Opinion
10-24-1957
Alexander, Bacon & Mundhenk, William F. Stone, Paul A. Unsworth, San Francisco, and Honey, Mayall & Hurley, Stockton, for appellant. Gordon J. Aulik, Stockton, for respondents.
Edward J. VOLF and Victoire R. Volf, Plaintiffs and Respondents,
v.
The OCEAN ACCIDENT AND GUARANTEE CORPORATION, Ltd., a corporation, Defendant and Appellant.*
Oct. 24, 1957.
Rehearing Denied Nov. 22, 1957.
Hearing Granted Dec. 17, 1957.
Alexander, Bacon & Mundhenk, William F. Stone, Paul A. Unsworth, San Francisco, and Honey, Mayall & Hurley, Stockton, for appellant.
Gordon J. Aulik, Stockton, for respondents.
VAN DYKE, Presiding Justice.
Appellant issued to respondents a comprehensive liability policy (General--Automobile Liability Form) wherein it agreed with respondents to pay on their behalf all sums which they should become legally obligated to pay as damages because of injury to or destruction of property including the loss of use thereof caused by accident. Other coverages were agreed upon but we are here concerned only with the above stated coverage which in the policy is called 'Coverage D'. This coverage was further described as 'Property Damage Liability--Except Automobile' and with respect thereto and under the heading 'Limits of Liability' it was provided that the liability was limited to $1,000 for each accident, to $10,000 for aggregate operations, aggregate protective, aggregate products, and aggregate contractual. The policy contained exclusionary clauses, which, as far as here material, were as follows: It was agreed that the policy did not apply under 'Coverage D' to injury to or destruction of, (1) property owned or occupied by or rented to the insured, or (2) except with respect to liability under sidetrack agreements and the use of elevators or escalators, property in the care, custody or control of the insured, or (3) any goods or products manufactured, sold, handled or distributed or premises alienated by the named insured, or work completed by or for the named insured, out of which the accident arises.
It appears from the evidence that Edward J. Volf was a general contractor who, during the policy period, was constructing a stucco residence for a Mr. Hoover pursuant to a contract. For the purpose of doing the required stucco work on the exterior walls he purchased cement which turned out to be defective, causing the stucco to crack. Shortly before final completion of the building, the owner, Mr. Hoover, noticed these cracks showing up in the stucco. Volf and Hoover then agreed that, if the cracks did not get any worse, Hoover would accept the building if the cracks were filled and painted over. However, the cracks became worse and, as an end result of the use of defective cement, Volf was required to completely replace the stucco job at an additional cost to him in the performance of his contract of $1,309.15. It appears that when the restuccoing was done the building was accepted by Hoover. Respondents then brought this action against the appellant insurance company, claiming that this loss was covered by the policy. Coverage was denied by appellant and after a trial respondents received judgment in the amount of said loss. The company appeals.
The policy is the familiar comprehensive liability policy whereunder, so far as material here, the insurer agreed to pay, on behalf of the insured, all sums which the insured became legally obligated to pay as damages to others because of injury to or destruction of property of such others if the injury or destruction were caused by accident. By-passing for the moment the obvious argument that Volf never became obligated to pay damages to Hoover because of injury to or destruction of the property of Hoover, it is clear that coverage was excluded by the exclusionary clauses above recited. Volf was performing a contract to build a building for Hoover and was in possession of the building as the work progressed. The building, therefore, was property in the care, custody and control of Volf at the time the accident happened, that is, at the time when the defective cement was used as a component part of the stucco which was applied under the provisions of the contract. The damage resulting to the stucco, and so, to that extent, to the building, through the use of defective cement was also damage to work completed by Volf. One who contracts absolutely and unqualifiedly, as it appears from this record Volf did, to erect a structure for a stipulated price, that is, enters into an entire and indivisible contract to complete the structure, must bear the loss occasioned by the accidental destruction of or injury to the structure before completion. (9 Am.Jur., Building and Construction Contracts, sec. 60). It is plain that the specific exclusionary clauses we have referred to excluded the damage here caused by accidental use of defective cement from the scope of the insuring agreements.
Even if we disregard the special exclusionary clauses, the description of 'Coverage D' appearing in the policy, when read with the other pertinent sections of the policy, makes it clear that the requisite conditions for coverage did not here exist. It was a contractual obligation of Volf to compete the building and turn it over to Hoover as a performance of his contract. When the defective cement was used in making the stucco which was applied to the building and it appeared that the work was not up to specifications, Hoover, acting under his contract, refused to accept the work. Responsive to his overriding contractual obligations, Volf removed the defective material and placed proper stucco on the building as he was required to do. Hoover then accepted the building. The result is that Volf never became legally obligated to pay damages to Hoover or to anyone because of injury to the building caused by his accidental use of defective cement.
In our view, the policy as applied to the situation presented by the record here is unambiguous and calls for no interpretation, save giving to the words used their common meaning. In such a case interpretation presents a question of law. In re Estate of Platt, 21 Cal.2d 343, 352, 131 P.2d 825. 'The policy is but a contract, and, like all other contracts, it must be construed from the language used; when the terms are plain and unambiguous, it is the duty of courts to hold the parties to such contract.' Laventhal v. Fidelity & Casualty Co. of New York, 9 Cal.App. 275, 276-277, 98 P. 1075.
The judgment is reversed, with instructions to the trial court to enter judgment in favor of appellant.
SCHOTTKY, J., and WARNE, J. pro tem., concur. --------------- * Opinion vacated 352 P.2d 987.