Dairyland Ins. Co. v. Concrete Products Co.

Citation203 N.W.2d 558
Decision Date17 January 1973
Docket NumberNo. 55182,55182
CourtUnited States State Supreme Court of Iowa
PartiesDAIRYLAND INSURANCE COMPANY, a corporation, Appellant, v. CONCRETE PRODUCTS COMPANY, a corporation, et al., Appellees, v. FIREMAN'S FUND INSURANCE COMPANY, a corporation, Interpleaded Defendant-Appellee.

Kindig, Beebe, McCluhan, Rawlings & Carter by Maurice B. Nieland, Sioux City, for appellant.

Gleysteen, Nelson, Harper, Kunze & Eidsmoe, by Marvin F. Heidman, Sioux City, for appellees Concrete Products Company and George Wayne Smith.

Ervin E. Nordstrom, Sioux City, for appellee Swen Swenson.

Heard before MOORE, C.J., and LeGRAND, UHLENHOPP, REYNOLDSON and McCORMICK, JJ.

REYNOLDSON, Justice.

This declaratory judgment action arises from the following situation: On December 11, 1968 Swen Swenson drove his truck to Concrete Products Company (Concrete Products) premises to buy some blocks. George Wayne Smith, employee of Concrete Products, used a front end loader to pick up the first cement blocks destined for the truck. He moved the load to the back of Swenson's truck, then raised the blocks to the truck bed level and again moved forward. Swenson was pinned between the front end loader and the bed of the truck and injured.

Swenson sued Concrete Products for damages, alleging he had been injured through negligent acts of that company's employee. Concrete Products cross-petitioned against Smith, claiming a right of indemnity or contribution from him for any amounts it became vicariously liable to pay Swenson.

Dairyland Insurance Company (Dairyland) insured the Swenson truck. Counsel for Concrete Products, contending Dairyland had liability coverage under the loading and unloading provision of its policy, demanded that it defend Smith and pay any judgment rendered against him. Under a reservation of rights Dairyland undertook Smith's defense.

Contemporaneously, Diaryland brought this action against Concrete Products, Smith and Swenson seeking declaratory judgment that its loading and unloading policy provision provided no coverage for Smith, no indemnity or contribution for Concrete Products, and no obligation to Swenson arising out of his insurance. Concrete Products interpleaded its general liability insurer, Fireman's Fund Insurance Company (Fireman's Fund). The latter company asserts a subrogated right against Smith (and therefore Dairyland) for any damages it might ultimately pay Swenson because of Concrete Products' vicarious liability.

The omnibus clause in Dairyland's policy defines 'insured' as the named insured (Swenson), 'and also includes any person while using the automobile * * * with the permission * * *' of the named insured or his spouse. A separate provision states, 'Use of the automobile * * * includes the loading and unloading thereof.'

Appealing, Dairyland contends trial court erred in ruling that its policy extended coverage to Smith; in determining responsibility to pay damages should be prorated between it and Fireman's Fund; and in holding Fireman's Fund (through Concrete Products) was entitled to full indemnity from Dairyland (through Smith), to the extent of Dairyland's coverage. We affirm.

I. Smith as an insured under Dairyland's truck policy.

While the contention of Concrete Products and Fireman's Fund that Smith was an unnamed insured under Dairyland's omnibus clause may on first impression appear strained, it is supported by a vast body of case law involving similar situations. See annotations at 95 A.L.R.2d 1122 and 160 A.L.R. 1259; 7 Appleman, Insurance Law and Practice § 4322, pp. 155--67 (1962); 7 Blashfield, Automobile Law and Practice § 315.7, pp. 588--91 (3d ed. 1966); 7 Am.Jur.2d, Automobile Insurance § 89, pp. 396--97; 45 C.J.S. Insurance § 829c(2), pp. 893--896; Brown and Risjord, Loading and Unloading: The Conflict Between Fortuitous Adversaries, 29 Insurance Counsel Journal 197 (1962); The Defense Research Institute, Inc., 'Loading & Unloading' Provision of the Automobile Liability Insurance Policy (Monograph, 1965).

Although this is a case of first impression in Iowa, well-reasoned decisions from many jurisdictions support principles of law we believe applicable.

Where, (as here) a motor vehicle insurance liability policy extends the term 'use' to include the loading and unloading of the insured vehicle and the policy provides coverage for 'damages because of * * * bodily injury * * * caused by accident and arising out of the * * * use of' the insured vehicle, a more liberal concept of causation is imparted than 'proximate cause' in its traditional legal sense. Fireman's Fund Insurance Co. v. Canal Insurance Co., 411 F.2d 265 (5 Cir. 1969); McCloskey and Company v. Allstate Insurance Companies, 123 U.S.App.D.C. 177, 358 F.2d 544 (1966).

The 'loading and unloading' clause is one of 'extensions,' that is, the insertion of this clause in a liability policy leads to the conclusion it was inserted for the purpose of extending coverage of the policy to accidents not covered by the other provisions of the standard motor vehicle liability policy. P. E. O'Hair & Co. v. Allstate Insurance Company, 267 Cal.App.2d 195, 72 Cal.Rptr. 690 (1968); Drew Chem. Corp. v. Amer. Fore Loyalty Group, 90 N.J.Super. 582, 218 A.2d 875 (App.Div.1966); Komorowski v. Kozicki, 45 Wis.2d 95, 172 N.W.2d 329 (1969).

