                             ____________

                              No. 95-1597
                             ____________


House of Lloyd, Inc.,             *
                                  *
                Appellee,         *
                                  *
     v.                           *
                                  *
Versa Corporation, doing          * Appeal from the United States
business as Versa, Ferguson       * District Court for the
Conveyor Corporation,             * Western District of Missouri
                                  *
                Defendant.        *
                                  *
Federal Insurance Company,        *
                                  *
                Appellant.        *

                             ____________

                  Submitted:    November 15, 1995

                        Filed: June 25, 1996
                            ____________

Before McMILLIAN, FLOYD R. GIBSON, and LOKEN, Circuit Judges.
                           ____________


McMILLIAN, Circuit Judge.


     Federal Insurance Company (Federal) appeals from a final
judgment entered in the United States District Court for the
Western District of Missouri in favor of House of Lloyd, Inc.
(Lloyd), on Lloyd's claim for insurance proceeds to cover the
replacement cost of certain equipment that was destroyed by a fire
on Lloyd's property while being installed by Federal's insured,
Versa Corporation (Versa).     House of Lloyd, Inc. v. Versa Corp.,
No. 89-0943-CV-W-6 (W.D. Mo. Jan. 26, 1995).   For reversal, Federal
argues that the district court erred in holding that (1) the loss
of property was covered by the policy Federal issued to Versa (the
Federal policy) even though the risk of loss had passed from Versa




                               -2-
to Lloyd, id. (June 7, 1993) (magistrate judge's order disposing of
risk of loss issue), and (2) Federal's share of the insurance
liability      was    83%,   as    compared     to   17%   attributed    to   Lloyd's
insurer, Travelers Indemnity Company (Travelers).                  Id. (Sept. 26,
1994) (district court order disposing of coverage issue); id.
(Jan.    26,   1995)     (district      court    order     disposing    of    monetary
allocation issue).           For the reasons discussed below, we hold that
the Federal policy did not cover the loss of property at issue in
the present case.            Accordingly, we reverse the judgment of the
district court in favor of Lloyd against Federal, decline to reach
the allocation issue as moot, and remand this case to the district
court with instructions to enter judgment for Federal.


                                      Background


        The background facts are stated in detail in the magistrate
judge's order dated June 7, 1993.               Id., slip op. at 1-12 (June 7,
1993).       The following is a brief summary of the facts.                        On
April 28, 1987, Lloyd entered into a contract with Versa whereby
Versa agreed to supply and install conveyor subsystems at Lloyd's
distribution facility under construction, located on Botts Road in
Grandview, Missouri.              On November 27, 1987, after the conveyor
subsystems      had    been       delivered,    but    before   installation      was
complete, they were damaged or destroyed in a fire at the Lloyd
distribution facility.             The Federal policy insuring Versa was in
effect at the time of the fire.                The Federal policy contained an
"Installation Floater," which included the following provision:


        1.   PROPERTY COVERED:

               This policy insures the property of the
               Insured and the property of others for which
               the Insured may be liable, consisting



                                          -3-
principally   of    mechanical   material[,]
handling equipment and metal products.




                    -4-
Joint Appendix, Vol. II, at 600 (attachment to parties' joint
stipulation of facts).   Lloyd also had an insurance policy issued
by Travelers (the Travelers policy), which was in effect at the
time of the fire and undisputedly covered Lloyd's loss.1


     Lloyd brought the present action in federal district court on
the basis of diversity jurisdiction, asserting two breach of
contract claims against Versa (Counts I and II) and a contract
claim against Federal (Count III).    As to Versa's liability, Counts
I and II of the complaint alleged that Versa bore the risk of loss
of the conveyor subsystems at the time of the fire.            As to
Federal's liability, Count III alleged that, under the terms of the
Installation Floater in the Federal policy, the conveyor subsystems
were "property of others for which [Versa] may be liable."


