Maryland Cas. Co. v. New Jersey Mfrs. (Cas.) Ins. Co.

• Decision Date: 10 January 1958
• Docket Number: A--334,Nos. A--329,s. A--329
• Citation: 48 N.J.Super. 314,137 A.2d 577
• Parties: MARYLAND CASUALTY COMPANY, a corporation of the State of Maryland, Plaintiff- Appellant, v. NEW JERSEY MANUFACTURERS (CASUALTY) INSURANCE CO., William H. Bair Trucking Company, Horace Kelly, South Jersey Port Commission, Operating Camden Marine Terminal, and William Cherry, Defendants-Respondents, and William Cherry, Defendant-Appellant. . Appellate Division
• Court: New Jersey Superior Court — Appellate Division

Page 314

48 N.J.Super. 314

137 A.2d 577

MARYLAND CASUALTY COMPANY, a corporation of the State of Maryland, Plaintiff- Appellant, v. NEW JERSEY MANUFACTURERS (CASUALTY) INSURANCE CO., William H. Bair Trucking Company, Horace Kelly, South Jersey Port Commission, Operating Camden Marine Terminal, and William Cherry, Defendants-Respondents and William Cherry, Defendant-Appellant.

Nos. A--329, A--334.

Superior Court of New Jersey Appellate Division.

Argued Sept. 16, 1957.

Decided Jan. 10, 1958.

Sidney P. McCord, Jr., Camden, for appellant Maryland Cas. Co. (Starr, Summerill & Davis, Camden, attorneys).

Albert B. Melnik, Camden, for appellant William Cherry (Hermann, Melnik & Lowengrub, Camden, attorneys).

Peter J. Devine, Jr., Camden, for respondent New Jersey Mfrs. (Cas.) Ins. Co. (Orlando, Kisselman & Devine, Camden, attorneys; Samuel P. Orlando, Camden, of counsel).

Grover C. Richman, Jr., Atty. Gen., for respondent South Jersey Port Commission (John F. Crane, Deputy Atty. Gen., of counsel), filed a statement in lieu of brief.

Before Judges GOLDMANN, FREUND and CONFORD.

The opinion of the court was delivered by

GOLDMANN, S.J.A.D.

Plaintiff brought an action seeking reimbursement by way of indemnification or contribution from defendants New Jersey Manufacturers (Casualty) Insurance Co. ('Manufacturers') and William Cherry. The insurance company answered denying liability. Cherry also answered and cross-claimed against Manufacturers. The Superior Court, Law Division, entered judgment dismissing the complaint and the cross-claim. 43 N.J.Super. 323, 128 A.2d 514 (1957). Plaintiff and Cherry appeal.

The facts are not in substantial dispute. On Sunday, March 2, 1952, Horace Kelly, a truckdriver in the employ of William H. Bair Trucking Company, drove a truck to the Camden Marine Terminal, operated and controlled by the South Jersey Port Commission, to pick up a load of large rolls of paper, weighing between 2,500 and 4,000 pounds each, which had just come into the terminal on a barge. Cherry was one of a group of men assigned by the terminal to the work of unloading the rolls from the barge onto the truck. He would pick up a roll by means of a fork lift, transport it a short distance to the Bair truck, raise it and let it roll onto the truck. Kelly was on the truck directing where the paper should be placed. In raising a load up to the top row Cherry failed to observe Kelly's presence and rolled the paper in such a manner that it struck and seriously injured Kelly. It is not disputed that Cherry was in the employ of the terminal, that Kelly was Bair's employee, or that the truck was at the terminal and being used in connection with the Bair Trucking Company business. In fact, Mr. Bair was on the terminal premises but not at the scene of the accident.

At the time of the accident plaintiff Maryland Casualty Company had in force a comprehensive general liability policy insuring the Port Commission for public liability. Cherry was not included within the coverage of that policy. Defendant Manufacturers had in force a standard automobile liability policy insuring the Bair Trucking Company for bodily injury or property damage arising out of the ownership, maintenance or use of its vehicles. The trucking company was also covered by a workman's compensation policy issued by Manufacturers, and compensation benefits were paid to Kelly thereunder.

Kelly in due course instituted an action against Cherry and the Port Commission, alleging that the injuries he had suffered resulted from Cherry's negligence and that the Port Commission was liable under the doctrine of Respondeat superior. The Port Commission and Cherry demanded that Manufacturers assume the defense of Kelly's action on their behalf, claiming coverage under the 'omnibus clause' (of which more hereafter) in its policy insuring the Bair Trucking Company. When Manufacturers refused to do so plaintiff, performing its contractual obligations under its policy insuring the Port Commission, assumed the defense of the Commission. It settled Kelly's claim during the pendency of the litigation by paying him $20,000, in consideration for which Kelly gave the Camden Marine Terminal, the Port Commission and plaintiff a general release. His action was thereupon dismissed as to them, with prejudice. It still subsists as against Cherry.

