Opinion ID: 1824526
Heading Depth: 1
Heading Rank: 2

Heading: Coverage of Bougie Under Insurance Policy of Integrity Mutual Insurance Company.

Text: The sole issue in the appeal of Integrity Mutual Insurance Company may be stated as follows: Given an automobile liability policy insuring a petroleum product tank delivery truck, and containing a standard loading and unloading clause insuring against damage resulting from erroneous delivery of liquid products, but excluding liability for accidents arising out of erroneous delivery of one liquid product for another, if such accident occurs after such operations have been completed or abandoned at the place of occurrence, is the insurer liable when the insured mistakenly misdelivers gasoline for fuel oil into a fuel oil storage tank, and upon discovering his error takes steps to remove the gasoline from the fuel oil storage tank and is preparing to deliver fuel oil into the fuel oil storage tank, when a damage-producing explosion occurs? The automobile liability policy issued by Integrity to Bougie covering the truck used in delivery of the fuel oil and gasoline to the Petersons contained a standard loading and unloading clause: Use of the automobile for the purposes stated includes the loading and unloading thereof. The policy also contained the following exclusion clause: It is agreed that the insurance afforded by the policy for bodily injury liability and for property damage liability does not apply to accidents arising out of the delivery of any liquid product into a wrong receptacle or the erroneous delivery of one liquid product for another, if the accident occurs after such operations have been completed or abandoned at the place of occurrence thereof. Such operations shall not be deemed incomplete because improperly or defectively performed or because further operations may be required pursuant to a service or maintenance agreement. Integrity contends that the phrase such operations refers only to the acts of misdelivery. Therefore, at the moment the insured realizes he has made an erroneous delivery and ceases, for example, to deliver gasoline instead of fuel oil, and begins preparations to correct his error, the exclusion clause is operative. Under the facts of this case, therefore, Integrity's position is that coverage on the policy ceased when Bougie terminated delivery of the gasoline into a fuel oil storage tank. Integrity predicates this interpretation upon a rule of grammatical constructionthe last-antecedent rule. `Relative and qualifying words, phrases, and clauses are to be applied to the words or phrase immediately preceding and are not to be construed as extending to or including others more remote unless such extension is clearly required by a consideration of the entire act. 36 Cyc. 1123.' [4] Therefore, because the phrase such operations appears immediately after the phrase, arising out of the delivery of any liquid product into a wrong receptacle or the erroneous delivery of one liquid product for another, accidents occurring after the delivery of the wrong liquid has ceased, but before the proper liquid is placed in the receptacle, are excluded from coverage, even though the driver and truck may be in close physical proximity to the scene of the accident. This court has consistently followed Mr. Justice HOLMES' epigrammatic direction to think things rather than words. The linguistic rule of construction must be viewed in the context of the entire contract. The rule is that qualifying or limiting words or clauses in a statute are to be referred to the next preceding antecedent unless the context or the evident meaning of the enactment requires a different construction. [5] (Emphasis added.) The term such operations can be reasonably construed to refer to the total process of attempting to deliver petroleum products into their proper containers. A driver who discovers that he has made an erroneous delivery, will obviously attempt to correct the error. This very attempt to remove a volatile liquid from a container creates a substantial risk as the facts of this case demonstrate. Therefore, Integrity's construction would sharply circumscribe the area of insured risk. This is an unreasonable result in circumstances which show that the driver removed the volatile liquid from the container, so that he could deliver the proper liquid, and thus totally unload his order. His task was to get the right liquid in the appropriate containerand the term such operations is shorthand for that result. More reasonably, abandonment and completion of such operations refers to a state of affairs where the driver of the truck physically leaves the unloading area, after erroneous delivery, thus creating a situation in which an intervening instrumentality, not insured by the driver's insurer, may provide a causal link in the chain leading to the accident. This construction is reinforced by the last sentence of the indorsement: Such operations shall not be deemed incomplete because improperly or defectively performed or because further operations may be required pursuant to a service or maintenance agreement. This language clearly limits the force of the completed operations doctrine which would continue coverage until the right liquid was in the appropriate receptacle, regardless of whether the erring driver may have left the delivery area prior to correcting his mistake. If the driver remains on the premises, however, and attempts to make proper delivery which necessarily involves terminating erroneous delivery, he is reasonably completing the operation of unloading. In the case at bar, Bougie never left the Peterson residence prior to the accident. After discovering that he was delivering gasoline into the fuel storage tank, he removed the gasoline from the tank in preparation for the delivery of the fuel oil. He cleared the gasoline from his hose, attached the hose to the faucet on the truck leading to the fuel oil compartment, and placed the nozzle of the hose adjacent to the fuel oil intake. These facts are evidence of his intention to deliver fuel oil before he left the premises. At this point the explosion occurred. Under the above analysis, Bougie was in the process of delivering the proper product to the appropriate receptacle, and had not completed or abandoned the operation of unloading. In any event, an analysis leading to the conclusion that the referent of such operations is a continuing attempt to make proper delivery rather than erroneous delivery is a reasonable construction of the indorsement. By definition, an ambiguous exclusion clause is one capable of several reasonable constructions. Hence the rule of construing ambiguity against the insurer must apply. [6] We conclude that by the terms of the policy, Bougie is covered for his erroneous delivery of gasoline for fuel oil and his attempts to correct the error. By the Court. Judgment reversed as to that part dismissing the allegations of plaintiffs' complaint, which predicate the liability of Sinclair Refining Company upon breach of contract. Judgment affirmed as to that part striking all allegations and denials of Integrity Mutual Insurance Company's answer as they relate to invoking an exclusion under the terms of the liability policy. Cause remanded for further proceedings not inconsistent with this opinion. Full costs allowed to plaintiffs to be charged equally against Sinclair Refining Company and Integrity Mutual Insurance Company; full costs allowed defendant and respondent, Norbert Bougie, to be charged against Integrity Mutual Insurance Company; 25 percent of its costs allowed defendant and respondent, Integrity Mutual Insurance Company, to be charged against Sinclair Refining Company.