May v. Chicago Ins. Co.

• Citation: 260 Or. 285,490 P.2d 150
• Parties: Charles MAY and Olson Towboat Co., a corporation, Appellants, v. CHICAGO INSURANCE COMPANY, a corporation, et al., Respondents.
• Decision Date: 30 November 1971
• Court: Supreme Court of Oregon

Page 150

490 P.2d 150

260 Or. 285

Charles MAY and Olson Towboat Co., a corporation, Appellants, v. CHICAGO INSURANCE COMPANY, a corporation, et al., Respondents.

Supreme Court of Oregon, In Banc.

Argued and Submitted June 3, 1971.

Decided Nov. 5, 1971.

Rehearing Denied Nov. 30, 1971.

Walter H. Evans, Jr., Portland, argued the cause for appellants. With him on the briefs was William D. Peek, Portland.

Carl R. Neil, Portland, argued the cause for respondents. With him on the brief were Lindsay, Nahstoll, Hart, Duncan, Dafoe & Krause, Portland, and Brendan J. Connolly, and Mendes & Mount, New York City.

McALLISTER, Justice.

This is a declaratory judgment proceeding brought by Olson Towboat Co. and Charles May seeking a declaration that they are covered as additional insureds under the liability provisions of certain policies of marine insurance issued to the defendant Sause Bros. Ocean Towing Co., Inc., by the sundry insurers named as defendants. The trial court held that plaintiffs were not covered by the policies and both plaintiffs appealed. We affirm.

The plaintiffs claim coverage for their liability resulting from the collision of a barge, while under tow, with a bridge owned by the State of Oregon. In an action brought by the state in the United States District Court a judgment for damages to the bridge was entered against both May and Olson Towboat, and others. State of Oregon By and Through State Highway Commission v. Tug Go-Getter, 299 F.Supp. 269 (D.Or.1969). That case is now on appeal to the United States Court of Appeals.

In the present case the parties stipulated to certain facts and also stipulated that they are bound by the facts and legal rulings of the opinion of the federal district court. The following factual summary is taken from the opinion of the federal court and from the stipulation of the parties.

The accident occurred on October 4, 1966, at Bullard's Bridge on the Coquille River upstream from Bandon. The barge J. WHITNEY, which was under bareboat charter to Oliver J. Olson & Company ('Olson'), was being towed from Yaquina Bay to Bandon and thence up the Coquille River to Rogge's Mill, immediately upstream from Bullard's Bridge. The barge was towed as far as Bandon by the tug JEAN NELSON, owned by Olson Towboat. ¹ Plaintiff May was employed by Olson Towboat and was the master of the JEAN NELSON.

The JEAN NELSON was not capable of navigating the Coquille River past Bandon, and a smaller barge owned by Olson Towboat was not available at the time. Representatives of Olson had made oral arrangements with Curtis Sause, vice-president of Sause Bros., for a Sause Bros. tug to meet the JEAN NELSON off the bar at Bandon, to sound the bar for the JEAN NELSON as it entered the Coquille River, and to take over the tow of the J. WHITNEY at Bandon and tow the barge through Bullard's Bridge to Rogge's Mill. ² Pursuant to this arrangement, the tug GO-GETTER met the JEAN NELSON, sounded the bar, and took over the tow of the barge at Bandon. At the request of his employers, John G. Davis, the master of the GO-GETTER, had asked May to come aboard the GO-GETTER and to pilot the tug and barge through Bullard's Bridge. May agreed, but there is no evidence that Olson Towboat, May's employer, knew that May was to do this.

Davis operated the GO-GETTER to a point about halfway between Bandon and the bridge. May then took over the controls and attempted to pass through the bridge. The attempt resulted in the barge colliding with one of the piers or columns of the bridge, causing structural damage.

In the resulting action by the state, the federal district court held that May's negligence was a cause of the collision, and that he was liable. ³ It also held that Olson Towboat was vicariously liable to the state for May's negligence. The portion of the opinion dealing with Olson Towboat's liability is set out in the margin. ⁴

The GO-GETTER was insured by the defendant insurers under 'tug form' policies of marine insurance known as the 'McLelland' form. Clause 28 of those policies provides liability coverage for collision of the tug or her tow with structures such as the bridge in the following language:

'And it is further agreed that if the vessel hereby insured and/or her tow shall come into collision or contact with any structure * * * and the Assured and/or Charterers and/or Operators and/or Lessees in consequence thereof * * * shall become liable to pay and shall pay by way of damages to any other person or persons any sum or sums in respect of any such accident, this Company will pay the Assured and/or Charterers and/or Operators and/or Lessees such proportion of such sum or sums so paid as its subscription hereto bears to the value of the Vessel hereby insured, * * *.'

