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ST. PAUL FIRE AND MARINE INSURANCE CO. v. COLEMAN

May 9, 1962

ST. PAUL FIRE AND MARINE INSURANCE COMPANY, PLAINTIFF,
v.
WILLIS P. COLEMAN AND ANNE WYLES COLEMAN, D/B/A LAKE HAMILTON MARINE SERVICE, MORGAN AGAR, JAMES E. STOVER, SR., WILLIAM T. STOVER, II, JAMES E. STOVER, JR., VICKI ANN STOVER, JOE G. FETZEK, VIRGINIA M. FETZEK, MARY CATHERINE FETZEK, VIRGINIA LINDA FETZEK, JOSEPH T. FETZEK AND WILLIAM T. STOVER, DEFENDANTS.



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

This is an action for a declaratory judgment in accordance with 28 U.S.C.A. § 2201, declaring that the alleged occurrence of June 6, 1961, is not covered by the policy of insurance issued by plaintiff, and that with respect to the said occurrence and the injuries, damages, claims and demands resulting therefrom, the plaintiff has no liability either present or contingent to the defendants or any of them by reason of the said policy of insurance.

By stipulation signed by the attorneys for all the parties, and filed herein April 16, 1962, the parties have agreed that the facts are as stated in said stipulation, which are summarized as follows:

The plaintiff, St. Paul Fire and Marine Insurance Co., is a corporation organized and existing under the laws of the State of Minnesota with its principal place of business in St. Paul, Minnesota. It is authorized to do business in the State of Arkansas and engages in the business of writing insurance contracts covering various risks.

The defendants, Willis P. Coleman, Anne Wyles Coleman and Morgan Agar, are citizens of the State of Arkansas and reside in Garland County within the Western District of Arkansas, Hot Springs Division. The Colemans, husband and wife, are doing business under the name of Lake Hamilton Marine Service in Garland County, Arkansas. At all times pertinent hereto the defendant, Morgan Agar, was an agent, servant and employee of the defendants Colemans.

All of the remaining defendants are citizens of Arkansas and residents of Pulaski County in the Eastern District of Arkansas. The amount involved exceeds $10,000, exclusive of interest and costs.

On June 18, 1960, the plaintiff issues its Manufacturers' and Contractors' Liability Insurance Policy No. 566JX6126 to the defendants Coleman, d/b/a Lake Hamilton Marine Service, insuring them against public liability from June 18, 1960, to June 18, 1961, for bodily injury or property damage under certain conditions and subject to certain exclusions as provided in said policy of insurance. The limit of liability for bodily injuries to any one person is $25,000 and for bodily injuries resulting from any one accident the limit of liability is $50,000. The limit of liability for property damage arising out of any one accident is $5,000.

Attached to the complaint is a true and correct copy of the policy.

On October 20, 1961, civil action No. 51159 was filed in the Circuit Court of Pulaski County, Arkansas, by the defendants, Joe G. Fetzek, Virginia M. Fetzek, Mary Catherine Fetzek, Virginia Linda Fetzek and Joseph P. Fetzek, against the defendant Willis P. Coleman, d/b/a Lake Hamilton Marine Service, and the defendant Morgan Agar. The complaint in said cause contains the following allegations:

    "On or about June 6, 1961, plaintiffs, Virginia M.
  Fetzek, Mary Catherine Fetzek, Virginia Linda Fetzek
  and Joseph P. Fetzek, were occupants of an inboard
  motor boat operated by William T. Stover, and owned
  by William T. Stover Company, Inc. Said boat was
  taken to the place of business of defendant Coleman
  for refueling. Defendant Coleman, as operator of a
  marine service on Lake Hamilton, maintained pumps for
  refueling of boats operating on Lake Hamilton and
  conducted the business of selling such fuel, which
  was high octane gasoline, inherently dangerous and
  volatile and requiring a high degree of care in
  handling. The fuel was placed in boats of purchasers
  by means of bringing the boat alongside defendant's
  dock near a pump, and permitting an employee of
  defendant to handle the refueling by taking a pump
  hose with a cutoff nozzle aboard the boat, and
  transferring fuel from the pump to the gas tank of
  the boat.

