FILED

November 8, 1995

Cecil Crowson, Jr.

Appellate Court Clerk

IN THE COURT OF APPEALS OF TENNESSEE

WESTERN SECTION AT JACKSON

 _______________________________________________

THE WRIGHT JEWELERS, INC.,

Plaintiff,

Vs. No. 02A01-9409-CV-00202

Shelby Circuit No. 44751

FIREMAN'S FUND INSURANCE

COMPANY d/b/a THE AMERICAN

INSURANCE COMPANY,

Defendant.

_________________________________________________________________________

FROM THE CIRCUIT COURT OF TENNESSEE FOR THE THIRTIETH 

JUDICIAL DISTRICT AT MEMPHIS

THE HONORABLE JANICE M. HOLDER, JUDGE

Sam L. Crain, Jr. 

BURCH, PORTER & JOHNSON, Memphis,

For Plaintiff-Appellant

Robert D. Flynn

SPICER, NORCROSS, FLYNN & RUDSTROM, Memphis,

For Defendant-Appellee

AFFIRMED

Opinion filed:

W. FRANK CRAWFORD,

PRESIDING JUDGE, W.S.

CONCUR:

ALAN E. HIGHERS, JUDGE
2

PAUL G. SUMMERS, JUDGE

This is a declaratory judgment action to determine coverage under an

insurance policy. Plaintiff, Wright Jewelers, Inc., appeals from the order of the

trial court denying its motion for summary judgment and granting summary

judgment to defendant, Firemen's Fund Insurance Company, d/b/a The

American Insurance Company.

By written stipulation of the parties, the undisputed facts are as follows:

1. Fireman's Fund Insurance Company, d/b/a The

American Insurance Company ("Fireman's Fund"),

issued a "Jewelers Block Policy" bearing No. 2-59-MJB

 616 00 13 to Wright Jewelers with coverage dates of

11-1-90 to 11-1-91.

2. In addition to the aforementioned policy issued by

Fireman's Fund, Wright also had a separate policy of

insurance captioned "SafeCo Protection Plan Business

Policy" bearing No. CP9021198A with coverage dates

of 11-1-90 to 11-1-91 with SafeCo Insurance Company

of America ("SafeCo").

3. The parties stipulate to the authenticity and

admissibility of the aforementioned policies of

insurance.

4. At all relevant times Bruce Harrington was the

President and a shareholder of The Wright Jewelers,

Inc. ("Wright").

5. At all relevant times Libby Wright ("Ms. Wright") was

the General Manager of Wright.

6. At all relevant times Holly Heine ("Ms. Heine") was

the Assistant Manager of Wright.

7. At all relevant times Dorothy Poole was employed

by Wright as an Appraiser.

8. At all relevant times Wright was engaged in the

business of selling jewelry, includingconsignment sales

of jewelry entrusted to it by others.

9. On July 17, 1991, Olivia Dowell ("Mrs. Dowell") took

her emerald-cut diamond ring to Wright.

10. Mrs. Dowell told Ms. Wright that she was interested
3

in selling the ring and she wanted to have it valued for

that purpose.

11. Mrs. Dowell left the ring with Wright, and she

authorized Ms. Wright to take the ring to New York City

so she could show it to dealers there.

12. The ring was taken to Wright by Mrs. Dowell for the

express purpose of being sold.

13. Ms. Wright took the ring to New York, where she

showed it to Greg Herdemian ("Mr. Herdemian"), who

was the Manger of Empire Diamond Corporation

("Empire").

14. Empire is a jewelry merchant which deals in

jewelry of the kind shown to Mr. Herdemian by Ms.

Wright, and Empire is in the business of selling jewelry,

including jewelry delivered to it for consignment sale.

15. Mr. Herdemian told Ms. Wright that Empire would

purchase the ring outright for a cash price of

$50,000.00 or take the ring on a consignment basis and

try to sell it for $60,000.00.

16. Mr. Herdemian gave Ms. Wright his business card

on the back of which he wrote the price for which he

would try to sell the ring if Empire took it on

consignment ($60,000.00) and the cashpricefor which

Empire would purchase the ring outright ($50,000.00).

17. A true, accurate and authentic copy of Mr.

Herdemian's business card is attached to these

stipulations and is admitted into evidence in place of

the original without further proof. 

18. After showing the ring to Mr. Herdemian, Ms.

Wright returned to Memphis with the ring.

19. After obtaining Mrs. Dowel's permission to attempt

to sell the ring, Ms. Wright sent the ring to Mr.

Herdemian at Empire via Loomis with a packing slip to

which Ms. Wright affixed the business card containing

the price range Mr. Herdemian had given Ms. Wright

on the ring.

20. Mr. Herdemian received the ring and the business

card, and he considered Empire's receipt of the ring

to be Empire's permission to sell the ring within the

price range contained on his business card.