The issue in the present case is whether plaintiffs May and Olson Towboat, who have been held liable for damages resulting from the collision of the GO-GETTER's tow with the bridge, are covered as 'operators' of the tug under the above-quoted provision of the insurance policies.

At the trial the parties introduced the evidence of experts in the field of marine insurance on the meaning of the term 'operators' in Clause 28. After hearing the testimony of plaintiffs' expert witness and reading the depositions of defendants' two experts, the trial court held that neither May nor Olson Towboat was an 'operator.' The trial court's declaratory judgment read as follows:

'FACTS

'Captain Charles May was operating the tug GO GETTER only in the sense of a towboat captain physically controlling or directing the control of the tug and its tow. He was acting as a special pilot for a special job, and had been loaned for a particular purpose. He was the servant of both Sause Bros. Ocean Towing Co. and Olson Towboat Co. Neither Captain May nor Olson Towboat Co. had overall operational responsibility for Sause's tug. Its job, crew and overall operation were strictly the responsibility of Sause. Olson Towboat's only relationship to this incident was to allow one of its experienced tug captains to do a favor for Sause on a difficult haul.

'INTERPRETATION OF POLICY

"Assured and/or charterers and/or operators and/or Lessees * * *'

'Note the word 'operators' is used in association with three other words. In this manner the word appears at least 16 times in Tug Form 1706, but never independently. (Once in clauses 12, 13 and 15; twice in clause 27; and 11 times in clause 28, which is the clause relied on by plaintiff). Thus the word 'operators' suggests something more than mere capacity to manipulate or control a vessel.

'The term 'operator' usually refers to a proprietary interest in a vessel. Plaintiff had no such interest in this case. * * *

'CONCLUSION

'Neither May nor Olson Towboat Co. had any proprietary interest in the tug GO GETTER at the time of the collision.

'The court concludes that there is no coverage under any clause of defendant's insurance policy that would extend to plaintiffs.'

Plaintiffs assign as error the trial court's holding that because they had no proprietary interest in the tug, they were not its 'operators' within the meaning of the policies.

As a preliminary matter, we consider the scope of our review. Plaintiffs contend, citing Consolidated Freightways, Inc. v. Flagg, 180 Or. 442, 176 P.2d 239, 177 P.2d 422 (1947), that on review of declaratory judgment proceedings this court is not bound by the trial court's findings of fact. Defendants respond that even though this court may not be bound by findings of fact in a declaratory judgment proceeding, it normally accords weight to the circuit court's decision.

The parties' contentions on this question are applicable only to declaratory judgment proceedings which are basically equitable in nature. The broad language in Consolidated Freightways on which plaintiffs rely, 180 Or. at 458, 176 P.2d 239, 177 P.2d 422, is no longer controlling in all declaratory judgment proceedings. It is now clear that such proceedings will be treated as either legal or equitable, depending upon their nature. Mayer v. First National Bank of Oregon, 93 Or.Adv.Sh. 554, 565, 489 P.2d 385 (September 29, 1971); Oregon Farm Bureau v. Thompson, 235 Or. 162, 179, 378 P.2d 563, 384 P.2d 182 (1963). We have treated declaratory judgment proceedings to determine coverage under insurance policies as legal in nature, rather than equitable, with the consequence that the trial court's findings of fact in such cases are binding on us if supported by any substantial evidence. Falk v. Sul America Terrestres, 255 Or. 246, 248, 465 P.2d 714 (1970); Oregon Farm Bureau v. Thompson, supra, 235 Or. at 199, 200--205, 378 P.2d 563, 384 P.2d 182 (concurring and dissenting opinions on rehearing, representing the views of five members of the court on this question). See, also, Reif v. Botz, 241 Or. 489, 406 P.2d 907 (1965). We cannot, therefore, accept the parties' invitation to review the evidence in this case de novo. We must accept the trial court's findings of fact if those findings have adequate support in the evidence.

As a general rule, the construction of a contract is a question for the court and is treated as a matter of law. Quillin v. Peloquin, 237 Or. 343, 346, 391 P.2d 603 (1964); Bakkensen v. John Hancock Mutual Life Ins. Co., 222 Or. 484, 493, 353 P.2d 558 (1960); Morey v. Redifer, 204 Or. 194, 213, 264 P.2d 418, 282 P.2d 1062 (1955). Under certain circumstances, however, there will be questions for the finder of fact in connection with the construction process. In Libby Creek Logging, Inc. v. Johnson, 225 Or. 336, 339, 358 P.2d 491, 493 (1960), we said:

'If the provisions of the contract are plain and unambiguous, it is the function of the court to interpret the contract and declare its legal effect. (Citing cases.)

'If the language of the contract is ambiguous, or if technical words, terms of art, or local phrases are used, evidence showing the meaning or interpretation of the contract may be...