Third persons, not otherwise connected with the insured vehicle or its owner, while loading the vehicle, are 'using' such vehicle within the meaning of coverage provisions of a policy which defines use as including loading and unloading. Travelers Insurance Co. v. Employers' Liability Assur. Corp., 242 F.Supp. 627 (D.Md.1965); Bituminous Casualty Corp. v. American Fidel. & Cas. Co., 22 Ill.App.2d 26, 159 N.E.2d 7 (1959); Improved Machinery, Inc. v. Merchants Mut. Ins. Co., 349 Mass. 461, 208 N.W.2d 796 (1965); Wagman v. American Fidelity & Casualty Co., 304 N.Y. 490, 109 N.E.2d 592 (1952); Travelers Insurance Co. v. Employers Casualty Co., 380 S.W.2d 610 (Tex.1964); 7 Am.Jur.2d, Automobile Insurance § 89, pp. 396--97.

Coverage may exist although neither the insured vehicle nor its driver are involved in the accident. McCloskey and Company v. Allstate Insurance Companies, supra; St. Paul Mercury Insurance Company v. Hitt, 336 F.2d 37 (6 Cir. 1964); Bituminous Casualty Corp. v. American Fidel. & Cas. Co., supra; Wagman v. American Fidelity & Casualty Co., supra; Improved Machinery, Inc. v. Merchants Mut. Ins. Co., supra.

There is no requirement the insured vehicle being loaded constitute the cause of the accident. Employers' Liability Assur. Corp. v. Indemnity Ins. Co., 228 F.Supp. 986 (D.Md.1964); P. E. O'Hair & Co. v. Allstate Insurance Company, supra; Bituminous Casualty Corp. v. American Fidel. & Cas. Co., supra; Improved Machinery, Inc. v. Merchants Mut. Ins. Co., supra; Wagman v. American Fidelity & Casualty Co., supra; Hertz Corporation v. Bellin, 28 App.Div.2d 1101, 284 N.Y.S.2d 140 (1967), aff'd mem., 22 N.Y.2d 736, 292 N.Y.S.2d 117, 239 N.E.2d 211 (1968); Penley v. Gulf Insurance Company, 414 P.2d 305 (Okl.1966).

Coverage exists if there is an immediate causal connection between the loading operation or the way it is carried out and the injury-causing mishap. Employers' Liability Assur. Corp. v. Indemnity Ins. Co., supra; 7 Appleman, Insurance Law and Practice § 4322, at pp. 157--58; 7 Am.Jur.2d, Automobile Insurance § 90, pp. 397-98.

Two theories have evolved in decisions determining the scope of the 'loading and unloading' clause. The 'coming to rest' doctrine, and earlier rule followed by a minority of jurisdictions, essentially interprets 'loading' as beginning only after the object to be transported has come into the immediate vicinity of the insured vehicle and 'unloading' to cease when the object transported first comes to immediate rest on removal from the vehicle. See American Oil Co. v. Hardware Mutual Casualty Co., 408 F.2d 1365 (1 Cir. 1969); 8 Blashfield, Automobile Law and Practice § 317.9, at p. 32; annot. 95 A.L.R.2d 1122 (1964).

Most jurisdictions follow the 'complete operation' or 'continuous passage' doctrine, expressing the view that the terms 'loading' or 'unloading' are not to be limited or controlled by place or distance but by the fact of a continuous and uninterrupted movement of the articles in getting them onto or off of the vehicle. St. Paul Mercury Insurance Company v. Huitt, supra; Travelers Insurance Co. v. Employers' Liability Assur. Corp., supra; Pacific Indemnity Company v. Run-A-Ford Company, 276 Ala. 311, 161 So.2d 789 (1964); Drew Chem. Corp. v. Amer. Fore Loyalty Group, supra; Penley v. Gulf Insurance Company, supra; Travelers Insurance Co. v. Employers Casualty Co., supra; Komorowski v. Kozicki, supra; 7 Appleman, Insurance Law and Practice § 4322, at p. 162; 8 Blashfield, Automobile Law and Practice § 317.9, at pp. 32--39; 7 Am.Jur.2d, Automobile Insurance § 88, pp. 393--96; Risjord, Loading and Unloading, 13 Vand.L.Rev. 903 (1960).

Examining the case Sub judice in light of these rules, Smith had obviously commenced the loading operation. Swenson's consent to this activity is uncontroverted. The blocks had left their place of rest and were in direct process of being carried to and placed on the insured vehicle. Under either the 'coming to rest' or 'complete operation' doctrine, Smith, in so loading, was using the Swenson truck. He was an unnamed insured as defined by the omnibus clause and his liability was covered by Dairyland's policy.

Dairyland, forcefully contending Smith was not so insured, relies on several decisions in which courts did not find a causal connection between the loading or unloading operation and the accident. See, e.g., Liberty Mutual Insurance Co. v. Johnson, Drake & Piper, Inc., 390 F.2d 410 (8 Cir. 1968). It also relies on a restrictive interpretation (which prevails mainly in Ohio) of the omnibus clause word 'insured.' See Buckeye Union Cas. Co. v. Illinois National Ins. Co., 2 Ohio St.2d 59, 206 N.E.2d 209 (1965); ...

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