Gamble-Skogmo, Inc. v. Saint Paul Mercury Indem. Co.

• Decision Date: 23 April 1954
• Docket Number: GAMBLE-SKOGM,I,No. 36049,36049
• Citation: 64 N.W.2d 380,242 Minn. 91
• Parties: nc. et al. v. SAINT PAUL MERCURY INDEMNITY CO.
• Court: Minnesota Supreme Court

Page 380

64 N.W.2d 380

242 Minn. 91

GAMBLE-SKOGMO, Inc. et al. v. SAINT PAUL MERCURY INDEMNITY CO.

No. 36049.

Supreme Court of Minnesota.

April 23, 1954.

Syllabus by the Court.

1. In action brought by American Automobile Insurance Company as assignee of any rights its insured Gamble-Skogmo, Inc., may have had under a comprehensive general liability insurance policy issued by defendant Saint Paul Mercury Indemnity Company by reason of a certain judgment rendered against Gamble-Skogmo, Inc., for negligence in a personal injury action, record examined and Held to sustain trial court's finding that defendant Mercury was estopped to rely on breach of condition of its policy with respect to forwarding of suit papers as a bar to any recovery thereon.

2. Various theories of estoppel advanced by defendant Mercury against plaintiffs considered in light of facts and circumstances presented and Held that trial court properly rejected defendant Mercury's contention that plaintiffs are now estopped to assert any liability under the Mercury comprehensive general liability policy by reason of the accident, action, and judgment in question.

3. For the reasons stated in the opinion, the liability of Gamble-Skogmo resulting from the accident, action, and judgment in question did not arise out of the use or unloading of an automobile within the coverage provisions of the American automobile policy but involved a general liability risk covered by defendant Mercury's comprehensive general liability policy and, therefore, the judgment against defendant Mercury should be affirmed.

Rosengren & Rufer, Fergus Falls, Harry H. Peterson, Minneapolis, for appellant.

Garrity & Garrity, Moorhead, for respondent Hartford Accident & Indemnity Co.

Field, Arvesen & Donoho, Fergus Falls, for respondents Gamble-Skogmo and American.

CHRISTIANSON, Justice.

This appeal presents for determination a novel and difficult question of insurance coverage. On July 14, 1948, Oscar Lyngstad was accidentally injured during the process of assembling a farm implement known as a Cockshutt swather preparatory to its being unloaded from the platform of a truck on which it was resting. Lyngstad shortly thereafter commenced an action to recover damages for his injuries. A jury trial was had in November 1948 which resulted in a verdict against Gamble-Skogmo, Inc. (hereafter called Gamble-Skogmo). Gamble-Skogmo was represented and defended in the action by American Automobile Insurance Company (hereafter called American). However, because of various circumstances surrounding the accident, which will be described in detail later, no less than three separate insurance companies, including American, had policies outstanding which afforded possible insurance coverage to Gamble-Skogmo for liability resulting from the injuries to Lyngstad. In order to relieve Gamble-Skogmo of the embarrassment of an unsatisfied judgment and to provide an efficient means to litigate the merits of the issue of insurance coverage, American paid the judgment entered in favor of Lyngstad and received an assignment from Gamble-Skogmo of all of Gamble-Skogmo's rights and claims against both Saint Paul Mercury Indemnity Company (hereafter called Mercury) and Hartford Accident & Indemnity Company (hereafter called Hartford) arising under their respective policies of insurance. ¹ In the assignment it was expressly understood that in paying said judgment American did not waive or relinquish in any way its own claim that its comprehensive automobile liability policy in which Gamble-Skogmo is the named insured afforded no coverage for the Lyngstad judgment. Pursuant to this assignment, American brought an action in the name of itself and Gamble-Skogmo against both Mercury and Hartford in order to recover the amount it paid to satisfy the Lyngstad judgment and in addition the expenses it incurred in defending that action. The case was tried without a jury in January 1950 in the district court of Otter Tail county and resulted in a judgment against Mercury for the full amount of the Lyngstad judgment and the expenses incurred in defending that action plus interest and costs. The judgment further provided that if no appeal was taken to this court or if the decision against Mercury was affirmed on appeal, then the action was dismissed as to Hartford. Mercury now appeals from the whole of this judgment.

