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Treasure Craft Jewelers Inc. v. Jefferson Insurance Co.

decided: August 14, 1978.



Before Hunter, Weis and Garth, Circuit Judges.

Author: Hunter

In this case Treasure Craft Jewelers, Inc., a Pennsylvania corporation, appeals an order of the district court granting summary judgment for defendant, Jefferson Insurance Company of New York. The trial judge held that the terms of the insurance policy issued by Jefferson to Treasure Craft did not provide coverage for a loss suffered by the insured. We affirm.


At some point during the late evening of February 6 or the early morning of February 7, 1976, the Southampton, Pennsylvania store of plaintiff Treasure Craft was broken into and robbed. Thieves stole $94,369 in jewelry and merchandise. Plaintiffs submitted a claim for reimbursement for part of the loss to defendant Jefferson Insurance. The claim was based on a policy issued by Jefferson in June of 1974, covering the jewelry in plaintiff's Levittown, Pennsylvania store. Treasure Craft claimed that certain of the jewelry in the Southampton store had been covered by the policy on the Levittown store up to a loss of $25,000.

Jefferson rejected the claim on the ground that the loss was not covered by the policy. Treasure Craft then brought suit to recover the $25,000 it claimed. Defendant's motion for summary judgment was granted by the district court.

The policy under which plaintiff claims provides standard "jewelers block" insurance for the plaintiff's store in Levittown. The contract states in part:


2. The maximum liability of the Company resulting from any one loss, disaster or casualty is limited to:

A. $100,000 in respect of property at the Insured's premises as described herein;

E. $25,000 in respect of property elsewhere and not included in Clauses (A), (B), (C), and (D) above or otherwise limited herein.

In endorsement entitled "Property in Custody of Personnel Away from Premises", the insurer provided for limitation of its liability to the insured for property not in the Levittown store. The endorsement stated that the coverage would be limited to $5,000 for property in the custody of Treasure Craft's officers and employees, unless the endorsement named the individual having custody at the time of the loss. Full $25,000 coverage was provided if the property was in the custody of an officer or employee named in the endorsement. Donald Bound, president of Treasure Craft, was one of the individuals listed. Under paragraph 7 of the policy, entitled "Insuring Conditions", the parties also agreed that coverage would not apply to "additional locations of the insured."

Plaintiff's theory in the district court was that at the time of the robbery, the jewelry in question was in the custody of Bound, the president of the company. It argued that although the property was not on the premises of the Levittown store, the jewelry lost would nevertheless be covered by the policy since it was property in the custody of an officer of the insured.

In support of this proposition and in response to Jefferson's motion for summary judgment, Treasure Craft submitted the affidavit of Donald Bound. The affidavit stated that Bound, as president and chief executive officer of Treasure Craft, has exercised supervisory powers over the Southampton store and spent a substantial amount of time at that store. Thus, plaintiff argued, Bound had custody of the jewelry at the time of the robbery.

Bound's deposition further explained the nature of his supervision over the jewelry in the Southampton store. Bound testified that the jewelry involved in this case was taken from the Levittown store to Southampton when that store opened in November 1975. Part of the merchandise was chosen for the inventory at the Southampton store and the rest, valued at approximately $33,000, was placed in that store's safe and remained there during the three months prior to the robbery. Bound also stated that when he visited the Southampton store, he would work on the merchandise left in the safe, rearranging and resetting the stones. He further related that the jewelry was being prepared for resale Not in Levittown, but at a third store, which had not opened at the time of the robbery.

The district court held that the policy did not cover the loss suffered by Treasure Craft. The court determined that the provisions in the contract were free from ambiguity, and that the parties had agreed to a limited scope of coverage. It read the policy to provide that the coverage of property outside of the Levittown store did not include property at another location of the insured. The court thus held that Jefferson had not insured ...

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