Aetna Casualty & Sur. Co. v. Ocean Accident & Guar. Corp., 16400.

CourtUnited States Courts of Appeals. United States Court of Appeals (3rd Circuit)
Citation386 F.2d 413
Decision Date30 November 1967
Docket NumberNo. 16400.,16400.

James F. Manley, Burns, Manley & Little, Pittsburgh, Pa., for appellant.

Frederick N. Egler, Egler, McGregor & Reinstadtler, Pittsburgh, Pa., for appellee.

Before SMITH and FREEDMAN, Circuit Judges and WORTENDYKE, District Judge.



In this action between two insurance companies the plaintiff seeks partial reimbursement from an alleged coinsurer for amounts paid to satisfy a judgment entered against plaintiff's insured. The District Court found in plaintiff's favor. We agree with the reasoning of Judge Marsh below that "the accident occurred in the course of operations performed for the named insured (Latrobe) by the independent contractor (Dill)," and that the hazard involved was covered by the policy issued by plaintiff's coinsurer (Ocean). 261 F.Supp. 223, 226 (W.D. Pa.1966).

Latrobe Brewing Company (Latrobe) contracted with Dill Construction Company, Inc. (Dill) to remove and replace an ammonia system used by Latrobe as the brewery's cooling plant. According to a stipulation by counsel the ammonia system included: "pipes of various sizes, condensers in shape of tanks for collecting the ammonia gas, and valves which performed varied functions in the system and ammonia gas in the pipes." An employee of Dill was fatally injured during the removal of the old system due solely to the negligence of Latrobe. In an action by the employee's estate against Latrobe, defended by Aetna Casualty and Surety Company (Aetna), a judgment was entered against Latrobe and satisfied by Aetna. There is no question concerning Aetna's obligation to Latrobe.

Latrobe, however, was also the named insured in a policy issued by Ocean Accident & Guarantee Corporation, Ltd. (Ocean). Aetna seeks reimbursement from Ocean. The question for decision is whether the Ocean policy extends coverage to the accident which occurred. Ocean has not questioned Aetna's standing to pursue this litigation as the equitable subrogee of Latrobe.

The pertinent language of the Ocean policy provides:

Ocean agrees to pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of bodily injury, sickness or disease, including death at any time resulting therefrom, sustained by any person, caused by accident and arising out of the hazards hereinafter defined. (Emphasis supplied.)
Definition of Hazards
DIVISION 3 — INDEPENDENT CONTRACTORS Operations performed for the named insured by independent contractors and general supervision thereof by the named insured, if the accident occurs in the course of such operations, other than (a) maintenance and repairs at premises owned by or rented to the named insured and (b) structural alterations at such premises which do not involve changing the size of or moving buildings or other structures. (Emphasis supplied.)

Two questions arise. (1) Did Latrobe's liability arise out of an accident occurring in the course of operations performed for Latrobe by an independent contractor? (2) Was the operation a structural alteration; if so, did it involve changing the size or moving a building or other structure? There is no argument that the work performed by Dill constituted maintenance or repair.

Ocean initially contends that since the accident was caused solely by Latrobe's negligence that it did not arise out of operations...

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    ...Co., 318 N.C. 534, 350 S.E.2d 66, 74 (1986). Other courts have held the phrase "broad and vague." See Aetna Cas. & Sur. Co. v. Ocean Accident & Guar. Corp., 386 F.2d 413, 415 (3d Cir.1967); Liberty Mut. Ins. Co. v. Westfield Ins. Co., 301 Ill.App.3d 49, 234 Ill.Dec. 578, 703 N.E.2d 439, 442......
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    ...81, 86, 27 Ill.Dec. 738, 389 N.E.2d 1146.) The third circuit construed the phrase in Aetna Casualty & Surety Co. v. Ocean Accident and Guaranty Corp. (3rd Cir. 1967) 386 F.2d 413, 414, 37 A.L.R.3d 1417: "The policy language 'arising out of' is very broad and vague. It must, therefore, be co......
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    ...were concerned with "structural alterations ... which do not involve ... moving ... structures." Cf. Aetna Cas. & Sur. Co. v. Ocean Accident & Guar. Corp., 386 F. 2d 413, 415 (3d Cir. 1967). The word "and" which precedes the words "general supervision," like the two main descriptive phrases......
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