American Auto. Ins. Co. v. Master Bldg. Supply & Lbr. Co.

• Decision Date: 23 December 1959
• Docket Number: Civ. No. 11063.
• Citation: 179 F. Supp. 699
• Parties: AMERICAN AUTOMOBILE INSURANCE COMPANY, a body corporate v. MASTER BUILDING SUPPLY AND LUMBER COMPANY, a body corporate, William Murphy, Jr., Esther Bernstein, and Samuel Bernstein.
• Court: U.S. District Court — District of Maryland

179 F. Supp. 699

AMERICAN AUTOMOBILE INSURANCE COMPANY, a body corporate v. MASTER BUILDING SUPPLY AND LUMBER COMPANY, a body corporate, William Murphy, Jr., Esther Bernstein, and Samuel Bernstein.

Civ. No. 11063.

United States District Court D. Maryland.

December 23, 1959.

Frederick J. Green, Jr., Baltimore, Md., for plaintiff.

Sol C. Berenholtz and Charles B. Heyman, Baltimore, Md., for Master Building Supply and Lumber Co.

William Murphy, Jr., and W. Hamilton Whiteford and Jacob A. Gross, Baltimore, Md., for Esther Bernstein and Samuel Bernstein.

THOMSEN, Chief Judge.

In this action for a declaratory judgment the issues are:

1. Whether the "loading and unloading" provisions of an automobile liability policy issued by plaintiff (insurer) to defendant Master Building Supply and Lumber Co. (Master) covered the injuries alleged to have been sustained by defendant Esther Bernstein when some sheetrock, delivered by Master to the Bernstein home, fell and injured her.

2. Whether the "premises-operations" division of a general liability policy issued by insurer to Master covered the alleged accident.

3. Whether insurer has waived or is estopped to raise the defense of non-coverage.

Facts

Master sells lumber, lumber products and building supplies from offices, warehouses and a storage yard at 3100 Cold Spring Lane, Baltimore, Maryland. It uses its trucks to deliver materials to building sites, houses and other buildings; its employees ordinarily leave the material wherever the customer tells them to leave it.

Two policies issued by insurer to Master were in force on June 25, 1958, the date of the accident:

1. An automobile policy, which covered liability for bodily injuries "caused by accident and arising out of the ownership, maintenance, or use of the automobile" and provided that "use of the automobile for the purposes stated includes the loading and unloading thereof." The purpose stated was commercial, and the truck which delivered the sheetrock to the Bernstein home was one of the trucks covered by the policy.

2. A general liability policy, which described in four "divisions" various "hazards" for which coverage might be obtained. The policy issued to Master, however, afforded coverage only for the hazard described as "Division 1. Premises —Operations. The ownership, maintenance or use of premises, and all operations." On the "Declarations" sheet of the policy, in the box headed "Division 1. Premises—Operations", insurer's agent had typed:

"3100 W. Coldspring Lane, Balto., Md. And Elsewhere In The State Of Md. Building Material Dealers —No Second-Hand Materials—Including Local Managers".

An exclusion provided: "This policy does not apply: (a) under division 1 of the Definition of Hazards, * * * to the ownership, maintenance, operation, use, loading or unloading of * * * (2) automobiles if the accident occurs away from such premises or the ways immediately adjoining * * *."

Master purchased no coverage for the hazards defined as "Division 2—Elevators" or "Division 3—Independent Contractors" or "Division 4—Products".¹

On June 23, 1958, Mrs. Bernstein and Peter Gordon, a carpenter who was working at the Bernstein home, went to Master's office and ordered some merchandise, including nails, lumber and nine pieces of sheetrock, to be delivered to her house. On the morning of June 25 defendant Murphy, an employee of Master, using a truck covered by the automobile policy, drove the material from Cold Spring Lane to the Bernstein home, a mile away, and parked the truck in the alley behind the house. He was told by Gordon to leave the nails and lumber in the yard, and by Mrs. Bernstein to bring the sheetrock into the cellar. Murphy lifted the first sheet from the truck, carried it into the cellar, and set it down with one edge on the cement floor and one edge leaning against the storage closet. He did not set it down or rest it from the time he removed it from the truck until he placed it in the basement. He followed this procedure with each piece of sheetrock. After the last piece was placed in the cellar Murphy obtained a receipt from Mrs. Bernstein, was paid by her, and left in the truck.