In said action the plaintiffs pray for damages as follows:

  Joe G. Fetzek                       $60,165.50
  Mary Catherine Fetzek               275,000.00
  Virginia Linda Fetzek                50,000.00
  Joseph P. Fetzek                     10,000.00
  Virginia M. Fetzek                  163,281.12

On October 9, 1961, a suit, civil action No. 51100, was filed in the Circuit Court of Pulaski County, Arkansas, by defendants James E. Stover, Sr., William T. Stover, II, James E. Stover, Jr., and Vicki Ann Stover, against the defendant, Willis P. Coleman, d/b/a Lake Hamilton Marine Service, and the defendant, Morgan Agar. The complaint in said cause contains the following allegations:

    "On or about June 6, 1961, plaintiffs, William T.
  Stover, II, James E. Stover, Jr. and Vicki Ann
  Stover, were passengers in an inboard motor boat
  operated by William T. Stover, and owned by William
  T. Stover Company, Inc. Said boat was taken to the
  place of business of defendant Coleman for refueling.
  Defendant, Morgan Agar, an employee of Coleman, and
  while acting under his direct supervision and control
  and in the performance of his assigned duties,
  attempted to place high octane gasoline in the gas
  tank of the said boat. In so doing, said Agar
  disconnected the pipe leading to the gas tank and
  poured high octane gasoline into the bilge of the
  boat. Defendants Willis P. Coleman and Morgan Agar
  did not check to see that the boat was properly
  serviced and that no gasoline had been spilled into
  the bilge, and did not warn or otherwise call to the
  attention of William T. Stover the fact that gasoline
  had been poured into the bilge, although the gasoline
  fill pipe was still raised some five inches above its
  normal position when the gasoline cap was replaced
  and the motor of the boat started."

The plaintiffs prayed judgment for damages in the following amounts:

  James E. Stover, Sr.                $49,710.41
  William T. Stover, II               250,000.00
  James E. Stover, Jr.                175,000.00
  Vicki Ann Stover                    100,000.00

On November 24, 1961, a suit, civil action No. 51295, was filed in the Circuit Court of Pulaski County, Arkansas, by William T. Stover against the defendants, Willis P. Coleman, d/b/a Lake Hamilton Marine Service, and Morgan Agar, in which he seeks to recover the sum of $22,111.20. In his complaint it is alleged:

    "On the date aforesaid, plaintiff brought the boat
  to defendant's dock and the refueling was undertaken
  by Morgan Agar, an employee of defendant Coleman,
  acting in the scope of such employment. Defendant
  Agar removed the cap from the gas tank of the boat
  and in so doing, he also disconnected the pipe
  between the cap and the tank, where the pipe adjoined
  the tank, and poured fuel from the pump to the tank.
  A portion of the fuel missed the tank because the
  said connection had been removed, and said fuel ran
  down into the bilge of the boat. The malfunction was
  ascertained by Morgan Agar, or in the exercise of due
  care should have been observed, because when he
  disconnected the pipe from the gas tank it resulted
  in the cap being five inches higher than the normal
  position. When the cap was replaced, Morgan Agar
  knew, or in the exercise of due care, should have
  known, that the pipe was disconnected, and that gas
  had escaped into the boat bilge. Defendant Agar was
  negligent in disconnecting the pipe, in allowing the
  gas to enter the bilge of the boat, and in failing to
  warn plaintiff of the danger thereof, and such
  negligence was the proximate cause of the subsequent
  fire and damage."

Paragraphs 10, 11, 12 and 13 of the stipulation of facts are as follows:

    "10. After the refueling of the boat by Morgan Agar
  (which was the purpose for which the boat was brought
  to Coleman's by Stover), William T. Stover started
  the engine of the boat, and, after the mooring lines
  were cast off, started pulling away from the dock. If
  called as a witness, William T. Stover would testify
  under oath that the engine of the boat was not
  functioning properly and was running irregularly. As
  the boat was moving from the dock, the engine died,
  and the boat drifted slowly without power. William T.
  Stover, the operator, then requested assistance of
  the employees of the Colemans, who were then upon the
  dock, and who immediately began making preparation to
  go to the boat and bring it back to the dock. But the
  employees of Coleman had not actually left the dock
  when, approximately four minutes after the boat left
  the dock, and after it had traveled a distance of
  seventy-three feet from the dock, the boat caught on
  fire and burned. The boat was at all these times on
  the waters of Lake Hamilton, in Garland County,
  Arkansas, and directly in front of the property lines
  of the Colemans' property if said lines were
  projected outwards toward the center of the lake.
    "A plat of Lake Hamilton, showing the entire lake
  and showing the Coleman property and the waters and
  shoreline adjacent thereto, is attached to this
  stipulation and may be considered as evidence in this
  case.
    "11. The property upon which Willis P. Coleman and
  Anne Wyles Coleman operate their business known as
  Lake Hamilton Marine Service is a tract of land
  riparian to Lake Hamilton, having 425 feet of
  shoreline, adjacent to which are four floating docks
  affording boat storage space, moorage, boat repairs
  and

