No. 13776
I N THE SUPREME COURT O THE STATE O MONTANA
F F
1977
A P A REAL ESTATE DEVELOPMENT, I N C . ,
LH
P l a i n t i f f and A p p e l l a n t ,
-vs-
AETNA LIFE & CASUALTY C M A T ,
O P PY
Defendant and Respondent.
Appeal from: D i s t r i c t C o u r t of t h e F o u r t h J u d i c i a l
District,
Honorable Edward T. D u s s a u l t , Judge p r e s i d i n g .
Counsel o f Record:
For A p p e l l a n t :
J o r d a n , S u l l i v a n and B a l d a s s i n , M i s s o u l a , Kontana
L e e J o r d a n a r g u e d , M i s s o u l a , Montana
For Respondent :
G a r l i n g t o n , Lohn and Robinson, M i s s o u l a , Montana
Gary Graham a r g u e d , M i s s o u l a , Montana
Submitted: September 2 2 , 1977
Decided:
oci 1371
Filed:
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M r . J u s t i c e John Conway Harrison d e l i v e r e d t h e Opinion of
t h e Court:
This i s an appeal from an order of t h e d i s t r i c t c o u r t ,
Missoula County, g r a n t i n g summary judgment t o defendant.
P l a i n t i f f Alpha Real E s t a t e Development, Inc . (Alpha)
brought an a c t i o n a g a i n s t i t s insurance c a r r i e r , Aetna L i f e
and Casualty Company (Aetna) t o recover on a c e r t a i n insurance
p o l i c y f o r t h e t h e f t of a commercial c a r p e t c l e a n e r . Aetna
moved f o r summary judgment on t h e ground t h e policy expressly
excluded coverage f o r t h e f t of such equipment. By i t s order
of February 3, 1977, t h e d i s t r i c t c o u r t granted Aetna's motion.
Alpha appeals.
A commercial c a r p e t cleaner valued a t $1400 t o $1500,
owned and u t i l i z e d by Alpha i n the maintenance of i t s apartment
b u i l d i n g , was s t o l e n on o r about June 7 , 1975. The c a r p e t
c l e a n e r was used e x c l u s i v e l y t o c l e a n and maintain t h e hallway
c a r p e t i n t h e apartment b u i l d i n g . A t t h a t time, Alpha was
covered by a property insurance policy issued by Aetna.
Following the l o s s , Alpha submitted a claim t o Aetna f o r
reimbursement due t o t h e l o s s of t h e c a r p e t c l e a n e r . The claim
was denied on t h e ground t h e c l e a n e r was not an " i n t e g r a l p a r t
of a b u i l d i n g o r s t r u c t u r e " covered by t h e p o l i c y , and a s such,
was expressly excluded from t h e f t coverage by t h e terms of t h e
policy. The p e r t i n e n t portion of t h e p o l i c y , Form MLB-101,
provided :
"I. INSURING AGREEMENT
"This policy i n s u r e s a g a i n s t a l l r i s k s of d i r e c t
physical l o s s t o Coverage A -
Building(s) , s u b j e c t
t o t h e provisions and s t i p u l a t i o n s h e r e i n and i n t h e
policy of which t h i s , -form i s made a p a r t .
"11. PROPERTY COVERED
"When t h e insurance under t h i s policy covers
b u i l d i n g s , such insurance s h a l l a l s o cover a l l
a d d i t i o n s and extensions attached t h e r e t o ; a l l
f i x t u r e s , machinery and equipment c o n s t i t u t i n g a
permanent p a r t of and p e r t a i n i n g t o t h e s e r v i c e of
t h e b u i l d i n g ; m a t e r i a l s and s u p p l i e s intended f o r
use i n c o n s t r u c t i o n , a l t e r a t i o n o r r e p a i r of t h e
b u i l d i n g s , yard f i x t u r e s ; personal property of t h e
insured a s landlord used f o r t h e maintenance o r
s e r v i c e of t h e described b u i l d i n g s * * *.
"VI . EXCLUSIONS
''This p o l i c y does n o t i n s u r e under t h i s form
against :
"D. Loss caused by:
5 t h e f t (including but n o t l i m i t e d t o burglary
and robbery) of any property which a t t h e time of
l o s s i s n o t an i n t e g r a l p a r t of a b u i l d i n g o r s t r u c t u r e
** *."
A t t h e hearing on t h e motion f o r summary judgment, Aetna
argued t h e c a r p e t c l e a n e r was not an " i n t e g r a l p a r t of a
b u i l d i n g o r s t r u c t u r e 1 ' such t h a t i t s t h e f t was expressly
excluded by Clause V I , D. ,5 of Aetna' s Form MLB-101. The
d i s t r i c t c o u r t granted summary judgment f o r defendant Aetna.
