Case Title: Sathre v. Brewer

Citation: 184 N.W.2d 668

Docket Number: 

State: minnesota

Court: Minnesota Supreme Court

Date: 1971-03-05T00:00:00Z

Document:
184 N.W.2d 668 (1971) Martin R. SATHRE, as trustee for the heirs of Francis L. Keena, decedent, Plaintiff, v. Robert B. BREWER, Jr., and Livingston Lumber Company, defendants and third-party plaintiffs, v. COLONIAL INSURANCE COMPANY OF CALIFORNIA, third-party defendant and fourth-party plaintiff, Respondent, v. GLENS FALLS INSURANCE COMPANY, fourth-party defendant, Appellant. No. 42299. Supreme Court of Minnesota. March 5, 1971. *669 Rufer, Hefte, Pemberton & Schulze, Fergus Falls, for appellant. Quinlivan, Williams, Johnson & Quinlivan, St. Cloud, John Simonett, Little Falls, for respondent. Heard before KNUTSON, C. J., and NELSON, OTIS, PETERSON, and KELLY, JJ. PETERSON, Justice. Livingston Lumber Company (hereafter lessee), insured by fourth-party defendant Glens Falls Insurance Company (hereafter Glens Falls), leased a truck from K. L. Luttschwager (hereafter lessor), insured by third-party defendant Colonial Insurance Company (hereafter Colonial). Defendant Robert B. Brewer, Jr., employed by lessee, was the driver of the truck when on December 15, 1966, it became involved in an accident resulting in the death of Francis L. Keena, a passenger. The wrongful death action by plaintiff, Martin Sathre, as trustee for Keena's heirs, was settled by stipulation with the two insurers and paid by Glens Falls. The two insurers stipulated that the trial court should thereafter determine whether the policies of both insurers afforded concurrent coverage or, if not, which of them afforded primary coverage. Lessee was engaged in the business of a saw mill and lumber yard. It used the leased truck exclusively in its business for long-haul transport of its products. The lease of the truck provided in part: Glens Falls wrote a comprehensive general automobile liability policy for the lessee's business. Insuring Agreement III of the policy provided coverage to Glens Falls did not wish to cover long-haul trucking, and lessee did not report the truck to Glens Falls as a hired vehicle. However, as the trial court found on the basis of preaccident and post-accident written communications between Glens Falls and its agent, Glens Falls was aware that its insured did engage in long-haul trucking. The condition of the Glens Falls policy upon which it relies for avoiding primary coverage provides: Lessor, as declared in its policy with Colonial, is engaged in the business of "truckmen-commercial." Although the subject truck was listed as insured, Colonial did not understand that it was insuring a truck rental business. Neither the lessee nor its employee was a named insured in that policy. Insuring Agreement III(a) of the Colonial policy provided: Condition 20 of the Colonial policy provided: The trial court found and concluded from all the insurable circumstances that Glens Falls' policy provided primary coverage of the leased truck and that it accordingly was not entitled to recover from Colonial any of the sums it had paid in the defense and settlement of plaintiff's claim. We affirm the judgment entered pursuant to these findings and conclusions. There is no talismanic rule for resolving this perennial problem of determining coverage of policies applicable to the same insured, vehicle, or loss situation. Until the insurance industry establishes a more practicable method for determining these issues, courts must labor to achieve an equitable result in individual situations. As this court said in Federal Ins. Co. v. Prestemon, 278 Minn. 218, 228, 153 N.W.2d 429, 435: In Woodrich Const. Co. v. Indemnity Ins. Co., 252 Minn. 86, 98, 89 N.W.2d 412, 420, we rejected any "arbitrary rule or circumstance" for determining respective liabilities in the situation of overlapping insurance coverage, and this was reiterated in Olson v. Hertz Corp., 270 Minn. 223, 227, 133 N.W.2d 519, 523. Criteria for determining respective responsibility of insurers, as stated in Olson and restated in Prestemon (278 Minn. 229, 153 N.W.2d 436), include these questions: We hold that, measured by these criteria and the totality of the insuring circumstances, the trial court reached a sustainable result. A most important insurable circumstance is that the accident-involved truck was a permanently hired vehicle, and Glens Falls' policy was intended to cover hired vehicles. The lease, too, is a significant insurable circumstance even though Glens Falls was not privy to it. The use to which the truck was being put at the time of the accident was an integral part of the lessee's business but only incidental to the lessor's business. Colonial, insurer for the lessor, did not understand that it was insuring a trucking-equipment rental business, but Glens Falls knew that its insured, the lessee, engaged in long-haul trucking as part of its business. The lessee, who controlled the vehicle, was a known quantity to Glens Falls and not to Colonial. Glens Falls' policy did not expressly *672 describe the hired vehicle, but it did agree to cover any vehicles that its insured might hire. Although Glens Falls may not have received all the premium it should have collected for its exposure,[2] this factor alone is not decisive of insuring intent, as was made clear in Prestemon. Federal Ins. Co. v. Prestemon, supra, and Dukeman v. Hardware Mutual Ins. Co., 286 Minn. 118, 174 N.W.2d 237, do not compel a contrary result. Without detailing differences in policy language or other insurable circumstances, we think that the situations there are distinguishable from the one presented here. With respect to the fact that in both Prestemon and Dukeman the accident-involved vehicle was a temporary loaner regularly provided for the convenience of customers, Judge James E. Preece aptly stated the important difference: We are not unmindful that in Dukeman a policy was deemed primary where it specifically named the insured vehicle and that in Prestemon we alluded to a "general rule" that, where one policy contains an excess clause and the other contains a no-liability clause, liability is imposed upon the latter for the reason that excess insurance does not provide other valid and collectible insurance. We simply reiterate that these are general propositions to be given substantial consideration along with other factors in the totality of insurable circumstances. Affirmed. [1] Condition (6) of the Glens Falls policy, evincing a relationship between the premium paid and the contemplated coverage, provides in part: "* * * The rates for each $100 of `cost of hire' shall be 5% of the applicable hired automobile rates, provided the owner of such hired automobile has purchased automobile Bodily Injury Liability and Property Damage Liability insurance covering the interest of the named insured on a direct primary basis as respects such automobile and submits evidence of such insurance to the named insured." [2] By Condition (6) of its policy, footnote 1, supra, Glens Falls in effect agreed to charge its insured, lessee, only 5% of its applicable hired automobile rate if lessor, owner of the hired vehicle, purchased insurance covering lessee on a direct primary basis and so advised lessee; and, absent such agreement, Glens Falls was to charge 100% of its hired automobile rate. The decision was left to its insured lessee, which, by its lease, decided upon the latter. The trial court concluded that this condition was "inconsistent with [Glens Falls'] claim that its hired automobile coverage is to be deemed excess."