Maryland Casualty Company, as plaintiff, then brought the instant action, seeking reimbursement by way of indemnification or, in the alternative, contribution from Manufacturers and Cherry, joining Kelly and the Bair Trucking Company as parties defendant. By its answer Manufacturers alleged that neither Cherry nor the Port Commission were insured parties, covered by the omnibus clause of its policy, because Cherry was not using the Bair truck within the meaning of the 'loading and unloading' clause; and further, that under the exclusion clause in its policy it was not liable for injury to any employee of an insured covered by workmen's compensation.

Cherry cross-claims against Manufacturers, claiming he was an insured under the omnibus clause of its policy; in effect, he demands that Manufacturers save him harmless of any claim by plaintiff based on its contention that he is liable to it because of his liability to his employer, the Port Commission, for having caused it a loss by the negligent performance of his work.

Plaintiff and defendant Manufacturers stipulated that neither the amount of the settlement entered into by plaintiff on behalf of the Port Commission, nor the means by or manner in which it was effected, would be contested and, further, that the liability of the Port Commission arose by reason of the relationship of Respondeat superior between the Commission and Cherry.

The Law Division judge held that although the Port Commission and Cherry came within the definition of 'insured' of the omnibus clause, they were excluded from coverage under the terms of the exclusion clause. He gave the exclusion clause a literal reading and said that the policy did not cover the instant situation because the employee injured was an employee of an insured, specifically the named insured, and benefits for his injury were payable to him under workmen's compensation. In arriving at this conclusion he relied heavily upon the case of Standard Surety & Casualty Co. of New York v. Maryland Casualty Co., 281 App.Div. 446, 119 N.Y.S.2d 795 (App.Div.1953). See 43 N.J.Super. 323, 128 A.2d 514 (Law Div.1957).

The appeal from the dismissal of plaintiff's complaint and defendant Cherry's cross-claim raises three questions: (1) are defendants Port Commission and Cherry 'insureds' under the Manufacturers' policy by virtue of its omnibus clause; (2) are these defendants excluded from coverage under the policy by reason of its exclusion clause; and (3) is plaintiff, as the subrogee of defendant Port Commission, entitled to full indemnification from defendant Manufacturers because of the relationship between the Port Commission and its employee Cherry, and the fact that he is not covered by any other insurance?

What has been referred to as the omnibus clause in Manufacturers' policy reads as follows:

'III DEFINITION OF 'INSURED.' The unqualified word 'insured' wherever used in coverages A and B (bodily injury and property damage liability, respectively) and in other parts of this policy, when applicable to such coverages, includes the named insured and also includes, under divisions 1 and 2 (owned and hired automobiles) of the Definition of Hazards, 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 * * *.'

Paragraph 5 of the 'Conditions' of the policy, captioned 'Purposes of Use Defined,' states:

'* * * (c) use of the automobile for the purposes stated includes the loading and unloading thereof.'

I.

Defendant Manufacturers would have it that neither Cherry nor the Port Commission were covered by the omnibus clause because neither was 'using' the Bair truck.

The 'loading and unloading' clause is a phrase of extension, expanding the term 'while using the automobile.' For an accident to be covered by that clause it must have occurred during the process of loading or unloading the vehicle and be causally connected with that act. There is a causal connection if the loading or unloading was the efficient cause of the accident. See generally, Annotation, 160 A.L.R. 1259 (1946).

The Bair truck was unquestionably being used with the permission of its owner, the named insured under Manufacturers' policy. Not only was Kelly, its driver, so using it, but every employee of the terminal who was assigned to loading the truck with the rolls of paper brought from the barge. Cherry was such an employee, and it matters not the slightest that he may have stopped his fork lift just short of the back of the truck and from that point raised the roll of paper to the loading point. What he was doing was part of the complete operation of loading. Cherry was acting for his employer and the Port Commission was vicariously liable for his acts. It was 'using' the truck through him. The trial judge properly found that the Port Commission and Cherry were additional insureds under the omnibus clause. American Oil & Supply Co. v. United States Casualty Co., 19 N.J.Misc. 7, 18 A.2d 257 (Sup.Ct.1940); Wagman v. American Fidelity & Casualty Co., 304 N.Y. 490, 109 N.E.2d 92 (Ct.App.1952); and see Annotation, 160 A.L.R. 1259, above.

II.

The question then arises whether the Port Commission and Cherry may, as additional insureds, claim the benefit of the policy in view of the provisions of the following exclusion clauses:

'THIS POLICY DOES NOT APPLY:

'(d) under coverages A and C, to bodily injury to or sickness, disease or death of any employee of the insured while engaged in the employment, other than domestic, of the insured or in...