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Estes Company v. Employers Mut. Cas. Co.





Appeal from the Appellate Court for the Third District; heard in that court on appeal from the Circuit Court of Rock Island County, the Hon. David DeDonker, Judge, presiding.


Plaintiff, Estes Company of Bettendorf, Iowa, commenced an action for declaratory judgment in the circuit court of Rock Island County against defendant, Employers Mutual Casualty Company, seeking a declaration that plaintiff was an additional insured entitled to defense and indemnity under the provisions of an automobile insurance policy issued by Employers to the Rock Island Ready Mixed Concrete Company. The circuit court found, in addition to matters not relevant to this appeal, that Estes was entitled to coverage under Employers' policy, relying upon Bituminous Casualty Corp. v. American Fidelity & Casualty Co. (1959), 22 Ill. App.2d 26, that the appearance filed by Employers' attorneys did not constitute a waiver or estoppel to assert the exclusions of the policy, and that Employers' refusal to defend was reasonable under the provisions of the policy. Both parties appealed this judgment to the appellate court. Employers sought review of the finding that the provisions of the policy afforded coverage to Estes. Estes sought review of the findings that Employers' refusal to defend was reasonable and that Employers had not waived and was not estopped from asserting the policy exclusions. The appellate court reversed the circuit court, holding that Estes was not entitled to coverage under the policy and that Employers had not waived and was not estopped to assert the policy exclusions. (72 Ill. App.3d 509.) We allowed Estes' petition for leave to appeal.

The facts preceding the action in the trial court were not in dispute and were made the subject of a stipulation. This stipulation provided that on September 20, 1974, Estes was acting as a general contractor engaged in the construction of a building in Moline. Anderson Construction Company, a subcontractor, agreed to supply and pour the concrete for the footings and foundation of the building. Concrete was supplied to Anderson at the jobsite by Rock Island Ready Mixed Concrete Company. Estes was not a party to the contract between Anderson and Ready Mixed. The concrete delivered by Ready Mixed was poured either directly into forms prepared by Anderson or into a bucket connected to an overhead crane. The crane and bucket were used to transport concrete from the Ready Mixed truck to locations where the concrete was to be placed in the forms. The crane was owned and operated by H.A.P. Excavating Company.

The parties also agreed that on September 20, 1974, six truckloads of concrete had been delivered to the jobsite between 1 p.m. and 4:30 p.m. by Ready Mixed. Between 4:30 p.m. and 5 p.m., the seventh load was delivered to the site. The crane bucket was swung over to the Ready Mixed truck, and the bucket was filled by a Ready Mixed driver-employee. The bucket was then swung over to locations along or near the footing and foundation forms where the concrete was emptied from the bucket. Several buckets of concrete were transported from the truck in this manner. As one bucket was being swung into position, the crane cable came in contact with high-voltage electrical-transmission lines owned and operated by Iowa-Illinois Gas and Electric Company. Two Anderson employees, Thomas Cosper and John Jones, suffered personal injuries when the crane and electrical lines came in contact.

The parties also agreed that Ready Mixed employees did not operate the crane at any time. The Ready Mixed trucks were not contractually or otherwise leased to Estes or Anderson, nor were the trucks borrowed by Estes or Anderson for any purpose. Ready Mixed employees exercised sole possession and control of the Ready Mixed trucks at all times here relevant.

The stipulation further provides that Ready Mixed was insured in accordance with the terms and conditions of an insurance contract issued by Employers. This contract provides coverage for bodily injury "caused by an occurrence and arising out of the ownership, maintenance or 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 relevant to the parties arguments in this court, the policy designates as an insured:

"(a) the named insured;

(c) any other person while using an owned automobile or a hired automobile with the permission of the named insured, provided 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 lessee or borrower of the automobile, or

(2) an employee of the named insured or of such lessee 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."

Cosper and Jones, the injured individuals, each filed personal injury actions against Estes, alleging violations of the Structural Work Act (Ill. Rev. Stat. 1973, ch. 48, par. 60 et seq.). Ready Mixed was not named a defendant in either of these actions.

Estes contends that the injuries to Cosper and Jones arose out of the acts or omissions of Ready Mixed, the named insured, in unloading the cement. Estes argues that its liability under the Structural Work Act (Ill. Rev. Stat. 1977, ch. 48, par. 60 et seq.) is derivative, and for this reason it is an insured under clause (d) of the policy issued by Employers. In support of this position, Estes argues that the appellate court erred in concluding that the injuries to Cosper and Jones did not arise out of the unloading of the Ready Mixed truck. Estes contends that the process of unloading is not completed until the cement reaches its ultimate destination, in this case, the cement forms. The appellate court found that unloading was completed when delivery was accomplished, i.e., when the cement was deposited in the bucket. Employers asks us to affirm the appellate court on this issue. The issue of whether Estes was an insured under clause (d) of this policy focuses initially on whether the injuries to Cosper and Jones arose out of a use of the Ready Mixed truck provided in the contract, in the present case, the unloading of the truck. Estes does not contend that it was an insured under any other clause of the policy.

Loading and unloading clauses have been a feature of insurance policies for many years. A substantial body of case law has developed to assist in the construction of these clauses in particular situations. As the appellate court has noted, the decisions construing unloading clauses have utilized one of two theories to determine when unloading is complete, the "coming to rest" doctrine or the "complete operations" doctrine. Under the "coming to rest" approach, the unloading process includes only the actual moving of the article from the motor vehicle until it first comes to rest. When the article has begun to move toward its final destination, independent of the motor vehicle, the vehicle is no longer connected with the process of unloading. (See American Automobile Insurance Co. v. American Fidelity & Casualty Co. (1951), 106 Cal.App.2d 630, 235 P.2d 645.) Unloading under the "complete operations" doctrine, however, includes all the operations necessary to effect a completed delivery. (See Entz v. Fidelity & Casualty Co. of New York (1966), 64 Cal.2d 379, 412 P.2d 382, 50 Cal.Rptr. 190.) We agree with the appellate court that the "complete operations" doctrine, which embraces all of the ...

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