No. 12491
I N THE SUPREME COURT O THE STATE O MONTANA F F
— 1973 —
STONEWALL INSURANCE COMPANY, a corporation,
P l a i n t i f f and A p p e l l a n t ,
JOHN L. WEST, STATE F R M T A AM UU L AUTOMOBILE INSURANCE COMPANY, FREDERICK W. BERGER and RAYMOND EISENZIMER,
Defendants and Respondents.
Appeal from: D i s t r i c t Court of t h e Eighth J u d i c i a l D i s t r i c t , Honorable Paul G . H a t f i e l d , Judge p r e s i d i n g .
Counsel of Record :
For A p p e l l a n t :
Cure and Borer, G r e a t F a l l s , Montana John F. Lynch argued, Great F a l l s , Montana
For Respondents:
D z i v i , Conklin, Johnson and Nybo, Great F a l l s , Montana Dennis McCaff e r t y argued, Great Fa 11s , Montana
Submitted: September 1 0 , 1973
Decided : SEP 2 7 1973 Filed: S P 2 7 1973 E
M r . J u s t i c e Frank I . Haswell d e l i v e r e d t h e Opinion of t h e Court,
T h i s i s a d e c l a r a t o r y judgment a c t i o n t o determine coverage under an automobile l i a b i l i t y i n s u r a n c e p o l i c y brought i n t h e d i s t r i c t c o u r t of Cascade County, b e f o r e t h e Hon. Paul G . Hat- field. The c a s e was submitted on an agreed s t a t e m e n t of f a c t s . The d i s t r i c t c o u r t g r a n t e d summary judgment f o r a l l d e f e n d a n t s , h o l d i n g t h a t t h e p o l i c y provided coverage. P l a i n t i f f appeals from t h a t judgment. The accident- i n q u e s t i o n occurred about one and one-half m i l e s s o u t h of Great F a l l s , Montana, on October 6 , 1968, when a v e h i c l e d r i v e n by defendant John L. West c o l l i d e d headon w i t h a c a r d r i v e n by defendant F r e d e r i c k W. Berger i n which defendant Raymond Eisenzimer was a passenger. k t t h e time of t h e a c c i d e n t defendant West had an automobile l i a b i l i t y i n s u r a n c e p o l i c y w i t h p l a i n t i f f Stonewall I n s u r a n c e Company p r o v i d i n g b o d i l y i n j u r y and p r o p e r t y damage coverage; defendant Berger had an automobile i n s u r a n c e p o l i c y w i t h defendant S t a t e Farm Mutual Automobile I n s u r a n c e Company. Following t h e a c c i d e n t S t a t e Farm p a i d f o r damages s u f f e r e d by Berger and all Eisenzimer ancl/made c l a i m s f o r reimbursement from defendant West. P l a i n t i f f Stonewall d e c l i n e d t o provide coverage f o r defendant West w i t h r e s p e c t t o t h e a c c i d e n t . The v e h i c l e defendant West was d r i v i n g a t t h e time of t h e a c c i d e n t belonged t o Ralph Ward, a l i c e n s e d used c a r d e a l e r , who o p e r a t e d an automobile s a l e s agency and r e p a i r shop. Ward had given defendant West permission t o d r i v e i t on a demonstra- t i o n r i d e w i t h a view toward i n t e r e s t i n g him i n purchasing i t . Defendant West's i n s u r a n c e p o l i c y w i t h p l a i n t i f f Stonewall con- t a i n s t h e f o l l o w i n g coverage e x c l u s i o n :
"c () This insuring agreement does not apply: * "* 9~ (2) to any action arising out of the operation of an automobile sales agen2, re- p.