Woodrich Const. Co. v. Indemnity Ins. Co. of North America

• Decision Date: 28 March 1958
• Docket Number: Nos. 37175--37177,s. 37175--37177
• Citation: 252 Minn. 86,89 N.W.2d 412
• Parties: WOODRICH CONSTRUCTION CO., Respondent, v. INDEMNITY INSURANCE COMPANY OF NORTH AMERICA, Appellant-Respondent, (Elmer Zaske et al., Third-Party-Defendants, Milwaukee Automobile Mutual Insurance Co., Respondent-Appellant, Aetna Casualty and Surety Co., Respondent-Appellant, Employers Mutual Liability Insurance Company of Wausau, Wisconsin, Respondent).
• Court: Minnesota Supreme Court

Page 412

89 N.W.2d 412

252 Minn. 86

WOODRICH CONSTRUCTION CO., Respondent, v. INDEMNITY INSURANCE COMPANY OF NORTH AMERICA, Appellant-Respondent (Elmer Zaske et al., Third-Party-Defendants, Milwaukee Automobile Mutual Insurance Co., Respondent-Appellant Aetna Casualty and Surety Co., Respondent-Appellant Employers Mutual Liability Insurance Company of Wausau Wisconsin, Respondent).

Nos. 37175--37177.

Supreme Court of Minnesota.

March 28, 1958.

Syllabus by the Court

1. In fixing liability in tort, negligence is never a material factor unless it is a proximate cause of the accident.

2. The Use of a motor vehicle does not require that the User, or the user's agent, be its actual operator since the term Use goes beyond the narrow meaning of the direct mechanical operation performed by the driver and encompasses the broader concept of employing or putting the vehicle into one's service by an act which assumes at any time--with the consent of the owner or his agent--the supervisory control or guidance of its movements.

3. Where, as an incident of and in the furtherance of his construction work, a general contractor assumes active control or guidance of a backward movement of a truck provided by a subcontractor, and his negligence in the exercise of that control and guidance is a proximate cause of the accident, the general contractor thereby participates in the operation of the truck to such an extent as to be a User of the vehicle. When he becomes legally obligated to pay damages proximately caused by such a negligent Use of the vehicle, he falls within the meaning of insurance contract provisions which provide coverage for the insured for all sums which he 'shall become legally obligated to pay as damages' for injuries to any person caused by accident and 'arising out of the ownership, maintenance or use' of an automobile.

4. The classification which places general liability policies covering risks incident to a business operation in a class separate and apart from liability policies covering risks incident to the operation of automobiles furnishes descriptive tokens of expression which are convenient in designating the type of risk contract involved, but such classification does not establish a rule of law which precludes the omnibus clause of an auto-liability policy from covering a general business risk or precludes a general-business-risk policy from covering an automobile risk.

5. Although some of our decisions in double-coverage situations have spoken of primary and secondary liability, this court has never expressly adopted the primary-tortfeasor doctrine. The following cases are distinguished: Commercial Cas. Ins. Co. v. Hartford Acc. & Ind. Co., 190 Minn. 528, 252 N.W. 434, 253 N.W. 888; Gamble-Skogmo, Inc., v. St. Paul Mercury Ind. Co., 242 Minn. 91, 64 N.W.2d 380; Eicher v. Universal Underwriters, 250 Minn. 7, 83 N.W.2d 895.

6. In determining the respective liabilities of insurance coverage in cases of overlapping coverage, the decision must rest upon a construction of the language employed by the respective insurers and not upon any so-called primary-tortfeasor doctrine or upon any other arbitrary rule or circumstance.

7. Where a liability policy defines a Hired automobile as one that is Used under contract in behalf of the named insured, the definition applies even though the user is not a direct party to the contract but the use is made available to him under a contract running between his subcontractor and the owner of the vehicle.

8. In the absence of restrictive or qualifying language the word Insured as used in the 'other insurance' clauses, as found in the policies herein, is to be given a broad and liberal meaning whereby the clause embraces Any other valid and collectible insurance, irrespective of whether such other insurance was procured by persons other than the named insured.

Richards, Janes, Hoke, Montgomery & Cobb, Minneapolis, for Indemnity Ins. Co. of North America.

Ernest A. Rich, Minneapolis, for Milwaukee Automobile Mut. Ins. Co.

Ray G. Moonan, George A. Lewis, Norman E. Evidon, Minneapolis, for Aetna Casualty & Surety Co.

Child & Child, Minneapolis, for Woodrich Const. Co.

Freeman, Peterson, Hoppe & Gaughan, Minneapolis, for Employers Mut. Liability Ins. Co.

MATSON, Justice.

