Owens Pacific Marine, Inc. v. Insurance Co. of North America

Plaintiff Owens Pacific Marine, Inc. (hereinafter referred to as the insured), was engaged in the business of selling and repairing boats, principally pleasure boats. When a purchaser contracted to buy a boat, the insured would spend anywhere from the next one to four weeks readying the boat for delivery to the purchaser. Often this procedure would include alterations or additions to the boat to satisfy the requirements of the particular purchaser.

On April 26, 1965, Robert Millspaugh contracted to purchase from the insured a new boat which he named the “Silver Dollar.” The boat did not contain a hot water heater and Mr. Millspaugh requested that one be installed. The insured did so between April 27, 1965, and May 6, 1965, the installation requiring alterations to the interior of the boat to accommodate the electric hot water heater. On May 7, 1965, the boat was delivered to the purchaser and about one week later the boat was completely destroyed, from the explosion of the electric hot water heater. Millspaugh sued the insured and recovered judgment. The insured incurred costs of $2,857.72 in defending the suit and suffered a loss of $15,922.11 in the payment of damages…