The opinion of the court was delivered by: MCCURN
MEMORANDUM-DECISION AND ORDER
This action arose from an accident which occurred in Albany, New York on December 22, 1981, when a truck driven by Albert J. Molchan struck a Niagara Mohawk Power Corporation building, causing an explosion within the building which injured the plaintiff. The truck, owned by Utility Equipment Leasing Corp., had been leased to Gallagher Equipment Leasing Co., Inc., which in turn had leased it to Niagara Mohawk Power Corporation. Gallagher retained Reuben-Siegfried Chauffeurs, Inc., to retrieve the truck from Niagara Mohawk's premises, and Molchan, an agent of Reuben-Siegfried, was in the process of retrieving the truck when the accident occurred. Suit was commenced on January 26, 1982 by Bessie McClaney, individually and as guardian ad litem of Grady M. McClaney, the injured party. Federal jurisdiction is based upon diversity of citizenship.
On February 22, 1983, this Court entertained three summary judgment motions which raised the same question: whether an insurance policy issued by fourth-party defendant New Hampshire Insurance Company, Inc., to defendant Gallagher Equipment Company, Inc., covers Gallagher's liability in this lawsuit. At the close of oral argument the Court granted the motions by Gallagher and Snyder Moore Agencies, Inc., et al., for summary judgment, declaring that the New Hampshire policy offered coverage to Gallagher here; and denied the motion by New Hampshire Insurance Company, Inc., for summary judgment for contra relief. This Memorandum constitutes the Court's decision and order herein.
Gallagher Equipment Company, Inc., applied for the policy, through the Snyder Moore Agencies, Inc., in 1980. The original application described Gallagher's operations as "Sales and Service Hydraulic Equipment". The policy issued was a "Garage Liability Policy" providing coverage in the amount of $100,000/person; $300,000/occurrence. The period of coverage was from February 1980 through February 1981.
Upon expiration, Gallagher obtained a renewal policy, which differed slightly in language from the previous policy, and which provided the same dollar coverage for February 1981 through February 1982. This policy, which was in effect at the time of the accident, states in Part IV A 1:
We (New Hampshire Insurance Company) will pay all sums the insured legally must pay as damages because of bodily injury or property damage to which this insurance applies caused by an accident and resulting from garage operations.
Part I F. of that policy defines "garage operations" as follows:
"Garage Operations" means the ownership, maintenance or use of the locations stated in the declarations and that portion of the roads or other accesses that adjoin these locations for garage business. Garage operations includes the ownership, maintenance or use of the autos indicated in Part II as covered autos. Garage operations also include all operations necessary or incidental to a garage business.
The parties agree that, under Part II of the insurance policy, Gallagher's coverage extended to "any auto" (as opposed to only autos owned by the insured); and includes the vehicle involved in this accident.
The policy also contains the following exclusions, which are relied upon by the insurer in disclaiming coverage:
C. WE WILL NOT COVER -- EXCLUSIONS This insurance does ...