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Grinnell Mutual Reinsurance Company v. Center Mutual Insurance Company3/26/2003
AFFIRMED IN PART AND REVERSED IN PART.
[ ] Center Mutual Insurance Company ("Center") appealed from a declaratory judgment holding that an automobile insurance policy it issued to Steven R. Haskins provided coverage for injuries suffered by James D. Jones in an accident on Haskins' farm, and ordering Center to indemnify Grinnell Mutual Reinsurance Company ("Grinnell") for a settlement payment made by Grinnell to Jones and for a guaranty of payment made by Grinnell to the United States on Haskins' behalf. We conclude the trial court did not err in ruling Center's automobile insurance policy provided coverage for the accident, but did err in ruling the Grinnell policy did not provide coverage and in ordering Center to fully indemnify Grinnell with interest for the settlement. We also conclude the trial court erred in ordering Center to indemnify Grinnell with interest on its guaranty to the United States. We affirm in part and reverse in part.
I.
[ ] During 1990, Haskins owned a farm near Deering. On April 22, 1990, Haskins' friend, Jones, who served in the United States Air Force, was driving in the area and stopped at Haskins' farmstead. Jones spoke with Haskins' wife, who told him she was supposed to help Haskins move an inoperable John Deere tractor the family stored in a field. Jones offered to help Haskins instead. After finding Haskins, Jones "asked him if he needed help moving the tractor and he said yes." They drove in Haskins' 1970 Chevrolet pickup to the field where the tractor was located.
[ ] Haskins took from the pickup toolbox a "light nylon rope" with a hook on one end and a braided loop on the other to hook up and tow the disabled tractor. Haskins wrapped the hooked end of the rope around the tractor axle, hooked the braided loop to the bumper hitch on the back of the pickup, and stuck a pin through the loop and through the bumper hitch. The tractor gear was placed in neutral and Jones steered the tractor while Haskins towed it with the pickup. While Haskins was towing the tractor with the pickup, he accelerated to take some slack out of the rope; the rope stretched, "the pin snapped out," and the rope snapped back striking Jones in the arm, severely injuring him. The trial court found: "The accident was caused by the fact there was no cauter pin inserted into the hole." Neither Center nor Grinnell disputed this finding on appeal. Jones was taken to the hospital at the Minot Air Force Base where he was hospitalized for 45 days and underwent seven surgeries on his arm.
[ ] At the time of the accident, Haskins' pickup truck was covered by an automobile insurance policy issued by Center. Haskins also had a farm insurance policy issued by Grinnell, covering his farming operation. Haskins first notified Grinnell about the accident and notified Center after the United States requested the insurance policy number for the pickup truck. Center and Grinnell each concluded its policy did not provide coverage for the accident. After Center refused to contribute with Grinnell to a settlement of Jones's claim against Haskins, Grinnell paid Jones $25,000 and obtained a signed release from him on May 22, 1991. The United States also submitted to Center and Grinnell a $17,684 bill for medical services provided for Jones. Both companies refused to pay, and on April 20, 1993, the United States sued Haskins, Center, and Grinnell in federal district court to recover Jones's hospital and medical expenses under the Medical Care Recovery Act, 42 U.S.C. ยง 2651 et seq. After Center refused to participate with Grinnell in a settlement with the United States, Grinnell, in a June 10, 1993, letter to the United States, "guarantee that the air force lien will be pai
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