In July 1948, Gamble-Skogmo, which is engaged generally in the business of merchandising and selling various goods and merchandise including farm equipment through a chain of retail stores, sold a Cockshutt swather to two brothers, Frank and Walter Dietz. The sale involved the delivery of the swather from Gamble-Skogmo's store outlet at Fergus Falls, Minnesota, to the Dietz farm, a distance of several miles. A 1940 Chevrolet 1 1/2-ton truck owned by Lawrence Jensen, a salesman employed by Gamble-Skogmo at the Fergus Falls store, was used to make the delivery. The Jensen truck was used pursuant to an arrangement under which Jensen was granted an operating allowance of 12 cents per mile when the truck was used on Gamble-Skogmo business, out of which Jensen paid all of the operating expenses of the truck. In order to transport the swather, which was loaded onto the truck at Fergus Falls, a part of the swather known as the hitch had to be disconnected from its operating position and elevated to a transport position. This procedure also involved disconnecting the tilting bar which is part of the hitch. Warren Sagerhorn, an employee of Gamble-Skogmo, drove the Jensen truck to the Dietz farm, and Albert Lindberg, another employee of Gamble-Skogmo, accompanied him as a helper. Upon arrival at the farm, the Dietz brothers and Lyngstad, an employee of the Dietz brothers at the farm, assisted Lindberg in reassembling the disconnected swather hitch and accompanying tilting bar in order to place the machine in ordinary operating position. This process of assembling the swather hitch and tilting bar was being performed while the swather was still located on the bed of the truck, the actual unloading or removing of the swather from the bed of the truck having not yet commenced. While they were so engaged in attempting to assemble the swather hitch and tilting bar, the tilting bar lever suddenly became released striking and injuring Lyngstad. At the time of the accident, the truck was parked in a private driveway and was not in motion or being operated in any way.

In the suit by Lyngstad which followed, Gamble-Skogmo, Lindberg, Sagerhorn, and Jensen were joined as defendants. The action against the latter two defendants was dismissed at the close of plaintiff Lyngstad's case; thus only the question of the possible liability of Gamble-Skogmo and Lindberg was submitted to the jury. The jury found against Gamble-Skogmo alone which under the instructions given by the court amounted to a determination by the jury that the cause of the accident was the failure on the part of Gamble-Skogmo to give adequate and proper instructions to Lindberg as to the proper and reasonably safe way in which to assemble the swather hitch and tilting bar and that Lindberg himself was not guilty of any negligence at the time and place of the happening of the accident. ² Prior to the accident, Lindberg had been in the employ of Gamble-Skogmo for only about a week as a part-time employee and had had no experience in setting up farm machinery. The supervisors and employees of Gamble-Skogmo who had the duty of instructing Lindberg with reference to the correct way to assemble a swather hitch and tilting bar were located at Fergus Falls and were not present during the delivery of the swather to the Dietz farm.

At the time of the accident in question, Gamble-Skogmo was the named insured in both a comprehensive automobile liability policy issued by American and in a comprehensive general liability policy issued by Mercury. In addition, a standard automobile policy issued by Hartford to Lawrence Jensen as the named insured contained a definition of 'insured' which was possibly broad enough to include Gamble-Skogmo. In view, however, of our disposition of this appeal, no description of the Hartford policy is necessary except to state that it insured against liability arising out of the ownership, maintenance, or use of an automobile, including the loading and unloading thereof.

The Mercury comprehensive general liability policy delineates insurance coverage as far as pertinent, in the following manner:

'INSURING AGREEMENTS

'COVERAGE A--BODILY INJURY LIABILITY

'To Pay any loss by reason of the liability imposed by law or contract upon the Insured for damages, including damages for care and loss of services, because of bodily injury, sickness or disease, including death at any time resulting therefrom, sustained by any person or persons.

'EXCLUSIONS

'This Policy does not apply:

'(a) except with respect to operations performed by independent contractors, to the ownership, maintenance or use, including loading or unloading, of (1) automobiles while away from premises (or the ways immediately adjoining) owned, rented or controlled by the Insured, or (2) aircraft;'

The policy further contained a special endorsement which reads as follows 'Notice is hereby accepted that this policy covers the sale, demonstration, servicing and use of farm machinery and farm tractors of all types and kinds.'

The pertinent insurance coverage afforded by the American comprehensive automobile liability policy appears as follows:

'INSURING AGREEMENTS

'COVERAGE A--BODILY INJURY LIABILITY

'To pay on behalf of the insured all sums which the insured shall become obligated to pay by reason of the liability imposed upon him by law, or assumed by him under any warranty of goods or products or any written contract, for damages, including damages for care and loss of services, because of bodily injury, sickness, or disease, including death at any time resulting...