Martin v. Ohio Casualty Insurance

T. Gr. Kavanagh, J. Defendant, Ohio Casualty Insurance Company, issued an aircraft liability insurance policy to the Finney Aviation company providing insurance coverage for property damage arising out of use of the insured aircraft. Plaintiffs rented a plane from Finney Aviation and while they were operating the plane, i.e., taxiing down a runway, it hit a curb, nosed over and was damaged. Pursuant to the insurance policy defendant paid Finney Aviation $2,179 for damages to the plane. The defendant insurance company, as subrogee of Finney, sued plaintiffs, Martin and Deneen, for $2,179, on the theory that plaintiffs were liable for. damages to the plane caused by them. The insurance policy issued to Finney Aviation' provided that defendant insurance company would defend any suit against the insured alleging injury to or destruction of property caused by accident and arising out of the ownership, maintenance or use of the aircraft and would pay all expenses of such defense. Plaintiffs, claiming that they were insured by definition under the policy, timely de *600 manded that Ohio Casualty assume defense of that suit and pay the expenses thereof. The insurance company refused so to do. Martin and Deneen retained counsel at their own expense and judgment of no cause of action was entered in their favor on the ground that they had not been negligent in the operation of the plane. Having successfully defended that action, plaintiffs commenced this action againt defendant for expenses incurred, in defending the prior suit. The lower court held that plaintiffs were insured under the policy and accordingly judgment in their favor was entered in the amount of $1,256 plus costs and attorney fees. Defendant appealed. The sole issue before us is whether the lower court was correct in its ruling that plaintiffs were insured under the policy or whether, as defendant claims, plaintiffs are not covered under the policy because they were operating the plane under a rental agreement. Two provisions of the insurance policy are pertinent to the question before us. Paragraph III of the “Insuring Agreements” defines “Insured” as follows: “The unqualified word ‘Insured’ wherever used in this policy with respects to coverages A, B, C, and D, includes not only the named insured but also any person while using or riding in the aircraft and any person or organization legally responsible for its use, provided the actual use is with the permission of the named insured. “The provisions of this paragraph do not apply: * * * “(d) to any person operating the aircraft under the terms of any rental agreement or training program which provides any remuneration to the named insured for the use of said aircraft.” *601 Item 6 of the “Declarations” provides: “The aircraft will be used only for the purposes indicated by ‘X’: * * * “3(e) ‘Commercial’. The term ‘Commercial’ is defined as including all the uses permitted under (c) and (d) above.” Item 6 (c) referred to in the above-quoted clause permits rental of aircraft to pilots. The question before us is one of first impression in Michigan, and while cases involving such clauses as these in aircraft insurance policies are not numerous, there is a sufficient number from which to glean some general rules of construction. See Petro v. Ohio Casualty Ins. Co. (1950, SD Calif), 95 F Supp 59; Fireman’s Fund Insurance Company v. McDaniel (1960, ND Miss), 187 F Supp 614; Wzontek v. Zurich Insurance Company (1965), 418 Pa 30 (208 A2d 861); Roberts v. Underwriters at Lloyds London (1961, SD Idaho), 195 F Supp 168; Continental Casualty Company v. Warren (1953), 152 Tex 164 (254 SW2d 762). The policy is to be considered as a whole and should be construed liberally in favor of the insured. This is in line with the Michigan rule as to construction of insurance policies generally. See Allor v. Dubay (1947), 317 Mich 281. Where the policy contains both typewritten and printed provisions, the latter must yield to the former because of the rule that typed provisions are deemed special conditions modifying the printed portions. It was this latter rule that the trial court invoked, and properly so, in ruling that item 6 of the “declarations” modified the definition of “insured” and extended coverage to a renter pilot. An “X” was typed into the box in front of subsection (e) of item 6, and this is the provision that authorized the use of the insured aircraft for rental to pilots. We hold that the court correctly ruled that *602 this provision modified the definition of “insured” and extended coverage to plaintiffs. “To hold otherwise would be to permit the * * * insurance company to ‘blow hot and cold’ in one breath, or, to give coverage in one part of the policy and take it away in another.” Fireman’s Fund Insurance Company v. McDaniel, supra, at page 618. The only reasonable construction of this policy is that the purpose of item 6 is to indicate the extent of the authorized use' of the aircraft and that protection is afforded for damages arising out of such authorized use. Since plaintiffs were insured under the policy defendant was obliged to pay the expenses of litigation incurred by plaintiffs, and plaintiffs were properly permitted to recover such expenses. Affirmed, costs to appellees. Lesinski, C. J., and J. H. Gillis, J., concurred.