Kaufman v. Liberty Mutual Insurance Company

• Decision Date: 13 March 1959
• Docket Number: No. 12638.,12638.
• Citation: 264 F.2d 863
• Parties: Ben KAUFMAN Trading and Doing Business as the Prince Distributing Company, and Continental Casualty Company, a Corporation, Appellant, v. LIBERTY MUTUAL INSURANCE COMPANY, a Corporation.
• Court: U.S. Court of Appeals — Third Circuit

264 F.2d 863 (1958)

Ben KAUFMAN Trading and Doing Business as the Prince Distributing Company, and Continental Casualty Company, a Corporation, Appellant, v. LIBERTY MUTUAL INSURANCE COMPANY, a Corporation.

No. 12638.

United States Court of Appeals Third Circuit.

Submitted November 18, 1958.

Decided March 13, 1959.

Robert E. Wayman, W. Arch Irvin, Jr., Dickie, McCamey, Chilcote & Robinson, Pittsburgh, Pa., for appellant.

V. C. Short, Pittsburgh, Pa., for appellee.

Before BIGGS, Chief Judge, and McLAUGHLIN and KALODNER, Circuit Judges.

KALODNER, Circuit Judge.

Under Pennsylvania law, what is the meaning of the term "loading or unloading" of a vehicle as used in Comprehensive Automobile Liability and General Liability policies?

That is the issue presented by this appeal from the Order of the District Court for the Western District of Pennsylvania in a declaratory judgment action¹ seeking construction of the term "loading or unloading" as used in the policies above mentioned. The case is one in federal court by diversity of citizenship² and involves Pennsylvania law.

The agreed facts are detailed in the opinion of the Court below.³ They may be summarized as follows:

In December, 1954, one Florence McClester sued Ben Kaufman, a beer distributor, in the Court of Common Pleas of Allegheny County, Pennsylvania, for injuries she suffered when Kaufman's employee negligently opened a cellar door set in a sidewalk in June, 1954. At the time of the accident Kaufman's beer truck was parked near the curb on Hoeveler Street, Pittsburgh, adjacent to the sidewalk cellar entrance to the basement of the Hoeveler Grill. A barrel of beer was removed from the truck by those in charge of it and placed upon the sidewalk between the curb and the sidewalk entrance to the Grill. The truck driver's helper then entered the basement of the Grill, by another entrance, unlocked the sidewalk cellar doors from the inside and was in the act of opening the doors when Mrs. McClester, a pedestrian, was struck by one of them and injured. The helper opened the cellar doors in order to deliver the barrel of beer inside the basement of the Grill.

While the McClester suit was pending in the State court, Kaufman, brought a declaratory judgment action in September, 1955 in the Western District of Pennsylvania against Liberty Mutual Insurance Company ("Liberty"), his general liability insurer, for construction and application to the accident involved of a clause excluding coverage for liability incurred while "loading or unloading" a vehicle. Later, Kaufman added as a party plaintiff Continental Casualty Company ("Continental"), an automobile liability insurer whose policy expressly covered "loading and unloading" a vehicle.

Agreeing that one of the two policies covered the accident to Mrs. McClester, Liberty and Continental stipulated Continental was to be held liable if the truck was being "unloaded" at the time of the accident; Liberty, if it was not.

The case came on for hearing and on December 19, 1956, the District Court held that the truck was being "unloaded" at the time of the accident and accordingly it was Continental's obligation to indemnify Kaufman. Appeal was taken from this decision and we reversed on the ground that the record did not disclose whether the claim against Kaufman was in excess of $3,000, the required jurisdictional amount in a diversity case, and remanded with direction to the District Court to dismiss unless further proceedings in that Court established the $3,000 jurisdictional requirement.⁴

Subsequently hearing was held in the District Court on December 16, 1957, at which time it was established that in the interim Mrs. McClester's suit in the State court had been settled for $4,000 which had been loaned to Kaufman by Continental for the purpose. The District Court found the $4,000 settlement was "fair and reasonable" and accordingly the jurisdictional requirement was met in the declaratory judgment action. It further adhered to its original ruling that Mrs. McClester was injured while the truck was being "unloaded" and Continental is therefore liable.

