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St. Paul Fire & Marine Ins. Co. v. Frankart

OPINION FILED DECEMBER 29, 1976.

ST. PAUL FIRE AND MARINE INSURANCE COMPANY, PLAINTIFF-APPELLANT,

v.

ROBERT U. FRANKART ET AL., DEFENDANTS-APPELLEES.



APPEAL from the Circuit Court of Tazewell County; the Hon. JAMES D. HEIPLE, Judge, presiding.

MR. PRESIDING JUSTICE STOUDER DELIVERED THE OPINION OF THE COURT:

This appeal is from the judgment of the Circuit Court of Tazewell County finding in favor of the defendants, Robert Frankart, Wilson Freight Company, Elijah Blake and Greater Peoria Mass. Transit District, and against plaintiff, St. Paul Fire and Marine Insurance Company, in a declaratory judgment action to determine the coverage of an insurance policy issued by plaintiff to defendant, Frankart.

Defendant-appellee, Elijah Blake, sued Robert Frankart and Wilson Freight Company for damages to compensate him for bodily injuries allegedly sustained in an accident which occurred on June 6, 1974, at the intersection of the west ramp for I-74 and the 700 block of East Washington Street in East Peoria, between a tractor-trailer driven by Frankart and a bus operated by defendant, Greater Peoria Mass. Transit District. The latter defendant brought an action against Frankart and Wilson to recover property damage to its bus allegedly caused by the accident.

This appeal is from the collateral action by St. Paul seeking declaratory relief concerning the coverage of its policy. The only issue on this appeal is whether the trial court erred in declaring that plaintiff, St. Paul Fire & Marine Insurance Company, had the duty to provide coverage for the occurrence in question to defendant, Frankart.

There was in effect on the day of the accident an endorsement to the policy issued by plaintiff to defendant, Frankart, which reads as follows:

"It is agreed that such insurance as is afforded by the Policy for Bodily Injury Liability * * * with respect to any automobile described below, or designated in Policy, as subject to this endorsement, does not apply * * *

(b) While the automobile or any trailer attached thereto is used to carry property in any business;

(c) While the automobile is being used in the business of any person or organization to whom the automobile is rented.

Description of Automobile:

1967 Peterbilt D/tractor S #23478"

Plaintiff argues that by reason of this endorsement, coverage is excluded for any claims arising out of the occurrence in question. Plaintiff argues both that defendant, Frankart, was Wilson's employee rather than an independent contractor, and that Frankart was acting in Wilson's behalf and for his benefit. Part of its argument is that the limited coverage provided by St. Paul is evidenced by the low premium charged. The premium was $61 per year for bodily injury liability and $60 per year for property damage liability.

The determining factor in the instant case is whether Frankart was acting in Wilson's business and for his benefit. The evidence shows Frankart was the owner of the tractor-trailer and a party to the lease agreement with Wilson, which purports on its face to reserve to Wilson the right to control the manner, means and details of and by which the driver of Frankart's equipment performs his services, as well as the ends to be accomplished.

After hauling a load for Wilson from Pennsylvania to Tulsa, Oklahoma, under Wilson's ICC Permit, Frankart called Wilson's terminal in Granite City, Illinois and determined no load was available to haul back in the direction of the home terminal in Cleveland, Ohio. Frankart testified he was hauling the empty trailer back to his home in Findlay, Ohio, via East Peoria, Illinois, where he intended to buy fuel and to try to contact another carrier to sublease or trip lease a load back to Ohio. He testified it was his custom to take this route because he could get a better price for fuel in East Peoria, and furthermore, it was the custom and practice between Wilson and the owner-operators that the driver chooses his own route and the places he buys fuel and eats and sleeps. The crux of plaintiff's argument is that the insurance policy between it and Frankart would not afford coverage while the vehicle was being used in the job of any person or organization to whom it is leased. There is no dispute that there was in effect at the time of the accident in question an endorsement to plaintiff's policy, which did exclude coverage under such circumstances. The entire dispute on this appeal is whether at the time of the accident Frankart's tractor-trailer was being used in the job of Wilson, to whom it was leased.

• 1 We recognize the principle that a common carrier is not at all times liable for the negligence of its drivers-lessors, but do not believe it is applicable to the case at bar. (See Wilcox v. Transamerican Freight Lines, Inc., 371 F.2d 403 (6th Cir. 1967), cert. denied, 387 U.S. 931, 18 L.Ed.2d 992, 87 S.Ct. 2053, and Gackstetter v. Dart Transit Company, 269 Minn. 146, 130 N.W.2d 326 (Minn. 1964).) This case must be decided in light of the ICC regulations which cover the leasing of owner-driven tractors for use in the business of franchised carriers engaged in interstate transportation. One such regulation requires a written contract having a minimum duration of 30 days, that copies of the lease be carried in the vehicle, that the vehicle be safety inspected by the carrier, that the carrier be properly identified on the tractor by name and by ICC operating authority number, and that proper records be maintained. The lease required by ICC regulations must provide for the exclusive possession, control and use of the equipment and for the complete assumption of responsibility in respect thereto by the lessee for the duration of the lease. The validity of these regulations and the practices they were designed to curb are discussed at length in American Trucking Associations, Inc. v. United States, 344 U.S. 298, 97 L.Ed. 337, 73 S.Ct. 307. The main thrust of the regulations is ...


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