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SEARS, ROEBUCK & CO. v. EMPLOYERS INC. OF WAUSAU

December 22, 1983

SEARS, ROEBUCK AND CO., PLAINTIFF,
v.
EMPLOYERS INSURANCE OF WAUSAU, A MUTUAL COMPANY, DEFENDANT.



The opinion of the court was delivered by: Getzendanner, District Judge:

  MEMORANDUM OPINION AND ORDER

Plaintiff, Sears, Roebuck and Co. ("Sears"), has moved for summary judgment against defendant, Employers Insurance of Wausau ("Employers"). Sears seeks a declaration that, by virtue of a policy of insurance issued by Employers to Midwest Technical Publications, Inc. ("Midwest"), and extended to Sears by a vendor's endorsement, Employers is obligated to defend Sears against Count III of the Second Amended Complaint filed against it in the Circuit Court of Cook County, Illinois, by Richard J. Short ("Short"). (PX-A).*fn1 Employers has filed a cross motion for summary judgment seeking the contrary declaration.

In Count III of Short's complaint, Short alleges that he purchased from Sears a manual containing instructions on the maintenance and operation of a Craftsman 10" Radial Arm Saw, and that it was the duty of Sears to write, print, publish and distribute the manual with a reasonable degree of care and caution so as not to injure Short, knowing that Short would rely upon the representations made in the manual. (PX-A at 5). Short then alleges the following:

    7. That, notwithstanding their aforesaid duty,
  [Sears was] then and there guilty of one or more
  of the following wrongful acts and/or omissions:
    a. Carelessly and negligently failed to provide
    Plaintiff with [sic] manual that gave adequate
    and proper instructions as to the operation of
    the Radial Arm Saw;
    b. Carelessly and negligently failed to
    properly instruct Plaintiff as to the correct
    and safe method of operating the aforesaid
    Radial Arm Saw;
    c. Carelessly and negligently failed to warn
    Plaintiff of the dangers involved in operating
    the aforesaid Radial Arm Saw.
    8. That, as a direct and proximate result of
  one or more of the aforesaid wrongful acts and/or
  omissions of [Sears], the aforesaid Radial Arm
  Saw caught [Short's] hand within, then and there
  injuring [Short] . . . . (PX-A at 5).

The facts material to this motion for summary judgment are undisputed. The manual referred to in Count III of the Short complaint is entitled "POWER TOOL KNOW HOW saves you money — Radial Saw." The manual is one of a series of "Know How" books concerning the operation of various power tools prepared for Sears by Midwest. The manual was copyrighted by Midwest in 1974. (PX-B). Sears purchased the finished manual from Midwest for resale in its retail stores. Other than the books in the "Know How" series, Sears purchases no products from Midwest. (PX-C).

The original version of the manual was prepared by Midwest over a period of several months in 1974. Midwest sent the drafts it prepared of various sections of the manual to James Durham, then the Assistant Buyer of Bench Power Tools for Sears. Mr. Durham forwarded these drafts directly to the various manufacturers of the products described or represented in the manual for comments and suggested revisions. The manufacturers sent the drafts, comments, and suggested revisions directly to Midwest, which incorporated them into the text. Midwest sent the revised drafts back to Mr. Durham, who forwarded them to the manufacturers for their final comments. Sears was not required to approve and did not in fact approve or disapprove the technical content of the manual before Midwest published it. However, all the technical writing aspects of the manual were handled solely by Midwest, incorporating the suggested revisions made directly to Midwest by the various manufacturers. (PX-D). Sears participated in the cover design of the manual.

With respect to the revised edition, Sears and Midwest agreed that Midwest would handle all writing and revisions agreed upon by Sears and Emerson Electric Company ("Emerson"), the manufacturer of the saw; that Sears and Emerson would serve in the capacity of technical advisor on power tool content and safety; that Sears and Midwest would decide on the manual content that would not directly affect the major power tools; and that prior to production of the manual, silver prints would be submitted to Sears for final review. (DX-C).*fn2

Employers issued to Midwest a policy of insurance which insures Midwest against loss as a result of any claim for "bodily injury and property damage arising out of the named insured's [Midwest's] products." This insurance policy further obligates Employers "to defend any suit against the insured [Midwest], . . . even if any of the allegations of the suit are groundless, false or fraudulent . . . ." (PX-E).

This policy also contains a vendor's endorsement (PX-F) which extends Employers' duties to defend and indemnify to Sears "with respect to the distribution or sale in the regular course of the vendor's business of the named insured's product." The endorsement was sold by Employers to Midwest for the minimum premium, $9.00 for bodily injury and $12.00 for property damage. Sears required the endorsement to continue business with Midwest and Sears specified the form of endorsement. (PX-F).

On September 21, 1981, based upon this vendor's endorsement, Sears tendered the defense of Count III of the Short complaint to Employers by a letter addressed to ...


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