In doing so the District Court relied on the decision of the Supreme Court of Pennsylvania in Wheeler v. London Guarantee & Accident Co., 1928, 292 Pa. 156, 140 A. 855, as declaring the Pennsylvania law with respect to what constitutes "unloading", and held it to be dispositive in the insant case. It limited application of a later decision by the Superior Court of Pennsylvania, an intermediate appellate court, in Ferry v. Protective Indemnity Company of New York, 1944, 155 Pa.Super. 266, 38 A.2d 493, 494, to a "loading" situation. Inferentially, the District Court indicated that the Pennsylvania courts have one rule with respect to "loading" and another with respect to "unloading".

Liberty agrees with the holding of the District Court that the Wheeler case supports its position and is dispositive here; Continental relies on the Ferry case as requiring a ruling in its favor and, distinguishing Wheeler on its facts, says it too supports its position.

In view of the foregoing it is necessary for us to ascertain just what the Wheeler and Ferry cases held with respect to the interesting question as to what, under Pennsylvania law, constitutes "loading" or "unloading" a vehicle.

Our analysis of the cases mentioned compels the conclusion that, in the language of Ferry, Pennsylvania construes liability under the "loading and unloading" clause to result only when there is a "connection between the accident and the use of the vehicle insured", or, the vehicle was "an active factor in the operation."

In Ferry the driver of the insured truck, in order to remove ashes from the basement of a building, parked it at the curb directly in front of the premises. He then entered the building by the front entrance and went to the basement where he picked up a can of ashes and carried it to the steps of a basement exit via a cellar door opening into the sidewalk. As he raised the cellar door he caused a pedestrian to trip on it with resulting injury. The driver who was moving the ash can intended to place its contents in the parked truck.

The policy involved in Ferry provided coverage, as did the Continental policy in the instant case, (1) for bodily injury "caused by accident and arising out of the ownership, maintenance or use of the automobile", and (2) "use of the automobile * * * includes the loading and unloading thereof."

After stating the prevailing Pennsylvania rule that "A contract of insurance must have a reasonable interpretation, such as was probably in the contemplation of the parties when it was made * * *" the Superior Court said (155 Pa.Super. at pages 269-270, 38 A.2d at page 494):

"The `loading and unloading\' clause is only an extension of the ownership, maintenance and use clause in the policy. To bring the accident within the `loading and unloading\' clause of the policy there must be a connection between the accident and the use of the vehicle insured. The vehicle must have been directly connected with the work of loading; or it must have been an active factor in the operation. See Wheeler v. London Guarantee & Accident Co., 292 Pa. 156, 140 A. 855.

"The precise line at which the loading of a truck begins or unloading ends may in some cases be difficult of ascertainment. But in the present case neither the ashes, nor the container in which they were carried, nor the insured truck was the cause of, or involved in, the accident. The instrumentality that caused the accident was the cellar door. This was merely a convenience preparatory to loading, and was not, under the facts, included in the process of loading the truck. See Stammer v. Kitzmiller, 226 Wis. 348, 276 N.W. 629.

"We are not unmindful that the decisions from other jurisdictions are not uniform in construing similar clauses in automobile liability policies. But we find no convincing authority which would justify a construction which would include within the coverage of the policy an act independent of any use of the insured vehicle. Our conclusion, under the facts in the instant case, is that the accident did not arise out of the loading of the truck as provided by the policy." (Emphasis supplied.)

It must be noted at this point that an application for allocatur from the Superior Court's decision was refused by the Pennsylvania Supreme Court, 155 Pa. Super. xxiii, 38 A.2d 493.

What was said and decided in Wheeler supports its citation in Ferry for the proposition that to bring a vehicle within the scope of the standard "loading and unloading" and "use" clauses of automobile liability policies it "must have been directly connected with the work of loading or unloading; or it must have been an active factor in the operation."

Wheeler involved construction of clauses in an automobile liability policy similar to those contained in the instant...