Entz v. Fidelity & Cas. Co. of New York

• Citation: 412 P.2d 382,50 Cal.Rptr. 190,64 Cal.2d 379
• Court: United States State Supreme Court (California)
• Decision Date: 31 March 1966
• Parties: , 412 P.2d 382 Howard W. ENTZ et al., Plaintiffs, Cross-Defendants and Respondents, v. FIDELITY & CASUALTY COMPANY OF NEW YORK, Defendant, Cross-Complainant and Appellant; United Pacific Insurance Company, Cross-Defendant and Respondent. Sac. 7613.

Page 190

50 Cal.Rptr. 190

64 Cal.2d 379, 412 P.2d 382

Howard W. ENTZ et al., Plaintiffs, Cross-Defendants and Respondents, v. FIDELITY & CASUALTY COMPANY OF NEW YORK, Defendant, Cross-Complainant and Appellant; United Pacific Insurance Company, Cross-Defendant and Respondent.

Sac. 7613.

Supreme Court of California In Bank.

March 31, 1966.

Fitzwilliam, Memering, Stumbos & DeMers and T. D. Bolling, Jr., Sacramento, for defendant and appellant and cross-complainant and appellant.

Johnson, Davies & Greve and Claire H. Greve, Sacramento, for plaintiffs and respondents and cross-defendants and respondents.

McCOMB, Justice.

Defendant appeals from a judgment in a declaratory relief action extending coverage of an insurance policy to additional insured under a 'loading and unloading' clause in the policy.

Facts: Mr. Pruitt, a cement worker, was injured when struck by an angle iron falling from atop an iron fence that was being erected by plaintiffs, doing business as Capitol Iron Works (hereinafter referred to as 'Capitol').

Capitol supplied the fence, dug post holes, set the iron posts therein, and aligned the fence, using the angle iron to maintain the fence in a straight position until the post holes were filled with cement.

Capitol ahd contracted with Mr. Martin, Pruitt's employer, to pour cement for five post holes and had agreed to pay him a certain amount per hole.

Mr. Martin had made arrangements with A. Teichert & Son to bring cement in a transit mix truck, owned by Teichert, to the job site and pour cement for the holes. The truck was operated by an employee of Teichert.

The truck driver testified that at the time of the accident he had dumpted enough cement for two post holes on the ground about a foot or two from the fence, and Mr. Pruitt was shoveling the cement into the post holes with a shovel.

Teichert's operations, including use of the truck, were insured by defendant. The contract of insurance provides under coverage A: 'To pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of bodily injury * * * sustained by any person and caused by accident.'

'Insured' is defined as including 'under coverages A and B, any person while using an owned automobile * * * and any person or organization legally responsible for the use thereof, provided the actual use of the automobile is * * * with (the named insured's) permission * * *.'

The term 'use' in the contract of insurance is defined therein to include 'loading and unloading.'

Capitol was insured comprehensively by United Pacific Insurance Company, but its policy did not extent coverage to nonowned automobiles. The cement truck here involved was such an automobile.

Pruitt filed an action against Capitol for damages for personal injuries. Thereafter, plaintiffs filed a declaratory relief action seeking a declaration that defendant was required to defend the action brought by Pruitt and to pay any judgment rendered therein against them.

Defendant filed a cross-complaint, naming as cross-defendants plaintiffs and United Pacific Insurance Company. In the cross-complaint, defendant sought a declaration that Capitol was not entitled to coverage under its policy; that United was obligated under its comprehensive liability policy issued to Capitol to defend the action brought by Pruitt and to pay any judgment rendered therein; and that if it was determined that Capitol had coverage under defendant's policy, the court further declare that any judgment against Capitol in the action brought by Pruitt be shared by defendant and United according to their respective policy limits.

In their answer, plaintiffs and United asserted that defendant had primary liability and that the insurance of United was excess only over and above defendant's policy.

The trial court found that defendant's policy was primary insurance, that defendant was required to defend the Pruitt action and pay all damages and costs therein up to its limit of coverage, and that United was required to pay under its policy only after defendant's policy limit was first exhausted.

Question: In construing a policy of vehicle insurance providing coverage for the use of a vehicle and declaring that such 'use' shall include the 'loading and unloading' thereof, does the 'complete operation' rule or the more restrictive 'coming to rest' rule apply?

