Barnette v. Hartford Insurance Group

ROONEY, Justice,

dissenting.

I dissent. I part company with the majority of the court (1) in its contention that the trial court erred in holding that appel*1384lant was not an “insured” under the insurance contract, and (2) in its resulting effort to apply law relative to a “cross employee exclusionary” clause to this case.

STANDARD

■Following is the standard by which we examine contracts on appeal:

“Our basic purpose in construing or interpreting a contract is to determine the intention and understanding of the parties. [Citations.] If the contract is in writing and the language is clear and unambiguous, the intention is to be secured from the words of the contract. [Citations.] And the contract as a whole should be considered, with each part being read in light of all other parts. [Citations.] The interpretation and construction is done by the court as a matter of law. [Citations.]
“If the contract is ambiguous, resort may be had to extrinsic evidence. [Citations.] An ambiguous contract ‘is an agreement which is obscure in its meaning, because of indefiniteness of expression, or because a double meaning is present.’ [Citation.] Ambiguity justifying extraneous evidence is not generated by the subsequent disagreement, of the parties concerning its meaning. [Citation.]” Amoco Production Company v. Stauffer Chemical Company of Wyoming, Wyo., 612 P.2d 463, 465 (1980).
“It is one thing to interpret a contract or to discern the contractual intent of the parties pursuant to established legal rules, but it is another thing to make a contract for the parties. We are obliged to do the former, and we are prohibited from doing the latter.
“ ‘Courts may not rewrite contracts under the guise of interpretation. * * *’ Quin Blair Enterprises, Inc. v. Julien Construction Company, supra, 597 P.2d at 951 (1979).” McCartney v. Malm, Wyo., 627 P.2d 1014, 1020 (1981).

THE CONTRACT

The language of the contract is plain. It affords insurance pursuant to “the Coverage Parts forming a part hereof.” One of the definitions set out in it is:

“ ‘insured’ means any person or organization qualifying as an insured in the ‘Persons Insured’ provision of the applicable insurance coverage. The insurance afforded applies separately to each insured against whom claim is made or suit is brought, except with respect to the limits of the company’s liability.” (Emphasis added.)

The majority places emphasis on the last sentence of this definition and refers to it as a “severability of interest” clause. I can accept it as such clause although the usual wording of a severability of interest clause:

“generally states that the term ‘the assured’ is used severally and not collectively, but that the inclusion of more than one assured shall not operate to increase the limits of the insurer’s liability.” Annotation: Validity, construction, and application of provision in automobile liability policy excluding from coverage injury or death of employee of insured, 48 A.L. R.3d 13, § 29, p. 96.

However, the last sentence of the definition of “insured” in the contract is applicable only if the insured is identified under the first sentence thereof. In other words, the person must first qualify under the “persons insured” provision of the applicable “coverage part” before the “severability of interest” clause comes into play. Among the “coverage part” of the contract are two of pertinency: Comprehensive General Liability Insurance part and Comprehensive Automobile Liability Insurance part. The Comprehensive General Liability Insurance part is of interest only insofar as the language therein fortifies the different language contained in the Comprehensive Automobile Liability Insurance part — to be noted specifically later.

Pertinent portions of. the “Persons Insured” provision of the Comprehensive Automobile Liability Insurance part are as follows:

“II. PERSONS INSURED
“Each of the following is an insured under this insurance to the extent set forth below:
“(a) the named insured;
*1385“(b) any partner or executive officer thereof, * * *;
“(c) any other person while using an owned automobile or a hired automobile with the permission of the named insured, provided his actual operation or (if he is not operating) his other actual use thereof is within the scope of such permission, * * * [1]
⅜ ⅜ ⅜! ⅛ ⅝ ⅜
“None of the following is an insured: “(i) any person while engaged in the business of his employer with respect to bodily injury to any fellow employee of such person injured in the course of his employment;” (Emphasis added.)

The language is specific in not including within an insured status one who is a fellow employee of the person injured “while engaged in the business of his employer.” And this is so whether or not the non-included one is the named insured, a partner or executive officer of the named insured, or someone using the automobile with permission of the named insured.

In this case, then, Barnette was not an insured since he was engaged in the business of his employer with respect to the injury to his fellow employee in the course of employment. Inasmuch as he was not an insured, the “severability of interest” clause did not apply since it “applies separately to each insured” and only to each insured.

