Opinion
No. 5092.
Argued January 2, 1963.
Decided February 21, 1963.
1. Where the defendant contractor by the terms of his contract with the plaintiff owner of a building partially destroyed by fire agreed to remove all debris leaving the walls intact and furnished liability insurance to save the owner harmless from liability to any person or property the evidence warranted the finding that the walls damaged by the contractor in the process of removal of the debris remained in the control of the owner and were considered incidental and separate from the contract operation and hence the policy exclusion to destruction of property "in the care, custody or control" of the contractor was inapplicable.
2. Generally, where property damaged is merely incidental to property upon which work is being performed by insured, property damaged is not in "control" of insured within exclusion clause by contractor's liability policy.
Petition for declaratory judgment by the insurer to determine whether it has any obligation under its manufacturers' and contractors' liability insurance policy to defend an action by the defendant Gladstone (owner) against the defendant Kamieniecki, a contractor to whom the policy was issued. The policy excluded injury to or destruction of property "in the care, custody or control of the insured or property as to which the insured for any purpose is exercising physical control. . . ."
The owner entered into a contract with the contractor to remove debris from the owner's premises which had been destroyed by fire. The contract required the contractor to furnish suitable liability insurance to save the owner harmless from "all liability to any person or property" which might be sustained, and provided that any salvage from merchandise or fixtures in the building should be disposed of by the contractor under the supervision and inspection of the owner. The contract also contained the following provision: "It is distinctly understood and agreed that the walls are to be left intact."
During the course of the contractor's work in removing the debris from the building a small remaining portion of the roof fell, causing damage to the walls. There was evidence that the owner, by her husband as agent, visited the removal operation at least once a day and sometimes more frequently, "to see that everything was kept in order and the fulfillment of the contract as far as the disposition of the salvage was concerned." There was also evidence that the owner's agent made visits during the removal operation "for the purpose of seeing whether the walls were being maintained in the proper manner." The contractor testified that he proceeded with his contract without instructions from the owner's agent except as to the removal of salvable material.
After hearing, the Court entered the following decree: "The Court finds that on the date the portion of the wall collapsed resulting in the civil action being instituted the said Steven Kamieniecki was not exercising physical control of the property involved and said property was not in the care, custody or control of said Steven Kamieniecki. The plaintiff is required to defend the action brought by Gertrude Gladstone and to answer within its policy limits to any judgment obtained in said action." The plaintiff's exception to the denial of its motion to set aside the decree was reserved and transferred by Leahy, C. J.
Sweeney Welts (Mr. Robert B. Welts orally), for the plaintiff.
Leonard Leonard (Mr. Richard W. Leonard orally), for the defendant Kamieniecki.
Morris D. Stein for the defendant Gladstone, furnished no brief.
It is probably an understatement to say that the courts have not been harmonious in applying the care, custody and control exclusion clause in liability insurance policies. 2 Richards, Insurance (5th ed.) s. 301A (1962 supp); Annot. 62 A.L.R. 2d 1242. "The courts have been more reluctant to apply the care, custody and control exclusion to realty than to chattels. Where, for instance, the insured has contracted to and is actually in the process of erecting a structure at the time of damage to that structure, then the exclusion is applicable. If, however, the contract is to make alterations or repairs, then the specific item under the contract to be repaired or altered is excluded, but not the whole building and surrounding area where the work is being done. For example, a window washer does not have the building where the windows are being washed under his care, custody and control. This rule of construction generally conforms to the intention of the underwriters who promulgated it." Ramsey, The Care, Custody, Control Exclusion of Liability Insurance Policies, 25 Insurance Counsel J. 288, 294 (1958).
In Sanco Co. v. Employers c. Ins. Co., 102 N.H. 253, it was held that the care, custody and control of the insured included possessory control as well as proprietary control and that damage to an elevator by an insured's employees was within the exclusion clause of the policy. See also, Hardware Mut. Cas. Co. v. Mason-, Moore-Tracy Co., 194 F.2d 173 (2d Cir. 1952). In the present case it is clear that the contractor had complete control over the removing of the debris from the building which had been destroyed by fire. The crucial question is whether the control of the contractor extended to the walls within the meaning of the exclusion clause of the policy. While the evidence in this case was not extensive on this issue, we think the Court was justified in finding that control of the walls remained in the owner and any work that needed to be done by the contractor in connection with the walls was incidental to his contract job of removing the debris. 7A Appleman, Insurance, s. 4493.4 (1962); Meiser v. Aetna Casualty Surety Co., 8 Wis.2d 233; Cohen v. Keystone Mut. Casualty Co., 151 Pa. Super. 211. The Court in making this finding and in its decree followed the general rule that where the property damaged is merely incidental to the property upon which the work is being performed by the insured, the property damaged is not in the control of the insured within the meaning of the exclusion clause in the contractor's liability insurance policy. Thomas W. Hooley Sons v. Zurich General Acci. Liability Ins. Co., 235 La. 289; A. T. Morris Co. v. Lumber Mut. Casualty Ins. Co., 163 Misc. 715, 298 N.Y.S. 227; Mayronne Mud Chemical Corp. v. T-W Drilling Co., 168 F. Supp. 800 (aff'd 272 F.2d 710 (5th Cir. 1959).
The conduct of the operations by the contractor, the nature of the work, the agreement between the owner and the contractor, and the owner's activities thereunder all point to the crucial factor that the walls of the building were considered incidental and separate from the contract operation and therefore were not within the exclusion clause of the liability insurance policy. See Cooke, Care, Custody or Control Exclusions, Insurance Law J. 7, 11 (Jan. 1959); Gowan, Provisions of Automobile and Liability Insurance Contracts, 30 Insurance Counsel J. 96, 103-4 (1963). Accordingly, the findings and decree of the Superior Court are affirmed. 7A Appleman, Insurance, s. 4493.4 (1962); 6 Couch, Insurance, s. 1274-1 (1962 supp.).
Exceptions overruled.
All concurred.