About four hours later, while Mrs. Bernstein was standing near the sheetrock, it fell upon her and injured her leg. There is no evidence in this case that the sheetrock had been touched by anyone in the meantime.

The same day, June 25, Mr. Bernstein notified Master of the accident, and a few days later the Bernsteins' lawyer wrote Master a letter making claim. On July 3 Master forwarded this letter to insurer's agent, who in turn notified insurer's claim office; they investigated the accident, took statements from Murphy and Master's president, and on July 17 got in touch with the Bernsteins' attorney.

On August 18 the Bernsteins sued Master and Murphy for damages in the Superior Court of Baltimore City, alleging the purchase of the sheetrock, its delivery to their home, that the stacking of the sheetrock was done in a negligent manner, that the sheetrock was left in an unstable and unsafe position, and that while Mrs. Bernstein was in the basement of her home and "in the act of passing this stack of sheet rock * * * because of its negligent and unsafe stacking, the sheet rock toppled and fell upon" her, breaking her legs and otherwise injuring her.

Copies of the declaration and writ of summons were served on Master and Murphy, requiring them to answer the action no later than September 16. On or about August 28 those papers were delivered to insurer for defense under the automobile policy.² On September 9 insurer's counsel wrote Master and Murphy that insurer "feels that this occurrence is not within the coverage afforded you by the aforementioned policy of insurance, but it is willing, nonetheless, to defend this suit on your behalf if you will, prior to Noon, Monday, September 15, 1958, return to me the enclosed Agreement properly executed by both of you." The agreement, a non-waiver agreement, was promptly executed. It provided that the defense and further investigation of the Bernsteins' action should be without prejudice to any right insurer might have to disclaim liability or coverage under the policy, and that either party might file an action for a declaratory judgment at any time.

In their letter returning the executed non-waiver agreement on October 13, counsel for Master and Murphy called attention to the general liability policy and stated that the execution of the agreement was without prejudice to such coverage as Master is entitled to under that policy in connection with the accident. This letter crossed a letter from insurer denying coverage under the general liability policy.

Thereafter, insurer's counsel entered his appearance for Master and Murphy in the Bernsteins' suit, which has not yet come to trial.

On December 3, 1958, insurer wrote Master and Murphy denying coverage under the automobile policy, and on December 10, filed the instant action for declaratory judgment in this court. On December 20, Master wrote insurer claiming coverage under both policies, stating that the declaratory judgment is premature, and expressing its desire that insurer's counsel continue to defend the Bernstein suit.

Discussion

1. The automobile policy provides coverage for injuries caused by accident and arising out of the use of certain vehicles, or by extension, arising out of the loading or unloading of those vehicles. The policy contains no definition of "loading and unloading", and no Maryland decision construing those words has been cited or found. The decisions in other states are well summarized in Raffel v. Travelers Indemnity Co., 141 Conn. 389, 106 A.2d 716, 718, as follows:

"Two doctrines have been evolved concerning the construction to be given to the phrases `arising out of the * * * use' and `"loading and unloading"'. (citing cases) By the more narrow construction, referred to as the `coming to rest' doctrine, `unloading' has been held to embrace only the operation of taking the goods from the vehicle to a place of rest out of the vehicle. Only that which occurs in this initial process is covered. (citing cases)

"The majority of the courts have adopted a broader construction and have held that the phrases in question comprehend not only the immediate transfer of the goods from the truck but also the operation of moving them from the vehicle to the place where they are to be ultimately delivered. This is referred to as the `complete operation' doctrine. Any occurrence during, or arising out of, this process is covered. (citing cases) The rationale of the `complete operation' doctrine, which we hold is the more just and understandable of the two, is that the facts of each case must establish a causal relationship between the `use' and `unloading' of the vehicle and the injuries inflicted."

I agree with the conclusion stated in the last sentence quoted above, and believe that the "complete operation" rule would be applied by the Maryland courts in such a case as this.

Insurer contends, however, that even if the "complete operation" doctrine be adopted, the automobile policy would afford no coverage in this case because the accident did not occur during the unloading operation, but several hours after the truck had left the scene. Insurer relies particularly on Liberty Mutual Ins. Co. v. Hartford Acc. & Ind. Co., 7 Cir., 251 F.2d 761, where the accident occurred 29 hours after the unloading operation had been completed. The decision of the Seventh Circuit was controlled by an Illinois Appellate Court opinion, which...