## Facts

- Shaver Transportation Company (Shaver), a barge operator, contracted with Weyerhaeuser Company (Weyerhaeuser) to transport liquid caustic soda from Weyerhaeuser to the buyer, GATX.
- Shaver arranged a marine open cargo insurance policy issued by The Travelers Indemnity Company (Travelers) for the shipment. The policy was written on an enumerated-perils basis (including standard marine perils and additional “specially to cover” clauses), rather than an all-risk form.
- The barge used for the first shipment had previously carried tallow.
- During loading, Shaver loaded the caustic soda through the barge’s input lines that had not been properly cleaned after the tallow carriage.
- Residual tallow in the lines contaminated the caustic soda, making it unfit for GATX’s intended use.
- GATX refused to accept delivery because of the contamination.
- The barge returned to Shaver’s dock with the cargo still aboard; Shaver heated the cargo to prevent it from solidifying while deciding how to handle the rejected shipment.
- Shaver notified Travelers through its broker, Johnson & Higgins, and was advised that the contamination did not appear to be a recoverable loss under the policy.
- The contaminated cargo was ultimately removed by a chemical-salvage company.
- Shaver and Weyerhaeuser claimed losses tied to the diminished value of the shipment (net of salvage) and related handling costs (including heating and repairs to equipment damaged by corrosion).
- Shaver and Weyerhaeuser sued Travelers in federal district court seeking coverage under the marine cargo policy.

## Issues

1. Whether contamination of caustic soda during loading from residual tallow in unclean cargo lines constitutes a covered loss under the policy’s “perils of the seas”/standard marine perils language.
2. Whether the policy’s shore-related coverage provision applies to contamination occurring during loading operations.
3. Whether the policy’s Inchmaree-type coverage (addressing certain accidents and negligence categories) covers contamination caused by Shaver’s failure to clean the loading system.
4. Whether a separate negligence clause provides coverage for a loss that otherwise does not fall within the enumerated perils.

## Decision

- The court held the contamination loss was not covered under the policy’s perils-of-the-seas or other standard marine perils provisions.
- The court held the shore-related clause did not apply because the loss was contamination during loading, not a shore risk of the type described by that clause.
- The court held the Inchmaree-type provision did not extend coverage to this kind of contamination from the insured’s loading procedures; reading it that broadly would effectively convert the limited, enumerated-perils policy into all-risk coverage.
- The court held the negligence clause did not create stand-alone all-risk protection and did not bring the loss within coverage where the underlying loss type was outside the policy’s covered risks.
- Judgment was entered for Travelers, denying recovery.

## Legal Principles

- An enumerated-perils marine cargo policy covers only the risks specified in the contract; the insured must show the loss fits within a covered peril.
- “Perils of the seas” and standard marine perils generally require a fortuitous marine casualty; contamination from an insured’s failure to clean loading lines is treated as an operational loading problem, not a covered sea peril.
- Clauses that extend coverage for certain accidents or negligence (including Inchmaree-type language) are read in the setting of the whole policy and do not automatically turn a limited perils policy into all-risk coverage.
- A negligence clause typically does not supply coverage by itself when the loss does not fall within the policy’s covered categories; negligence is not a substitute for a covered peril.
- Policy interpretation looks to the contract language and the coverage the parties chose; selecting a limited form of coverage matters when deciding whether a claimed loss is within the bargain.

## Conclusion

The district court denied coverage for a shipment of caustic soda contaminated during loading by residual tallow in unclean barge lines, holding that the loss did not fall within any enumerated-peril, shore-related, Inchmaree-type, or negligence provision of the marine cargo policy, and entered judgment for Travelers.


Shaver Transportation Co. v. Travelers Indemnity Co., 481 F. Supp. 892, 1980 AMC 393 (1979)