Summary
In North Amer. Iron Steel Co. v. Isaacson Steel Erectors (36 A.D.2d 770, affd 30 N.Y.2d 640), this court was asked to construe a clause which excluded coverage for damage to "property in the care, custody or control of the Insured * * * or property as to which the insured for any purpose is exercising physical control".
Summary of this case from Dubay v. Trans-Amer Ins. Co.Opinion
March 29, 1971
In an action to recover damages for property injuries, in which the causes in plaintiff's complaint were settled, the third-party defendants appeal from so much of a judgment of the Supreme Court, Kings County, dated June 24, 1970 and made after a nonjury trial of the third- and fourth-party complaints, as is in favor of the third-party plaintiff against the third-party defendants. Judgment reversed insofar as appealed from, on the law and the facts, with costs, and third-party complaint dismissed. The specific question before this court is the validity of the third-party complaint, in which the defendant and third-party plaintiff ("Isaacson") sought to hold the third-party defendant insurers ("insurers") for their failure to defend the main action. The vital issue is whether a certain exclusionary clause in the comprehensive liability policy issued by the insurers to Isaacson in connection with the latter's work in the construction of the New Jersey Pavilion of the 1964-1965 World's Fair in Flushing, New York City, is applicable. The clause in question, under its pertinent provision, excluded coverage for injury to or destruction of "property in the care, custody or control of the Insured [Isaacson] or property as to which the insured for any purpose is exercising physical control" (italics supplied). We find the language of the exclusionary clause to be unambiguous. There is no basis for holding the insurers liable on the theory that, since they were responsible for the wording of the policy, any ambiguity should be resolved against them. On the contrary, the record shows that Isaacson was fully aware of the intent and meaning of the exclusion and specifically took steps to protect itself against the liability excluded, i.e., purchased a separate policy from the fourth-party defendant, Reliance Insurance Company. The incident which prompted this litigation occurred on September 5, 1963, when a portion of the steel structure being constructed by Isaacson at the fairgrounds collapsed. The State of New Jersey had engaged the North American Iron and Steel Co. ("North American") as one of the several prime contractors in the construction of its Tercentenary Pavilion. North American was to furnish and erect certain steel structures. It subcontracted the steel erection to Isaacson and he was to work with steel provided and delivered to the site by North American. The site was an open area of approximately 200 by 300 feet. The basic design of the Pavilion called for the erection of clusters in the four corners of the site. Each cluster was to consist of three steel booms, approximately 80 feet in length, weighing about four tons, rising vertically and angling away from each other. The booms were to be set on a common swivel base anchored in the ground by concrete foundations and the booms were to be connected to each other near their tops by tie cables. From the top of each boom, pendent cables were to be dropped and affixed by clevises to approximately 25 roof canopies which, in turn, were to be connected to steel rectangular housing frames set into concrete pedestals in the ground. First, Isaacson installed the four boom clusters, interconnected them and dropped the pendent cables. To hold the clusters somewhat in place, guy wires were tied to the top of each boom and anchored at ground level to platform pedestals. Isaacson then assembled several roof frames, connected them to appropriate pendent cables and set them down on temporary scaffolding next to assigned concrete pedestals. On September 5, 1963, while the entire Isaacson crew was engaged in setting one roof frame on the scaffolding, three of the four boom clusters collapsed. It is not clear from the record exactly what caused the clusters to collapse. There is some indication that the roof frame in question was connected by wire to the cluster designated as cluster No. 1. That cluster was the first of the three to topple. We conclude, however, that the cause of the accident is of secondary importance. The prime issue is whether Isaacson had "care, custody or control" or "for any purpose" was "exercising physical control" over the booms when they collapsed. If so, coverage under its policy with the appellant insurers was excluded. We believe the answer is that Isaacson was exercising physical control and that the trial court's finding that these insurers failed to sustain their burden of proof on this point is contrary to the weight of the evidence. The trial court placed emphasis on the fact that it considered the steel work as real property and stated that "the view of the New York courts is that the exclusion clause `will not be construed to relieve the insurance carrier where the subject matter involves real property as opposed to personal property'" (quoting from Klapper v. Hanover Ins. Co., 39 Misc.2d 215, 216). We do not believe the issue of realty as opposed to personalty is dispositive and do not affirm the finding on that issue, although some of us are of the view that the fact that the entire structure, when completed, was such that it could be removed at the conclusion of the Fair and that the site was eventually to be restored to its original condition is an indication that the New Jersey Pavilion was never intended to become a part of the real estate owned by the City of New York. The facts which we consider supportive of our view that Isaacson was exercising "physical control" are the following: the steel erection work by Isaacson was in process and was far from complete; the clusters were such that they would be adjusted to connect with each other as they were completed; and the Isaacson men were actively physically engaged at the site and apparently in sole control when the collapse occurred. In summary, we believe that the policy, considered as a whole, clearly indicates that the phrase excluding coverage for loss of any property "as to which the Insured for any purpose is exercising physical control" (emphasis added) was clearly intended to negate liability on the part of the insurers under the fact pattern here; that a "reasonable man reading the policy would draw no other conclusion" ( Lionel Freedman, Inc. v. Glens Falls Ins. Co., 27 N.Y.2d 364, 368); and that the insured was of the same opinion when it obtained insurance from the Reliance Insurance Company to cover the very factual situation here present, i.e., "physical control", which was excluded from the policy of the third-party defendants. Munder, Acting P.J., Martuscello, Latham and Shapiro, JJ., concur; Benjamin, J., dissents and votes to affirm the judgment insofar as appealed from.