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GEHRLEIN TIRE CO. v. AMERICAN EMPLRS. INS. CO.

June 17, 1964

GEHRLEIN TIRE COMPANY, a Corporation, Anthony J. Gehrlein, Richard V. Gehrlein, Robert T. Dolan, Michael Pillitteri
v.
AMERICAN EMPLOYERS INSURANCE COMPANY, a Corporation



The opinion of the court was delivered by: WILLSON

The present jury case in which the diversity jurisdiction of this Court is invoked involves the interpretation and application of a comprehensive general liability insurance policy. The case is presently before this Court on defendant's Motion for Summary Judgment, which is based on the ground that the pleadings, depositions, admissions, and affidavits show that there is no material issue of fact and that the defendant is entitled to judgment as a matter of law. The parties concede that American Employers Insurance Company Policy No. 865194, issued to the plaintiff corporation, is the policy to be construed. However, defendant disclaims any liability under the policy.

The underlying controversy involves an accident suffered by Fred Heid on November 1, 1958, while the policy was in force. Heid brought two tires and two rims to Gehrlein Tire Company's station and requested that the tires be mounted on the rims. The tires were mounted on the rims and delivered to Heid. Heid took the mounted tires away from Gehrlein's place of business to his own place of business and proceeded to mount the tire-rim assembly on the wheel of his truck when the tire-rim assembly exploded seriously injuring him. As a result thereof he sued the Gehrlein Tire Company, a corporation, and recovered a judgment in the Court of Common Pleas of Erie County, Pennsylvania, in Case No. 278, November 1960, for personal injuries in the sum of $ 54,986.68. That judgment is now final against the Gehrlein Tire Company. During the course of the litigation, Gehrlein Tire Company commenced dissolution proceedings. Plaintiffs in this case are several individuals who are all the stockholders, officers, and directors of the corporation, Gehrlein Tire Company, and who join because of individual and personal liability imposed upon them as liquidating trustees of the assets of the corporation; the liability, of course, being the liability to pay the judgment in favor of Heid.

 It is defendant's contention that the accident was the result of a completed operation with the exclusion of products liability as defined in the policy. Also defendant contends that the individuals who join as plaintiffs are not real parties in interest.

 On the other hand, plaintiffs contend that Gehrlein's liability to the injured party was based on negligence wholly apart from the manufacture or sale of any product. Plaintiffs contend that Gehrlein solely rendered a service in assembling Heid's tires and rims. Thus, say plaintiffs, the products hazard exclusion of the policy is not applicable, and the service was covered by the general provisions of the Comprehensive Liability Policy.

 Plaintiffs also contend that three of the plaintiffs, Michael Pillitteri, Anthony J. Gehrlein, and Richard V. Gehrlein are named insureds under Endorsement No. 6 of the policy and are thus real parties in interest under the insurance contract. Plaintiffs further support this contention by pointing to the definition of Insured as including 'any partner, executive officer, director, or stockholder thereof while acting within the scope of his duties as such.' Finally, plaintiffs point to the fact that personal liability for the personal injury claim and judgment of Frederick Heid is being asserted against the individual plaintiffs.

 This Court is in agreement with plaintiffs' contention that they are the real parties in interest under Rule 17(a), of the Federal Rules of Civil Procedure.

 As previously stated, the policy involved in this case is styled 'Comprehensive Liability Policy.' The business of the insured is described as 'Rubber Tire Dealer and Sales.' Under its terms Gehrlein is covered for 'Bodily Injury Liability' under Coverage B. However, the products hazard as defined in the policy is excluded under Coverage B. Item 6, is a description of the hazards covered by the policy and the premium charged for each hazard. It reads in part as follows:

 A. PREMISES -- OPERATIONS

 Purposes of Use -- Classification of Operations

 RUBBER TIRE DEALERS -- RETAIL -- INCLUDING REPAIRING, VULCANIZING, AND THE ADJUSTMENT OF TIRES TO VEHICLES AWAY FROM THE PREMISES OF INSURED,

 CODE 3437'

 Premium Bases, Annual Rates, and Annual Advance

 Premiums are in five (5) columns to the right.

 The main policy consists of four printed pages attached to which are some sixteen inserts. Under CONDITIONS, there are nineteen numbered paragraphs. Paragraph one relates to Premium; paragraph two, Inspection and Audit. We are vitally ...


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