defined herein, while
  the Object is in use or connected ready for use at
  the Location specified for it in the Schedule,
  subject to the Declarations, to the Conditions, to
  other terms of this policy and to the Schedules and
  Endorsements issued to form a part thereof, as
  follows:

"Coverage A — Loss on Property of Assured

    "To pay for loss on the property of the Assured
  directly damaged by such Accident (or, if the Company
  so elects, to repair or replace such damaged
  property), excluding (a) loss from fire concomitant
  with or following an Accident or from the use of
  water or other means to extinguish fire, (b) loss
  from an Accident caused directly or indirectly by
  fire or from the use of water or other means to
  extinguish fire, (c) loss from a combustion explosion
  outside the Object concomitant with or following an
  Accident, (d) loss from delay or interruption of
  business or manufacturing or process, (e) loss from
  lack of power, light, heat, steam or refrigeration
  and (f) loss from any other indirect result of an
  Accident; * * *."

Schedule 1 of the policy provides, inter alia:

    "The Objects covered under this Schedule are
  designated and described as follows: * * *
  Description of Object (All Fire Tube Boilers) Class
  (2) Size (All Sizes) Coverage (Limited) Boiler Piping
  (Included) * * *.

"Definition of Accident

    "C. (a) As respects any Object which is designated
  and described in this Schedule and for which the word
  `Broad' is inserted in the column headed `Coverage',
  `Accident' shall mean
    "1. A Sudden and accidental tearing asunder of the
  Object, or any part thereof, caused by pressure of
  steam or water therein, but cracking shall not
  constitute a sudden and accidental tearing asunder;
    "2. A sudden and accidental crushing inward of a
  cylindrical furnace or flue of the Object caused by
  pressure of steam or water within the Object;
    "3. A sudden and accidental cracking of any cast
  metal part of the Object, if such cracking permits
  the leakage of steam or water; or
    "4. A sudden and accidental bulging or burning of
  the Object, or any part thereof, which is caused by
  pressure of steam or water within

  the Object or which results from a deficiency of
  steam or water therein and which immediately prevents
  or makes unsafe the continued use of the Object;
  but Accident shall not mean the cracking of any part
  of the Object other than a cast metal part, nor the
  tearing asunder, crushing inward, cracking, bulging
  or burning of any safety disc, rupture diaphragm or
  fusible plug, nor leakage at any valve fitting, joint
  or connection.
    "(b) As respects any Object which is designated and
  described in this Schedule and for which the word
  "Limited" is inserted in the column headed
  `Coverage', `Accident' shall mean
    "A sudden and accidental tearing asunder of the
  Object, or any part thereof, caused by pressure of
  steam or water therein, but cracking shall not
  constitute a sudden and accidental tearing asunder;
  but Accident shall not mean the tearing asunder of
  any safety disc, rupture diaphragm or fusible plug,
  nor leakage at any valve fitting, joint or
  connection."

The policy contains the following endorsement:

    "Use and occupancy (Valued) endorsement No. 1. This
  Endorsement forms a part of policy No. PP 61990 and
  is effective from noon of November 28, 1952. Assured
  Good Canning Company. Item 1. Premium $29.60
  (included). Item 2. Daily Indemnity — One
  Hundred and 00/100. Item 3. Limit of Loss —
  Five Thousand and 00/100. Item 4. Premises —
  Jennie Lind Road, at Suburban Crossing, Fort Smith,
  Arkansas. Item 5. Schedules, Pages or Endorsements of
  the policy — Schedules Nos. 1 and 2 (or
  substitutes). Item 6. Business — Production.
  Item 7. Commencement of Liability determined with
  respect to — Time of Accident. Item 8. Other
  Address for Notice of Accident — 17th Floor,
  Gulf States Bldg., Dallas, 1, Texas.

"Insuring Agreement

    "In consideration of the Premium specified in Item
  1 and subject to the Exclusions and Conditions of
  this Endorsement, the Company hereby agrees, with
  respect to Business on the Premises described in Item
  1,
    "1. To pay the Assured the amount of Daily
  Indemnity, specified in Item 2, for each Day of Total
  Prevention of Business;
    "2. To pay the Assured a part of the Daily
  Indemnity for each Day of Partial Prevention of
  Business; and
    "3. To pay that amount of expense which is
  reasonably incurred by the Assured or the Company to
  reduce or avert Prevention of Business, but only to
  the extent that the total amount, that otherwise
  would have been paid under Sections 1 and 2 of this
  Agreement, is thereby reduced; provided the Total
  Prevention of Business or the Partial Prevention of
  Business is caused solely by an Accident, which
  occurs while this Endorsement is in effect, to an
  Object designated and described in any Schedule, Page
  or Endorsement, specified in Item 5, and while said
  Object is in use or connected ready for use; * * *

"Exclusions

    "The Company shall not be liable for payment for
  any Prevention of Business * * *
    "(2) Resulting from fire concomitant with or
  following an Accident or from the use of water or
  other means to extinguish fire;
    "(3) Resulting from an Accident caused directly or
  indirectly by fire * * *."

At all times material herein the policy, together with its schedules and endorsements, was in full force and effect.

3.

The boiler in question is an H.R.T. boiler, sometimes referred to as a fire tube boiler. It, along with another boiler of the same kind, was installed at the plant of Good Canning Company, Fort Smith, Arkansas, in 1939 by the Boal Foundry and Machinery Company. There was no evidence as to the price paid for the boiler or the age of the boiler at the time it was ...


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