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Michigan Mutual Liability Co. v. Continental Casualty Co.

December 11, 1961

MICHIGAN MUTUAL LIABILITY COMPANY, PLAINTIFF-APPELLANT,
v.
CONTINENTAL CASUALTY COMPANY ET AL., DEFENDANT-APPELLEE



Author: Duffy

Before DUFFY, KNOCH and CASTLE, Circuit Judges.

DUFFY, Circuit Judge.

This dispute between two insurance companies concerns principally the proper interpretation of an employee exclusionary clause in an automobile insurance liability policy issued by defendant Continental Casualty Company.

Prior to May 17, 1954, plaintiff issued a comprehensive general automobile insurance policy to J. F. Martin Cartage Company. Also, prior to the same date, defendant Continental Casualty Company issued its comprehensive automobile policy to Arthur Dixon Transfer Company.

On May 17, 1954, Harold Cinkel, an employee of Arthur Dixon Transfer Company, while in the course of his employment, drove a Dixon truck upon the premises of J. F. Martin Cartage Company, the consignee of the load.

Domingo Martinez, an employee of the J. F. Martin Cartage Company, began unloading the Dixon truck using a lift truck in so doing. During such unloading, packaged merchandise fell from the lift truck injuring Cinkel. Thereafter Cinkel sued J. F. Martin Cartage Company in the Superior Court of Cook County, Illinois, for damages sustained as a result of the accident.

About three months after Cinkel was injured, Martin was served with process in the Cinkel suit and delivered the complaint to plaintiff, its insurance carrier, and requested the plaintiff to take over the defense of the suit. Plaintiff did not tender the suit to defendant Continental until February 16, 1956, which was about eighteen months after it had received the complaint from Martin. Continental refused to accept the defense.

On August 8, 1958, plaintiff settled the Cinkel suit by payment of the sum of $20,000. Releases were secured from the Cinkels releasing J. F. Martin Cartage Company from its liability to indemnify for the injuries to Cinkel caused by its employee Domingo Martinez.

Plaintiff, Michigan Mutual Liability Company, as the subrogee of Martin, sued Continental and Domingo Martinez for $27,794.94, the sum expended in investigating and settling the claim of Cinkel against Martin. The District Court at first denied and later granted Continental's motion for a summary judgment. Dismissal of the complaint followed.

Continental carried the Workmen's Compensation for Dixon Transfer Co. After Cinkel was injured, Dixon notified Continental of the accident. Continental conducted an investigation and made a settlement of the claim under the Workmen's Compensation Act. S.H.A.Ill. ch. 48, ยง 138.1 et seq.

The pertinent provisions of the Continental policy here under consideration are as follows:

"Receipts Basis - Truckmen.

(Form A)

"It is agreed that such insurance as is afforded by the policy for Bodily Injury Liability and for Property Damage Liability applies with respect to all owned automobiles and hired automobiles, and the use, in the business of the named insured, ...


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