Liberty Mutual Insurance Co. v. Johnson, Drake & Piper, Inc.

• Decision Date: 08 March 1968
• Docket Number: No. 18734.,18734.
• Citation: 390 F.2d 410
• Parties: LIBERTY MUTUAL INSURANCE COMPANY, Appellant, v. JOHNSON, DRAKE & PIPER, INC., Modern Erecting Co., Harlan Stowe and Wesley P. Janshen, and Continental Casualty Company and Aetna Casualty and Surety Company, Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

390 F.2d 410 (1968)

LIBERTY MUTUAL INSURANCE COMPANY, Appellant, v. JOHNSON, DRAKE & PIPER, INC., Modern Erecting Co., Harlan Stowe and Wesley P. Janshen, and Continental Casualty Company and Aetna Casualty and Surety Company, Appellees.

No. 18734.

United States Court of Appeals Eighth Circuit.

March 8, 1968.

Francis W. Van Eps, of Robb, Robb, and Van Eps, Minneapolis, Minn., for appellant.

Wright W. Brooks, of Faegre & Benson, Minneapolis, Minn., for appellees Modern Erecting Co. and Aetna Casualty and Surety Co.

Dale I. Larson, of Robins, Davis & Lyons, Minneapolis, Minn., for appellee Wesley P. Janshen.

John G. Kressel, of Ryan, Kain & Kressel, Minneapolis, Minn., for appellees Johnson, Drake & Piper, Inc. and Continental Casualty Co.

Before VAN OOSTERHOUT, Chief Judge, and MATTHES and MEHAFFY, Circuit Judges.

MEHAFFY, Circuit Judge.

This appeal is from a Minnesota federal district court judgment upon a declaratory judgment action and involves the interpretation of an automobile liability insurance policy covering the use of a ready-mix concrete truck.

In an opinion reported in 258 F.Supp. 603 (D.Minn.1966), the district court held that appellant, Liberty Mutual Insurance Company, was liable under its policy covering a ready-mix concrete truck for injuries sustained by Edward L. Thill, an employee of one of the subcontractors on a construction job, as a result of the falling of a crane which was transporting the concrete to the top of a one-story building for the purpose of pouring a slab roof. The concrete had been unloaded from the ready-mix truck at the job site by the normal process which includes the tilting of the mixer containing the concrete and the positioning of a chute or spout underneath the opening in the mixer from which the concrete pours at the place and/or into the receptacle designated by the purchaser, which in this instance was into a "bucket" attached to a crane. The case was tried to the district court upon a stipulation of facts, and, being a diversity action, the substantive law of Minnesota is controlling. For reasons hereinafter set forth, we reverse the judgment of the district court.

Appellant, Liberty Mutual, provided the insurance for J. L. Shiely Company which delivered the concrete to the construction job site in a ready-mix truck. Appellee Johnson-Drake was the general contractor and in charge of all the construction, which included a one-story building at Wold Chamberlain Airport for the Minneapolis-St. Paul Metropolitan Airport Commission to be used by Western Airlines. The general contractor's insurance carrier, Continental Casualty Company, is likewise an appellee here. Modern Erecting Co., owner of the crane, and Harlan Stowe and Wesley P. Janshen, crane operator and oiler for Modern, are also appellees, as is Aetna Casualty and Surety Company, the insurance carrier for Modern.

Johnson-Drake, the general contractor, had subcontracted the concrete work to Jesco, Inc. and the excavation and other earth moving work to Ashbach Construction Company. Edward L. Thill, the workman who was injured, was an employee of Ashbach, and was engaged in the operation of a backhoe machine with which he was backfilling at the time of the accident.

A day or two before the accident, which occurred on June 23, 1960, the general contractor's superintendent gave instructions to Jesco to be ready to lay the concrete slab for the roof commencing at 8:00 a. m. on the 23rd. The general contractor agreed with Jesco to supply the means for getting the concrete from the ready-mix truck to the roof of the building. The general contractor engaged Modern Erecting Co. to provide a truck crane, a crane operator and a crane oiler, who in this instance were the aforementioned Stowe and Janshen. The general contractor furnished its own bucket to be attached to the crane for conveyance of the concrete to the roof.