For the same reason, the “cross employee exclusionary” clause need not be considered in this case. It is a clause which normally appears among others in the “exclusions” section of an insurance contract. Each part of the contract in this case is divided into sections with headings of “Exclusions,” “Persons Insured,” “Limits of Liability,” etc. Inasmuch as Barnette does not qualify as an “insured” under the “Persons Insured” section of the Comprehensive Automobile Liability Insurance Coverage part, it is unnecessary to determine whether or not he is excluded under the “Exclusions” section. Such section has application only to the “insured.” It provides in pertinent part:

“This insurance does not apply:
“(b) to any obligation for which the insured or any carrier as his insurer may be held liable under any workmen’s compensation, unemployment compensation or disability benefits law, or under any similar law;
“(c) to bodily injury to any employee of the insured arising out of and in the course of his employment by the insured * * *.” (Emphasis added.)

Barnette did not have coverage in the first instance since he was not an insured.

Any consideration of interplay between the “cross employee exclusionary” clause and the “severability of interest” clause is an exercise in futility.

OTHER CONTRACTS

Contrary to the contract involved in this case, the contracts involved in the eases cited in the majority opinion do afford insurance coverage to the actor as an “insured” and the issues do then involve the interplay to the “severability of interest” clause and the “exclusion” clause. The wording in such contracts is similar to the wording in the Comprehensive General Liability Insurance part of this contract.2 Included under its “Persons Insured” provisions are the named insured and “any executive officer, director or stockholder thereof while acting within the scope of his duties as such,” but fellow employees are not excluded as “Persons Insured” except with respect to “mobile equipment”3 operated on *1386a public highway. Accordingly, the “sever-ability of interest” clause would apply to Barnette if this coverage part was available to his use inasmuch as he would be an “insured” under this coverage part of the contract. As in the cases cited in the majority opinion, the “Exclusions” provisions of this part of the contract provide in pertinent part (as do those in the Comprehensive Automobile Liability Insurance Coverage part, supra):

“This insurance does not apply:
* sj« 4? ‡ ‡
“(i) to any obligation for which the insured or any carrier as his insurer may be held liable under any workmen’s compensation, unemployment compensation or disability benefits law, or under any similar law;
“(j) to bodily injury to any employee of the insured arising out of and in the course of his employment by the insured * * jfi ff

Under the Comprehensive General Liability Insurance part of this contract, the seemingly contradictory provisions (“sever-ability of interest” clause and “cross employee exclusionary” clause) referred to by the majority opinion could exist and the result reached by the majority opinion could result. But the Comprehensive General Liability Insurance Coverage part of the contract does not apply to this case (see fn. 2), and Barnette’s recovery against appellee, if any, must be based on the Comprehensive Automobile Liability Insurance Coverage part of the contract. As already noted, the Comprehensive Automobile Liability Insurance Coverage part does not include Bar-nette as an insured as does the Comprehensive General Liability Insurance Coverage part — and as do the cases cited in the majority opinion relative to Barnette’s coverage under the policy.

The lengthy quotation in the majority opinion from Commercial Standard Insurance Company v. American General Insurance Company, Tex., 455 S.W.2d 714, 48 A.L.R.3d 1 (1970), recognizes that the “sev-erability of interest” clause applies separately to the insureds and that, therefore, the exclusion from insurance must be separately applied. The contract included the actor as an insured and then provided an exclusion with the words “this policy does not apply * * This is not the same as in the case where the actor was not an insured at all and therefore not subject to the “severability of interest” clause. Bar-nette was never an insured, and it would be straining the reasoning of the Texas court to apply such reasoning to this case. The Texas case is also distinguishable on the facts. It is a contest involving insurance for a subcontractor, and it is a contest between insurance companies — as are some of the other cases cited in the majority opinion.

The insurance contract involved in the following cases which are those cited or quoted from in the majority opinion relative to this issue did not exclude the actor from the status of an insured and the issue centered around the exclusion clauses in the contracts. The contract directions were that “this policy does not apply * * *” or “this insurance does not apply * * *” to the actor under certain circumstances: General Aviation Supply Co. v. Insurance Company of North America, 181 F.Supp. 380 (E.D.Mo.1960); Zenti v. Home Insurance Company, Iowa, 262 N.W.2d 588 (1978); United States Fidelity & Guaranty Company v. Globe Indemnity Company, 60 Ill.2d 295, 327 N.E.2d 321 (1975); Marwell Construction, Inc. v. Underwriters at Lloyd’s, London, Alaska, 465 P.2d 298 (1970); Liberty Mutual Insurance Company v. Iowa National Mutual Insurance Company, 186 Neb. 115, 181 N.W.2d 247 (1970); United States Fire Insurance *1387Company v. McCormick, 286 Ala. 531, 243 So.2d 367 (1970); Shelby Mutual Insurance Co. v. Schuitema, Fla.App., 183 So.2d 571 (1966), aff'd 193 So.2d 435 (1967); Ratner v. Canadian Universal Insurance Company, 359 Mass. 375, 269 N.E.2d 227 (1971); Liberty Mutual Insurance Co. v. Home Insurance Indemnity Co., 116 N.H. 12, 351 A.2d 891 (1976); and Bankers & Shippers Insurance Company of New York v. Watson, 216 Va. 807, 224 S.E.2d 312 (1976).

