Amery Motor Co. v. Corey

• Decision Date: 06 March 1970
• Citation: 174 N.W.2d 540,46 Wis.2d 291
• Parties: AMERY MOTOR CO., Inc., et al., Plaintiffs, v. Warren W. COREY et al., Defendants and Third-Party Plaintiffs-Appellants, Indianhead Truck Line, Inc., Defendant, UNLIMITED OPPORTUNITIES, INC., Third-Party Defendant-Appellants, AGRICULTURAL INS. CO. et al., Third-Party Defendant-Respondents.
• Court: Wisconsin Supreme Court

Page 540

174 N.W.2d 540

46 Wis.2d 291

AMERY MOTOR CO., Inc., et al., Plaintiffs, v. Warren W. COREY et al., Defendants and Third-Party

Plaintiffs-Appellants,

Indianhead Truck Line, Inc., Defendant,

UNLIMITED OPPORTUNITIES, INC., Third-Party Defendant-Appellants,

AGRICULTURAL INS. CO. et al., Third-Party Defendant-Respondents.

Supreme Court of Wisconsin.

March 6, 1970.

This case involves the construction of a loading and unloading provision of an automobile liability policy and comes to this court on a motion for summary judgment and a demurrer.

About 4:00 o'clock a.m. on February 20th, 1965, an explosion and fire started in the storage tanks of a bulk plant at Amery, Wisconsin, operated by Warren W. Corey. The tanks were being filled with gasoline by Dennis Houle, the driver for the Indianhead Truck Line, Inc. (Indianhead), the transporter of the gasoline. The fire spread to adjacent properties and approximately 40 suits for property damage and personal injury were commenced, claiming in the excess of $450,000. By stipulation, the cases were consolidated into this case to avoid multiplicity.

Amery Motor Co., Inc., and others are claimants and their complaint alleges negligence on the part of the owner, lessees and sublessees of the bulk plant and of the driver of the transport truck of Indianhead. The bulk plant was owned by Cities Service Oil Company which leased it to Unlimited Opportunities, Inc., which subleased it to S & F Petroleum Company, which in turn subleased it to the plant operator, Warren W. Corey. Hereinafter they will be referred to as owner-lessees. As to these ownerlessees the complaint alleges negligence in respect to a defective condition of the bulk tanks and of the premises. The complaint alleges Houle was negligent, and therefore his employer Indianhead was responsible for the manner in which he unloaded the gasoline and for his failure to discover the defects in the bulk tanks. Agricultural Insurance Company, Lloyds of London, and The London & Edinburgh Insurance Company Limited (insurers) are the insurers of Indianhead.

While there are many pleadings, the issues arise basically but not solely out of the third-party complaint of the owner-lessees of the bulk plant against the insurers which allege they are additional insureds under Indianhead's automobile insurance policies. This legal question is presented by a motion of the insurers for summary judgment dismissing the third-party complaint. There was another issue before the trial court on demurrers by the insurers concerning an indemnity agreement whereby Indianhead represented to two of the lessees it would carry liability insurance for their benefit for claims arising out of loading and unloading of Indianhead's trucks. The bulk plant was under what is known in the industry as a 'key stop arrangement.' To facilitate deliveries at night, Indianhead was furnished a key to unlock the pipes to the tanks when no employee of the bulk plant was present. After the hose from the truck was affixed to a connecting pipe, the gasoline was removed from the truck by a high-speed-displacement pump on the truck powered by the truck engine. According to Houle, after he had emptied two of the four storage compartments of the truck and was starting on the third, he observed a rupture in a gasoline storage tank and the gasoline spilling from it. Shortly thereafter the gasoline became ignited.

The trial court held, so far as is relevant to this appeal: (1) That although the insurance policies provided coverage during loading and unloading for Indianhead, the policies contained an express exclusion which denied such coverage to the owner-lessees of the bulk plant as additional insureds, and (2) that the policies did not cover any liability of Indianhead which was assumed by an oral agreement, as here, or one which indemnified the owner-lessees from their own negligence. The owner-lessees of the bulk plant appeal.

