NO. 84-319
I N THE SUPREME COURT O F THE STATE O F MONTANA
1985
BAUER RANCH, INC., and R . F . BAUER,
P l a i n t i f f and R . e s p o n d e n t .
MOUNTAIN WEST FARM BUREAU MUTUAL
INSURANCE COMPANY,
D e f e n d a n t and A p p e l l a n t .
APPEAL FROM: D i s t r i c t C o u r t of t h e Second J u d i c i a l D i s t r i c t
I n and f o r t h e C o u n t y of S i l v e r B o w
T h e H o n o r a b l e A r n o l d O l s e n , Judge p r e s i d i n g .
COUNSEL O F RECORD:
For Appellant:
Landoe, Brown, P l a n a l p , Kornrners & J o h n s t o n e , B o z e m a n ,
Montana
F o r Respondent:
Corette, Smith, Pohlman & A l l e n , B u t t e , Montana
S u b m i t t e d on B r i e f s : Jan. 31, 1 9 8 5
Decided: February 26, 1985
Filed:
Clerk
1 . ,711stice John C. Sheehy delivered the Opinion of the
Court.
Mountain West Farm Bureau Mutual Insurance Company
appeals from a judgment entered against it in favor of Bauer
Ranch, Inc. and R. F. Rauer in the District Court of the
Second ,Tudicial District, Silver Row County.
We affirm the District Court judgment.
On December 8, 1982, a 1979 White Freightliner tractor
owned by Eauer was totally destroyed by collisjon at a time
when it was covered under an insurance policy issued by
Mountain West to Bauer. Mountain West raises two issues in
this appeal, first, that the White Freightliner tractor was
a t the time of its destruction leased or rented to Craig
Britton and so excluded from coverage, and second, that Bauer
may not raise the issue of estoppel against the insurance
company when the defense of estoppel is not included in its
pleadings.
This case was tried to the District Court sitting
without a jurv. The pertinent findi.r!gs of fact are that
Mountain West issued a policy of insurance providing
collision and physical damage coverage for the 1979 White
Freightliner tractor; that such policy was in force on
December 8, 1980; thzt Bauer had purchased the 1979 White
Freightliner tractor under an agreement with his son-in-law,
Craig Britton, who was then in the trucking business; that
according to the agreement Britton would care for the
vehicle, provide for a driver, and use the vehicle, and in
return, Rritton would haul Rauer's hay and cattle at no
charge; that prior to the agreement, Bauer had been expendinu
approximately $30,000 per year in trucking charges for the
hauling of his hav and cattle.
The policy coverage for the vehicle was subject to
certain exclusions, but the exclusion did not apply to use of
the truck on a share expense basis.
Mountain West contended that the arrangement with
Britton constituted a lease of the tractor by Bauer and that
Sauer was therefore not entitled to physical damage coverage
for the accident under the exclusion. In connection with
that issue, the District Court found that Bauer had purchased
the vehicle in August 1980 for $56,000; that Britton
maintained the vehicle through December 8, 1982; that Britton
hauled Rauer's cattle and hay whenever Bauer wanted them
hauled during that period; that at no time did Britton ever
pay any lease or rental monies for the use of the vehicles;
that Bauer at all times had the riqht to control the use of
the vehicle, in that he could have demanded return of the
vehicle from Britton at any time; that when the accident
occurred on December 8, 1982, the vehicle was pulling a
trailer loaded with cattle that belonged to Britton. The
court further found that in August 1980, before the issuance
of the policy, t.he insurance agent for Mountain West was
advised how the vehicle was to be used under the arrangement
between Rauer and Britton.
The District Court found and concluded that the use of
the vehicle pursuant to the oral agreement between Rauer and
Britton was on a share eypense basis and as such was not
excluded from coverage under the policy of insurance.
The findinqs of fact made by a district court in a case
tried without a jury are not to be set aside by us unless
they are clearly erroneous. Ru1.e 52 (a), M. R.Civ.P. We have
sometimes said that findings of fact must be sustained if we
determine that there is substantial credible evidence to
support the findings of fact and conclusions of law. Cameron
v. Cameron (19781, 179 Mont. 219, 587 P 3 1 939.
.1. Regardless
of how we may state the test, essentially it boils down to
the language of Rule 52 (a), that unless clearly erroneous,
the findings of the District Court must he sustained.
In truth, there is little 8ispute between the parties as
to the facts of this czse. What is in dispute is the legal
effect of the arrangement between Bauer and Britton, that is
whether the arrangement constituted a lease as a matter of
!w
a, or an arrangement for shared expenses, as determined by
the District Court.