Stowe and Janshen brought the truck crane to the job site about 7:45 a. m. on June 23. After a discussion with the general contractor's superintendent, Stowe and Janshen positioned the crane and prepared it for operation. About 9:00 a. m. the hoisting of the concrete began, and the crane had hoisted between fifteen and twenty bucket loads of concrete to the rooftop when the accident occurred at approximately 10:30 a. m. Two of Shiely's ready-mix trucks had been emptied and a third had been partially emptied. This operation was accomplished by the slackening of the cable on the crane and the lowering of the bucket to the ground so that the concrete could be poured from the ready-mix truck into the bucket. Jesco, the concrete subcontractor, had one of its employees stationed by the truck, which was located about forty feet from the truck crane, in order to spot the bucket. This workman would guide the bucket to the ground before it was filled and would signal the crane operator when to lift it. When the bucket arrived in the vicinity of the roof, the crane operator received signals from Jesco's employees concerning the position of the bucket, and the concrete was placed directly in the forms on the roof.

When the accident occurred, the crane operator had lifted the loaded bucket into the air and swung it about midway to the rooftop when the outriggers began to rise. The crane operator looked for a place to drop the bucket but saw Thill backfilling below, and therefore attempted to raise the boom. It kept tipping, however, and the boom of the crane fell across Thill's tractor, causing severe injuries to Thill and rendering him a paraplegic. Janshen, who was supposed to be on the outside checking the blocking of the crane, was inside the cab of the crane trying to dry out his clothes inasmuch as it was raining. The tractor which the injured workman was operating was located sixty-one feet from the center of the crane in its upright position.

Thill brought an action in the District Court for the County of Hennepin, Minnesota, against Johnson-Drake, Modern, Shiely and Jesco for the recovery of damages for the bodily injuries he sustained in the accident. Harlan Stowe and Wesley P. Janshen were joined as third-party defendants upon the claim of Modern that it was entitled to indemnity against them if Modern should be adjudged liable to Thill. Johnson-Drake, Modern, Stowe and Janshen gave timely notice to Liberty Mutual of their claims to coverage under Shiely's policy with Liberty and tendered to Liberty the defense on their behalf of Thill's state court action, but Liberty declined these tenders. The case went to trial on May 13, 1963, and the jury, by its special verdict, found that Johnson-Drake, Modern and Wesley P. Janshen were negligent and that the negligence of each was a proximate cause of the accident, and assessed Thill's damages at $642,400.00. On July 10, 1963, the trial court made and filed its Findings of Fact, Conclusions of Law and Order for Judgment, by which it adopted the jury's special verdict and also found that Harlan Stowe was negligent and that his negligence was a proximate cause of the accident, and ordered judgment in Thill's favor against Johnson-Drake and Modern in the sum of $642,400.00. The trial court also ordered that Modern have judgment for indemnity in its favor against Harlan Stowe and Wesley P. Janshen for such sum as Modern was required to pay to Thill. On February 20, 1964, the court amended its order, holding that recovery by Thill of more than $375,000.00 would be excessive and that motions for a new trial would be granted unless Thill consented that the amount of the verdict be reduced to $375,000.00. Thill consented.

An appeal was taken to the Minnesota Supreme Court, which affirmed the trial court's judgment in an opinion reported in Thill v. Modern Erecting Company, 272 Minn. 217, 136 N.W.2d 677 (1965). Upon the filing of the decision on September 3, 1965, Continental paid for Johnson-Drake one-half of the amount of the verdict, interest and costs in the sum of $213,390.44, and Aetna paid the other one-half for Modern, making a total of $426,780.89 paid to Thill.

Appellees brought this action against Liberty Mutual, carrier of Shiely's liability insurance on the concrete ready-mix truck, seeking to recover from Liberty the full amount paid to Thill on the theory that the accident resulted from the unloading of the truck and that under the terms of the policy the employees of the general contractor and/or its subcontractors who were assisting in the unloading were omnibus insureds.

The automobile liability insurance policy issued by Liberty Mutual to J. L. Shiely Co. on the concrete ready-mix truck here involved contains the following provisions:

"DEFINITION OF INSURED. With respect to the insurance for bodily injury liability and for property damage liability the unqualified word `insured\' includes * * * 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 by the named insured or with his permission. * *

* * * * * *

"Use of the automobile for the purposes stated includes the loading and unloading thereof."

All of the appellees claim coverage, either directly or by way of subrogation, under the omnibus insured clause and the loading-unloading clause of the Liberty policy, and Continental and Aetna claim that their insurance policies provide only excess and secondary coverage. Aetna also asserts that since its policy with Modern does not cover employees such as Stowe and Janshen and since Modern is entitled to indemnity from these employees, Aetna, as subrogee of Modern, is entitled to recover from Liberty because Stowe and Janshen are covered by Shiely's policy with Liberty.

Liberty contends in defense of these claims that the tipping of the crane and the resultant injuries to Thill did not arise out of the use of the Shiely truck, or out of the unloading of the truck within the meaning of the Liberty policy; that no causal relation...