Archibald v. Midwest Paper Stock Co.

• Decision Date: 05 May 1970
• Docket Number: No. 53955,53955
• Citation: 176 N.W.2d 761
• Parties: Kenneth ARCHIBALD, Administrator of the Esate of Mildred Pauline Archibald, Deceased, Plaintiff-Appellant, v. MIDWEST PAPER STOCK COMPANY and Cecil J. Morris, Defendants-Appellees. MIDWEST PAPER STOCK COMPANY, Cross-Petitioner-Appellee, v. DART TRANSIT CO., Defendant to Cross-Petition-Appellant.
• Court: Iowa Supreme Court

Page 761

176 N.W.2d 761

Kenneth ARCHIBALD, Administrator of the Esate of Mildred Pauline Archibald, Deceased, Plaintiff-Appellant, v. MIDWEST PAPER STOCK COMPANY and Cecil J. Morris, Defendants-Appellees.

MIDWEST PAPER STOCK COMPANY, Cross-Petitioner-Appellee, v. DART TRANSIT CO., Defendant to Cross-Petition-Appellant.

No. 53955.

Supreme Court of Iowa.

May 5, 1970.

Rehearing Denied June 22, 1970.

Arthur Popham, Kansas City, Mo., and Pryor, Riley, Jones & Walsh, Burlington, for plaintiff-appellant and cross-petition defendant-appellant.

Fred Cromwell, Burlington, for defendants-appellees.

LARSON, Justice.

The sole question before us in this third appeal involving Midwest Paper Stock Company (hereinafter called Midwest), Cecil J. Morris, and Dart Transit Co. (hereinafter called Dart), is whether under a lease agreement between Midwest and Dart, Midwest's driver Morris was to be protected under a liability insurance policy Dart, the lessee, was to carry while a truck operation was under its control.

The original action in this involved case was brought by Kenneth Archibald, Administrator of the Estate of Mildred Pauline Archibald, deceased, against Midwest and Morris on January 7, 1965. In a collision on September 18, 1963, between a passenger automobile owned and operated by Mrs. Archibald and a truck owned by Midwest and driven by Morris, Mrs. Archibald was killed. The original petition alleged her death was caused by Midwest's truck negligently operated by its driver. Upon cross-petition brought by Midwest Dart was made a party defendant. It alleged that at the time of the accident the truck was being operated by Dart under a lease agreement, Exhibit 'A', with the owner Midwest who supplied the driver Morris. Settlement with the estate was made by Dart on July 20, 1964, for $15,000, and Dart was assigned all its claims against Midwest and Morris.

In a prior decision we considered this lease agreement and held Dart could not recover from Midwest for the loss under the terms of the trip lease. Archibald v. Midwest Paper Stock Co., 260 Iowa 1, 148 N.W.2d 460. In another decision found in 158 N.W.2d 739, we held that, as a result of an assignment from Archibald, the administrator, Dart was the real party in interest in its effort to recover over.

On June 7, 1968, Midwest's motion for summary judgment under Rule 237, R.C.P., contending that due to the prior decisions of this court it was released from any claims arising in the action, was sustained. On January 29, 1969, Dart's motion for summary judgment against Morris under Rules 237 and 238, based upon a failure of Morris to answer a request for admissions, was considered and continued. On February 10, 1969, a motion to dismiss was filed by Morris and Midwest. Its basis was that any action that Dart might have against either was invalid because Dart under the agreement Exhibit 'A' was required to carry liability insurance for the benefit of Midwest and Morris. They maintained that Dart being adjudicated, the real party in interest was obligated to protect Midwest and Morris from liability, and thus could only recover indemnity against itself.

In this phase of the action Dart had asked for a default judgment against Morris, based primarily upon his failure to plead and answer a request for admissions. Dart's motion for summary judgment and default judgment was overruled, and the Midwest-Morris motion for dismissal was sustained. The trial court's ruling was not predicated on the factual issue of Morris' negligence or on the question of claim liquidation. The motion was sustained on the ground that, since Morris was the employee of Midwest, the provisions of the trip lease obligated Dart to protect both the lessor and its driver with liability insurance while the equipment was being operated in the service of the lessee Dart. When Dart's motion for rehearing was denied on June 12, 1969, it appealed. We affirm.

Appellant assigns as error the trial court's action in overruling Dart's motion for default and for summary judgments against Morris, and the sustaining of the Midwest-Morris motion to dismiss.

I. Appellant Dart contends that, since the lease agreement Exhibit 'A' did not specifically include the driver Morris, he, as Dart's agent, was primarily liable, and Dart was only secondarily or vicariously liable, but as the employee of Midwest, Morris was covered under omnibus provisions of Midwest's insurance and that its carrier should be held liable to indemnify Dart for its loss paid to the injured party.

Dart argues that by the terms of the lease it was obligated to carry liability insurance for the protection of only the lessee, the public, and the lessor, and that this did not include the driver, who at the time of this accident was Dart's agent under its direction and control and, as such, was primarily liable for his own negligence and for the amount paid by Dart to settle plaintiff's claim herein.

Appellant relies upon the following authorities: Transport Indemnity Co. v. American Fidelity & Casualty Co., Second Appellate District, Division One, California Court of Appeal, 84 Cal.Rptr. 856 (filed February 27, 1970); Pacific National Ins. Co. v. Transport Ins. Co., 8 Cir., 341 F.2d 514; Brannaker v. Transamerican Freight Lines, Inc. (Mo.), 428 S.W.2d 524; Barsh Truck Line, Inc. v. Jerry Lipps, Inc. (Mo.App.), 424 S.W.2d 81; McFarland v. Dixie Machinery & Equipment Co., 348 Mo. 341, 153 S.W.2d 67, 136 A.L.R. 516. Under the view we take of this matter they are not applicable, for they involve for the most part disputes between insurance carriers as to their liability under the policies provided.

Morris contends he is protected by lessee's contractual obligation to carry liability insurance for his protection, that Dart is solely liable for the loss and cannot shift it to another, and that to permit recovery against Morris, an employee of Midwest, would be contra to Dart's obligation to protect the lessor's driver under the lease.

Thus, the nub of this controversy is whether Morris, as lessor's employee, was included as a party protected by the lease agreement between lessor and lessee. It must be conceded, if he was so protected, then Dart's liability to insure against losses resulting from driver negligence in the operation of the leased equipment would avoid its claim for indemnity against the lessor's insurance carrier and only result in a claim for indemnity against itself.

II. The rule is well settled in this jurisdiction that a contract should be read and interpreted as an entirety rather than seriatim by clauses. Mealey v. Kanealy, 226 Iowa 1266, 1277, 286 N.W. 500, 506, 131 A.L.R. 945, 951. Also see our first Archibald case, 260 Iowa 1, 6, 148 N.W.2d 460, 463.

Although we have not passed specifically on this phase of the controversy between the parties, in denying recovery against Midwest we construed this agreement in the first Archibald case and, in so doing, relied upon and followed the pronouncements in American Fidelity and Casualty Co. v. Simmons, 253 F.2d 634 (4 Cir. 1958), a case very similar to the case at bar. In Simmons, the district court's pronouncement, approved by the appellate court, when considering a somewhat similar agreement between lessee and lessor, stated at page 636 of 253 F.2d: 'The writing properly interpreted clearly shows that the public liability is to protect the equipment for both and the cost is to be paid by the lessee out of the hired equipment's earnings, * * *. The lease does not warrant an implication that the...