Kuckenberg

This is an appeal by an insured contractor from a judgment for the insurer disallowing a claim as beyond the coverage of a policy which insured against liability for damage “caused by accident.”

Diversity'of citizenship is the basis of federal jurisdiction. The insurance contract was executed in Oregon to protect the contractor from liability for damage incidental to his operations. It follows and is not disputed that Oregon law determines the critical question whether a policy which in terms insures against liability for property damage “caused by accident” is properly construed to insure against the harm which occurred in this case.

The contractor had been engaged by the United States to construct a highway along a mountainside on a course from 20 to 600 feet above and roughly paralleling a railroad line of the Southern Pacific Company. The road building required extensive blasting of the rocky slope as well as the removing of trees, boulders and masses of rubble. From time to time the blasting and clearing caused large quantities of this heavy material to fall upon the railroad right of way damaging the track and the roadbed.

Part of this damage is the subject matter of the…