Simpsonville Wrecker Service, Inc. v. Empire Fire and Marine Ins. Co.

Decision Date15 December 1989
Docket NumberNo. 88-CA-2171-MR,88-CA-2171-MR
Citation793 S.W.2d 825
PartiesSIMPSONVILLE WRECKER SERVICE, INC., Appellant, v. EMPIRE FIRE AND MARINE INSURANCE COMPANY, Market Finders Insurance Corp. and Ryan Insurance, Inc., Appellees.
CourtKentucky Court of Appeals

Laurence J. Zeilke, Charles F. Merz, Pedley, Ross, Zielke, Gordinier & Porter, Louisville, for appellant.

William P. Swain, Ronald L. Coombs, Louisville, for appellee, Ryan Ins., Inc.

Ronald L. Coombs, Louisville, for appellee, Market Finders, Inc. Corp.

Wayne J. Carroll, Louisville, for appellee Empire Fire and Marine Ins. Co.

Before CLAYTON, DYCHE and LESTER, JJ.

LESTER, Judge.

This is an appeal from a summary judgment dismissing appellant's complaint brought in contract on an insurance policy.

Simpsonville Wrecker Service, as part of its business enterprises, was engaged in the transportation of heavy equipment including large cranes on low boy trailers. For some fourteen years prior to 1987, SWS purchased what it thought to be cargo transportation insurance through Ryan Insurance, Inc., an agent, and a broker, Market Finders, from Empire and Marine Insurance Company, the carrier.

In May, 1987, Brandeis Machinery and Supply Corporation engaged SWS to transport a DMM Drill (a crane type piece of equipment) from Texas to Indiana. In preparation for the trip the crane was secured to the trailer by chains of 3/8 inch steel links and drawn tightly in a crisscross pattern. During the course of the journey the drill struck an overpass causing damages in the sum of $322,019.80 as asserted by Brandeis against SWS. Appellant requested Empire to pay for the repair of the drill which on several occasions it refused to do denying liability under the terms of the policy. In addition, the insurance company refused to defend the Brandeis litigation.

Keeping in mind that only the crane and not the tractor-trailer struck the overpass, Empire denied liability on the basis that there was no collision within the applicable policy provision which states:

The Insured's liability for loss of or damage to property insured hereunder directly caused by:

* * * * * *

(b) collision, i.e., accidental collision of the vehicle with any other vehicle or object (the striking of curbing or any portion of the roadbed or the striking of rails or ties of street, steam or electrical railroads, or contact with any stationary object in backing for loading or unloading purposes, or the coming together of trucks and trailers during coupling or uncoupling, shall not be deemed a collision.)

Interestingly enough, preceding the above-quoted language, the policy provided:

This Endorsement covers the liability of the Insured as carrier, under tariff, bill of lading or shipping receipt issued by the Insured, for direct loss or damage, from perils hereinafter specified, on shipment of lawful goods or merchandise (hereinafter called Property) consisting principally of heavy machinery, equipment cranes, autos while loaded for shipment and in transit in or on vehicles described herein, operated by the Insured, while in the custody and control of the Insured.

It is not difficult to understand why SWS thought the type of transportation and accident involved herein were covered. Of paramount importance and which should be kept firmly in focus is that the purpose of the policy was to cover "shipment" of "property consisting principally of heavy machinery, equipment, cranes, autos while loaded for shipment in transit in or on vehicles described herein, operated by the insured, while in the custody and control of the Insured." (emphasis added) It is of equal importance to bear in mind that the policy was not intended to nor did it cover the transporting vehicle.

With the denial of liability appellant filed its complaint alleging that Empire breached its contract by denying liability. It also alleged that Market Finders and Ryan misrepresented to SWS that the policy did in fact provide coverage for the type of accident involved which was a breach of their fiduciary duty involving errors and omissions in their professional business practices. Plaintiff-below charged the defendants with unfair claim settlement practices pursuant to KRS 304.12-230 and requested compensative, exemplary and punitive damages.

