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St. Paul Fire & Marine Ins. v. Frankart





Appeal from the Appellate Court for the Third District; heard in that court on appeal from the Circuit Court of Tazewell County, the Hon. James D. Heiple, Judge, presiding.


The plaintiff, St. Paul Fire & Marine Insurance Company, filed a declaratory judgment action in the circuit court of Tazewell County against defendants, Robert U. Frankart (its insured), Wilson Freight Company (Wilson), and others. It sought to determine whether, under its policy, it was obligated to afford Frankart coverage. The circuit court entered judgment in favor of defendant Frankart, upon consideration of documentary evidence stipulated to by the parties. The plaintiff appealed, and the appellate court reversed. (45 Ill. App.3d 29.) On petition of co-defendant Wilson, we granted leave to appeal.

Frankart was the owner and operator of a tractor and trailer which he leased to Wilson, a common carrier, under the terms of a lease dated April 8, 1974. The lease, in accordance with Interstate Commerce Commission (ICC) regulations, authorized Frankart, who did not possess a required ICC permit of his own, to transport freight in interstate commerce under Wilson's ICC permit. It further provided, inter alia, (1) that Frankart lease his equipment to Wilson for its "exclusive possession, control, responsibility and use"; (2) that Frankart's equipment display Wilson's permit identification when in use under the lease; (3) that Frankart be allowed to sublease his equipment to another common carrier; and (4) that, during the duration of any sublease, Wilson's permit identification be removed. The lease also required that Frankart obtain, at his own expense, "bobtail and deadhead" insurance, as well as comprehensive insurance coverage. ("Bobtail" and "deadhead" are terms used in the trucking industry to mean, respectively, the operation of a tractor without a trailer and the operation of a tractor while pulling an empty trailer.)

To meet the lease requirement, Frankart obtained a combination automobile policy from the plaintiff, which policy included an endorsement entitled "Insurance for Non-Trucking Use." The policy endorsement stated:

"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 the 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"

Because of the limited scope of the coverage, the annual policy premium for the year ending April 5, 1975, amounted to only $61 for bodily injury liability and $60 for property damage liability.

On June 6, 1974, with both the lease and the insurance policy in force, Frankart was involved in a collision between his tractor-trailer and a Greater Peoria Mass. Transit District bus. The accident occurred in East Peoria, Illinois. Approximately a week before the accident, Frankart had picked up a load of steel in Coatesville, Pennsylvania, as directed by Wilson. Frankart delivered the load under Wilson's ICC permit to its destination in Tulsa, Oklahoma, on June 5. Immediately thereafter, Frankart called Wilson's terminal in Granite City, Illinois, and was told that no loads were then available for him to transport in the direction of Wilson's home terminal in Cleveland, Ohio. Frankart then drove to Wilson's Granite City terminal, where he took his name off the availability list and departed, with an empty trailer, for his home in Findlay, Ohio. He deviated from the most direct route home in order to pass through East Peoria, where he could save on the price of fuel and where he might sublease with another carrier. As the truck was exiting Interstate 74 in East Peoria, and before Frankart had an opportunity to sublease, the accident occurred.

The issue before this court is whether the appellate court erred in concluding that the tractor-trailer was still being used in the business of Wilson at the time of the accident, thereby excluding coverage under the terms of the insurance policy.

The scope of the insurance coverage in this case must be construed in the context established by the ICC regulations which cover the leasing of owner-driven tractors by franchise carriers engaged in interstate commerce. The main thrust of the regulations is to prevent licensed carriers from escaping liability to injured members of the public by claiming that their lessor-drivers were independent contractors rather than employees. Prior to the regulations, an injured person could not fix financial responsibility on the licensed carrier without first establishing that the carrier had a right to control the lessor-driver's activities and that the lessor-driver was acting within the scope of his employment at the time of the accident. In a recent case, this court held that the purpose of the regulatory scheme was to eliminate such issues and to impose vicarious ...

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