Liberty Mutual Ins. Co. v. Steenberg Construction Co.

• Decision Date: 04 August 1955
• Docket Number: No. 15074.,15074.
• Citation: 225 F.2d 294
• Parties: LIBERTY MUTUAL INSURANCE COMPANY, a mutual corporation, Appellant, v. STEENBERG CONSTRUCTION COMPANY, a corporation (Plaintiff), and Employers' Mutual Liability Insurance Company of Wisconsin, a corporation (Third Party Defendant), Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

225 F.2d 294 (1955)

LIBERTY MUTUAL INSURANCE COMPANY, a mutual corporation, Appellant, v. STEENBERG CONSTRUCTION COMPANY, a corporation (Plaintiff), and Employers' Mutual Liability Insurance Company of Wisconsin, a corporation (Third Party Defendant), Appellees.

No. 15074.

United States Court of Appeals Eighth Circuit.

August 4, 1955.

Linus J. Hammond, St. Paul, Minn. (Reginald Ames and Cummins, Cummins, Hammond & Ames, St. Paul, Minn., on the brief), for appellant.

Michael W. Gaughan, Minneapolis, Minn. (Freeman & Peterson, Minneapolis, Minn., on the brief), for appellees.

Before GARDNER, Chief Judge, and JOHNSEN and COLLET, Circuit Judges.

JOHNSEN, Circuit Judge.

A general contractor, erecting an addition to a building in St. Paul, Minnesota, assumed to direct the movements of a subcontractor's truck, making delivery of mixed concrete for the general contractor's use in laying a floor, by supervising and signalling, from the rear of the truck, the course to be taken by the driver on the premises, in backing the truck to the spot where the general contractor desired to have the concrete dumped. The supervising, signalling and backing operations, so being carried on, resulted in the truck occasioning personal injury to a third party, not an employee of either the general contractor or the subcontractor.

The injured party sued both the general contractor and the subcontractor, in the Minnesota state courts, for negligence, and recovered a judgment against them jointly, which was affirmed by the Supreme Court of Minnesota, in Swanson v. J. L. Shiely Co., 234 Minn. 548, 48 N.W.2d 848. Satisfaction of the judgment was thereafter made, through payment of one-half of its amount by the general contractor and one-half by the subcontractor's truck-liability insurer. Suit was then brought by the general contractor, in the federal courts, on diversity jurisdiction, against the subcontractor's insurer, for indemnity, contending that the omnibus clause of the subcontractor's truck policy constituted the general contractor an insured under the policy, as to the accident involved. The trial court, on a non-jury trial, granted recovery, and the insurer has appealed.

The general contractor, during the pendency of the third-party action, had requested the insurer to recognize it as an insured under the policy and to take charge of its defense, but the insurer had refused. The insurer's policy contained the following omnibus provision: "The unqualified word `insured' includes the named insured here the subcontractor and * * * also * * * any person while using the automobile and any person or organization legally responsible for the use thereof, provided the actual use of the automobile is with the permission of the named insured * * *." The general contractor carried comprehensive public-liability insurance, issued by another insurance company, on all of its construction activities, but the coverage thereof was qualified by a proviso in relation to vehicles owned by someone else, that "the insurance under this policy with respect to loss arising out of the use of any nonowned automobile shall be excess insurance over any other valid and collectible insurance available to the insured under a policy applicable with respect to such automobile or otherwise".

The trial court, in granting recovery against the subcontractor's insurer, held that the active directing by the general contractor of the backward movement of the truck and the admitted following by the subcontractor's driver of the signals so given him — particularly since both of these things had been done as incidents of the construction work and both had proximately contributed to occasion the accident — made the participation of the general contractor such an immediate part of the actual operating of the truck as to constitute the general contractor, in a sufficient legal sense, a person "using the automobile", or in any event a person "legally responsible for the use thereof", within the language and coverage of the omnibus clause of the policy. The right of the general contractor in the situation to give the directions and the duty of the subcontractor's driver to conform to them are conceded here, so that no question of any nature is involved in respect to the condition or requirement of the truck policy that "the actual use of the automobile" must be "with the permission of the named insured".

We can see no reason generally to regard the trial court's reading and application of the language of the omnibus clause as being unsound or unreasonable in the situation. But more specifically controlling than this, as a question of reviewing a determination of state law made by a federal district court, we can in any event find no persuasive basis to warrant us in declaring the holding here to be clearly erroneous, as a considered appraisal, by a capable and experienced trial judge, of what the local law of his jurisdiction is. No Minnesota statute, decision or other demonstrable indication of state legal mind, on the effect of such omnibus-clause language, has been pointed out to us, or discovered by us, that is capable of even raising a doubt in our mind as to the permissiveness of the trial court's view.

In the absence of any controlling local...