Although interrogatories were filed along with an affidavit no evidence by way of deposition was taken. Appellant filed a motion for partial summary judgment while Empire, and only Empire, moved for similar relief. The court denied appellant's motion but granted Empire's, but in so doing, dismissed SWS' complaint which had the effect of dismissing its causes of action against defendants who had not sought summary judgments. Moreover, the court failed to address Ryan's counterclaim against SWS for unpaid premiums. It is in this posture that the cause is presented to us.

The crucial issue is whether the damage to the crane in hitting an overhead object absent a collision involving the vehicle transporting it is within the scope or coverage of the policy. Appellee cites to us a text, an insurance industry bulletin and cases from Alabama, Massachusetts, Georgia, Texas, Washington and Missouri for the position that the type of damage involved is not compensable. For Empire's edification we can direct its attention to Nebraska (Barish-Sanders Motor Co. v. Fireman's Fund Ins. Co., 134 Neb. 188, 278 N.W. 374 (1938)) and Pennsylvania (Myers v. Continental Ins. Co., 72 Pa. D. & C. 77, 60 Dauph Co. 539 (1950)) as being also supportive. Although appellant may claim the weight of authority, nevertheless, a conflict exists. 43 Am.Jur.2d Insurance Sec. 725 (1982), and 10A Couch, Insurance Sec. 42:171 (1982). Reflecting the opposite viewpoint, we note it can be found in the jurisprudence of Montana (Aetna Ins. Co. v. Cameron, Mont., 633 P.2d 1212 (1981)), South Carolina (Huckabee Transport Co. v. Western Assurance Co., 238 S.C. 565, 121 S.E.2d 105 (1961)), Michigan (C. & J. Commercial Driveway, Inc. v. Fidelity & Guaranty Fire Corp., 258 Mich. 624, 242 N.W. 789 (1932)), North Carolina (Gould Morris Electric Co. v. Atlantic Fire Ins. Co., 229 N.C. 518, 50 S.E.2d 295 (1948)) and a federal case from New Jersey (Garford Trucking, Inc. v. Alliance Ins. Co., 195 F.2d 381 (2nd Cir.1952)). Kentucky has not spoken.

Empire has set forth, by way of brief, the reasoning of our several sister jurisdictions which bolsters their contention. We now turn to the logic of the counterviews as more particularly set forth in C. & J. Commercial Driveway, supra, Gould Morris Electric Co. supra, and Bucks County Construction Co., Inc. v. Alliance Ins. Co. of Philadelphia, 162 Pa.Super. 153, 56 A.2d 338 (1948).

In the case at bench the insurer styled its policy a "Motor Cargo Liability--Truckmen's Schedule Form" and was issued to the "carrier" to cover the liability of the insured "on shipment of lawful goods or merchandise (hereinafter called Property) consisting principally of heavy machinery, equipment, cranes, autos while loaded for shipment and in transit in or on vehicles described herein...." In C. & J. Commercial Driveway the policy covered "all lawful goods and merchandise consisting principally of automobiles ..." while in Bucks County Construction Co. coverage was extended to the property of the plaintiff including a Bucyrus-Erie Shovel. In Gould Morris Electric Co., even though general merchandise was not covered specific items were, namely, hot water heaters. Thus, we note that the common thread running through all the cases is that the policies were intended to cover cargo, as opposed to the vehicles carrying it, and that, in addition to general merchandise, specific items were enumerated. As the Gould court pointed out:

Thus, the parties knew from the amount of insurance and the character of the shipment, that, in all probability, portions of the cargo would extend above the top of the truck.

In the present litigation Empire drafted the contract knowing full well that cranes were to be transported and that its share of coverage (there being excess carriers in addition to appellant) was $100,000. The company here would be hard pressed to deny such knowledge after fourteen years of providing insurance to SWS.

We next turn to the so-called collision clauses. In the cause before us the disputed provision is "collision, i.e., accidental collision of the vehicle with any other vehicle or object...." In C. & J. Driveway, Inc. the clause provided "accidental collision of the truck with any other automobile, vehicle or object" and the Bucks County Construction Co. case specified "[c]ollision, Derailment or Overturning of land conveyances...." Gould Morris Electric Co. stated "collision of the conveyance on which the goods are carried...." In all of the cases discussed the policies required collision of the truck transporting the cargo and, likewise, in all the instances...

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