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Estes Co. v. Employers Mutual Casualty Co.





APPEAL from the Circuit Court of Rock Island County; the Hon. DAVID DeDONCKER, Judge, presiding.


The plaintiff, Estes Company of Bettendorf, Iowa, commenced a declaratory judgment action against the defendant, Employers Mutual Casualty Company, asserting that plaintiff was entitled to defense and indemnity under an automobile liability insurance policy issued by the defendant to the Rock Island Ready Mixed Concrete Company. The circuit court of Rock Island County entered judgment for plaintiff, and the defendant appealed. The facts preceding this action are not in dispute and were made the subject of a stipulation.

On September 20, 1974, plaintiff was acting as a general contractor on a building construction project. Plaintiff had entered into a subcontract with the Anderson Construction Company which provided Anderson would supply and pour concrete for the footings and foundation of the building. Concrete was supplied to Anderson at the jobsite by Rock Island Ready Mixed Company pursuant to an oral supply contract confirmed by written delivery tickets. Estes was not a party to the contract between Anderson and Ready Mixed, When the concrete was delivered to the jobsite by Ready Mixed, it was poured either directly into forms prepared by Anderson or into a concrete bucket connected to an overhead crane. The crane and bucket were used to transport the concrete from the truck to the forms. The crane was owned by H.A.P. Excavating Company, which was affiliated with Anderson.

According to the stipulation, the crane bucket was swung over to the Ready Mixed truck, which was parked on the site, where the bucket was filled by a Ready Mixed driver-employee. The bucket was then swung over to the location along or near the footings and foundation forms where the concrete was emptied from the bucket. When the seventh truck load of concrete arrived at the site, several buckets of concrete were removed utilizing this procedure and without event. The next bucket was filled with concrete as before, but as the crane was swinging the bucket into place, one of the cables of the crane came into contract with a high voltage electrical transmission line. Two Anderson employees, John Jones and Thomas Cosper, received electrical burns when the crane contacted the tension lines. At no time during delivery did Ready Mixed employees operate Anderson's crane. The Ready Mixed trucks were not contractually or otherwise leased to Estes or Anderson Construction Company, nor were the trucks borrowed by Estes or Anderson Construction Company for any purpose. Ready Mixed employees exercised sole possession and control of the Ready Mixed truck at all times material.

Cosper and Jones each filed a personal injury action against several defendants, including the plaintiff in this case. The suit against Estes was based on alleged violations of the Structural Work Act. (Ill. Rev. Stat. 1977, ch. 48, pars. 60 through 69.) Ready Mixed was not named a defendant by either Cosper or Jones.

At the time of the accident, Ready Mixed was insured under a policy of insurance issued by the defendant Employers, which provided coverage for bodily injury "caused by an occurrence and arising out of the * * * use, including loading and unloading, of any automobile and the company shall have the right and duty to defend any suit against the insured seeking damages on account of such bodily injury * * *." As is relevant here, the policy provided an insured was:

"(c) Any other person while using an owned automobile or hired automobile with the permission of the named insured, providing his actual operation or (if he is not operating) his other actual use thereof is within the scope of such permission, but with respect to bodily injury or property damage arising out of the loading or unloading thereof, such other person shall be an insured only if he is:

(1) A leasee or borrower of the automobile, or

(2) An employee of the named insured, or of such leasee or borrower;

(d) Any other person or organization but only with respect to his or its liability because of acts or omissions of an insured under (a), (b), or (c) above."

Following discovery depositions in the Cosper and Jones actions, Estes wrote to Employers asserting coverage under the Ready Mixed policy and demanding defense and indemnity for the personal injury actions. Employers initially responded in July of 1976 denying liability and refusing to defend. The present action was filed on September 10, 1976. On September 13, 1976, Lane & Waterman, attorneys retained by Employers, filed an appearance on behalf of the Estes Company in the consolidated actions of Cosper and Jones. While the appearance was general, an attorney for Lane & Waterman testified that the appearance was filed "for the sole purpose of monitoring the status" because of difficulties he was having in obtaining any information from Estes' attorney who was defending the personal injury actions. It appears that Lane & Waterman did not participate at all in the defense of the personal injury actions.

In June of 1977 Employers made a written offer to Estes to defend the personal injury actions reserving its rights to subsequently deny any and all coverage, but also agreeing to be bound by any adverse determination of the declaratory judgment action. This offer was rejected.

In holding for plaintiff in this action, the circuit court concluded that plaintiff was an insured entitled to coverage under defendant's policy. The court also found that the appearance of Lane & Waterman did not give rise to waiver or estoppel in favor of plaintiff and the refusal of defendant to defend the personal injury action was not unreasonable and did not constitute a wilful refusal to defend under the terms of the policy. We reverse.

The first issue we consider is whether the accident arose out of the unloading of the Ready Mixed truck. Plaintiff's position is essentially that the unloading was not completed until the concrete reached its ultimate destination, i.e., the forms. The defendant argues ...

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