Opinion ID: 1431706
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Heading Rank: 3

Heading: Allocation of Risk of Loss

Text: Anderson's next issue attempts to focus our attention on the alleged negligence of the crane operator. It argues that this operator was, in substance, an employee of Certified when the crane was damaged and his alleged negligence in causing the damage is attributable to Certified. Anderson cites as support for this theory several cases involving leases of cranes and other equipment, in which the lessor supplied the equipment operator and that operator's conduct was found to be the proximate cause of damage to the equipment or injury to another person. See Rocky Mountain Bridge Company v. Martin K. Eby Construction Company, 543 P.2d 1288 (Colo. App. 1975); Great Western Sugar Company v. Erbes, 148 Colo. 566, 367 P.2d 329 (1961); Chartier v. Winslow Crane Service Company, 142 Colo. 294, 350 P.2d 1044 (1960); Foy-Proctor Co. v. Marshall & Thorn, 169 Ky. 377, 183 S.W. 940 (1916). Anderson's argument ignores the written lease agreement, and the cases it cites are similarly distinguishable on their facts. Anderson fails to recognize that the parties to this type of contract are free to allocate the risk of loss among themselves as they choose. Allstar Video, Inc. v. Baeder, 730 P.2d 796, 798-799 (Wyo. 1986). Anderson cites no cases that involve written lease agreements containing an express allocation of risk of loss provision. The written lease agreement between Anderson and Certified is a lease of personal property for a definite period of time for the mutual advantage of the parties, sometimes referred to as a bailment lease. Fuchs v. Goe, 62 Wyo. 134, 163 P.2d 783, 789, 166 A.L.R. 1329 (1945). See also 9 S. Williston, Williston on Contracts § 1041A at 927-928 (1967). In this type of lease, the bailee is generally held to a standard of ordinary care regarding the condition of the personal property involved. Mazzola v. Sawyer, 702 P.2d 167, 169 (Wyo. 1985); Fuchs, 163 P.2d at 789. However, the parties to a bailment lease may specially contract to place the risk of loss or damage to bailed personal property on the bailee, essentially making bailee an insurer of the personalty. Allstar Video, 730 P.2d at 799; Fuchs, 163 P.2d at 789-790. A special contract between the parties may either enlarge or limit the obligation of the bailee [to exercise ordinary care] as it ordinarily would be under the general law. Fuchs, 163 P.2d at 789. Such changes in a bailee's obligations to care for personal property under a bailment contract are enforceable only if they are expressed in clear and explicit language. Fuchs, 163 P.2d at 790-791. See also Allstar Video, 730 P.2d at 798-799. The bailee's contractual duty to insure the personal property must arise from the plain meaning of the words used to limit the obligation. Fuchs, 163 P.2d at 791. The express language of the written lease agreement in this case clearly and explicitly obligated Anderson to maintain insurance against risk of loss or damage to the crane, regardless of the cause. The second term of the written lease agreement evidencing the contract between Anderson and Certified provided: SECOND: Lessee [Anderson] agrees to keep the equipment fully insured at all times against all risks of loss or damage from every cause whatsoever and Lessee shall carry public liability and property damage insurance covering the equipment in an amount sufficient to indemnify Lessor against any loss. All such insurance shall be in the name of both Lessor and Lessee, specifically naming Lessor as a co-insured. The Proceeds of such insurance shall, at Lessor's option, be applied to repair, restore, or replace the equipment or toward Lessee's obligations hereunder. Lessee shall provide Lessor with certificates of insurance. (Emphasis added.) This language obligates Anderson to insure the crane and to co-insure Certified against any loss from damage to the crane. This allocation of the risk of loss exists no matter who Anderson attempts to blame for damaging the crane.