Appeal from the United States District Court for the Northern District of Illinois, Eastern Division, No. 85 C 6531-Harry D. Leinenweber, Judge.
EASTERBROOK, Circuit Judge.
A trucking mishap has produced a dispute about insurance coverage. Walter Ragland, doing business as Ragland Trucking, owned the offending truck; Daniel Donnelly was driving the truck at the time; Ragland, who lacked the certificates of public interest, convenience, and necessity needed to operate the truck in either interstate or intrastate commerce, had signed leases with both Illinois Cargo, Inc., and Highland Transport, Inc. American Interinsurance Exchange insured Cargo; Occidental Fire & Casualty insured Ragland. American's policy covers a leased truck "while [it] is being used exclusively in [Cargo's] business as a trucker." Occidental's policy excludes accidents that occur while the truck "is being used in the business of any person or organization to whom the [truck] is rented." American contends that the truck was not being used "exclusively" in Cargo's business. Occidental, for its part, denies coverage because Ragland was devoting the truck to business other than Ragland's, and Occidental does not care whose.
After a bench trial on stipulated facts, the district court held that American's policy covers Cargo, Ragland, and Donnelly, and that Occidental's policy does not apply. The stipulation recited that the night before the accident, Ragland gave Donnelly the keys to the truck and told him to pick up straps suitable for securing tarpaulins to trailers. (The "truck" in question is a tractor; lessees supplied the trailers.) At 7:45 a.m. on April 9, 1984, Donnelly reported to Cargo. The truck had been parked nearby, in a space Ragland rented from D & M Enterprises (an unrelated party), since March 16. D & M's lot is behind Ragland's house and next to Cargo's yard. Richard Benoit, Cargo's president, told Donnelly that no load was available. Benoit did not say whether there would be loads later. Cargo had never used Donnelly as a driver, however, and Benoit had hinted to Ragland that he never would. Benoit may have been prescient, for within minutes after Donnelly drove off in search of straps, the tractor was involved in a multi-vehicle crash. Three suits have been filed in Illinois courts as a result.
The lease between Ragland and Cargo, dated November 21, 1983, and running for three years, recited that it was made under the authority of the Illinois Commerce Commission. Illinois permits leases by the trip. Its rules, 92 Ill. Adm. Code § 1360.40(c), require the lease to transfer exclusive possession and authority only "during such periods as the equipment is operated by or for [the certificate holder] as the lessee". Truckers must file a lease for every trip; it is a convenient and lawful alternative to file a master agreement that covers all trips for a maximum of three years. The Interstate Commerce Commission, which regulates interstate truck transportation, requires leases to cover blocks of time rather than specific operations. 49 C.F.R. § 1057.12(c)(1) (requiring exclusive possession and control for the "duration of the lease", without the qualification related to operation). The Ragland-Cargo lease states in part:
For the duration of this lease LESSOR leases Equipment to LESSEE for LESSEE'S exclusive possession, control, use and responsibility curing the periods the vehicle is operated by or for the lessee.
In claiming that American's policy applies, Cargo and Occidental emphisized that the lease puts the truck in Cargo's "exclusive possession"; American replied that the "exclusive possession [and] control" lasted only "during the periods the vehicle is operated by or for" Cargo, and it pointed out that there may be other periods, as the lease also provides:
Nothing herein shall be construed as preventing the LESSOR from entering into a subsequent Lease of the same equipment during the duration of this Lease . . . .
In other words, Ragland could (and did) lease the truck to more than one holder of operating authority, implying that "exclusive possession [and] control" took place only during the operation by a given lessee: the holder of the operating authority had to have exclusive control while its authority was in use, but different lessees could have control on different trips, and between trips Ragland might have control. Ragland's son testified in deposition-there appears to be no dispute on the point-that Ragland treated the truck as available by the trip, and that when Cargo did not have a load, Regland would try to find someone who did. On this view, the Ragland-Cargo lease simply avoided the need to file a multitude of single-trip leases with the Illinois Commerce Commission.
Starting from the premise that the Ragland-Cargo lease is a master agreement covering trips, rather than a single time lease, American argued that Cargo was not using the truck (exclusively or otherwise) when the collision occurred. Cargo had not used Ragland's services since March 16 and had never accepted Donnelly as a driver; on April 9 Benoit had said that there was nothing for Donnelly to haul; Donnelly headed off on an errand for Ragland, to buy straps that would be of aid to Highland or any other lessee; Donnelly did not ask for or receive Benoit's permission to move the truck, but simply used the keys Ragland had provided; Donnelly did not need Cargo's permission, because he was not moving freight on the authority of Cargo's certificates; for all Cargo knew, Donnelly's next stop after buying the straps would have been Highland's yard. So, American insisted, its policy does not apply, for it says:
The owner or anyone else from whom you [Cargo] hire or borrow a covered auto [powered vehicle] which is a trailer is an insured while the trailer is connected to another covered auto which is a power unit, or, if not connected:
a. Is being used exclusively in your business as a trucker, and
b. Is being used pursuant to operating rights granted to you by a public authority.
(The boldface terms, thus in the original, are defined in American's policy.) Cargo and Occidental responded that the lease runs for three years, that Donnelly had reported to Cargo for work on April 9 and might well have returned (for he had not been told that no loads would be available all day), that the truck's last use was in Cargo's business, and that it displayed Cargo's name on a placard at the time of the ...