The 'coming to rest' rule is now clearly the minority view and is being superseded by the 'complete operations' rule. (See Magarick, Loading and Unloading Under the Standard Automobile Policy, 67 Dick.L.Rev. 257, 258--259; Risjord, Loading and Unloading, 13 Vand.L.Rev. 903, 904; 95 A.L.R.2d 1122, 1129.)

The following statement from American Auto. Ins. Co. v. American Fid. & Cas. Co., 106 Cal.App.2d 630, 634, 235 P.2d 645, 647, points up the difference between the two doctrines: 'Generally speaking, in determining whether the accident occurred during the unloading of a motor vehicle within the meaning of a 'loading or unloading' provision in a liability policy, the courts have adopted one of two theories, the 'coming to rest' or the 'complete operation' doctrine.

'Of the two, the 'coming to rest' doctrine gives the more limited construction to the 'loading and unloading' provision. Under this doctrine, 'unloading' includes only the actual removing or lifting of the article from the motor vehicle up to the moment when it has actually come to rest and has started on its course to be delivered by other powers and forces independent of the motor vehicle, and the motor vehicle itself is no longer connected with the process of unloading. The motor vehicle is then said to be no longer in use.

'Under the 'complete operation' doctrine, which is the broader of the two, 'unloading' is regarded as embracing all the operations which are required in any specific situation to effect a completed delivery of the article. For practical purposes, this doctrine makes no distinction between 'unloading' and 'delivery."

It should no noted that under the 'complete operations' rule the number of temporary or intermediate stops or resting places is immaterial.

Where a policy provides for coverage during the loading or unloading of a vehicle, the terms 'loading' and 'unloading' must be given their plain and ordinary meaning. (See United States Fid. & Guar. Co. v. Church, D.C., 107 F.Supp. 683, 687 (6).)

Accordingly, where an accident occurs while materials being removed from a vehicle are in continuous movement and have not yet come to a rest, coverage is applicable irrespective of which theory has been adopted, the 'coming to rest' rule of the 'complete operations' rule, provided, as hereinafter set forth, there is some causal relationship between the accident and the use of the vehicle.

Under such circumstances, the person conducting the unloading operations is covered by the policy whether he is the driver of the vehicle, the consignee, or a third person. (See Colby v. Liberty Mutual Ins. Co., 220 Cal.App.2d 38, 43(1b), 33 Cal.Rptr. 538; Industrial Indem. Co. v. General Ins. Co., 210 Cal.App.2d 352, 356(5), 26 Cal.Rptr. 568; American Auto. Ins. Co. v. Transport Indem. Co., 200 Cal.App.2d 543, 548(1a), 19 Cal.Rptr. 558; Pleasant Valley Assn. v. Cal-Farm Ins. Co., 142 Cal.App.2d 126, 131, 298 P.2d 109; American Auto. Ins. Co. v. American Fid. & Cas. Co., supra, 106 Cal.App.2d 630, 637--638, 235 P.2d 645.)

Although some courts following the 'complete operations' rule have held that 'unloading' is not complete until the material has been delivered to the place where it is to be used by the consignee (St. Paul Mercury Ins. Co. v. Huitt (6th Cir. 1964) 336 F.2d 37, 42(7); Lamberti v. Anaco Equipment Corp., 16 A.D.2d 121, 226 N.Y.S.2d 70, 72--73), it would appear more reasonable to hold that 'unloading' has been completed when, following removal of the material from the vehicle, the deliveror has finished his handling of it, and it has been placed in the hands of the receiver at the designated reception point, even though it is necessary for the consignee, or someone on his behalf, to transport it thereafter to another point. (San Fernando Valley Crane Service, Inc. v. Travelers Ins. Co., 229 Cal.App.2d 229, 236--237(6), 40 Cal.Rptr. 165 (hearing denied by the Supreme Court); Travelers Insurance Co. v. Employers Casualty Co. (Tex.Civ.App.) 370 S.W.2d 105, 108(5).)

In American Auto. Ins. Co. v. American Fid. & Cas. Co., supra, 106 Cal.App.2d 630, 235 P.2d 645, in which the court determined that 'unloading,' as used in the policy there under consideration, included all acts necessary to make a commercial delivery of the materials transported, it was said at page 636(3), 235 P.2d at page 649: 'As a matter of common knowledge, 'commercial delivery' includes 'taking the articles from their usual place of storage or assembly to the place of destination and turning them over to the control or possession of the purchaser or receiver. Sometimes delivery may be made by depositing things on the sidewalk or on a platform or other convenient place. That, however, is usually indicated by the custom of the business or agreement of the parties. Normally a...