NO. 91-012
IN THE SUPREME COURT OF THE STATE OF MONTANA
1991
CONTINENTAL INSURANCE COMPANY, ,-
Plaintiff and Respondent,
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APPEAL FROM: District Court of the Eleventh Judicial District,
In and for the County of Flathead,
The Honorable Michael H. Keedy, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
I. James Heckathorn, Murphy, Robinson, Heckathorn
& Phillips; Kalispell, Montana
For Respondent:
Donald R. Herndon, Herndon, Hartman, Sweeney &
Halverson, P,C.; ~ i l l i n g s ,Montana
Submitted on briefs: 1 1 19g1
Decided: September 2 4 , 1991
Filed:
Justice R. C. McDonough delivered the Opinion of the Court.
Gene Bottomly and Van Bottomly appeal from an order of partial
summary judgment granted by the District Court of the Eleventh
~udicial District, Flathead County, in favor of plaintiff
Continental Insurance Company. The District Court held that
neither of the defendants were "residents of the householdu of the
named insured Richard Bottomly within the meaning of Continental
Insurance Company Preferred Farmowner's policy. We reverse.
The issues on appeal are:
1) Whether the ~istrict Court erred in granting partial
summary judgment to Continental Insurance Company (Continental)
which in effect ruled Continental had subrogation rights against
Gene and Van Bottomly.
2) Whether an insurance carrier has a right of subrogation
against a parent for the negligent acts of his minor child.
3) If an insurance carrier has no right of subrogation, are
the appellants entitled to a counterclaim for damages?
A fire destroyed the llBottomly
Cabin" on August 4, 1982. The
fire apparently resulted from an electric blanket which had been
accidently left on the high setting by Van Bottomly. Sometime
prior to the fire, Continental through their agent Richard Green,
issued a Preferred Farmowner's Policy covering the Bottomly cabin
to Richard V. Bottomly (Appellant Gene Bottomlyls brother and
Appellant Van Bottomly's uncle). Green was aware that the insured
property was recreational in nature and would be used by members
of the Bottomly family. No discussions took place between Green
and Richard Bottomly as to who additional insureds were under the
policy.
A brief history of the Bottomly cabin is necessary. Richard
and Gene Bottomlyls father, R.V. Bottomly, Sr. homesteaded on Lake
McDonald prior to the establishment of Glacier National Park.
After R.V., Sr. died in 1961, his widow, Mrs. ~ourielBottomly
became sole owner of the cabin. According to the testimony of
appellant Gene Bottomly, sometime prior to Mrs. Bottomlyls death
in 1979 it was decided that the cabin would be left to the family
members who would put time and money into remodeling the cabin.
This devise was made with the understanding that all the family
members could use the cabin. Mrs. Bottomly subsequently left the
cabin to Richard and James Bottomly, Gene Bottomlyfs brothers.
Gene Bottomly, spent part of every summer at the cabin from
1929 or 1930 throughout his school years and during his adulthood
with the exception of the time between 1948 and 1952 while he
served in the armed forces and attended the university.
Due to the size of the Bottomlyls extended family (some
twenty-six or twenty-seven grandchildren) and as a matter of
course, Gene Bottomly always asked permission to use the cabin.
Prior to his motherrs death he would call her for permission.
Afterwards he would call his brother Richard Bottomly because he
was the oldest, Gene Bottomly was never denied permission to use
the cabin. Over the past twenty years Richard and Gene Bottomly
have been at the cabin at the same time on approximately fifteen
occasions.
The Bottomly cabin was equipped with dishes, sheets, utensils,
and other necessities. Almost every year Gene bought something for
the cabin. He put in a new stove and a refrigerator, He also
donated smaller items such as silverware, sheets, and towels. Gene
did not contribute to the utility bills or to the taxes on the
property. The general, unwritten family rule was that each family
member was to replace any lost, used or damaged items occasioned
during their stay.
Continental paid the named insured, Richard Bottomly the loss.
Two years later, Continental instituted a subrogation suit against
Gene and Van Bottomly. This appeal followed.
The case before us is one of first impression. All material
facts are uncontested. Our standard of review is to determine if
the District Court's determination as to the law is correct.
Steer, Inc. v . Dept. of Revenue, 47 St.Rep. 2199, 803 P.2d 601.
There is a dearth of authority pertaining to the applicable law
under these facts. That is, who qualifies under a homeowner's
policy as an insured for subrogation purposes when the subject
matter of the policy is a family seasonal dwelling?
The insurance policy before us contained the following
language :
1. l'insuredU means
(a) the Named insured stated in the Declaration of
this policy;
(b) if residents of the Named insured's household,
his spouse, the relatives of either, and any other person
under the age of twenty-one in the care of the insured;
It is not disputed that Gene and Van Bottomly are related to
the named insured Richard Bottomly.