The annotation at 48 A.L.R.3d 13, supra, quoted in the majority opinion, concerns itself with the specific provisions in automobile liability insurance policies “expressly excluding from coverage under the policy injury to, or death of, an employee of the insured.” It is predicated on the assumption that the actor is an insured. It discusses the definite split of authority on the question of insurance coverage under the exclusion clause when the actor is not the employer of the injured person4 — thus addressing the question of who is an insured under the exclusion clause. But it anticipates that the actor is an insured in the first instance, a condition not here present.

The quotation in footnote 3 of the majority opinion from 12 Couch on Insurance 2d, § 45:581 also has reference to the effect of the “exclusion” clause on an insured. Couch goes on to say in § 45:589:

“In order to avoid the conflicting results discussed above with regard to actions between fellow employees, insurers have in recent years inserted in the omnibus clause a limitation stating that ‘the insurance with respect to any person or organization other than the named insured does not apply to any employee with respect to injury to or death of another employee of the same employer injured in the course of such employment in an accident arising out of the maintenance or use of the automobile in the business of such employer.’ Accordingly, regardless of whether the suit is brought against the named insured or the additional insured, the insurer will generally be relieved of liability where the circumstances fall within the language of the exclusionary provision.” (Footnotes omitted.)

The language of the contract in this case is similar and the result should be the same. The omnibus clause (see fn. 1) and the clause extending coverage to officers, etc., are part of the definition of the “insured” and the definition specifically provides that “any person while engaged in the business of his employer with respect to bodily injury to any fellow employee of such person injured in the course of his employment” is not an insured.

CONCLUSION

The trial court is correct in finding that: “The automobile liability insurance coverage section of the contract is clear and not ambiguous. The issue is whether Mr. Barnette is an insured under the contract. * * 5

The plain and clear definition of the “insured” in that part of the contract does not make Barnette an “insured.” Thus, it is unnecessary to consider the applicability of the “cross employee exclusionary” clause of the contract to the facts of this case.

The majority holding contravenes the standard by which we examine contracts on appeal, supra. It is rewriting the contract under the guise of interpretation.

Finally, and as an aside, I discern an inconsistency between (1) our holding in Barnette v. Doyle, Wyo., 622 P.2d 1349 (1981) to the effect that Barnette’s status was disassociated from his official company position6 for the purpose of liability under *1388an action brought against him by Doyle, and (2) the holding of the majority of the court in this case involving the identical incident to the effect that Barnette’s status is associated with his official company position for the purpose of insurance carrier liability.

I would affirm.

1. This clause (subsection c) is commonly referred to as the “omnibus” clause.

. Coverage cannot be claimed in this case under the Comprehensive General Liability Insurance part inasmuch as the following is one of the exclusions contained therein:

“(b) to bodily injury or property damage arising out of the ownership, maintenance, operation, use, loading or unloading of
“(1) any automobile * * *.”

.“Mobile equipment” is defined as follows: “* * * a land vehicle (including any machinery or apparatus attached thereto), whether or not self propelled, (1) not subject to motor vehicle registration, or (2) maintained for use exclusively on premises owned by or rented to the named insured, including the ways immediately adjoining, or (3) designed for *1386use principally off public roads, or (4) designed or maintained for the sole purpose of affording mobility to equipment of the following types forming an integral part of or permanently attached to such vehicle: power cranes, shovels, loaders, diggers and drills; concrete mixers (other than the mix-in-transit type); graders; scrapers, rollers and other road construction or repair equipment; air-compressors, pumps and generators, including spraying, welding and building cleaning equipment; and geophysical exploration and well servicing equipment.”

.The annotation also reflects that there is a definite split of authority upon the question of the effect a “severability of interest” clause has on the insurance coverage under the exclusion clause when the actor is not the employer of the injured person.

. The trial court also explained in what fashion the cases cited to it by plaintiff in support of his position did not apply “to the situation at hand.”

. Barnette was president, director and owner of 50% of the stock of the named insured, Bar-*1388nette Enterprises, Inc. His wife owned the other 50% of the stock.