The opinion of the court was delivered by: MARSH
This litigation is concerned with the respective obligations of two insurance companies under their automobile liability insurance policies. The problem arises from a jury trial at which the following facts were established.
On or about December 20, 1962, Midwest Emery Freight Systems, Inc. (Midwest) leased a tractor-trailer (truck) from Stanley S. Grimm, together with a driver, Robert Lee Dunlap, who was a regular employee of Grimm. This vehicle was used by Midwest, an interstate trucker, under its Interstate Commerce Commission (I.C.C.) certificate to transport salt solely for its own customers from points in Ohio to consignees at points in Pennsylvania. As the result of a collision in Pennsylvania between the truck and an automobile, the plaintiffs' decedents were killed. The defendants in the suit were Midwest, Grimm and Dunlap.
At the trial, the parties stipulated the damages to be $80,000. The jury found specially that Grimm had orally leased the truck to Midwest for this one trip; that both Midwest and Grimm had the right to control and direct the driver Dunlap at the time and place of the accident; and that Dunlap's negligence was the proximate cause of the accident. Accordingly, judgments totaling $80,000 were entered in favor of the plaintiffs against Dunlap, Grimm, and Midwest, jointly and severally, and judgments were entered in favor of Midwest on its cross-claim against Dunlap for indemnity.
The insurers involved are Illinois corporations: Security Mutual Casualty Company (Security) for Midwest and All-State Insurance Company (All-State) for Grimm.
The plaintiffs issued execution on their judgments and named the insurers, Security and All-State, garnishees. The bodily injury coverage in each policy is $100,000/$300,000. After plaintiffs' interrogatories were answered by each garnishee, the plaintiffs filed motions for summary judgment against each garnishee. Security moved for summary judgment against All-State.
The plaintiffs contend that the insurance carriers are liable to pay the judgments pro rata. Each carrier contends that the other is liable for the whole amount of the judgments; All-State urging that Security, the insurer of Midwest, has primary coverage and is liable for the entire amount of the judgment; and Security arguing that All-State was the sole insurer of Dunlap and Grimm on the fatal trip and is liable for the entire amount. In our opinion, Security is liable for the judgments in their entirety and plaintiffs' motion for summary judgment against Security should be granted.
Security, however, vigorously contends that under § 1(a)(1) of the endorsement quoted in f.n. 4, supra, Dunlap was not covered as an employee
of Midwest since the accident did not occur "while such automobile * * * [was] being used exclusively in the business of the named insured [Midwest] and over a route the named insured * * * [was] authorized to serve by federal or public authority * * *."
We disagree with this contention. There is no dispute that the truck carried a cargo of salt over Midwest's authorized route from points in Ohio to points in Pennsylvania. The shipments were arranged by Midwest with the shippers of the salt. In our opinion, the transportation of the salt in the truck was "exclusively" Midwest's "business". Since Midwest was a carrier certificated by the I.C.C. to transport cargo interstate, that transportation was its exclusive business. In this instance, Grimm's business was leasing a truck and driver to Midwest; his business did not extend to transporting cargo interstate. Grimm, not having an I.C.C. permit, could not legally have undertaken that type of transportation business. As found by the jury, Dunlap, the driver on the fatal trip, was engaged in the work of operating the leased truck for Midwest, as well as the work of operating the truck for Grimm, but we think Dunlap was driving "exclusively in the business" of Midwest within the meaning of Security's policy.
On the contrary, since Midwest's status as a certificated carrier made it liable as a matter of law for the negligence of a driver of a commercially leased truck operated under Midwest's I.C.C. certificate,
in our opinion it was definitely intended that Security's policy, of necessity, would provide coverage for Midwest in this situation. See: 49 U.S.C.A. § 315; 49 C.F.R. § 174.1.
In addition, if an ambiguity exists in the language of the phrase "exclusively in the business of the named insured", we think, in accord with the accepted rule of construction, that the language should be construed strictly against the insurer and in favor of providing coverage for Security's named insured, the certificated carrier, Midwest.
We conclude, then, that since the accident occurred while the truck was on the exclusive business of Midwest, the driver Dunlap and the lessor Grimm are "insureds" under "1. Definition of Insured. (a)(1)" of ...