  service facilities and access to the lake from the
  physical improvements situated upon the land and from
  the lake to the improvements upon the land. In the
  conduct of their business, the Colemans have on
  occasions moored boats of customers at points more
  distant from their floating docks than was the boat
  in question at the time of the explosion.
    "12. Lake Hamilton is an artificial lake created by
  the Arkansas Power & Light Company by damming the
  Ouachita River. It covers approximately 7150 acres.
  It has 170 miles of shoreline when the lake is full,
  as it usually is during the summer months.
    "13. For the purpose of this declaratory judgment
  action, and for that purpose only, and without the
  truth thereof being admitted for any other purpose
  whatsover, the Court may consider the various
  allegations of the various complaints which are
  quoted above in this stipulation as being true,
  except as they conflict with this stipulation."

In the Declarations, Item 3, the policy provides:

"The insurance afforded is only with respect to such and so many of the following coverages and divisions thereunder as are indicated by specific premium charge or charges. The limit of the Company's liability against each such coverage and divisions shall be as stated herein, subject to all the terms of this policy having reference thereto.

 ------------------|-----------------------|--------------------------|--------------
                   |       Limits of       |                          |   Advance
      Coverages    |       Liability       |          Divisions       |  Premiums
                   |                       |                          |
 ------------------|-----------------------|--------------------------|---------------
                   |                       |                          |
  A. Bodily Injury | $25,000 each person   | 1. Premises — Operations | $(46.20) 45.56
    Liability      | $50,000 each accident | 2. Elevators             | $| $aggregate    | 3. Independent           | $| (Aggregate applies to |     Contractors          | $|   Div. 4 only)        | 4. Products — Completed |
                   |                       |     Operations           |
                   |                       |                          |
 ------------------|-----------------------|--------------------------|---------------
                   |                       |                          |
  B. Property      | $5,000 each accident | 1. Premises — Operations | $10.00
    Damage         | $25,000 aggregate     | 2. Elevators             | $Liability      | (Aggregate applies to | 3. Independent           | $|   Divs. 1, 3 & 4      |     Contractors          | $|                       | 4. Products — Completed  |
                   |                       |     Operations           |
                   |                       |                          |
 ------------------|-----------------------|--------------------------|---------------
                   |                       |                          |
  C. Medical       | $each person   | 1. Premises — Operations | $Payments       | $each accident |                          |
                   |                       |--------------------------|---------------
                   |                       |                          |
                   |                       | 2. Elevators             | $|                       |                          |
 ------------------|-----------------------|--------------------------|---------------
                   |                       |                          |
  D. Contractual   | $each person   |                          |
    Liability of   | $each accident |                          |
    a Specified    |                       | 1. Bodily Injury         | $Type           |                       |     Liability            |
                   |-----------------------|--------------------------|----------------                     |                       |                          |
                   | $each accident |                          |
                   | $aggregate       | 2. Property Damage       |
                   |                       |     Liability            | $--------------------------------------------------------------------------------------
  Endorsements 12736 — Amend of Prem Condition 12772-Nuclear E Encl. $(
 --------------------------------------------------------------------------------------
                                           Total advance premium      $(56.20) 56.56"
  The policy further provides:
    "In consideration of the payment of the premium and
  the statements contained in the declarations and
  subject to the limits of liability, exclusions,
  conditions and other terms of this policy, the ST.
  PAUL FIRE AND MARINE INSURANCE COMPANY herein called
  the Company, AGREES with the Insured, named in the
  declarations made a part hereof:

"INSURING AGREEMENTS

"I. Coverage A — Bodily ...


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