Drew Chemical Corp. v. American Fore Loyalty Group

• Decision Date: 06 April 1966
• Docket Number: No. A--749,A--749
• Citation: 218 A.2d 875,90 N.J.Super. 582
• Parties: DREW CHEMICAL CORPORATION, Plaintiff-Appellant, v. AMERICAN FORE LOYALTY GROUP, etc., and The Fidelity and Casualty Co. of New York, etc., Defendants-Respondents.
• Court: New Jersey Superior Court — Appellate Division

Page 582

90 N.J.Super. 582

218 A.2d 875

DREW CHEMICAL CORPORATION, Plaintiff-Appellant, v. AMERICAN FORE LOYALTY GROUP, etc., and The Fidelity and Casualty Co. of New York, etc., Defendants-Respondents.

No. A--749.

Superior Court of New Jersey, Appellate Division.

Argued March 7, 1966.

Decided April 6, 1966.

Hugh J. O'Gorman, Newark, for appellant (Raymond L. Cunneen, Newark, attorney).

Peter W. Thomas, Newark, for respondents (Lum, Biunno & Tompkins, Newark, attorneys).

Before Judges GOLDMANN and FOLEY.

GOLDMANN, S.J.A.D.

Plaintiff appeals from a Law Division judgment in favor of defendant Fidelity and Casualty Co. (Fidelity) following the filing of an opinion in which the trial judge held that plaintiff did not come within the coverage of Fidelity's automobile liability policy insuring Nappi Trucking Corporation (Nappi).

The facts are not in dispute. On August 21, 1961 Byford, an employee of Nappi, drove its tank truck to the premises of plaintiff Drew Chemical Corporation (Drew) for the purpose of delivering a fatty acid liquid. The liquid was to be transferred to a storage tank on plaintiff's premises. When Byford arrived at the premises he was met by Evans, an employee of Drew. Evans took an 18-foot hose (owned by Nappi and part of the truck's equipment) which had a coupling at either end, and attached one end to a valve on the truck and the other end to a valve on an iron pipeline which ran into plaintiff's vats. Drew's pumps supplied the mechanical force necessary to transfer the acid from the truck to the vats. Evans started the pump but there was no flow of acid. Believing that the Drew pipeline was clogged, Evans requested Byford to uncouple the hose at the truck so that he could clear the line. Byford did so and placed his end of the hose into a nearby ditch. Evans first attempted to unclog the line by running air pressure through it. When this proved unsuccessful, he ran steam under pressure through the line. The hose suddenly whipped about, striking Byford and injuring him. The movement of the free end of the hose was undoubtedly caused by the steam pressure dislodging the impediment in the Drew line.

Byford recovered workmen's compensation from his employer, Nappi. He also instituted a personal injury action against Evans and his employer Drew, alleging that Evans' negligence had caused his injuries. In that suit Drew's general liability insurer requested Fidelity, as Nappi's automobile liability carrier, to defend and pay any judgment rendered in Byford's favor. It refused to do so. In the present action plaintiff Drew sought a declaratory judgment that it was an additional insured under the Fidelity policy. Further, it demanded that Fidelity indemnify it for the $4,000 which Byford recovered in his action against Drew, as well as for $110 in assessed costs and $300 in counsel fees incurred in defending the negligence suit.

The policy issued by defendant Fidelity to Nappi provided, under section I of the 'Insuring Agreements,'

'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 and caused by accident.'

And section III under that heading defined 'Insured' as follows:

'The unqualified word 'insured' includes * * * (2) under coverages A and B, any person while using an owned automobile or a hired 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 with his permission * * *.'

Paragraph 3(f) of the heading 'Conditions' defined the word 'use':

'Use of an automobile includes the loading and unloading thereof.'

Plaintiff contended in the Law Division (as it does here) that the accident to Byford occurred during the unloading of the Nappi truck, and therefore it was an additional insured because of the loading and unloading clause of the policy. Defendant took the position that there was no coverage because (1) the unloading had not commenced, and (2) even if it had, it was not the efficient cause of the accident. In addition, defendant claimed that there could be no coverage because of the workmen's compensation exclusion clauses of its policy. The Law Division judge held that the accident had occurred during the process of unloading, as that term is interpreted under the 'complete operation' doctrine discussed below. He considered defendant's contention that the workmen's compensation exclusion clauses of its policy stood in the way of coverage as untenable, citing as authority our opinion in Maryland Cas. Co. v. N.J. Mfrs., etc., Ins. Co., 48 N.J.Super. 314, 321 et seq., 137 A.2d 577 (1958), affirmed 28 N.J. 17, 145 A.2d 15 (1958). (Defendant has abandoned its cross-appeal on this latter point.) However, while finding that the accident occurred while the unloading operation was in progress, the trial judge concluded that the necessary causal relation did not exist between the unloading or use of the truck and the accident.

I

In construing the meaning and scope of the words 'loading and unloading' in automobile liability policies, courts have been guided by one of two basic theories--the 'coming to rest' doctrine and the 'complete operation' doctrine. See Annotation, 'Risks within 'loading and unloading' clause of motor vehicle liability insurance policy,' 95 A.L.R.2d (1964), supplementing 160 A.L.R. 1259 (1946). Under the 'coming to rest' doctrine, unloading comprises 'only the actual removing or lifting of the article from the motor vehicle up to the moment when the goods which are taken off the motor vehicle actually come to rest and every connection of the motor vehicle with the process of unloading ceases.' Ibid., 95 A.L.R.2d, at p. 1129. On the other hand, the 'complete operation' doctrine has been said to cover the entire process involved in moving the goods, from the moment they are given into the insured's possession until they are turned over at the place of destination to the party to whom delivery is to be made. 12 Couch on Insurance (2d ed. 1964), § 45:128, pp. 197--8. We consider this doctrine as the more modern and enlightened one, supported by the weight of authority. See 95 A.L.R.2d, at pp. 1130 and 1134. It was clearly approved in the Maryland Casualty Co. case. As we said there, the 'loading and unloading' clause is one of extension, expanding the meaning of the phrase 'while using the automobile.' The merit inhering in this view is that it reflects the reasonable contemplation of the parties.

The scope of the 'complete operation' doctrine can only be determined in a particular factual context. We need not decide here whether that doctrine should be understood to encompass the entire period beginning with when the goods (here the fatty acid) leave their original location and continuing until the delivery has been completed. Compare St. Paul Mercury Ins. Co. v. Huitt, 336 F.2d 37, 42 (6 Cir.1964). The question here is whether the tank truck was being unloaded when the accident occurred--specifically, had the unloading begun? Defendant contends it had not, for no chemical had left the truck. Plaintiff, on its part, claims that unloading began with the arrival of the Nappi truck at the hook-up site; and when the hose was connected to the outlet on the truck and to the intake of the Drew pipeline, and the valves turned on, the process of unloading was further advanced. Cf. Pellicano v. Royal Indemnity Co., 35 Misc.2d 259, 229 N.Y.S.2d 654 (Sup.Ct.1962) (unloading of truckload of concrete held to have commenced with the arrival of truck at job site).

If the 'complete operation' doctrine obliterates the distinction between preparations for loading and the loading itself (see Couch, op. cit., above), there is no reason for a distinction to be drawn between preparations for unloading and the unloading. To hold that the unloading had not begun until the actual passage of the acid through the hose would be to apply the constructional doctrine of 'coming to rest.' Since the hose was the means by which the acid was customarily unloaded the parties must have contemplated that it would have to be taken off the truck and attached to both the truck outlet and the Drew pipeline intake for unloading to start. In our view, therefore, the unloading began when Byford stopped the truck at the place he was to discharge the...