     In the course of the litigation, the parties stipulated to a
separation of issues for trial purposes.      The parties agreed to
first have the risk of loss issue tried by the court; afterward,
depending on the outcome in that bench trial, a jury trial would be
held on the remaining liability issues.      House of Lloyd, Inc. v.
Versa Corp., slip op. at 2 (Apr. 16, 1992) (order incorporating
parties' stipulation).   By consent of the parties, the first trial
was conducted by a magistrate judge.      The magistrate judge held
that Versa was not liable to Lloyd because the risk of loss of the
conveyor subsystems passed to Lloyd upon delivery.     Id., slip op.
at 12-28 (June 7, 1993).2


     1
      Lloyd asserts, however, that there was dual coverage under
the Federal policy and the Travelers policy.
     2
      In an order dated July 19, 1993, the magistrate judge held
that the June 7, 1993, ruling was interlocutory and not a final and
appealable judgment or order. House of Lloyd, Inc. v. Versa Corp.,
No. 89-0943-CV-W-6 (W.D. Mo. July 19, 1993).      Later, after the
district court entered judgment in favor of Lloyd on the issue of

                                -5-
     Following the magistrate judge's June 7, 1993, ruling on the
risk-of-loss issue, the district court required the parties to file
stipulated facts and ordered briefing on the issue of Federal's
liability.3      The district court then disposed of the issue of
Federal's liability without a jury trial or a bench trial.                 Id.
(Sept. 26, 1994) (memorandum and order).4               In its order dated
September 26, 1994, the district court held that the Federal policy
covered      Lloyd's   loss   because   coverage    under   the   Installation
Floater was triggered by Versa's equitable responsibility for the
conveyor subsystems, notwithstanding the fact that the risk of loss
had passed from Versa to Lloyd.         Id. at 3.   The district court then
invited briefing regarding the amount of money owed by Federal.


Federal's liability, the magistrate judge ordered entry of final
judgment in favor of Versa in accordance with the June 7, 1993,
order. Id. (Mar. 17, 1995). Lloyd has not cross-appealed with
respect to the risk-of-loss issue.         Accordingly, the final
determination that the risk of loss passed from Versa to Lloyd upon
delivery of the conveyor subsystems is not reviewable in the
present appeal and must be accorded appropriate deference as the
law of the case.
         3
        These procedural steps were taken by the district court
despite the court's earlier ruling that, if Lloyd were found in the
initial bench trial to have borne the risk of loss vis-a-vis Versa,
then a jury trial would be held on Lloyd's remaining claim against
Federal. Id., slip op. at 2 (Apr. 16, 1992).
     4
      It is unclear from the materials provided on appeal how the
district court procedurally reached the issue of Federal's
liability in the manner it did.      As noted above, the district
court's order of April 16, 1992, stated that the issue of Federal's
liability would be tried by a jury if Lloyd were found to have
borne the risk of loss. Id. No jury trial or bench trial was
held, however, and instead the district court ruled on the merits,
apparently relying solely on the facts stipulated by the parties
and the magistrate judge's findings.        Id. (Sept. 26, 1994)
(memorandum and order). Federal asserts in its brief on appeal
that this is an "appeal from a civil bench trial."        Brief for
Appellee at 6.    Lloyd, by contrast, asserts that "the District
Court's judgments . . . were in the nature of summary judgment."
Supplement to Brief of Appellant (filed May 16, 1995).

                                        -6-
Following that briefing, the district court found that Federal was
liable for $1,045,884.05 of the total loss, and Travelers was
liable for the remaining $214,217.21.   Id. at 7 (Jan. 26, 1995)
(allocating liability according to a ratio of relative liability




                               -7-
derived by comparing applicable limits in two policies).                  Judgment
was entered.      Id. (Jan. 26, 1995); id. (Mar. 17, 1995).                Federal
appealed.


                                 Discussion


        We first consider our standard of appellate review.               As noted
above (see note 3 supra), neither the district court's orders nor
any other      documentation    in   the    record    on   appeal      reveals   the
specific procedural mechanism employed by the district court in
deciding the issue of Federal's liability.                 However, whether we
treat    the   district   court's     decision       as    a   summary    judgment
disposition or the equivalent of a bench-tried matter, the standard
of review is essentially the same.           Assuming as true the facts to
which the parties have stipulated, and the magistrate judge's
uncontested finding that the risk of loss had passed from Versa to
Lloyd upon delivery of the conveyor subsystems, we determine de
novo whether, as a legal matter of contract interpretation, the
Federal policy covered Lloyd's loss.          For the reasons stated below,
we hold that it did not.


        The disposition of this case turns on the legal effect of the
following words in the Installation Floater of the Federal policy:
"this policy insures . . . the property of others for which the
Insured    may   be   liable,   consisting     principally        of    mechanical
material[,] handling equipment and metal products."               In arriving at
the legal conclusion that these words required Federal's coverage
for Lloyd's loss of the conveyor subsystems, the district court
relied on Folger Coffee Co. v. Great Am. Ins. Co., 333 F. Supp.
1272 (W.D. Mo. 1971) (Folger Coffee) (where bailee's insurance
policy provided "the policy covers . . . property of others held by
the insured for which the insured is liable," personal property of


                                      -8-
bailor damaged while in bailee's possession was covered under
bailee's insurance policy regardless of whether the damage resulted
from bailee's negligence or other wrongdoing).   The district court




                               -9-
held that the coverage provided under the Installation Floater for
property of others for which Versa "may be liable" was not limited
to losses for which Versa would be legally liable, but rather more
broadly referred to losses of or damage to property of others for
which the insured was legally or equitably responsible.    House of
Lloyd, Inc. v. Versa Corp., slip op. at 2-3 (Sept. 26, 1994)
(citing Folger Coffee, 333 F. Supp. at 1274-75 ("it is concluded
that Missouri courts would follow the prevailing view and construe
the word `liable' in the policy in the case at bar to be synonymous
with `responsible'")).


     The district court then reasoned:


           If it seems adequately established, as in
     Folger Coffee, that "liable" should include the
     practical responsibilities of a bailee, regardless
     of legal liability, it will be acknowledged that
     the present case requires going a step or two
     beyond bailment situations.     Unlike a bailment,
     there was here shared possession of the subsystem
     components, not exclusive possession in Versa, the
     party which had contract obligations but no longer
     owned the property. However, the duty to install
     was a continuing responsibility of Versa's, and in
     that sense it remained at least "equitably"
     responsible for the property that it was to install
     and for which it would presumably have actual
     priority in handling, despite technically shared
     possession. Moreover, the specified duration of
     coverage definitely included the installation
     period, which strongly indicates that the period
     during   which   Versa   would   be  "liable"   was
     contemplated as extending through installation and
     until acceptance.


Id. at 3.


     In the present appeal, Federal argues that the district
court's liability determination contradicts the plain meaning of


                               -10-
the Installation Floater.      Federal maintains that the language of
the   Installation   Floater   plainly   indicates   that   Federal   only
provided coverage for damages that Versa was obligated to pay.
Because the risk of loss passed to Lloyd upon delivery, Federal




                                  -11-
argues, Versa was not obligated to pay damages; thus, there is no
coverage under the Federal policy.                   Federal further argues that the
district court erred in interpreting Folger Coffee.                            Unlike the
bailee-insured in Folger Coffee, Versa, the insured in the present
case, did not bear the risk of loss at the relevant time.                        The mere
fact       that   Versa       was    responsible      for   installing   the     conveyor
subsystems at the time of the fire, Federal argues, does not
legally or equitably create responsibility to protect against the
loss of or damage to that property, particularly where the property
was not within Versa's exclusive custody and control.


       Lloyd,       by    contrast,       maintains         that   Federal's     proposed
interpretation           of    the    Installation      Floater      suffers    from   the
mistaken assumption that Federal provided coverage for liability
when, in fact, Federal provided coverage for the loss of or damage
to   property.           That       covered   property,      Lloyd   argues,     included
property of others for which Versa was responsible, including the
conveyor subsystems.            In support of this argument, Lloyd highlights
the fact that the Installation Floater contains numerous references
to the insured "property."                Lloyd also relies on language in the
Underwriting Guidelines for the Installation Floater5 and a letter

       5
        The Underwriting Guidelines provided in pertinent part:

       The interest of the owner, seller or contractor is
       covered against loss or damage to machinery,
       equipment, building materials or supplies being
       used with and during the course of installation,
       testing, building, renovating or repairing. Such
       policies provide coverage at points or places where
       work is being performed, while in transit, and
       during temporary storage or deposit.

Joint Appendix, Vol. II, at 614.                        Elsewhere the Underwriting
Guidelines state:

       1.         Property Covered


                                              -12-
from Federal to Versa's attorney in which Federal disclaimed a duty
to   defend    Versa   against    Lloyd's   claims   on     grounds      that    the
                                                            6
Installation Form was "not a liability form."                     Responding to
Federal's     contention   that    the   district    court       erred    in    its
application of Folger Coffee, Lloyd disputes the notion, advanced
by Federal, that Folger Coffee implicitly recognizes a distinction
between bailment cases and non-bailment cases.              Lloyd defends the
district court's reasoning on grounds that Folger Coffee rests on
a more fundamental distinction between coverage for liability and
coverage for property.       Finally, Lloyd argues that the district
court's interpretation of the Installation Floater is consistent
with   Missouri    state   court    cases   which    have       recognized      that
insurance contract language referring to "property of others" for
which the insured may be liable expresses an intent by the insurer
to benefit parties other than the named insured and to pay them
directly.     Brief for Appellee at 18-23 (citing Peters v. Employers
Mut. Casualty Co., 853 S.W.2d 300 (Mo. 1993) (en banc) (Peters)
(policy provided coverage to college faculty members, not named in



          Our Builders Risk/Installation floater covers
          physical loss or damage to property during
          installation.    It does not cover nor is it
          intended to cover the General Liability of
the Insured.    Every contractor and sub-contractor should be
expected to have a General Liability policy to protect this
exposure.


Joint Appendix, Vol. II, at 616 (emphasis in text).


       6
        When this lawsuit was initially brought by Lloyd, Versa
contacted Federal and demanded that Federal provide Versa with a
defense; Federal responded by letter stating that the Installation
Form was "not a liability form, and therefore there is no duty to
defend the insured against actions such as those alleged in the
complaint, for breach of contract." See Joint Appendix, Vol. III,
at 738 (letter).

                                     -13-
the policy, whose personal property was destroyed in a fire in the
insured college's theater); Mitchell v. K.C. Stadium Concessions,
Inc., 865 S.W.2d 779 (Mo. Ct. App. 1993) (Mitchell) (policy of
lessee provided coverage to lessor, for damage to lessor's personal




                               -14-
property resulting from a fire on the leased property); Boatmen's
First Nat'l Bank v. Hawkeye-Security Ins. Co., 861 S.W.2d 600 (Mo.
Ct. App. 1993) (Boatmen's v. Hawkeye-Security) (where insured
sought coverage for personal property stolen from a warehouse and
the actual title owner of the stolen property was not a named
insured but was a corporation jointly owned by the insured and his
wife, judgment for insurance company was reversed on grounds that
ambiguities existed precluding determination of coverage issue at
summary judgment stage)).


     We agree with Lloyd that the Installation Floater at issue in
the present case expresses an intent to benefit directly parties
not named in the policy, where appropriate.    However, upon careful
de novo review, we hold that the district court erred in concluding
that the Federal policy covered Lloyd's loss in the present case.
Specifically,   the    district   court's   interpretation   of   the
Installation Floater is inconsistent with that provision's ordinary
and plain meaning.    As the Missouri Court of Appeals explained in
Boatmen's v. Hawkeye-Security, 861 S.W.2d at 602,


           [t]he rules of construction applicable to
     insurance contracts require that the language used
     be given its plain meaning. Robin v. Blue Cross
     Hosp. Serv., Inc., 637 S.W.2d 695, 698 (Mo. banc
     1982) (citations omitted).      If the policy is
     unambiguous, it must be enforced according to its
     terms. Id. If the language is ambiguous, it will
     be construed against the insurer. Id. Language is
     ambiguous if it is reasonably open to different
     constructions; and language used will be viewed in
     light of the meaning that would ordinarily be
     understood by the layman who bought and paid for
     the policy. Id.


     Applying the above-stated principles to the undisputed facts
of the present case, we hold that Lloyd's loss was not covered by
the Federal policy by virtue of the Installation Floater.    We hold

                                  -15-
that the relevant language of the Installation Floater ("this
policy insures . . . the property of others for which the Insured




                              -16-
may be liable") is clear and unambiguous: Federal must indemnify
Versa for its liability arising out of the loss of or damage to
property of others during installation.              Furthermore, notwith-
standing Federal's stated assertion that it did not have a duty to
defend Versa, we read the words "may be" in the Installation
Floater as signifying Federal's duty to defend Versa against claims
arising out of the loss of or damage to property of others during
Versa's installation.     We interpret the words "may be" for the
purpose of eliminating the possibility that those specific words
indicate that Federal must cover Lloyd's losses regardless of
Versa's obligation to pay.      Federal's duty to defend Versa is not
otherwise at issue in the present appeal.


      Moreover, the meaning that would ordinarily be understood by
the party which bought and paid for the policy (i.e., Versa) is
that the Installation Floater operates as an indemnity provision.
The   letter   from   Federal   to    Versa   upon    which   Lloyd   relies
demonstrates, not only that Federal refused to provide a defense
for Versa, but also that Versa understood the Installation Floater
to be an indemnity provision.        Significantly, Versa, not Lloyd, is
the party which "bought and paid for the insurance."           Boatmen's v.
Hawkeye-Security, 861 S.W.2d at 602.          Accordingly, we hold as a
matter of law that, under the facts of the present case, the
Installation Floater imposed upon Federal no more than a duty to
defend Versa and to indemnify Versa for its legal obligations to
pay for the loss of or damage to property of others during Versa's
installation.


      Finally, our interpretation of the Installation Floater is
consistent with Folger Coffee.         Unlike Versa in the present case,
the insured in Folger Coffee retained the risk of loss at all
relevant times because of the parties' bailment relationship.            In
a bailment situation, the bailor can recover for loss of or damage

                                     -17-
to the bailment property upon proof that the loss or damage
occurred while in the bailee's possession because an inference of




                              -18-
negligence is raised under the res ipsa loquitur doctrine.               Royster
v. Pittman, 691 S.W.2d 305, 308 (Mo. Ct. App. 1985).              Versa was not
a bailee in the present case.             The mere fact that Versa had a
contractual obligation to install the conveyor subsystems was not
the same, for liability purposes, as a bailee's responsibility to
protect against damage or loss, particularly in light of the fact
that the conveyor subsystems were not even within Versa's exclusive
custody and control but were located on Lloyd's property at the
time of the fire.            Cf. Peters, 853 S.W.2d at 302-03 (where
building-owner's      policy    provided      coverage    for    "contents"   of
building, loss of personal property of plaintiffs who were not
named insureds was covered "property of others" because it was
destroyed   while     contained        within    the    insured's     building).
Moreover, Lloyd is bound by the district court's determination that
the risk of loss had passed to Lloyd at the time of the fire.                 We
therefore   hold      that     Versa    was     not    legally   or    equitably
"responsible" for the conveyor subsystems within the meaning of
Folger Coffee.


     Accordingly, we reverse the judgment of the district court in
favor of Lloyd against Federal, decline to reach the allocation
issue as moot, and remand this case to the district court with
instructions to enter judgment for Federal.


     A true copy.

            Attest:

                      CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.




                                       -19-