Continental sets forth several cases from various
jurisdictions construing similar language contained in the Bottomly
policy. However, these cases involve year round residential
dwellings, and questions of initial coverage under uninsured
automobile policies, or homeowner policies. They do not involve
equitable subrogation questions.
The Oklahoma Supreme Court has stated "[~]ubrogation is a
fluid concept depending upon the particular facts and circumstances
of a given case for its applicability. To some facts subrogation
will adhere - to others it will not." Sutton v. Jondahl (19751,
532 P.2d 478, 482, citing Home Ownersv Loan Corp. v. Parker (l937),
181 0x1. 234, 7 3 P.2d 170. Also see Iowa National Mutual Insurance
Co. v. Boatright (l973), 33 Colo.App. 124, 516 P.2d 439, where a
father negligently caused a fire at his daughter's home while a
temporary resident and subrogation did not adhere.
In Home Ins. Co. v. Pinski Brothers (1972), 160 Mont. 219,
500 P.2d 945, Home Insurance Company, which paid an explosion loss,
claimed subrogation rights against a policyholder who held a
liability policy with one of Home's subsidiaries. M. at 226, 500
P.2d at 949. In Pinski we held as follows:
No right of subrogation can arise in favor of an insurer
against its own insured since, by definition, subrogation
exists only with respect to rights of the insurer against
third persons to whom the insurer owes no duty . . . .
[t]o allow subrogation under such circumstances would
permit an insurer, in effect, to pass the incidence of
the loss, either partially or totally, from itself to its
own insured and thus avoid the coverage which its insured
purchased. Id., 500 P.2d 949.
Gene and Van Bottomly maintain that Reeder v. Reeder (19841,
Neb. 120, 348 N.W.2d 832, is controlling. In Reeder, when
Theodore Reeder moved to Texas his brother Bernard Reeder moved
into Theodorets home temporarily while his own underwent
construction. Theodore agreed to keep the insurance on the house
with the intent that while Bernard and his family occupied it their
interests would be protected. Id, at 833. The Nebraska Supreme
Court determined that while the relationship created by the two
brothers could be likened to both landlord/tenant and
licensor/licensee it was neither. Reeder at 834-
The Reeder court reasoned that the question was "whether the
carrier by seeking to recover from Theodore Reederfs 'guestI1is
in
effect, seekinq to recover from the insured himself for the very
risk that the carrier insured and for which it received premium^.^^
Reeder at 835. The court stated that however the relationship is
characterized, "that by permitting the carrier to sue the brother,
in effect the carrier is suing the insured. his we believe the
carrier may not do." Reeder at 836. We agree with the Nebraska
Supreme Court.
Further, we stated in St. Paul Fire & Marine v. Thompson
(19671, 150 Mont. 182, 187, 433 P.2d 795, 798, ll[T]hetest is not
what the insurer intended the words to mean but what a reasonable
person in position of an insured would understand them to mean."
In the case before us Richard Bottomly purchased an insurance
policy for the family cabin. In his sworn affidavit he stated he
believed that his brother, Gene Bottomly, and nephew Van Bottomly,
were members of his household and that their interests were
protected under the policy.
Richard Green, the selling agent, testified by deposition that
he was aware the Bottomly cabin was a seasonal dwelling used for
recreational purposes by members of the Bottornly family and
friends .
Under these circumstances, it was reasonable for an insured
to believe the insurance covered such family members. We therefore
conclude Gene and Van Bottomly qualified under a homeowner's policy
covering a family seasonal dwelling, as insureds for subrogation
purposes.
Because we do not hold that Continental has the right of
subrogation under the facts we do not reach the issue of whether
Gene Bottomly can be liable for the negligence of his son Van
Bottomly .
Gene and Van Bottomly maintain that the summary judgment
issued on their counterclaim for damages against Continental should
be reversed. Because appellant's brief does not set forth an
argument on the issue we regard the issue as abandoned.
The District Court's order for partial summary judgment on
behalf of Continental Insurance Company is
Reversed.
We Concur'
.
September 24, 1991
CERTIFICATE OF SERVICE
I hereby certiQ that the following order was sent by United States mail, prepaid, to the
following named:
I. James Heckathorn & Pamela L. Miller
Murphy, Robinson, Heckathorn & Phillips
P.O. Box 759
Kalispeil, MT 59903
Donald R. Herndon
Herndon, Hartman, Sweeney & Halverson
P.O. Box 80270
Billings, MT 59108-0270
ED SMITH
CLERK OF THE SUPREME COURT