In an action--involving the construction of four insurance policies--brought by plaintiff insured to recover the amount it had paid in settlement of damages based upon an adjudicated liability for accidental injuries, three defendant insurers have each appealed from portions of an order granting or denying (as the case may be) motions for summary judgment.

Plaintiff, Woodrich Construction Company (herein called Woodrich), a general contractor engaged in road construction work, was one of the defendants in an earlier action appealed to this court, namely, Crawford v. Woodrich Const. Co., Inc., 239 Minn. 12, 57 N.W.2d 648. In that action, Woodrich and his subcontractor, Walter Baker, and Elmer Zaske, who owned and operated a truck hired by subcontractor Baker, were all sued as defendants by William M. Crawford for damages for personal injuries sustained by him while acting as a state inspector on a Woodrich road construction job. Crawford was injured while he was making an alignment inspection and the Zaske truck backed over him. In that action the jury awarded plaintiff a verdict for $80,000 against Woodrich only. Upon appeal, the order denying an alternative motion for judgment notwithstanding the verdict or a new trial was affirmed. The Crawford case established as a matter of both fact and law that both Baker and Zaske were exonerated of all negligence and that the sole tortfeasor was Woodrich. The facts out of which the Crawford action arose are set forth in our decision in the Crawford case.

In order to understand the relationship of the parties to the present action, it is necessary to identify the insurers of the defendants in the Crawford case. On June 8, 1950, when the Crawford accident occurred, Woodrich was covered by a comprehensive general liability policy issued by Employers Mutual Liability Insurance Company of Wausau, Wisconsin (herein called Employers). Woodrich was also covered by a comprehensive automobile liability policy issued by Indemnity Insurance Company of North America (herein called Indemnity). Both Employers and Indemnity policies provided for payment up to a $50,000 limit of liability plus costs of defense for a case involving injury to a single person.

The subcontractor, Baker, was insured by Aetna Casualty & Surety Company (Aetna) under a comprehensive automobile liability policy with a limit of $15,000 for injury to a single person plus costs of defense. The driver and owner of the truck, Zaske, was insured under a comprehensive automobile liability policy issued by Milwaukee Automobile Mutual Insurance Company (Milwaukee) with a policy limit of $15,000 plus costs of defense.

Throughout the trial of the case, which finally resulted in a Crawford judgment for $80,000, Employers and Indemnity defended Woodrich, Aetna defended Baker, and Milwaukee defended Zaske. The Crawford case was tried twice. Crawford obtained a verdict in the first trial against Woodrich only, and the trial judge set aside the verdict and granted a new trial. The second trial again resulted in a verdict for Crawford against Woodrich alone. On or about April 7, 1953, the Crawford judgment (which had been entered against Woodrich) was paid by Employers and Woodrich, Employers paying Crawford. $54,882.63 (liability under its policy plus interest) and Woodrich paying Crawford $31,617.37 in satisfaction of the judgment. Indemnity, Aetna, and Milwaukee made no payment on the Crawford judgment, and refused to contribute any portion of the judgment.

This action was commenced by Woodrich to recover on the Indemnity policy for the excess payment made on the Crawford judgment. Indemnity brought in as third-party defendants the subcontractor, Baker, and the truck driver and owner, Zaske, along with their respective insurers, Aetna and Milwaukee. Subsequently, Employers intervened in this action, seeking contribution from Indemnity, Aetna, and Milwaukee for the payment made by Employers on the Crawford judgment, and Woodrich amended its complaint to state a cause of action against Aetna and Milwaukee.

All parties moved for summary judgment. The trial court granted judgment for Baker and Zaske and dismissed them from the action. Indemnity's motion was denied. The motions of Aetna and Milwaukee were denied unless upon subsequent trial they should establish their defenses of lack of notice, lack of cooperation, failure to tender defense, res judicata, and estoppel and waiver. The respective motions of plaintiff Woodrich and Employers, subject to the aforesaid conditional defenses of Aetna and Milwaukee, were granted with the effect that the four insurers, Employers, Indemnity, Aetna, and Milwaukee, were held concurrently liable for the payment of the Crawford judgment in proportion to the limits of their respective policies. The trial court, pursuant to M.S.A. § 605.09(4), ¹ as a part of its order certified that the questions raised by the order disposing of the motions were important and doubtful. The appeal herein is taken by Indemnity, Aetna, and Milwaukee.

Issues

In passing on the general question of whether the respective policies cover Woodrich's liability in damages to Crawford, and in determining whether such coverage, where it exists, is excess or concurrent, this appeal raises a number of specific issues bearing on the interpretation and construction of the several insurance contracts. (1) First we have the basic issue of whether the liability of Woodrich to Crawford in negligence arose from a Use of an automobile within the coverage of the Indemnity, Aetna, and Milwaukee auto liability policies, or whether such liability arose only from a general business risk covered by...