In Peterson v. Sinclair Refining Co., 20 Wis. 2d 576, 123 N.W.2d 479 (Wis. 1963), property damage arose after a delivery of the wrong type of liquid product. The Petersons ordered fuel oil and gasoline from Sinclair.
The Sinclair delivery truck had four separate compartments, two containing fuel oil and two containing gasoline.
The delivery person pumped the gasoline into a gasoline tank on the Peterson property. He then moved his truck and prepared to pump the fuel oil into an oil tank in the Petersons' basement.
He erroneously attached the fuel oil hose to the wrong compartment in his truck, however, and pumped gasoline into the oil tank.
When the delivery person went into the Petersons' basement to determine if the tank was full, he realized his mistake. He tried to "ladle the gasoline out of the storage tank . . . with a bucket" and pour it back into the gasoline compartment of his truck. Id. at 481.
He then drained the rest of the gasoline into a sewer in the basement using a small hose. After he had removed most of the gasoline, he prepared to pump fuel oil into the oil tank.
Around this time, an explosion occurred, damaging the Peterson home and causing personal injury to Mr. Peterson and the delivery person.
Sinclair's automobile liability policy insured the delivery truck and contained the following relevant exclusion:
It is agreed that the insurance afforded by the policy for bodily injury liability and for property damage liability does not apply to accidents arising out of the delivery of any liquid product into a wrong receptacle or the erroneous delivery of one liquid product for another, if the accident occurs after such operations have been completed or abandoned at the place of occurrence thereof. Such operations shall not be deemed incomplete because improperly or defectively performed or because further operations may be required pursuant to a service or maintenance agreement. Id. at 486.
The insurer argued that the phrase "such operations" in the exclusion referred to the mis-delivery of one liquid product for another.
Thus, it maintained that, because the explosion had occurred after the delivery person had ceased mis-delivering the gasoline and was beginning to properly deliver the fuel oil, the mis-delivery was "completed" and the exclusion applied.
The court rejected this argument, concluding that the phrase "such operations" more reasonably encompassed "the total process of attempting to deliver petroleum products into their proper containers." Id. at 486-87.
The court further reasoned that the phrase "abandonment and completion of 'such operations'" meant "a state of affairs where the driver of the truck physically leaves the unloading area, after erroneous delivery, thus creating a situation in which an intervening instrumentality, not insured by the driver's insurer, may provide a causal link in the chain leading to the accident." Id. at 487.
Because the delivery person still was on-site and in the process of attempting to correct the mis-delivery of the gasoline at the time the explosion occurred, the operations were not complete and had not been abandoned.
Thus, the exclusion was inapplicable.