21. Both Wright and Empire implicitly understood that
4

Empire had authority to sell the ring on behalf of the

Dowells within the price range earlier quoted by

Empire.

22. Ms. Heine, an employee and agent of Wright,

called Empire to confirm the proposed sales price for

the ring.

23. Following delivery of the ring to Empire for

purposes of sale, Ms. Heine, acting for and on behalf

of Wright, confirmed with Jack Dowell ("Mr. Dowell")

that Wright and Empire had permission to sell the ring.

24. Mr. Dowell, by telephone conversation with Ms.

Heine in approximately August, 1991, expressly

confirmed once again that Wright and Empire had

Mrs. Dowell's permission to sell the ring.

25. Ms. Heine, acting upon the verbal permission and

authorization of Mr. Dowell, told Empire that Wright's

clients had given Wright permission to sell the ring.

26. At all relevant times Mr. Dowell was acting as the

authorized agent of his wife, Mrs. Dowell, and he had

the authority to communicate with Wright on Mrs.

Dowell's behalf.

27. Empire was expressly authorized by Mrs. Dowell,

through Wright, to sell the ring.

28. Mr. Herdemian, acting in his capacity as Empire's

Manager, thereafter sold the ring at retail to an

individual.

29. The ring was sold by Empire for its actual fair

market value.

30. The actual faire market value of the ring of [sic]

the time and place of sale was between $45,000.00

and $52,000.00.

31. Empire sold the ring with the express consent and

permission of Ms. Dowell and with the knowledge of

Wright.

32. Both prior and subsequent to the sale of the ring

Wright told the Dowells that it would reduce the

commission that it would earn on Empire's sale of the

ring because the Dowells were apparently unhappy

with the progress or result of the transaction.

33. Ms. Heine, on behalf of Wright, informed Mr.
5

Dowell of Wrights' reduction in its sales commission.

34. Shortly after Empire sold the ring to the individual,

Ms. Heine telephone Mr. Herdemian and told him that

Wright's client had changed her mind and did not

want to sell the ring; Ms. Heine asked Mr. Herdemian

to try to get the ring back.

35. Mr. Herdemian contacted the individual to see if

he would return the ring, but the individual refused.

36. When Ms. Wright sent the ring to Empire, and while

Empire had the ring on consignment, Mrs. Dowell was

the owner of the ring.

37. At all relevant times Empire had possession of the

ring on a consignment basis.

38. Neither Empire nor Mr. Herdemian received any

compensation, in the form of a commission or

otherwise, from Wright.

39. Subsequent to the sale of the ring by Empire,

Wright invoiced Empire for the portion of the sales

price to be remitted to Wright ($50,000.00).

40. A true, accurate and authentic copy of the

invoice dated 10/1/91 from Wright to Mr. Irving Brod of

Empire is attached to these Stipulations and is

admitted into evidence in place of the original without

further proof.

41. On or about October 1, 1991, Empire remitted to

Wright the sum of $50,000.00.

42. The ring was not damaged by either Wright or

Empire.

43. The ring was not misplaced or mislaid by either

Wright or Empire.

44. At all relevant times Empire was not a commission

salesman or selling agent on the payroll or in the direct

or indirect employ of Wright.

45. Wright's policy of insurance with Fireman's Fund

provides for a deductible of $1,000.00.

46. After Mr. and Mrs. Dowell filed suit against Wright,

Wright sent written demand to Fireman's Fund and

SafeCo requesting that each provide Wright with a

defense to, and coverage for, the lawsuit.
6

47. Both Fireman's Fund and SafeCo denied coverage

and refused to provide Wright with a defense.

48. Wright filed this declaratory judgment action

against Fireman's Fund and SafeCo seeking a ruling

from the court that either or both insurance

companies were obligated to provide Wright with a

defense and with coverage for any judgment entered

against Wright in the underlying lawsuit.

49. Both companies filed answers denying the duty to

defend Wright or provide it with coverage under their

respective policies.

50. Wright ultimately settled with SafeCo for a lump

sum payment from SafeCo of $5,000.00.

51. SafeCo prepared, and Wright executed, a

document entitled "Full Release and Settlement of All

Claims" ("Release").

52. A true, accurate and authentic copy of the

Release is attached to these stipulations and is

admitted into evidence without further proof.

Wright's complaint seeks a declaratory judgment that Firemen's Fund is

liable for the amount of any judgment obtained by the Dowells against Wright.