Tinkham, Smith, Bliss & Patterson, Wausau, Anderson, Davis, Witkin & Fredrickson, Superior, for appellants; Albertson, Norton, Jergens & Gunderson, Stillwater, Minn., Louis G. Nagler, Balsam Lake, of counsel.

Doar, Drill & Norman, New Richmond, for respondents.

HALLOWS, Chief Justice.

While this appeal was en route, this court decided Lukaszewicz v. Concrete Research, Inc. (1969), 43 Wis.2d 335, 168 N.W.2d 581, which rendered much of the material in the main briefs immaterial. In Lukaszewicz we held invalid as contrary to the public policy expressed in the omnibus statute, sec. 204.30(3), Stats., a limitation of the additional insured's interest in a loading and unloading coverage attached to an automobile liability policy which excluded coverage 'if the accident occurs on premises * * * owned, rented or controlled either by the person or by the employer of the person against whom claim is made * * *.' That decision now changes the issue on appeal to whether the owner-lessees of the bulk plant are additional insureds because of their relationship to the use of the truck in unloading the gasoline.

While these policies were issued in Minnesota they purport to be governed by Wisconsin law. Attached to the basic 50-page policy of Agricultural Insurance Company, which policy was adopted by reference by the other two insurers, is a Wisconsin Insurance Endorsement for Blanket Policies. The purpose of this endorsement is to conform the policy to the statutory requirements for common motor carriers of property, one of which requires the policy to comply with the omnibus statute. There is no question that the policies cover the risk of loading and unloading. On page seven of the basic policy is attached the usual loading and unloading endorsement which is substantially in the same form as considered in Lukaszewicz.

The insuring agreement of the policy provides for payment of all sums the insured is legally obligated to pay as damages caused by accident 'arising out of the use of the automobile.' The Wisconsin insurance endorsement refers to 'use' of the motor vehicles. An (additional) insured in the policy is defined as 'any person while using the (owned) automobile * * * provided the actual use of the automobile is by the named insured * * * or with (his) permission * * *' Use of an automobile by the terms of the policy 'includes the loading and unloading thereof.' The omnibus sec. 204.30(3), Stats., provides 'No such policy shall be issued or delivered in this state to the owner of a motor vehicle, unless it contains a provision reading substantially as follows: The indemnity provided by this policy is extended to apply, in the same manner and under the same provisions as it is applicable to the named assured, to any person or persons while riding in or operating any automobile described in this policy when such automobile is being used for purposes and in the manner described in said policy.' This is extended coverage to a person only if or while he is operating the automobile when it is being used for purposes and in the manner described in the policy and with the named insured's consent.

In Lukaszewicz in construing the word 'operating' in the omnibus clause, which is the key word in the definition of an additional insured for our present purpose, we stated the word 'operating' in the statute in connection with loading or unloading of an automobile meant 'participating in the loading and unloading activity.' In an automobile liability policy, as distinguished from a property liability policy, the purpose is coverage of causal negligence in the 'use' of the automobile. Persons actively engaged in loading and unloading the automobile in the commonly accepted meaning of those words are considered to be using or operating the automobile and are covered by the loading and unloading provision of the policy. In Lukaszewicz the loading and unloading coverage of the truck was extended to the employee of the owner of the premises on which the truck was being unloaded because he was using a fork lift to remove concrete products from the truck. This coverage was not because the truck was on the premises of the employer or because the accident happened there but because the employee of the owner of the premises was actually participating in removing from the truck its load of concrete products and thus was using or operating the truck.

In Wagman v. American Fidelity & Cas. Co. (1952), 304 N.Y. 490, 109 N.E.2d 592, the court made a similar determination and extended the omnibus coverage of unloading by...