Royal Indem. Co. v. Smith

Decision Date12 February 1970
Docket NumberNo. 45038,No. 3,45038,3
Citation121 Ga.App. 272,173 S.E.2d 738
CourtGeorgia Court of Appeals

Syllabus by the Court

Whether property is in the care, custody or control of an insured so as to exclude coverage under a contractor's liability policy, is answered in each case by first determining by legitimate actuarial considerations whether the circumstances of the particular property damage fall within the types of risk against which the exclusion was purposefully directed.

Appeal from a summary judgment granted to the plaintiff-insured in a suit for breach of a contractor's liability insurance contract based upon the refusal of the defendant-insurer to compensate third parties for property damage caused by plaintiff. Defendant also appeals from the denial of its motion for summary judgment.

Swift, Currie, McGhee & Hiers, George W. Hart, Atlanta, for appellant.

Joe Salem, C. Lawrence Jewett, Atlanta, for appellee.

HALL, Presiding Judge.

Plaintiff is the properietor of a painting business. He had a subcontract to sandblast and paint the walls of a massive steel tank under construction at an Atlanta sewage treatment site. The tank had a double wall. In the center of the inner tank was a drum to which one end of a catwalk was attached. The other end rested on rollers which ran in a groove all around the top of the outer tank. Also attached to the drum, but on the floor of the inner tank, was a radial sweeper arm which moved automatically when the catwalk was moved. The floor of the tank contained a small ramp which caused the sweeper arm to glide up and then fall back to the floor at one point in the circle. When fully operational, a motor in the drum would cause the catwalk and sweeper arm to revolve in a clockwise direction. The damage in question was caused when plaintiff's crew, in order to paint the top of the wall beneath the wheels of the catwalk, moved it around in a counterclockwise direction, which in turn ran the sweeper arm against the wrong side of the ramp and bent it. Repair of the arm cost approximately $6,000. There is no dispute on the facts or on the question of plaintiff's liability for the damage.

The insurance contract between plaintiff and defendant designated as 'comprehensive general liability insurance' provides that 'The company shall pay on behalf of the insured all sums which the insured shall be obligated to pay because of * * * (b) property damage to which this insurance applies caused by an occurrence * * *' In the section entitled 'Exclusions,' the policy further provides that the insurance does not apply '(i) to property damage to * * * (3) property in the care, custody or control of the insured or as to which the insured is for any purpose exercising physical control.' Defendant contends that the sweeper arm at the time of its damage was in the care, custody and control of the plaintiff and therefore within the exclusion from coverage.

This type of exclusion is commonly found in contractor's liability policies but in the relatively few cases in which it has been litigated, there has been little agreement on its legal meaning or on its application to a particular set of facts. The cases are collected in 62 A.L.R.2d 1242 and the annotated case is often cited for the general rule on the extent of the care, custody or control necessary to bring the exclusion into operation. This is: 'Where the property damaged is merely incidental to the property upon which work is being performed by the insured, the exclusion is not applicable. (Citations) However, where the property damaged is under the supervision of the insured and is a necessary element of the work involved, the property is in the 'care, custody or control' of the insured.' International Derrick & Equipment Co. v. Buxbaum, 240 F.2d 536, 62 A.L.R.2d 1237.

Having stated these general principles, the cases then proceed to ride off in all directions. Some patterns have emerged, however. Where real property is involved, the courts have been very reluctant to find care, custody or control in repairmen or subcontractors who have been engaged to work on only a portion of a structure. At the other extreme, where there is a clear bailment of chattels, care, custody or control is nearly always found. The only two Georgia cases may very well have turned on this distinction, though they do not specifically say so. In General Insurance Co. of America v. Camden Construction Co., 115 Ga.App. 189, 154 S.E.2d 26, this court said the exclusion was unambiguous and found that control of an asphalt truck was clearly in an unloading crew which had directed the parking of the truck at a specific place on its own work site and had then taken over all facets of unloading, fitting it with a heating apparatus and hoses and pumping the asphalt where it wanted. (The truck driver, in fact, when to sleep.) On the other hand, the Fifth Circuit Court of Appeals, applying Georgia law,...

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  • National Mut. Ins. Co. v. McMahon & Sons, Inc.
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    ...Stewart Warner Corp. v. Burns International Security Services, Inc., 527 F.2d 1025 (7th Cir.1975); Royal Indemnity Co. v. Smith, 121 Ga.App. 272, 173 S.E.2d 738 (1970); Hendrix Electronic Co. v. Casualty Reciprocal Exchange, 297 So.2d 470 (La.Ct.App.1974). From the stipulated facts, it is c......
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    ...those in interest to the property, the special knowledge of the insured of a policy of that kind among others. Royal Indemnity Co. v. Smith, 121 Ga.App. 272, 173 S.E.2d 738 (1970); Elcar Mobile Homes, Inc. v. D. K. Baxter, Inc., 66 N.J.Super. 478, 169 A.2d 509 (1961); Arrigo's Fleet Service......
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    ...Elcar Mobile Homes, Inc. v. D. K. Baxeter, Inc., 66 N.J.Super. 478, 484, 169 A.2d 509, 512 (1961); Royal Indemnity Co. v. Smith, 121 Ga.App. 272, 275, 173 S.E.2d 738, 740 (1970). We point out that these purposes are well serviced by the language of the clause in that, read literally, it is ......
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