Court Opinion

ID: 9443197
Source: CourtListenerOpinion
Date Created: 2023-08-03 19:13:48.726968+00
Date Added: 2024-06-11T17:29:24.344730
License: Public Domain

POPE, Circuit Judge
(dissenting).
I think that when the endorsed gin-yard receipts were delivered by Eloy to Smith & Co., the relationship of the parties, which had theretofore been 'that of seller and buyer, became one of bailee and -bailor. The paragraph in the gin-yard receipts relating to insurance on the cotton must be construed to be an undertaking and promise of Eloy that the cotton was and would be insured against loss by fire. I think that this express promise added to the obligations of Eloy stated or implied in the original purchase contract. If there was any consideration for this new or additional undertaking or promise, I think it was valid and enforceable. There seems to be no question by either party that if this clause in the gin-yard receipts created such an obligation, Eloy would be liable to Smith & Co. for failure to claim and collect the insurance. Farney v. Hauser, 109 Kan. 75, 198 P. 178. It is shown that it had the insurance, for the Home Insurance policy was introduced in evidence and it would *747seem to cover this cotton.1 *Home Ins. Co. v. Balt. Warehouse Co., 93 U.S. 527, 23 L.Ed. 868.
As for the question of whether the promise was supported by a consideration, had the appellant been permitted to prove, as it offered to do, that there was a custom in the trade that after the first twenty days the 'holder of such a receipt would upon presentation of a bill for the same, pay the cost of the insurance on the cotton, the record would have contained evidence from which a consideration might be found. I am therefore of the opinion that it was error to reject the offered evidence, and I would reverse and remand with directions to grant a new trial.
Apparently the majority view 'here is that the promise with respect to the insurance contained in the gin-yard receipts should be disregarded because it is hard to understand why Smith & Co. would pay for its own insurance upon cotton purchased if it intended to rely upon the gin-yard receipts.
I think that view overlooks the special limiting provisions in the policy of the National Fire Insurance Co. which was issued to Smith & Co. That policy provided : “ * * * this insurance does not cover the following: * * * Cotton for which any carrier or other bailee is liable, or cotton under bills of lading or storage receipts that give the carrier, warehouseman or other bailee the benefit of any insurance thereon, or cotton on which any carrier or other bailee has insurance which would attach if his policy had not been issued, or insurance which would, under any circumstances, inure to’ the benefit of the Assured hereunder.”2
The policy also provided that after presentation of proofs of loss with respect to cotton, of the kind mentioned in the language quoted, the Insurance Company would “advance' as a loan to the Assured the amount of such loss or damage, repayable only to the extent of any recovery from such carrier or bailee.” After the loss here in question, the National Fire Insurance Company did just that, and took Smith & Cods receipt for the amount paid, which recited that it was a loan. I know of no reason why this provision of the policy should not be given effect or why the advance of the money to Smith & Co. should not be treated as a loan. See Luckenbach v. McCahan, 248 U.S. 139, 39 S.Ct. 53, 63 L.Ed. 170; Clark Cotton Co. v. Jones, 31 Ga.App. 587, 121 S.E. 519.
It is apparent that the National Fire Insurance policy procured by Smith & Co. gave only limited coverage. It is a fair inference that such a policy is obtainable at a lower premium. I think therefore that it was reasonable for Smith & Co. to rely not only upon its own policy but also on the insurance described in the gin-yard receipts.3
*748I can perceive no reason why, if appellant is allowed to. prove consideration therefor, the plainly worded recitals of the .gin-yard receipts relating to insurance should not be enforced against Eloy.
On Petition for Rehearing
The petition for rehearing is denied.
POPE, Circuit Judge.
I adhere to the views of my dissenting opinion, but agree that a rehearing would serve no useful purpose.

. Apparently Eloy permitted the insurance adjuster to talk it out of claiming and collecting the insurance. Whether the conduct of an insurance agent would constitute such a waiver as would permit Eloy even yet- to sue the Home Insurance Company is, of course, not before us, nor is the question of whether Smith & Co. might itself have recovered from the insurance company in view of the fact that the policy covered merchandise “held in trust” or “left for storage”. See annotation 61 A.L.R. 720; Century Ins. Co. v. First Nat. Bank, 5 Cir., 102 F.2d 726. The conclusion of law (No. 3) that Eloy could not recover on its cross-claim against Home, was predicated on Eloy’s prayer for judgment against Home, only if Smith & Co. recovered against Eloy, and upon pleadings which made no claim of waiver. Had the judgment been reversed, as I think it should be, the entire ease should have been remanded, and the question of Home Insurance Co.’s liability reopened.

. In printing the record, the printer has apparently detached portions of this policy and attached it to the Home Insurance policy, which makes the printed record confusing. Inspection of the original exhibits shows what happened.

. I am at a loss to understand the reason for the lengthy extract from testimony-concerning a custom in Texas. Admittedly that “does not * * * control custom at Phoenix.” Its only purpose could' be to disclose Smith & Co.’s unilateral understanding of the original purchase contract, which clearly was plain and unambiguous.