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Central States Grain Co-Operative Inc. v. Nashville Warehouse & Elevator Corp.

March 13, 1931


Appeal from the District Court of the United States for the Indianapolis Division of the Southern District of Indiana; Robert C. Baltzell, Judge.

Author: Sparks

Before ALSCHULER, EVANS, and SPARKS, Circuit Judges.

SPARKS, Circuit Judge.

This is a case in which appellant sues (1) Nashville Warehouse & Elevator Corporation, hereafter referred to as the warehouse, on a warehouse contract; (2) Grain Dealers' National Mutual Fire Insurance Company, hereafter referred to as the insurance company, on a policy of fire insurance executed and delivered to appellant against the loss or damage of its grain by fire; and (3) nine other insurance companies, hereafter referred to as indemnitors, on their several indemnity contracts issued to the warehouse indemnifying the warehouse against loss resulting from the destruction or damage of grain owned by it, and also against loss which it might sustain by the damage or destruction of grain owned by others.

The bill of complaint contains the following allegations: The warehouse owned and operated a public warehouse licensed under the Act of Congress of August 11, 1916, as amended July 24, 1919, and the rules and regulations made thereunder, which provides that such warehousemen, for all agricultural products received by them to be warehoused, must issue warehouse receipts stating, among other things, identification of the grain; and providing that such grain should be stored in an individual bin or compartment designated by lot or cargo numbers, or by letters, numbers, or other clearly distinguishable words or signs, securely affixed, or so marked and placed in the warehouse that the identity of such grain will not be lost. Said warehouse was located at or near Indianapolis, and consisted of two or more buildings, one of which was of wood construction and the others were of concrete.

On or between September 17 and November 2, 1928, appellant delivered to the warehouse about 16,880 bushels of wheat and 2,551 bushels of oats, for which the warehouse issued to appellant United States warehouse receipts, none of which stated that the identity of any of the grain was to be preserved or gave any identification whatever, nor was there any agreement to that effect; and all the grain thus received became a part of the entire mass of grain contained in the warehouse. Prior to September 17, 1928, the insurance company issued to appellant its policy in suit, in the sum of $25,000, whereby it insured appellant against loss or damage by fire to the grain so deposited.

Prior to November 3, 1928, the indemnitors issued to the warehouse their policies of insurance -- and they were in force on the last named date -- by which they agreed to indemnify the warehouse for such loss as might be sustained by reason of damage to, or destruction of, any grain contained in its elevator, whether such grain belonged to the warehouse or was held by it in storage or in trust or for the benefit of any other. The aggregate amount of said indemnifying policies exceeded $100,000.

Appellants are unable to describe the lastnamed policies in greater detail or to set forth copies by reason of the fact that they were in the possession and under the control of the indemnitors. The bill does allege, however, that the indemnitors' policies inured to the benefit of all storers of grain in said warehouse during the time said policies were in force.

On November 3, 1928, a fire destroyed the wooden part of the elevator belonging to the warehouse and damaged the remaining part, causing great damage to all the grain stored in the wooden building and some damage to the grain stored in the concrete buildings. As to the exact amount of damage to the gain, appellant has no information, and has been unable to ascertain it, but such information is within the knowledge of appellees.

Prior to the fire, the warehouse had not delivered to appellant was entitled to have time of the fire appellant was entitled to have delivered to it, by the warehouse, grain of the kind, quality, and quantity as represented by said warehouse receipts, which was then of the value of $26,831.54. Since the fire, the warehouse has delivered to appellant 3,561 bushels of damaged wheat of the value of $3,488.40, leaving the sum of $23,353.14 due and owing to appellant from appellees; but the proportion thereof due from each appellee is unknown to appellant, and is unascertainable by it without the aid of the court. The bill alleges that timely notice of its loss was given by appellant to appellees; and within sixty days after the fire the warehouse and the indemnitors denied liability therefor, and claim that indemnitors' policies do not inure to the benefit of appellant, and that all of appellant's grain was stored in the wooden portion of said elevator. The bill further alleges that appellant is without knowledge sufficient to make positive allegations as to values or amounts of grain stored, grain damaged, lost or salvaged, or of the amounts or terms of the policies issued other than that of the insurance company, and a determination of this cause will involve a long, intricate, and arduous computation and accounting, and it is impossible to file an appropriate complaint upon the law side of the court; that all policies of insurance covering the grain destroyed as aforesaid must contribute to the payment of said loss, and, in order that the respective rights of all the parties hereto may be equitably adjusted and determined, it is necessary that this cause be filed on the eqity side of the court.

The bill prays for an accounting to determine (a) the amounts and kinds of grain damaged, destroyed, and salvaged; (b) the proportions, amounts, and extent to which appellant's grain was damaged, destroyed, and salvaged; (c) what grain, if any, the warehouse is obligated to deliver to appellant; (d) the amount of damage suffered by appellant; and (e) the proportions thereof for which each of the appellee insurers is respectively liable.

On motion of the indemnitors, the District Court dismissed the bill on its merits, and from this decree appellant appeals.

Owing to the fact that neither the originals nor copies of indemnitors' policies are filed with the bill, we are limited in our discussion of them to appellant's allegations of fact with relation thereto. These allegations, however, are made with certainty and under oath, and we think they are quite sufficient to determine the questions presented.

Appellant describes these contracts as policies of insurance by which indemnitors agreed to indemnify the warehouse for such loss as might be sustained by reason of damage to, or destruction of, any grain contained in its elevator, whether such grain (1) belonged to the warehouse, or (2) was held by the warehouse in storage or in trust for the benefit of any other. From the other allegations of the bill, it is quite clear that the relation existing between appellant and the warehouse is that of bailor and bailee, and it is well settled that a bailee is liable to the bailor only for such damage to the bailment property as results proximately from the negligence or willfulness of the bailee. Rice v. Nixon, 97 Ind. 97, 49 Am.Rep. 430; Drudge v. Leiter, 18 Ind.App. 694, 49 N.E. 34, 63 Am.St.Rep. 359. Neither negligence nor willfulness being alleged, we may assume that the warehouse is not liable to appellant for the damage done to appellant's grain by reason of the fire. Nor could the warehouse maintain an action against the indemnitors for appellant's loss. A contract to indemnify and hold harmless is not an original covenant to pay, but is rather an undertaking to repay or reimburse the indemnitee or make good to him the actual loss which he may suffer. One of the characteristic differences between a contract of indemnity and one to pay legal liabilities is that upon the former an action cannot be brought and recovery had until the liability indemnified against is discharged; whereas upon the latter the cause of action is complete when the liability attaches. That there is a distinction between a covenant to pay money and a covenant to indemnify is well recognized. In re Lathrop, Haskins & Co. (C.C.A.) 216 F. 102; Central Trust Co. v. Louisville Trust Co. (C.C.A.) 100 F. 545; Derry v. Morrison, 8 Ind.App. 50, 34 N.E. 107. This court, in United States ...

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