Wright also alleges that the policy required Firemen's Fund to provide Wright a

defense to the Dowell suit and that since Fireman's refused to provide a

defense, Fireman's is required to reimburse Wright to the costs incurred in

defending the suit. Wright relies upon the following policy provisions:

JEWELERS' BLOCK POLICY FORM - 

CM 00 59 08 83

Commercial Inland Marine Coverage Form

Part C - Property Insured

The Property Insured Is As Follows:

1. Pearls, precious and semi-precious stones, jewels,

jewelry, watches and watch movements, gold, silver,

platinum, other precious metals, and alloys and other

stock usual to the conduct of the Insured's business,

owned by the Insured;

2. Property as described above delivered or entrusted
7

to the Insured by others who are not dealers in such

property or otherwise engaged in the jewelry trade;

* * *

Part E - Insuring Conditions

1. This policy insures against all risks of loss of or

damage to the above described property arising from

any cause whatsoever except: [No exceptions are

applicable.]

* * *

6. In the event of loss of or damage to property of

others held by the Insured for which claim is made

upon the Company, the right to adjust such loss or

damage with the owner or owners of the property is

reserved to the Company and the receipt of such

owner or owners in satisfaction thereof shall be in full

satisfaction of any claim of the Insured for which such

payment has been made. If legal proceedings be

taken to enforce a claim against the Insured as

respects any such loss for damage, the Company

reserves the right at its option without expense to the

Insured, to conduct and control the defense on behalf

of and in the name of the Insured. No action of the

Company in such regard shall increase the liability of

the Company under this policy; nor increase the limits

of liability specified in the policy.

Wright Jewelers, relying upon the definition of loss approved in R.T.E. Corp.

v. Maryland Cas. Co., 247 N.W.2d 171 (Wisc. 1976), asserts that the ring was

"placed beyond recovery," and, therefore, is lost. Wright argues that "[t]he ring

was entrusted to plaintiff by the Dowells, and plaintiff, in turn, entrusted the ring

to Empire on their behalf. The ring cannot be recovered by plaintiff, and,

therefore, it is lost." 

We do not disagree that the ring was placed beyond Wright's recovery

when Empire sold the ring to a buyer in the ordinary course of business. See

T.C.A. § 47-2-403(2) (1992)("Any entrusting of possession of goods to a merchant

who deals in goods of that kind gives him power to transfer all rights of the

entruster to a buyer in the ordinary course of business"). However, Wright is
8

overlooking the uncontroverted proof by stipulation that "Empire sold the ring

with the express consent and permission of Ms. Dowell and with the knowledge

of Wright." (Emphasis added.).

The policy provision insures "against all risks of loss of . . . the above

described property . . . ." Thus, giving the language its usual and ordinary

meaning, the policy provides coverage for lost property. Black's Law Dictionary

(6th ed. 1979) defines "lost" as: 

 An article is "lost" when the owner has lost the

possession or custody of it involuntarily and by any

means, but more particularly by accident or his own

negligence or forgetfulness, and when he is ignorant

of its whereabouts or cannot recover it by an ordinary

diligent search.

The same dictionary also defines "lost property" as:

 Property which the owner has involuntarily parted

with and does not know where to find or recover it, not

including property which he has intentionally

concealed or deposited in a secret place for safekeeping. Distinguishable from mislaid property which

has been deliberately placed somewhere and

forgotten.

The policy in this case provides the insured payment for lost property,

which is generally understood to be property which has been parted with

involuntarily. Therefore, in our opinion, the voluntary conveyance and sale of

the ring do not constitute a "loss" under the policy in question. It is difficult to

conceive of an insurance policy which would include within the definition of lost

property, property that is voluntarily conveyed by the owner, thereby placing

the property beyond the owner's recovery. To allow an insured to claim a loss

whenever insured property is "placed beyond recovery," without regard to

whether the insured acted voluntarily, could allow an insured a recovery in a

number of fraudulent or potentially fraudulent situations. 

In the absence of fraud or mistake, a contract must be interpreted and
9

enforced as written, and in construing the contract, the words expressing the

parties' intention should be given their usual, natural and ordinary meaning.

Ballard v. North American Life & Cas., 667 S.W.2d 79 (Tenn. App. 1983). Giving

the words used in the contract before us their ordinary and usual meaning, we

find that it was the intention of the parties that the insurance policy would cover

lost property. The property in this case was not lost, but was voluntarily

conveyed.

Wright also argues that Fireman's Fund is obligated by the policy provisions

to defend the action filed by the Dowells. We must respectfully disagree. There

is no contract provision requiring Fireman's Fund to defend. The policy clearly

and unambiguously states that Fireman's Fund has the option to defend;

therefore, this argument is without merit. 

The order of the trial court granting summary judgment is affirmed. Costs

of the appeal are assessed against the appellant.

____________________________________

W. FRANK CRAWFORD, 

PRESIDING JUDGE, W.S.

CONCUR:

_________________________________

ALAN E. HIGHERS, JUDGE

_________________________________

PAUL G. SUMMERS, JUDGE