Editor’s Note: At the end of this classic case, there is a very interesting statement about insurance policies and contracts of adhesion. It truly demonstrates how judicial opinion can sometimes change quickly.

Issue: Larry Enderlin owned a stud bull. Enderlin and Rolland Adkisson orally agreed that the latter would transport Enderlin’s bull to Adkisson’s herd of cows. The parties agreed that Enderlin would have the option of buying any calves born to the cows at market price.

On October 13, 1980, Adkisson called Enderlin, who was not available. Adkisson then talked to Enderlin’s son and informed him that the bull was needed again for three of the cows. Adkisson agreed to pick up the bull and take it to his farm.

The evidence showed that Adkisson drove his truck to the Enderlin farm. There he secured Enderlin’s livestock trailer to his truck. Adkisson and his son, together with Enderlin’s son, loaded the bull onto the trailer. Adkisson closed the trailer door, but admitted that neither he nor his son secured the latch on the door.

The Adkissons started home. After about a fourth of a mile, Adkisson felt the trailer jerk. He looked back and saw the bull lying in the road. The bull, which had fallen from the trailer through the unlatched door, died later.

Enderlin filed suit against Adkisson and recovered a judgment for $14,000. Both Enderlin and Adkisson had insurance policies, but the lower court found that each policy excluded such a loss. Enderlin appealed.

Judgment: Adkisson’s general farm liability policy excluded coverage form "Property damage to…property occupied or used by the insured or rented to or in the care, custody, or control of the insured or as to which the insured is for any purpose exercising physical control."

The court noted that there is a two-part test to determine whether liability is excluded under such clauses:

1) The property must be within the possessory control of the insured at the time of the loss.

2) The property must be a necessary element of the work performed. In this case, the lower court found that liability was excluded, and the higher court agreed.

Enderlin argued that the negligent act and the damage were separated in this instance. He said the negligence was the failure to latch the trailer door. Enderlin felt that this preceded and was separate from the damage, which was the fall and subsequent death of the bull.

The court said that the bull came into the possession and "in the care, custody and control" of Adkisson at the time he closed the trailer door.

Enderlin further argued that Adkisson , as a prudent business man, had secured a farm liability policy, and that he himself, in a like show of prudence, had secured an automobile liability policy. He said each of them took all possible precautions to protect themselves against losses, and yet the insurance carriers were relying on fine print in the contracts to escape liability.

Enderlin further contended that the concept of adhesion contracts in relation to reasonable expectations should be applied here. The court disagreed, stating it knew of no decision that held an insurance contract to be one of adhesion. In fact, quite the opposite was true. It pointed out that the courts have consistently ruled that insurance contracts were to be interpreted as any other ordinary contract.

The judgment of the lower court in favor of the insurance companies was affirmed.

Insurance Company of North America v. Enderlin et al: Pekin Insurance Company, Third Party Defendant-Appellee-No. 3-83-0223-Appellate Court of Illinois , Third District-January 17, 1984-459 North Eastern Report (2d) 310. (Rough Notes Magazine August, 1984).