Thus, t h e determinative inquiry i s whether the d i s t r i c t
c o u r t was c o r r e c t i n g r a n t i n g summary judgment t o defendant
on t h e b a s i s of t h e language of t h e i n s u r i n g agreement.
Alpha's p o s i t i o n i s t h a t t h e c a r p e t cleaning machine was
an " i n t e g r a l part" of t h e s t r u c t u r e of t h e insured apartment
b u i l d i n g , and i s expressly covered under t h e general provision,
Clause 11. PROPERTY C V R D a s "personal property of t h e insured
OEE
a s landlord used f o r t h e maintenance o r s e r v i c e of t h e des-
c r i b e d buildings':. The p o l i c y , i t i s contended, i s ambiguous i n
i t s terms a s , on t h e one hand, it provides f o r wide coverage,
including f i x t u r e s and nonf i x t u r e maintenance equipment, b u t
on t h e o t h e r hand negates such coverage i n t h e case of t h e
l o s s of such items due t o t h e f t . When a c o n t r a c t i s thus
ambiguous, t h e ambiguity should be resolved i n the i n s u r e d ' s
favor.
Aetna' s argument r e f u t e s t h e p o s i t i o n s taken by Alpha
and a s s e r t s , i n essence, t h a t t h e c o n t r a c t i s p l a i n and c l e a r
upon i t s f a c e i n excluding n o n i n t e g r a l items of personal property,
such a s a commercial c a r p e t c l e a n e r , from t h e f t coverage. An
" i n t e g r a l part" i t i s maintained, i s something akin t o a f i x t u r e ,
such a s a h e a t i n g device, a door, a water pump, e t c . There being
nothing f o r t h e c o u r t t o construe, t h e d i s t r i c t c o u r t was c o r r e c t
i n g r a n t i n g summary judgment.
W do n o t c i t e , nor have we been a b l e t o f i n d , any case
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a u t h o r i t y which p r e c i s e l y d e f i n e s t h e term " i n t e g r a l part" i n
t h e context of t h e dilemma presented by t h i s case. The insurance
c o n t r a c t i t s e l f nowhere d e f i n e s t h e term. The s i t u a t i o n i s
f u r t h e r clouded by t h e f a c t t h e c l a u s e of g e n e r a l coverage
r e f e r s t o " f i x t u r e s " and various items of p e r s o n a l t y , such a s
c o n s t r u c t i o n , s e r v i c e , and maintenance equipment. The s o l e
reference t o t h e phrase " i n t e g r a l part" appears i n t h e exclu-
sionary c l a u s e . The g e n e r a l and exclusionary c l a u s e s , read
t o g e t h e r , 9 i e l d a c o n t r a c t u a l ambiguity n e c e s s i t a t i n g j u d i c i a l
construction. Indeed, t h e d i s t r i c t c o u r t appears t o have
recognized t h e ambiguity engendered by t h e c o n t r a c t u a l language
i n i t s m d e r g r a n t i n g summary judgment.
- 4 -
Therefore our discussion s t a r t s with the proposition
t h e c o n t r a c t i n question contains a patent ambiguity. We
focus on the language of the exclusionary clause i n the l i g h t
of the general provisions. I n Terry v. National Farmers Union
L i f e I n s . Co., 138 Mont. 333, 356 P.2d 975 (1960), the Court
stated:
" e keep i n mind t h a t i n construing an exclusion
W
policy, i n case of uncertainty, every doubt should
be resolved i n favor of the insured, and the policy
should be construed s t r i c t l y a g a i n s t the i n s u r e r
company. *** Otherwise s t a t e d a c o n t r a c t of insur-
ance w i l l be cons trued s t r i c t l y a g a i n s t the i n s u r e r
and l i b e r a l l y i n favor of t h e insured. ** *I1
138 Mont. 339.
See a l s o : Johnson v. Equitable Insurance Co., 142 Mont. 128,
381 P.2d 778 (1963) ; Holmstrom v. Mutual Benefit Health &
Accident Ass'n., 139 Mont. 426, 364 P.2d 1065 (1961).
Further, it i s uncontroverted t h a t i n construction of
a c o n t r a c t a p a r t i c u l a r clause of a contract i s subordinate
t o the general i n t e n t of the contract. Section 13-716, R.C.M.
