Northland Ins. Co. v. Crites
| Decision Date | 14 April 1981 |
| Docket Number | No. 1-580A139,1-580A139 |
| Citation | 419 N.E.2d 164 |
| Parties | NORTHLAND INSURANCE COMPANY, Appellant (Plaintiff Below), v. Richard Dale CRITES, Empire Fire and Marine Insurance Company, the Midwestern Indemnity Company, Everett A. Frost, Elzar Hargis, Northwestern National Insurance Group, Protective Insurance Company, and American States Insurance Companies, Appellees (Defendants Below). |
| Court | Indiana Appellate Court |
James R. Fisher, Joseph A. Schenk, Ice, Miller, Donadio & Ryan, Indianapolis, for appellant.
John T. Lorenz, Peter G. Tamulonis, Kightlinger, Young, Gray & DeTrude, Indianapolis, for appellee, Empire Fire & Marine Ins. Co.
John T. Hume, III, Smith & Jones, Indianapolis, for appellee, Midwestern Indem. Co.
Rex P. Killian, Hall, Render & Killian, Indianapolis, for appellee, Protective Ins. Co.
Northland Insurance Company (Northland) appeals from the trial court's decision in a declaratory judgment. Northland brought the action to determine which of four insurance companies is liable for damages resulting from a collision between a semi-tractor operated by Richard Crites (Crites) and various individuals. Each insurance company moved for summary judgment and requested judgments in its favor. The trial court denied Northland's motion and found that the company was liable for the damages. The trial court granted the motions of Empire Fire and Marine Company (Empire), The Midwestern Indemnity Company (Midwestern), and Protective Insurance Company (Protective), and found that they were not liable for the damages.
We affirm.
In 1976, Crites owned two semi-tractors and two trailers which were under a permanent equipment lease to Underwood Transfer Co., Inc. (Underwood). On September 27, 1976, Crites had a conversation with an agent for Hoosier Transport Incorporated (Hoosier), who sought Crites' services to haul a load of wire mesh from Kokomo to Terre Haute. After checking with Underwood's dispatcher and determining that he was not needed, Crites entered into an equipment lease agreement with Hoosier. This lease provides, in relevant part, that Hoosier was to lease one of Crites's tractors for a period of one year, with either party having the option to terminate the lease on ten days written notice, after the expiration of thirty days from the contract date. The lease specifies that it is for a series of trips to transport such property "as the lessee may require." The lease also requires that the "equipment shall ... remain under the complete control of the lessee for the duration of this lease ..."
Pursuant to the directions of Hoosier's agent, Crites took his tractor to Penn Dixie Steel Corporation in Kokomo. There, he picked up a trailer loaded with wire mesh and proceeded to make his delivery in Terre Haute. While returning from Terre Haute to Kokomo, Crites was involved in the accident which gave rise to this case. At the time of the accident, Crites was still pulling the trailer which he picked up at Penn Dixie. This trailer was leased to Hoosier by a third party. Crites had not signed off the lease with Hoosier at the time of the accident. Crites explained that he was enroute to Hoosier's terminal to return the trailer and to sign off the lease at that time. This was in accordance with customary arrangements between Crites and Hoosier when he was using their trailer rather than his own. In such a situation, Hoosier received an additional fee for providing the trailer.
Crites also explained that he thought the lease with Hoosier was for only one trip. However, although Crites referred to the lease as a "trip lease," he did not think his obligations to Hoosier terminated upon delivery of the goods being transported, but rather when he returned the trailer to Hoosier's terminal and signed off the lease. His perceptions were based on prior dealings between the parties.
Northland provided liability coverage to Hoosier in certain circumstances. Empire provided liability coverage to Crites in certain other situations. Midwestern provided liability coverage to Underwood and Crites was a named insured in the policy. Protective also provided coverage to Underwood.
The following issues are presented for review: First, Northland argues the trial court erred in failing to construe the lease between Crites and Hoosier as a trip lease, without provisions for a return trip. Such a construction would place Crites within the scope of an exclusionary clause in Northland's policy. In a related argument, Northland contends the Public Service Commission's (PSC) regulations are not determinative of an insurer's liability and that, therefore, they are not liable because Crites had completed his delivery. Northland also argues the trial court erred by construing ambiguities in Empire's and Midwestern's policies in favor of the insurers rather than the insured. 1
Northland's policy provided coverage to "additional insured" including "any person while using an owned automobile or a 'hired automobile.' " Crites was admittedly included in this provision. This provision was limited by the following endorsement:
The insurance with respect to any person or organization other than the named insured does not apply: ... (d) with respect to any hired automobile; to the owner or any lessee of such automobile, or to any agent or employee of such owner or lessee, if the accident occurs ... (2) after arrival of the automobile at its destination under a single-trip contract which does not provide in writing for the return trip of the automobile ... (Emphasis added.)
By interpreting the lease as a trip lease, without provisions for a return trip, Northland applies this exclusionary clause to Crites to exclude coverage.
We cannot agree with Northland's contention that the lease between Hoosier and Crites was a trip lease. The PSC's regulations, in effect at the time of the accident, provided for trip leasing in the following situations, none being applicable to the case at bar:
(c) Trip Lease of Equipment by and to Carriers. For purposes of this rule the term "trip lease of equipment" shall mean the augmentation of an authorized carrier's fleet by assuming the complete direction, control, responsibility and supervision over motor vehicle equipment it does not own in a one-way, one-trip movement. Equipment which may be trip leased by an authorized carrier is restricted to the following:
(1) Authorized carrier equipment which will be moved toward a service point of the authorized lessor carrier under the trip movement and will then be under use in the authorized service of the lessor carrier; or (2) Equipment otherwise used in the transportation of commodities exempt from economic regulation, which equipment is being operated back to its base of operation; or
(3) Equipment of a private carrier only if such equipment is owned by and used exclusively in the service of the private carrier and is being operated back to its base of operation.
Ind.Admin.Rules & Regs. (8-2-7-6)-2(c) (Burns Code Ed.)
Northland also contends that the PSC's regulations are not necessarily determinative of an insurer's liability, although they specify when a lessee carrier will be liable. 2 Northland contends that Crites had reached his destination under the lease when he made delivery in Terre Haute. Northland, again emphasizing its point of view that the lease was for only the single trip, argues that although Hoosier might be liable for Crites's actions because he had not signed off the lease, Northland is not liable because once Crites reached his "destination" he came within the scope of the policy's exclusionary clause.
In support of this argument Northland refers us to Allstate Ins. Co. v. Liberty Mutual Ins. Co. (3rd Cir. 1966) 368 F.2d 121, a case involving a declaratory action to determine which of two insurance companies, lessor's or lessee's, should bear primary liability for an accident. The lessee's insurance policy contained an exclusionary endorsement similar to the one in Northland's policy. The court held that, as between two insurance companies, the lessor's company should bear primary liability where the driver had made his delivery, although he had not signed off the lease. We note important factual distinctions between that case and the case at bar. In Allstate Ins. Co., the lease was for a one way trip and after the driver made his delivery, the lessor's obligations to the lessee were completed. Although the driver had not signed off the lease, the lessor had resumed complete control of the equipment. In the case before us, the fact that Hoosier's trailer was being used necessitated its return to Hoosier's terminal. Furthermore, Hoosier received additional income because its trailer was used. Therefore, when Crites made his delivery in Terre Haute, he had not reached his final destination, but...
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