Oakley Fertilizer, Inc. v. Continental Insurance Company

276 S.W.3d 342 (2009)

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Nature of the Case

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Facts

D issued an insurance policy to P. The policy covered shipments of goods made in the course of P's business. The policy covered all shipments for P's own account or for the account of Owners of the cargo transported by P which P agrees to insure, such agreement to be made prior to any known or reported loss, or prior to or simultaneous with the sailing of the vessel. P entered into negotiations with Ameropa (Buyer) for 3000 short tons of fertilizer to be shipped to Caruthersville, Missouri from New Orleans on barges operated by a third party carrier. P sent a 'sales contract' to Buyer, which Buyer received but did not sign or return. The sales contract memorialized the terms discussed during the parties' negotiations. The contract also included a term providing that the cargo's title and risk of loss would transfer from P to Buyer after P received 'good funds' from Buyer and that 'Buyer assumes responsibility for product insurance at that point.' The buyer emailed an electronically signed agreement to purchase the cargo ('purchase agreement') to P. The cargo was loaded onto the barges in New Orleans. On August 29, Hurricane Katrina damaged the barges. P advised Buyer that the cargo was not damaged. Relying on this advice, Buyer tendered full payment to P on September 8, 2005. The cargo arrived at its destination and Buyer rejected it due to 'crusty wet product.' P later sold the damaged cargo at salvage value issued a credit to Buyer for a partial amount of the purchase price and provided substitute fertilizer in lieu of a refund on the remaining purchase price. D denied coverage on the grounds that the cargo's title and risk of loss transferred from P to Buyer at the time the cargo was loaded in New Orleans, prior to the damage, and, therefore, Buyer, not P, was responsible for the loss. P sued D alleging breach of its insurance contract. Both parties filed motions for summary judgment. The trial court granted D's motion. It held that substantial evidence was presented by both parties to prove that there was no agreement between the parties as to the time of transfer of cargo title and risk of loss. Pursuant to applicable U.C.C. Rules and evidence presented, the title and risk of loss transferred at the time of loading the barges and before the loss herein occurred. P appealed.