F & M Schaefer Brewing Co. v. Forbes Food Division, Chemical Leaman Tank Lines, Inc.

• Decision Date: 21 January 1977
• Citation: 376 A.2d 1282,151 N.J.Super. 353
• Parties: F & M SCHAEFER BREWING COMPANY and the Interborough Mutual Indemnity Insurance Company of Mineola, New York, Plaintiffs, v. FORBES FOOD DIVISION, CHEMICAL LEAMAN TANK LINES, INC., and Chemical LeamanTank Lines, Inc., and Aetna Life and Casualty Company, Defendants.
• Court: New Jersey Superior Court

Page 353

151 N.J.Super. 353

376 A.2d 1282

F & M SCHAEFER BREWING COMPANY and the Interborough Mutual Indemnity Insurance Company of Mineola, New York, Plaintiffs, v. FORBES FOOD DIVISION, CHEMICAL LEAMAN TANK LINES, INC., and Chemical LeamanTank Lines, Inc., and Aetna Life and Casualty Company, Defendants.

Superior Court of New Jersey, Law Division.

Jan. 21, 1977.

Vincent J. Cartier, Jersey City, for plaintiffs (McLaughlin & Cartier, Jersey City, attorneys).

Frank L. Brunetti, Jersey City, for defendants (Lamb, Hutchinson, Chappell, Ryan & Hartung, Jersey City, attorneys).

MONAGHAN, J. D. C., Temporarily Assigned.

The litigation in this indemnification action revolves around the question as to whether there is insurance coverage under a "loading and unloading" clause in an automobile liability policy. The case was submitted upon a written stipulation of facts and read into the record at a hearing before the court. In addition, exhibits were introduced into evidence and briefs submitted.

On December 13, 1972 William Thomas, employed as a tank truck driver by Chemical Leaman Tank Lines, Inc. (Leaman), drove to the premises of the F. & M. Schaefer Brewing Company (Schaefer) for the purpose of making a pick-up of yeast slurry, a by-product of the brewing industry. The trip was made pursuant to a contract between Leaman and the Campbell Soup Co., who was the purchaser of the yeast slurry from Schaefer. Thomas drove to the slurry loading area on the Schaefer premises and parked his truck near a piping outlet which was used in making transfers of the slurry from the Schaefer plant to tank trucks. In order to permit the easy alignment of the end of the discharge pipe with the opening in the top of the tank trucks, the pipe outlet was connected to a swivel and spring-tension apparatus. This permitted the piping to be moved horizontally or lifted vertically by the use of an attached rope. The procedure followed, when the piping was in its set position, was for the driver of the tank truck to then go to a buzzer, located on the building wall, and signal the Schaefer employees inside the plant that everything was ready for the opening of the valves to permit the yeast slurry to be transferred by gravity flow to the truck.

On this day Thomas, after parking his truck, climbed the ladder of the truck and stood on the catwalk. He opened the manhole on the top of the truck and was then thrown the rope by a Schaefer employee. In maneuvering the pipe so that it would fit over the manhole, Thomas had to pull on the rope. In doing so the rope broke, causing him to lose his balance and fall to the ground, sustaining severe injuries.

Following the accident Thomas sued Schaefer for damages for personal injuries. Although that action was ultimately settled, Schaefer, for the purposes of this proceeding, has admitted that the rope was defective as the result of it being exposed to a caustic soda cleaning solution that had been used to clean the piping hose.

Subsequent to the institution of the Thomas suit, Schaefer notified Leaman and its insurer that the Thomas accident was covered under the loading/unloading clause of Leaman's motor vehicle policy. Leaman's insurer, Aetna Casualty and Surety Company (Aetna), rejected Schaefer's contention and refused to undertake the defense of the action against Schaefer. Thereafter Schaefer and its underwriter, Interboro Mutual Indemnity Insurance Company (Interboro), brought this indemnification action seeking coverage under the policy.

The relevant portions of the Aetna policy read as follows:

I. BODILY INJURY LIABILITY COVERAGE PROPERTY DAMAGE LIABILITY COVERAge

The company will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of

bodily injury or

property damage

to which this insurance applies, caused by an occurrence and arising out of the ownership, maintenance or use, including loading and unloading, of any automobile * * *

II. PERSONS INSURED

Each of the following is an insured under this insurance to the extent set forth below:

(a) the named insured

(c) any other person while using an owned automobile or a hired automobile with the permission of the name insured, provided his actual operation or (if he is not operating) his other actual use thereof is within the scope of such permission, but with respect to bodily injury or property damage arising out of the loading or unloading thereof, such other person shall be an insured only if he is:

(1) a lessee or borrower of the automobile, or

(2) an employee of the named insured or of such lessee or borrower; * * *

It has been the contention of plaintiffs Schaefer and Interboro that the injuries of Thomas occurred during the loading of the Leaman truck and therefore Schaefer was an additional insured under the loading/unloading clause of the policy. Defendants, on the other hand, argue that Schaefer cannot be considered to be an insured under the policy because the accident did not occur during the loading of the tank truck, nor was Schaefer a borrower or lessee of the truck, as would be required when a person, other than the named insured, claims to be an additional insured under the loading/unloading clause.