An ambiguous provision in an insurance policy is
construed against the insurance company. A clause in an
insurance policy is ambiguous when different persons looking
a t it in the light of its purpose cannot agree upon its
meaning. Walker v. Fireman's Fund Insurance Company (D.
Mont. 1967), 268 F.Supp. 899. If the language is
unambiguous, and subject to only one meaning, there is no
basis for the interpretation of policy coverage under the
guise of ambiguity. Nelson v. Combined Ins. Co. of America
(1970), 155 Mont. 1.05, 467 P. 2d 707. In interpreting and
applying insurance contracts, the common rather than
technical usage and meaning of definitional terms and
policies should be used. Riefflin v. Hartford Steam Boiler
Insp. and Ins. Co. (1974), 1.64 Mont. 387, 521 P.2d 675.
Regardless of ambiquity, however, exclusions and words of
].imitation jn a policy must be strictly construed against the
insurer. Aetna Ins. Co. v. Cameron (Mont. 3981), 633 P . 2 d
1-212, 38 St.Rep. 1530. If the policy language is ambiguous
as applied to the facts of a case, the construction most
favorable to the insured should be adopted. Such
construction applies particularly to exclusionary clauses.
Lindell v. Ruthford (1979), 183 Mont. 135, 598 P.2d 616.
With the foregoing background of applicable law on the
construction of insurance contracts, we look at the
exclusionary clause relied on by Mountain West:
"We don't insure your [truck] while it. is rented or
leased to others or used to ca.rry persons for a
charge. This does not apply to the use of your
[truck] on a share expense basis."
Under ?.he facts of this case, the truck was not being
used to carry persons for a charge, and that exclusion does
.
not apply. Without quibble we can say the exclusion does not
apply to the use of the truck on a "share expense basis."
The exclusion does apply if the truck is rented or leased to
others, but it is arguable under the language used that the
exclusi.on would not apply if it were rented or leased on s,
share expense basis.
We are unable to say that the arrangement. between Bauer
a.nd Britton here was a lease or rental as a matter of law.
Although it was a contract by which Bauer gave to Britton the
temporary use of his property for a reward, and it was to be
returned to him at a future time, S 70-1-601, MCA, and
Britton had the duty of keeping the tractor i n repair, 9
.
70-1-605, MCA; yet the agreement did not contemplate that
Bauer would have to put the tractor in the condition fit for
the purpose for which it was delivered to Fritton or to
repair all deteriorations thereof not occasioned by the fault
of Britton, S 70-8-101, MCA. In an ordinary rental of
personal property, the hirer must bear all the expenses
concerning it as might naturally be forseen to attend it
d u r i n g i t s u s e by him, S 70-8-102, MCA. I t would seem that
t h e c o s t of i n s u r a n c e a g a i n s t p h y s i c a l damage i s a n e x p e n s e
t h a t m i g h t n a t u r a l l y be f o r e s e e n , a n d a n e x p e n s e t h a t must b e
5 o r n e by B r i t t o n , if t h e arrangement w e r e a l e a s e under $
70-8-102.
We are convinced in this case that the arrangement
between Bauer and B r i t t o n was o n e f o r s h a r i n g o f e x p e n s e s .
Rauer a s owner b o r e t h e e x p e n s e o f t h e p u r c h a s e o f t h e t r u c k
and p r o v i d i n g i t s i n s u r a n c e . In return f o r its use, Britton
h a u l e d B a u e r ' s c a t t l e a n d b a y f o r no c h a r g e whenever it w a s
demanded. o f him. Thus B r i t t o n b o r e t h e e x p e n s e t h a t would
o r d i n a r i l y be b o r n e by Bauer for that item. It is clear
therefore that the arrangement between Bauer and B r i t t o n ,
w h a t e v e r e l s e it was, was one f o r t h e s h a r i n g o f e x p e n s e s
that were incidental to the operation of t h e use of the
tractor. I n t h a t circurrstance, t h e use w a s not within t h e
exclusion to the policy coverage relating to leased and
rented vehicles.
Our c o n c l u s i o n t h a t t h e a r r a n g e m e n t between Bauer a n d
S r i t t o n was on a s h a r e e x p e n s e h a s i s f o r t h e u s e o f t h e t r u c k
disposes of a l l o t h e r i s s u e s i n t h e case. T h e r e i s no n e e d
t o d i s c u s s t h e second i s s u e r a i s e d by Mountain W e s t .
Affirmed.
We Concur: