Morgan L.Lucid and Mary J. Lucid - Page 7

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               The July 31, 1987, Lucid Cruising corporate minutes                    
          mentioned the “decided strained feelings” with Kanter Yachts, and           
          that:  “[Petitioners’] * * * dependence upon having a good                  
          seaworthy yacht that is attractive to show is most important in             
          making this corporation solvent.”  Petitioners decided to begin             
          an advertising campaign for the upcoming Seattle boat show                  
          because Kanter Yachts would be responsible for the advertising              
          and registration for the Annapolis boat show.                               
               In September 1987, petitioners took possession of the                  
          Brendan in Canada but damaged it the next day while sailing.  The           
          vessel was returned to Kanter Yachts for repairs.  Petitioners'             
          insurance policy covered the damage to the sailboat.  The                   
          insurance contract was entitled, “The Travelers Personal Yacht              
          Policy” from The Travelers Insurance Companies.  The policy read,           
          in part:                                                                    
               Private Pleasure Use Only                                              
               We do not provide any coverage under this policy while                 
               the insured yacht is used for charter, hire, or any                    
               other commercial purpose, unless approved by us in                     
               writing.                                                               
          The Brendan was returned to petitioners in January 1988.  It was            
          shipped overland from Port Stanley, Ontario, Canada, to Seattle,            
          Washington.  The sailboat was damaged by the trucking company in            
          transit.  The damage was repaired, and petitioners showed the               
          Brendan at the Seattle boat show from January 16, 1988 through              
          February 28, 1988.  Petitioners distributed their business cards            
          and brochures that were supplied by Kanter Yachts.  Approximately           



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