1947. For a general discussion of t h i s r u l e see: 1 7 A C.J.S.
Contracts, 5 9 294(b), 295 ( f ) .
Both of the r u l e s find a p p l i c a b i l i t y here. The conclusion
t o be drawn from a reading of the general provision i s t h a t
service and maintenance equipment, including an item such a s
a commercial carpet cleaner, i s t o be grouped together with
f i x t u r e s and the buildings themselves f o r purposes of coverage.
W f i n d such language governs the i n t e r p r e t a t i o n and defines
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the parameters of the term " i n t e g r a l part" i n the exclusionary
clause. Hence, the carpet cleaner was covered a s an " i n t e g r a l
part1' of the apartment building. To r a t i f y defendant Aetna's
p o s i t i o n would be t o l i m i t t h e f t coverage t o items v i r t u a l l y
incapable of being s t o l e n .
This Court i n t h e case of S t . Paul F i r e & Marine I n s .
Co. v. Thompson, 150 Mont. 182, 187, 433 P.2d 795, adopted
the t e s t f o r interpreting t h i s contract:
"* * * Again, looking t o t h e Kansas r u l e which we
have adopted, we f i n d t h a t , ' t h e t e s t i s n o t what t h e
i n s u r e r intended t h e words of t h e p o l i c y t o mean b u t
what a reasonable person i n t h e p o s i t i o n of an insured
would understand them t o mean. ' "
I f an i n s u r e r d e s i r e s t o l i m i t i t s coverage i n c e r t a i n
a r e a s , i t should employ language c l e a r l y and p r e c i s e l y out-
l i n i n g such r e s t r i c t i o n s . Johnson v. Equitable Insurance Co , .
supra.
The order g r a n t i n g summary judgment i s reversed and
t h e cause i s remanded f o r proceedings i n accordance with
t h i s opinion.
W Concur:
e
M r . J u s t i c e Frank I. Haswell, d i s s e n t i n g :
I would a f f i r m t h e d i s t r i c t c o u r t judgment.
The theme of t h e majority opinion i s t h a t t h e insurance
p o l i c y i s ambiguous and doubts concerning i t s meaning must
be resolved i n favor of t h e insured. I n m view t h e policy
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coverage i s unambiguous, c l e a r and c e r t a i n leaving no room
f o r j u d i c i a l c o n s t r u c t i o n of i t s terms.
The policy c o n t a i n s a s p e c i f i c exclusion f o r t h e f t .
The o p e r a t i v e language of t h i s exclusion reads:
"EXCLUSIONS. This p o l i c y does n o t i n s u r e ***
against *** l o s s caused by ** *theft *** of
any property which *** i s n o t an i n t e g r a l p a r t
of a b u i l d i n g o r s t r u c t u r e ** *.It
A s I s e e i t , a c a r p e t c l e a n e r simply cannot be considered
a p a r t of a b u i l d i n g o r s t r u c t u r e without doing violence t o
the p l a i n meaning of t h e English language. The d e s c r i p t i v e
a d j e c t i v e " i n t e g r a l " f u r t h e r expands t h e exclusion, b u t i n no
sense transforms a c a r p e t c l e a n e r i n t o an " i n t e g r a l p a r t of
a building or structure". I n common usage, t h e language
cannot be t o r t u r e d t o a c h k such meaning i n m opinion.
y
Nor can an ambiguity be c r e a t e d by reading t o g e t h e r t h e
g e n e r a l coverage c l a u s e and the s p e c i f i c exclusion i n my
judgment. A s i n a l l insurance p o l i c i e s excluding c e r t a i n
p e r i l s , t h e general coverage c l a u s e i s s t a t e d i n broad terms
and t h e exclusionary c l a u s e s p e c i f i c a l l y excludes those p e r i l s
f o r which insurance i s n o t purchased. Thus t h e insurance p o l i c y
h e r e i s n e i t h e r i n t e r n a l l y i n c o n s i s t e n t nor ambiguous i n i t s
terms, and t h e r e i s no b a s i s i n law f o r i n t e r p r e t i n g t h e c o n t r a c t
against the insurer.
This Court cannot rewrite a new policy under the guise
of judicial construction contrary to that expressed in the
policy agreed upon and purchased by the insured. Johnson v.
Metropolitan Life Insurance Co., 107 Mont. 133, 83 P.2d 922
For these reasons, I respectfully dissent.
Justice.
Mr. Justice Daniel J. Shea dissenting:
I agree with the foregoing dissent of Mr. Justice
Frank I Haswell.
.