Commercial Standard Ins. Co. v. New Amsterdam Cas. Co.

• Decision Date: 23 March 1961
• Docket Number: 1 Div. 851
• Citation: 131 So.2d 182,272 Ala. 357
• Court: Alabama Supreme Court
• Parties: COMMERCIAL STANDARD INSURANCE COMPANY v. NEW AMSTERDAM CASUALTY COMPANY et al.

Page 182

131 So.2d 182

272 Ala. 357

COMMERCIAL STANDARD INSURANCE COMPANY v. NEW AMSTERDAM CASUALTY COMPANY et al.

1 Div. 851.

Supreme Court of Alabama.

March 23, 1961.

Rehearing Denied June 22, 1961.

Lyons, Pipes & Cook, Mobile, for appellant.

Johnston, McCall & Johnston, Mobile, for appellee New Amsterdam Cas. Co.

J. Terry Reynolds, Jr., and Wm. R. Lauten, Mobile, for appellee cross-appellant and guardian ad litem.

SIMPSON, Justice.

This is an appeal from a declaratory judgment proceeding wherein the Mobile Circuit Court in Equity rendered a decree holding appellant (to be referred to as Commercial or Commercial Standard) to be primarily liable, and the appellee (to be referred to as New Amsterdam) to be secondarily liable as related to the defense and satisfaction of any judgment or obligation involving the disposition and satisfaction of law actions filed in the Circuit Court of Mobile County by Norris P. Richard and Suzanne Michele Richard against Gary Ellis, Individually and doing business as Ellis Nurseries, and Kenneth L. Ross for alleged injuries sustained by Suzanne Michele Richard on the 27th of January, 1957.

The facts giving rise to the litigation are briefly summarized: Gary Ellis was doing business in Mobile as Ellis Nurseries, and his agent in selling his products was Kenneth L. Ross. Mr. and Mrs. Norris P. Richard, on the date mentioned, purchased some shrubbery from Kenneth L. Ross, salesman for Ellis Nurseries, at the Bradford and Government Street location in Mobile. Ross delivered the articles to the Richard's two-door automobile parked in the Ellis Nurseries' parking lot and placed part of the articles in the trunk and the remainder on the floor in the rear seat of Richard's automobile and perhaps one bush on the floor in the front of the car. Ross remained beside the open door of the automobile for a period of three or four minutes conversing with Mrs. Richard about purchases she had made previous to those that day. At the close of the conversation Ross, as a convenience for Mrs. Richard, proceeded to close the car door. Suzanne Michele Richard, their twenty-one months old daughter, as a result of the door being closed upon the fingers of her right hand, suffered the injuries complained of in the actions at law.

Appellant, Commercial Standard, had issued an automobile liability policy to Norris P. Richard, and appellee, New Amsterdam, which filed the bill, had issued a comprehensive general liability policy to Gary Ellis, Doing Business as Ellis Nurseries. The principal question is whether Kenneth L. Ross, as agent of Ellis Nurseries, and Gary Ellis, Individually and Doing Business as, etc., were covered under the omnibus clause of Commercial Standard's policy to Richard, thereby devolving upon said Commercial Standard and primary duty and obligation to defend the actions at law and to pay such judgments as may be rendered. The trial court held that Ross and Ellis, etc., were omnibus insureds under appellant's policy; that Ellis' liability, if any, is based upon the doctrine of respondeat superior; that appellant was to defend both Ross and Ellis and pay within the applicable limits of liability of its policy any judgment rendered against either or both; should appellant's liability become exhausted with respect to any judgment rendered against Gary Ellis, only then would appellee, New Amsterdam, become obligated as insurer of Ellis as a secondary or vicarious liability.

The pertinent provisions of Commercial Standard's policy which gave rise to this construction are as follows:

'Insuring Agreements

'I. Coverage A--Bodily Injury Liability: 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 ownership, maintenance or use of the automobile. [Emphasis supplied.] * * *

'III. Definition of Insured: (a) With respect to the insurance for bodily injury liability and for property damage liability the unqualified word 'insured' includes the named insured and, if the named insured is an individual, his spouse if a resident of the same household, and also includes any person while using the automobile and any person or organization legally responsible for the use thereof, provided the actual use of the automobile is by the named insured or such spouse or with the permission of either. [Emphasis supplied.] * * *

'Conditions

'25. Purposes of Use: * * *

(c) Use of the automobile for the purposes stated includes the loading and unloading thereof.' [Emphasis supplied.]

There is no dispute that Suzanne Michele Richard received injuries caused by the accident; nor is there any dispute that such injuries were received when Kenneth L. Ross closed the door of the Richard's automobile after delivering the articles sold. The dispute arises as to whether or not Kenneth L. Ross was 'using' the automobile at the time of the accident within the omnibus insured's clause of Commercial Standard quoted above. Undoubtedly, use of the automobile by 'loading' is an element of coverage in Commercial Standard's policy, but we shall undertake to show that the learned trial court was in error in holding that coverage was afforded appellees Ross and Ellis under the omnibus loading clause of Commercial's policy. No fixed rule can be set down to define the term 'loading' in all cases. Each case must be treated separately according to its own particular facts. We are here concerned only with the connotation of the word 'loading' under the circumstances related.

The general rule is that insurance policies should be liberally construed in favor of the insured and words of the policy must be given their ordinary and generally understood meaning. Strained or unusual construction of any of the terms should not be indulged in in favor of either the insurer or the insured. Kilby Car & Foundry Co. v. Georgia Casualty Co., 209 Ala. 356, 358, 96 So. 319.

The terms employed in Commercial's policy do call for construction since the term 'loading' is not clearly spelled out. In insurance contracts the term 'loading' is a term of extension and not intended to restrict coverage otherwise afforded, and the phrase 'use of the automobile' in that connection extends beyond its usual connotation and applies to the physical process of moving goods in or onto an automobile while it is at rest. American Oil & Supply Co. v. United States Casualty Co., 19 N.J.Misc. 7, 18 A.2d 257; Pacific Automobile Insurance Co. v. Commercial Casualty Ins. Co., 108 Utah 500, 161 P.2d 423, 424, 160 A.L.R. 1251; 7 Appleman's Insurance Law and Practice 92, § 4322.

Concededly Kenneth L. Ross was not using the automobile at the time of the injury in the sense that he was driving or directing its movements, but it is the contention of the appellees that he was using the automobile by 'loading' the articles purchased by the Richards and the act of closing the door consummated the loading, thereby...