Generally speaking, the courts have construed "loading and unloading" clauses as expanding the meaning of the phrase "use of the automobile" in the omnibus clause of automobile liability policies and consequently have extended the insurance coverage to some accidents in which the vehicle does not take an active part. Maryland Cas. Co. v. N. J. Mfrs. Cas. Ins. Co., 48 N.J.Super. 314, 137 A.2d 577 (App.Div.1958), aff'd 28 N.J. 17, 145 A.2d 15 (1958); Connecticut Indem. Co. v. Lee, 168 F.2d 420 (1 Cir. 1948). In the majority of jurisdictions the courts have adopted one of two basic theories: either the "coming to rest" doctrine or the "complete operation" doctrine. Annotations, 160 A.L.R. 1259 (1946) and 95 A.L.R.2d 1122 (Supp.1964). 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 where (a) the goods which were taken off the automobile have actually come to rest and (b) every connection of the motor vehicle with the process of unloading has ceased. (160 A.L.R. at 1264)

The "complete operation" rule, on the other hand, is one of broader construction, interpreting the loading/unloading clause to include the

* * * entire process involved in the movement of goods from the moment when they are given into the insured's (the trucker's) possession until they are turned over at the place of destination to the party to whom delivery is to be made. (Id. at 1267)

The more inclusive "complete operation" doctrine appears to have become the rule followed by the New Jersey courts. Cenno v. W. Virginia Paper & Pulp Co., 109 N.J.Super. 41, 262 A.2d 223 (App.Div.1970), certif. den., 56 N.J. 99, 265 A.2d 149 (1970); Drew Chem. Corp. v. Amer. Fore Loyalty Group, etc., 90 N.J Super. 582, 218 A.2d 875 (App.Div.1966); Maryland Cas. Co. v. N. J. Mfrs. Cas. Ins. Co., supra ; Turtletaub v. Hardware Mut. Cas. Co., 26 N.J.Misc. 316, 62 A.2d 830 (D.Ct.1948).

However, the fact that an accident occurs during the loading or unloading of a vehicle does not in itself mean that coverage will be provided by the automobile insurance. What is required to establish coverage is that the act or omission which resulted in the injury or damage be an act or omission which was necessary to carry out the loading or unloading process, Employers Liab. Assur. Corp. v. Indemnity Ins. Co., 228 F.Supp. 896, 900 (D.Md.1964), and not merely an act or omission concerning the maintenance of the loading or unloading premises. The case of Atlantic Mut. Ins. Co. v. Richards, 100 N.J.Super. 180, 241 A.2d 468 (Ch.Div.1968), aff'd 105 N.J.Super. 48, 251 A.2d 134 (App.Div.1969), is a good example of this dichotomy. That case held that despite the fact that the plaintiff's deceased husband had been injured during the unloading of a truck, the actual cause of the accident was the negligent maintenance of the loading platform. In so holding the court said:

To construe the maintenance of the loading platform as a "use of the automobile" in unloading would be to extend automobile liability coverage to negligence occurring prior to the arrival of the truck, that is, failing to remove dunnage from the proximity to the open stairwell, and to a nuisance grounded in negligence, that is the stairwell without guardrail. (at 183, 241 A.2d at 470)

As the result of such a determination the court found that the accident occurred outside of the coverage provided by the loading/unloading clause in the truck owner's insurance policy. Accord, General Acc. Fire and Life Assur. Corp. v. Brown, 35 Ill.App.2d 43, 181 N.E.2d 191 (D.Ct.App.1962); Indiana Lumbermens Mut. Ins. Co. v. Statesman Ins. Co., 260 Ind. 32, 291 N.E.2d 897 (Sup.Ct.1973); see Cenno v. W. Virginia Paper & Pulp Co., supra ; American Oil Co. v. Hardware Mut. Cas. Co., 408 F.2d 1365 (1 Cir. 1969); Southern California Petro Corp. v. Royal Indem. Co. 70 N.M. 24, 369 P.2d 407 (Sup.Ct.1962); Cosmopolitan Mut. Ins. Co. v. Baltimore & Ohio R. Co., 18 A.D.2d 460, 240 N.Y.S.2d 88 (App.Div.1963).

In reviewing the facts of the case at bar it may initially appear that the negligence involved would be of the type that would fit into the category of negligent maintenance of the premises. The landowner, here Schaefer, was under a duty to maintain its premises in a reasonably safe condition and part of those premises included the rope attached to the slurry transfer equipment. However, while this duty existed generally with regard to Schaefer's business invitees, it also was required as a specific step in the loading operation of the Leaman truck. Although there are no factually similar...