---- - pair shop, service station, storage garage or public parking place". (Emphasis added) . The single issue presented for review is: Does this policy exclusion preclude coverage for the accident in question? Stonewall's contention is that the actual reason the car was being driven by West was for demonstration purposes inci- dent to the sale and purchase of an automobile. Demonstrating automobiles is a function of an automobile sales agency, and therefore within the exclusionary provisions of Stonewall's insuring agreement. Stonewall further contends it is not necessary that the automobile sales agency be that of insured. Stonewall argues that because West was using the automobile for demonstration purposes for the ultimate benefit of Ward, the car salesman and owner, policy reasons dictate that Ward should provide insurance coverage for accidents which arise our of the opera- tion of his automobile sales agency. Stonewall's position is a minority view. State Farm Automobile Insurance Co. v. Sampson, 305 F.Supp. 50, aff'd 428 F.2d 475. Such interpretation, excluding a "test drive" situation, would create a gap in the insured's personal coverage. To permit such an exclusion would be a strained construction of the phrase "operation of an automobile sales agency". The majority rule, limiting the exclusionary clause to situations where the insured was using the non-owned automobile in an automobile business of his own, is the better reasoned rule. Helmich v. Northwestern Mutual Insurance Co., 376 F.2d 420; United States Fidelity & Guaranty Co. v. Dixie Auto Ins. Co., 292 F,Supp. 554, aff'd 403 F.2d 717; Caster v. Motors Insurance Corporation, 28 Ill.App.2d 363, 171 W.E.2d 425. In interpreting policies of insurance the courts resolve uncertainties and ambiguities in the policy against the insurer,
s i n c e i t i s r e s p o n s i b l e f o r t h e language i n t h e c o n t r a c t . S e c t i o n 13-720, R.C.M. 1947; S t . Paul F i r e & Marine I n s . Co. v. Thompson, 150 Mont. 182, 433 P.2d 795; Johnson v. C o n t i n e n t a l Cas.Co., 127 Mont. 281, 263 P.2d 551. Here, a r e a d i n g of t h e excl.usion i n q u e s t i o n p r e s e n t s an u n c e r t a i n t y c r e a t e d by t h e language used when a p p l i e d t o t h e f a c t s i n t h e p r e s e n t c a s e . 11 The e x c l u s i o n a r y p r o v i s i o n i s ambiguous a s t o whose automobile s a l e s agency" t h e p o l i c y p r o v i s i o n s r e f e r . The g e n e r a l r u l e i s t h a t e x c l u s i o n a r y c l a u s e s r e l a t i n g t o t h e b u s i n e s s u s e o f non-owned v e h i c l e s a r e designed t o r e q u i r e an i n s u r e d who u s e s non-owned v e h i c l e s i n f u r t h e r a n c e of h i s b u s i n e s s t o seek a d d i t i o n a l coverage f o r t h e added r i s k s i n c i - d e n t t o such u s e . The p e r t i n e n t i n q u i r y i n i n t e r p r e t i n g a u t o - mobile b u s i n e s s e x c l u s i o n c l a u s e s i n harmony w i t h t h e i r g e n e r a l purpose i s determing t h e r e l a t i o n s h i p , i f any, between t h e i n s u r e d ' s u s e of a non-owned automobile and some b u s i n e s s o r o c c u p a t i o n a l i n t e r e s t of t h e i n s u r e d . 7 Cum.Supp., Appleman- I n s u r a n c e Law and P r a c t i c e - 44455, pp. 510,513 (1972). I n t h e p r e s e n t c a s e t h e i n s u r e d had no b u s i n e s s i n t e r e s t i n t h e p a r t i c u l a r automobile s a l e s agency. The i n s u r e d was merely d r i v i n g a v e h i c l e owned by i t . Such p r o v i s i o n should n o t b e c o n s t r u e d t o c r e a t e an u n a n t i c i p a t e d gap i n t h e i n s u r e d ' s lj-a- b i l i t y coverage by r e q u i r i n g t h e i n s u r e d t o t e s t d r i v e automo- biles a t his peril. W hold t h a t t h e p o l i c y e x c l u s i o n a p p l i e s only where t h e e i n s u r e d o p e r a t e s an automobile s a l e s agency o r t h e o t h e r e n t e r - p r i s e s named i n t h e e x c l u s i o n a r y c l a u s e . The summary judgment of t h e d i s t r i c t c o u r t i s a f f i r m e d .
Justice,.