Hallett v. St. Paul Fire & Marine Insurance

Ringold, J.*

(dissenting) — I respectfully dissent from the majority. The majority misperceives the issue by stating, "The principal issue in this appeal is whether the St. Paul policy provides coverage for Willhite's individual liability." Willhite's tortious conduct is not in issue, but the question before us is whether the accident occurred while Willhite was furthering the affairs of the partnership.

Partnership Liability

A partnership is considered an aggregate of the partners rather than a separate legal entity, Vasey v. Snohomish Cy., 44 Wn. App. 83, 91, 721 P.2d 524 (1986) (quoting with approval Bortle v. Osborne, 155 Wash. 585, 285 P. 425, 67 A.L.R. 1152 (1930)), at least with respect to relations with third parties. Cf. State v. Birch, 36 Wn. App. 405, 675 P.2d 246 (1984) (partnership is separate entity with respect to some aspects of a partner's rights in partnership property). The partnership is liable to thé same extent as a partner for his or her wrongful acts while acting in the ordinary course of the partnership's business, RCW 25.04.130, such as a partner's negligent operation of a car while conducting *575business of the partnership. Melosevich v. Cichy, 30 Wn.2d 702, 193 P.2d 342 (1948). All partners are jointly and severally liable for tort claims against the partnership. RCW 25.04.150.

The insurance agreement at issue here is an addendum to the policy and is headed, "Liability Protection for Autos You Don't Own." The pertinent paragraphs of the agreement provide:

What autos are covered
The types of autos covered under this agreement are indicated on your Introduction page or by an "X" in the appropriate box or boxes below. These autos are considered "covered autos" for this agreement.
/x/ Hired autos only. We'll cover autos you lease, hire, rent or borrow. . . .
/x/ Non-owned autos only. We'll cover autos you don't own, lease, hire or borrow which are used in connection with your business. This includes autos owned by your employees or members of their households but only while used in your business or your personal affairs.
/x/ Optional partnership coverage. We'll protect your partnership against liability claims that result when any of your partners uses an auto owned by the partner or by a member of his or her household for your business. We'll also protect the remaining partners against liability claims, but we won't protect the owner of the auto.
What this agreement covers
This agreement provides excess insurance for any covered auto. Excess insurance applies after primary coverage has been used up.
We'll pay damages you're legally responsible for because of bodily injury or property damage caused by an accident involving the use of a covered auto. Bodily injuries include sickness, disease and death. Property damage includes loss or use of tangible property.
Who's protected under this agreement
1. You're protected under all circumstances covered by this agreement.
*5762. When "hired autos" are covered under this agreement, anyone else is protected while using a hired auto with your permission, except:
The owner of the hired auto.
Anyone working in a business of selling, servicing, repairing or parking autos.
3. Anyone responsible for the actions of a protected person is also protected to the extent he or she is responsible. But the owner of a covered auto is not protected.

The introductory portion of the policy names the firm, "Sax & Maclver," as the insured. Since the firm is not a legal entity separate from the partners, in order to give the policy meaning we must read it as insuring each partner as well while engaged in partnership business. Willhite hence is insured while acting within the scope of the partnership. His leased car was covered under the paragraph stating: "We'll cover autos you [i.e., the insured] lease, hire, rent or borrow."

The agreement extends coverage to cars not owned by the partners. The majority argues that it contains two exclusions that act to deny coverage to Willhite. An exclusion in subparagraph 2 states that the owner of a hired car is not covered. Willhite's car was leased, and Hallett does not argue that its owner was covered. Subparagraph 3 states that "the owner of a covered auto is not protected." Since the agreement encompasses only autos that the partners do not own, this language again excludes only non-partners from coverage.2

The majority relies on a part of a paragraph titled "Optional partnership coverage" to bolster its decision. The paragraph, quoted above, states that "we won't protect the owner of the auto." The partners purchased coverage under this paragraph with an additional premium. Yet the *577majority would read this to limit coverage rather than enlarge it. It is unreasonable to interpret a provision, one for which the partners paid an additional premium, in a manner that diminishes their benefits. The correct interpretation of the paragraph is that since it is part of the agreement that extends coverage to cars not owned by the insured, the paragraph excludes only car owners who are not partners, or employees not engaged in the business of Sax & Maclver. Under the majority's view, as I understand it, if the operator of the car had been an employee, operating his own or a leased car on partnership business, the paragraph would apply to protect the partners. There is no rationale whereby the operation of the car by a partner should be treated differently.

Failure To State Claim

The majority also claims that Hallett failed to assert that the partnership was liable. Hallett's amended complaint names the firm of Sax & Maclver and each partner individually as defendants. Furthermore, as noted by the majority, paragraph 14 of the amended complaint asserts that the firm and the defendant partners are legally responsible for Willhite's tort. Under CR 54(c), a final judgment shall grant whatever relief the prevailing party is entitled to, even if the party had not requested such relief in its pleadings. Daves v. Nastos, 105 Wn.2d 24, 27-28, 711 P.2d 314 (1985). CR 54(c) applies to summary judgments. Draper Mach. Works, Inc. v. Hagberg, 34 Wn. App. 483, 488-89, 663 P.2d 141 (1983). Furthermore, CR 8(f) requires: "All pleadings shall be so construed as to do substantial justice." Hallett's amended complaint is sufficient to state a cause of action against the firm, regardless of any perceived shortcoming in the complaint's prayer for relief.

The trial court erred in granting St. Paul's motion for summary judgment on the grounds that there were no material issues of fact of whether Willhite was covered *578under the policy and whether the firm was liable for the tortious conduct. I would reverse and remand for trial.

Reconsideration denied March 31, 1988.

Review denied by Supreme Court July 5, 1988.

Judge Solie M. Ringold is serving as a judge pro tempore of the Court of Appeals pursuant to CAR 26.

In its discussion the majority begs the question of whether the policy covers individual partners when it paraphrases the latter exclusion as reading that "the owner of a covered auto, if someone other than Sax & Maclver, is not protected."