Carriers Insurance Exchange v. TRUCK INSURANCE EXCH.

• Decision Date: 05 March 1962
• Docket Number: Civ. A. No. 505.
• Citation: 203 F. Supp. 764
• Parties: CARRIERS INSURANCE EXCHANGE and O'Boyle Tank Lines, Incorporated, Plaintiffs, v. TRUCK INSURANCE EXCHANGE and Maybelle Transport Company, Defendants.
• Court: U.S. District Court — Western District of Virginia

203 F. Supp. 764

CARRIERS INSURANCE EXCHANGE

and

O'Boyle Tank Lines, Incorporated, Plaintiffs, v. TRUCK INSURANCE EXCHANGE and Maybelle Transport Company, Defendants.

Civ. A. No. 505.

United States District Court W. D. Virginia, Danville Division.

March 5, 1962.

Meade, Tate & Meade, Danville, Va., for plaintiffs.

Sanford & Clement, Danville, Va., for defendants.

DALTON, Chief Judge.

This is a declaratory judgment action between two transport companies and their respective insurers to determine the ultimate liability for damages arising out of an explosion and fire on July 10, 1961, at Bassett Forks, Virginia. Both parties have moved for summary judgment and the cause is now before this Court for determination on the depositions filed herein, oral argument of counsel, and trial and pre-trial briefs submitted by counsel.

Both parties agree that the explosion and the resultant injuries and damages were caused by the negligence of the driver of the tractor and trailer unit, John W. Pearman, in leaving the unit unattended, and in failing to exercise proper care while gasoline was being pumped out of the tank trailer and into an upright out-of-ground storage tank by means of a portable pump. They likewise agree that, as to third parties, they are jointly and severally liable for the injuries and damages done to these third persons.

The issue for determination in this cause is who should be ultimately responsible for these damages — O'Boyle's insurer, Carriers Insurance Exchange, or Maybelle's insurer, Truck Insurance Exchange?

The parties also are in agreement upon the basic facts leading up to the explosion and fire.

The defendant, Maybelle Transport Company, is a North Carolina company transporting petroleum products in tank trailers in intrastate commerce in North Carolina, but not possessing the necessary authority from the Interstate Commerce Commission to transport petroleum products in interstate commerce although having permission to haul other products in interstate commerce. The plaintiff, O'Boyle Tank Lines, Incorporated, is a Virginia trucking company similar to Maybelle, but one which is authorized by the Interstate Commerce Commission to transport petroleum products in interstate commerce.

Maybelle had as a customer, Savings Oil Company of Tupelo, Mississippi, which operated H and D Oil Company, a Virginia corporation, with storage tanks and pumps on the premises of Hurd's Super Market, Bassett Forks, Virginia. Whenever Maybelle had an order to transport gasoline from the pipeline terminal at Friendship, North Carolina, to H and D Oil Company at Bassett Forks, it leased one of its tanker units to O'Boyle and the delivery was completed under O'Boyle's license. Maybelle's equipment and driver made the delivery, and O'Boyle received ten percent (10%) of the revenue for permitting Maybelle to use their franchise license — O'Boyle collecting the full charges and then making distribution to Maybelle.

Prior to January 31, 1961, this agreement between Maybelle and O'Boyle had always been only an oral agreement or lease. About that time a supervisor of the Interstate Commerce Commission informed both parties that the oral lease arrangement would no longer be acceptable by the I.C.C. As a result thereof, on January 31, 1961, Merritt of O'Boyle and Greer of Maybelle met and signed a lease.

This first one-trip lease required the lessor, Maybelle, to provide public liability insurance. About twenty later one-trip leases were executed by the two companies, the last one being the lease of July 10, 1961, the date of the explosion. All of these twenty subsequent leases required that the lessee, O'Boyle, must provide public liability insurance. That is to say, of the twenty-one written leases executed by the parties, O'Boyle was to provide public liability insurance under all except the first lease, including the lease dated July 10, 1961, under which the petroleum was being transported on the day of the accident.

Maybelle's counsel further contends that the lessee (O'Boyle) is bound under the I.C.C. regulations, Ex parte Order No. MC-43, dated November 23, 1956, Sec. 207.4, paragraph (4):

"(4) Exclusive possession and responsibility. Shall provide for the exclusive possession, control, and use of the equipment, and for the complete assumption of responsibility in respect thereto, by the lessee for the duration of said contract, lease or other arrangement, * * *"

O'Boyle alleges that lease #1 was the applicable lease, that the subsequent change in liability coverage was made without their knowledge or consent, and O'Boyle has asked that the lease of July 10, 1961, be reformed to meet the terms of lease #1. Maybelle, on the other hand, alleges that the lease of July 10, 1961, being a solemn written agreement duly signed by authorized agents of the respective parties, is the lease controlling the liabilities growing out of the explosion.

The facts disclose that neither of the leases contained provisions relating to public liability which represented the true intentions of the parties. At no time did the parties discuss the terms of the lease in reference to imposing specific obligations as to liability insurance. The only discussion held between them about the contents of the lease concerned the division of the revenue. None of the leases were read by the parties before they were signed, and both companies apparently were chiefly interested in obtaining a written lease to satisfy the I.C.C. As R. H. Greer, Vice-President of Maybelle, testified:

"As far as knowing what was in the lease it wouldn't have made a bit of difference because we didn't discuss it, didn't read it, just signed it because we were purely interested in getting a lease." (P. 56, Deposition, Filed Jan. 3, 1962)

Mr. Greer further testified that the lease #1, signed on January 31, 1961, was one of a form which had been used previously with another company, Sugar Transport. He stated that on that day, or the next, February 1, 1961, he instructed his secretary to make up two or three hundred form leases, this time copying a form that Maybelle and O'Boyle had used previously to haul corn syrup from Baltimore to North Carolina; and that he had no intention of changing any of the terms of their agreement when he ordered these form leases prepared.

It is an unusual business practice for two companies to enter into an agreement without establishing the terms of liabilities, but that is what obviously happened in this case. It is clear that the parties did not have in mind or intend to contract on the public liability feature. Ordinarily the parties to a written agreement are bound by the contents of a written contract or lease which they have had an opportunity to read, and they may not escape the liabilities which it embraces by claiming ignorance of its contents. Ashby v. Dumouchelle, 185 Va. 724, 40 S.E.2d 493. However, there are instances...