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Maryland Casualty Co. v. Holmsgaard

APRIL 9, 1956.

MARYLAND CASUALTY COMPANY, PLAINTIFF-APPELLANT,

v.

JOHN HOLMSGAARD ET AL., DEFENDANTS-APPELLEES.



Appeal from the Circuit Court of Winnebago county; the Hon. ALBERT S. O'SULLIVAN, Judge presiding. Reversed and remanded with directions.

JUSTICE EOVALDI DELIVERED THE OPINION OF THE COURT.

Appellant, an insurance corporation, brought suit for declaratory judgment against the appellees for construction of a certain policy issued by it to the defendant, Ellis L. Grove. The relief asked for in the complaint was two-fold: (1) that the court declare and determine that the company be not required to defend, and (2) that the company be not required to pay any judgment that might be entered against its assured, or his agent, in a suit brought by defendant, John Holmsgaard, against the assured, Ellis L. Grove, and his agent, Ronald Grove, in the circuit court of Winnebago County, Illinois, in Cause No. 65101. The circuit court by its judgment and order found that appellant was obligated under the policy of insurance to furnish defense and pay any judgment within the limits of its policy obtained against its assured, Ellis L. Grove, or his agent, Ronald Grove, in said suit brought by John Holmsgaard against them. From said judgment and order this appeal is taken.

Plaintiff's contentions are as follows: (1) the policy of insurance in question excluded from coverage property in the insured's hands as a bailee for hire, or in his care, custody, and control; and therefore, by the terms of the policy the company was neither obligated to defend the suit nor to pay any judgment entered against its assured arising out of the occurrence alleged in the amended complaint filed in said Cause No. 65101; (2) that the terms and provisions of the policy of insurance were plain and not ambiguous; and (3) that the judgment and order of the circuit court was contrary to the law.

Defendant, John Holmsgaard, was the owner of a 1954 Dodge four-door sedan on July 20, 1954, and his wife drove this car on the above date to the Gem Welding and Machine Shop owned and operated by Ellis L. Grove to have a trailer hitch installed beneath the car by welding to the frame. The automobile was left in said shop. Holmsgaard's amended complaint alleged that the defendant, Ellis L. Grove, by and through his agent and servant, Ronald Grove, was guilty of various negligent acts or omissions, and as a direct and proximate result of the defendants' negligence, the automobile then and there owned by the plaintiff, while under the sole care, custody and control of the defendants, and while the trailer hitch was being welded to the frame by the defendant, Ronald Grove, as said agent, was set on fire or ignited by the welding torch or welding equipment then and there used by said defendant and said automobile was totally consumed and destroyed by fire. At the trial defendant Holmsgaard asked and was given leave to amend the amended complaint in said Cause No. 65101 on its face by striking out the language "sole custody and control" and inserting in lieu thereof, "while in the possession of the defendants as bailees for hire, . . . ." While the trailer hitch was being welded to the frame by Ronald Grove, as agent of Ellis L. Grove, the automobile was set on fire and totally destroyed.

On October 25, 1953, E.L. Grove, doing business as Gem Welding and Machine Company, was issued Manufacturers' and Contractors' Schedule Liability Policy by the Maryland Casualty Company, which bore number 53-227954 and shows a renewal of identical policies written for prior years. The policy was in effect on July 20, 1954. Ellis L. Grove had paid all premiums due.

The policy states on its face:

"The insurance afforded is only with respect to such and so many of the following coverages and divisions thereunder as are indicated by specific premium charge or charges. The limits of the company's liability against each such coverage and division thereunder shall be as stated herein, subject to all of the terms of this policy having reference thereto.

--------------------------------------------------------------------------- | Manual | | Coverage A | Coverage B Hazards | Code | | Bodily | Property Purposes of Use | No. | | Injury | Damage | | | Liability | Liability ----------------------------|---------|--------|-------------|------------- 1. Premises — Operations | | | Advance Premiums | | | | Welding or Cutting | | | | (see attached schedule) | 3428 | | $12.00 | $10.00 | | | MP | MP" ---------------------------------------------------------------------------

The attached schedule above referred to is as follows:

"Supplement to Item 3 of the Declarations

(For attachment to Schedule Liability Policies 52 and 53) ---------------------------------------------------------------------------- | Manual | Premium | | Item 3. | Code | Bases | Rates | Purposes of Use | No. | | Coverage | Coverage | | | | A | B | --------------------------------|--------|-----------|----------|----------| WELDING OR CUTTING — | | | | | NOC — shop or outside — | | | | | including incidental machining | | | | | operations, connected | | | | | therewith — NPD — welding or | | | | | cutting performed under air | | | | | pressure shall be classified | | | | | and rated as `Caisson Work | | | | | . . .' or `Tunneling . . .' | | | | | welding or cutting in | | | | | connection with demolition jobs | | | | | shall be classified and rated | | | | | as `Wrecking . . .'; welding in | | | | | connection with the erection of | | | | | iron or steel frame structures | | | | | or bridges, provided such | | | | | erection is properly classified | | | | | under Code Nos. 5067 or 3452, | | | | | shall be classified and rated | | | | | under the appropriate iron or | | | | | steel erection classification | 3428 | $4,000.00 | .072 | .25 | | | | | | ---------------------------------------------------------------------------- ----------------------------------------------------------- | Advance Item 3. | Premiums Purposes of Use | Coverage | Coverage | A | B --------------------------------|-------------|------------ WELDING OR CUTTING — | | NOC — shop or outside — | | including incidental machining | | operations, connected | | therewith — NPD — welding or | | cutting performed under air | | pressure shall be classified | | and rated as `Caisson Work | | . . .' or `Tunneling . . .' | | welding or cutting in | | connection with demolition jobs | | shall be classified and rated | | as `Wrecking . . .'; welding in | | connection with the erection of | | iron or steel frame structures | | or bridges, provided such | | erection is properly classified | | under Code Nos. 5067 or 3452, | | shall be classified and rated | | under the appropriate iron or | | steel erection classification | $12.00 | $10.00 | MP | MP" -----------------------------------------------------------

In said policy plaintiff insured said Ellis L. Grove as follows:

"INSURING AGREEMENTS

I Coverage A — Bodily Injury Liability Coverage B — Property ...


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