McDonald Industries, Inc. v. Rollins Leasing Corp., 47205-0

• Court: United States State Supreme Court of Washington
• Citation: 95 Wn.2d 909,631 P.2d 947
• Docket Number: No. 47205-0,47205-0
• Parties: McDONALD INDUSTRIES, INC., also known as McDonald Cranes Company, also known as Cranes Company, also known as Crane Rentals; Gene Lange; and Safeco Insurance Company of America, Respondents, v. ROLLINS LEASING CORPORATION, Petitioners, John Doe Insurance Company; Thomas G. Spiller and Sharon Spiller, his wife; Defendants, and Margaret Workman and Victor D. Workman, her husband, Respondents.
• Decision Date: 30 July 1981

Page 909

95 Wn.2d 909 631 P.2d 947 McDONALD INDUSTRIES, INC., also known as McDonald Cranes
Company, also known as Cranes Company, also known
as Crane Rentals; Gene Lange; and Safeco
Insurance Company of America,
Respondents,
v.
ROLLINS LEASING CORPORATION, Petitioners,
John Doe Insurance Company; Thomas G. Spiller and Sharon
Spiller, his wife; Defendants,
and Margaret Workman and Victor D. Workman, her husband, Respondents. No. 47205-0. Supreme Court of Washington, En Banc. July 30, 1981.

Page 910

Moriarty, Mikkelborg, Broz, Wells & Fryer, Robert O. Wells, Seattle, for petitioners.

R. Scott Fallon, Seattle, for respondents.

STAFFORD, Justice.

This is an action to determine the extent of insurance coverage. The Court of Appeals[631 P.2d 948] held that coverage provided by petitioner Rollins Leasing Corporation insured respondents McDonald Industries, Inc., up to the policy limits. 26 Wash.App. 376, 613 P.2d 800. We affirm.

Respondent McDonald rented a tractor (the portion of a tractor-trailer combination which includes the engine and driver's compartment) from Rollins. The rental agreement stated that Rollins would provide insurance coverage for liability "arising from the ownership, maintenance or use" of the rented vehicle. The rental agreement further stated on the reverse side, in conspicuous type, "said policy (of insurance) does not cover ... liability arising from loading or unloading of said vehicle".

Employees of McDonald attached the rented tractor to a trailer owned by McDonald and loaded an 11-ton steel crane counterweight onto the trailer. The weight was secured by only one chain, which the trial court found to be violative of a federal regulation ¹ and thus negligence per se. While a McDonald employee was driving the tractor-trailer combination through an "S" curve, at 40 m.p.h., the counterweight

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slid under the retaining chain and fell off the trailer. Two vehicles collided with the counterweight, resulting in three separate bodily-injury claims. Although substantial damages were incurred, they are covered by insurance regardless of the outcome of this decision.

McDonald and Safeco Insurance Co., which had issued a policy to McDonald covering such liability, brought a declaratory judgment action requesting that Rollins' insurance coverage under the rental agreement be deemed primarily liable and that the Safeco policy be held to provide only secondary coverage.

The trial court dismissed the complaint with prejudice, holding the accident did not arise from "ownership, maintenance or use" of the rented vehicle, but instead was "caused by negligent loading of the trailer in question". The trial court held the accident was excluded from coverage by the "loading and unloading" clause of the insurance policy.

The Court of Appeals reversed. It found the exclusionary clause to be ambiguous, and thus strictly construed it against Rollins. Since the accident did not occur during the "loading and unloading" process, the exclusionary clause was held not to apply. We granted review to determine whether an insurance policy which covers liability arising from the ownership, maintenance or use of a vehicle but which excludes coverage for liability arising from loading or unloading of the vehicle, covers liability arising from an accident caused by improper loading.

Before this issue can be resolved two other matters must be discussed. First, the rental agreement makes it clear that the parties intended that liability insurance coverage was to be provided by Rollins. It had a liability policy on the rented vehicle under which the renter became an insured unless he opted out of the coverage. This was explained on the rental agreement form, and McDonald did not opt out of the coverage. The rental agreement also stated the limits of the liability insurance policy, including the fact that it excluded "liability arising from loading or unloading of said

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vehicle". It repeatedly referred to this as liability insurance, and contained a "hold harmless" clause whereby the renter was obligated to indemnify Rollins from any loss in excess of the liability insurance provided. Furthermore, Rollins does not contend this was not a liability insurance policy. Further, there is an undisputed finding of fact that Rollins provided liability insurance. ²

[631 P.2d 949] Second, it is apparent that, in the case at hand, the covered vehicle was in "use" when the accident occurred. Indeed it was being used for the sole purpose for which it had been rented. See Mays v. Aetna Cas. & Sur. Co., 242 So.2d 264 (La.App.1970). The "use" was, in fact, a causative factor in the accident. Without the motive power of the insured tractor the trailer would not have been able to negotiate the "S" curve on the highway at 40 m.p.h. The tractor was more than a mere coincidental place in which the injury occurred. Without question its use "contributed in some way to produce the injury". Transamerica Ins. Group v. United Pac. Ins. Co., 92 Wash.2d 21, 593 P.2d 156 (1979); Handley v. Oakley, 10 Wash.2d 396, 116 P.2d 833 (1941). Thus, the accident was covered by the insurance unless excluded by the "loading and unloading" exemption.

In determining the meaning of the "loading and unloading" clause the normal rules of construing insurance policies must...