Insurance Co. of No. Amer. v. Northwestern Nat. Ins. Co.
| Citation | 494 F.2d 1192 |
| Decision Date | 11 April 1974 |
| Docket Number | No. 73-1897.,73-1897. |
| Parties | INSURANCE COMPANY OF NORTH AMERICA, Plaintiff-Appellant, v. NORTHWESTERN NATIONAL INSURANCE CO., Defendant-Appellee. |
| Court | United States Courts of Appeals. United States Court of Appeals (6th Circuit) |
G. Cameron Buchanan, Alexander, Buchanan & Seavitt, Detroit, Mich., on brief, for plaintiff-appellant.
Harold F. Klute, Klute, Stone & Campbell, Niles, Mich., on brief, for defendant-appellee.
Before PHILLIPS, Chief Judge, and LIVELY and ENGEL, Circuit Judges.
This is an action between two liability insurance carriers, Insurance Company of North America and Northwestern National Insurance Company, to determine which of them is obligated to extend liability coverage for damages to a crane.
In the construction of a multi-story parking facility in Ann Arbor, Michigan, Precast Schokbeton, Inc., now known as Cork Street, subcontracted with the principal contractor, Jeffress-Dyer, Inc., to furnish and install complete precast concrete work as specified in a written contract. To perform its work, Cork Street required the use of a crane which, with operator, was furnished by L. W. Connelly and Sons, Inc. at an agreed hourly charge.
On May 19, 1966, after work hours, the crane was severely damaged when it was struck by concrete pillars which had previously been erected by Cork Street. The loss sustained, originally stipulated at $100,000 triggered a lawsuit in the Wayne County, Michigan Circuit Court against Cork Street and others by Connelly's property damage insurance carrier.
The instant action was brought in the United States District Court for the Eastern District of Michigan to determine, as between two liability insurance carriers, which was bound to defend Cork Street in the state action and to pay any judgment awarded against it based on the damage to the crane.
Both Insurance Company of North America and Northwestern National Insurance had, through the same agency, issued liability insurance policies to Cork Street. The loss occurred during the coverage period of each policy. The dispute between the two liability insurers, turned upon whether at the time of the damage, the crane had been "rented" by Connelly to Cork Street as the term was used in the respective policies.1
In a carefully written opinion, reported at 371 F.Supp. 550, the District Court held upon the facts presented, that under applicable Michigan law the crane was not "rented" at the time of the loss and accordingly rendered judgment against INA and in favor of Northwestern for the agreed amount of loss which had been suffered by the latter.
We conclude that the judgment in favor of defendant-appellee should be affirmed for the reasons stated in the trial court's opinion, supra, unless it erred in considering evidence outside the scope of the written stipulation of facts entered into between the parties. This constitutes, in our judgment, the only issue meriting treatment beyond that already afforded by the court below.
To protect themselves and Cork Street in the state action, INA and Northwestern joined to provide Cork Street's defense. Later, while this action was pending, the state action was compromised and settled, the two insurance companies splitting the $60,000 agreed settlement figure and costs of defense, with ultimate responsibility for the whole to await the District Court's decision on the coverage issue.
On June 28, 1971, INA and Northwestern filed in the court below a stipulation of facts incorporating therein, applicable portions of their respective insurance policies and a copy of the contract between Jeffress-Dyer and Cork Street and also a copy of a memo or form described thereon as "rental contract" which was used each day between Cork Street and Connelly to disclose the hours the Connelly crane was in operation.
The stipulation provided in part:
"It is hereby stipulated by and between the parties by their respective counsel that this Honorable Court may accept the Statement of Facts, binding on each of the parties and on the basis of the same a decision may be made and a Judgment entered thereon — determining which insurer was the insurer covering the damaged property at the time of the loss and liable for damages, . . . ."
Relying upon the stipulation as filed, INA thereupon moved for summary judgment under Rule 56 of the Federal Rules of Civil Procedure, claiming "that there existed no genuine issues of material fact, but rather, only legal questions remain for determination by this court."
INA's motion was met by Northwestern's claim that, the stipulation notwithstanding, there were in addition to the facts agreed upon, at least four further factual issues in dispute requiring resolution before a decision on the merits could be reached. Northwestern's response to the motion was accompanied by the affidavit of one of its attorneys, the purport of which was to claim that defendant in executing the stipulation never intended it to limit the right of either party to submit proofs and arguments relative to ultimate issues not alluded to in the stipulation.
In arguments before the District Court, INA vigorously contended that the stipulation was by its own terms all-inclusive. Further, it claimed that its agreement to participate in the compromises of the state action was premised upon the fact that the District Court's decision on the coverage issue would be limited to consideration of the policies involved and the facts contained in the stipulation, thus allowing the entire dispute to be resolved without the expense of further litigation.
While INA made a strong case before the District Court, as it acknowledged, the existence of an understanding that the stipulation was all-inclusive was not so clear as INA urged.
In addition to the sworn affidavits of Northwestern's counsel, counsel for INA acknowledged that, at the time the stipulation was being prepared and before it was signed, co-counsel for Northwestern had indicated that there were still additional questions to be resolved. In a letter dated May 26, 1971, addressed to INA counsel, he stated in part:
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