Summary
In Workman v. Republic Mut. Ins. Co., 144 Ohio St. 37, 56 N.E.2d 190, Workman and Sayles, partners, were dealing in automobiles and operating a repair garage.
Summary of this case from Jeffries v. General Cas. Co.Opinion
No. 29888
Decided August 2, 1944.
Insurance — Automobile liability — "Garage liability" endorsement and policy component parts of single contract — Endorsement regarded as modification of original contract terms, when — "Premises liability" provision — No coverage for injuries resulting from accident occurring away from premises — Although caused by defective parts or inefficient work furnished by insured — Actual ownership of automobile in purchaser, when — Possession delivered, note and chattel mortgage executed — Application signed for transfer of certificate of title but certificate not issued — No coverage under "garage liability" endorsement, when — Accident occurred after automobile delivered to purchaser but before certificate of title issued.
1. A "garage liability" endorsement affixed to an automobile liability insurance policy, which contains a provision that "this endorsement is subject to the terms, conditions, limitations and agreements of the policy to which it is attached insofar as the same are not inconsistent with the specific undertakings of this endorsement," and the policy must be construed as component parts of a single contract, and the endorsement must be regarded as a modification of the terms of the original contract if an inconsistency clearly appears.
2. A "premises liability" provision in such policy, extending indemnity "to cover injuries including death at any time resulting therefrom, sustained by any person or persons (not employed by the insured) on or about the premises described * * * and caused by the operations which are necessary to the conduct of the named insured's business as described herein," does not insure against liability for injuries resulting from an automobile accident which occurred off and away from and in no way connected with the premises described, although caused by defective parts furnished for, or inefficient workmanship upon, such automobile by the insured.
3. Where the insured sold an automobile and delivered possession thereof to the purchaser who signed an installment note for the purchase price, executed a chattel mortgage securing the same, signed an application for transfer of the certificate of title which the vendor had delivered to the purchaser, and redelivered same to the vendor for filing in an adjoining county within the three days permitted by law, actual ownership with complete possession and control passed to the purchaser. ( Automobile Finance Co. v. Munday, 137 Ohio St. 504, approved and followed.)
4. A provision in the "garage liability" endorsement affixed to an automobile liability policy, that "the policy shall cover the operation of any automobile or trailer owned by or in charge of the named insured for purposes necessary to the conduct of the named insured's business classified as automobile sales agency or garage * * *," does not insure against liability for injuries resulting from an accident which occurred after such automobile, with complete possession and control, has been delivered to the purchaser thereof, although a certificate of title thereto had not been issued to the purchaser at the time of such accident.
CERTIFIED by the Court of Appeals of Franklin county.
This case originated in the Court of Common Pleas of Franklin county as an action for a declaratory judgment under the provisions of Sections 12102-1 to 12102-16, inclusive, General Code.
The plaintiffs, G.R. Workman and A.E. Sayles, were partners and, under the name of Workman Sayles, were conducting the business of dealing in automobiles and operating a repair garage in the village of Danville, Ohio. The defendant The Republic Mutual Insurance Company, of Columbus, Ohio, is a mutual insurance corporation organized pursuant to the provisions of Section 9607-2 et seq., General Code. The defendant Charles Kidwell heretofore recovered a judgment against the plaintiffs which judgment is unsatisfied.
The defendant insurance company had issued a certain policy of insurance to the plaintiffs on September 16, 1940, which policy bore a "garage liability endorsement," the premium on which was computed on the basis of the payroll of the garage, which policy was in effect on the 28th day of June, 1941, when the defendant Charles Kidwell was injured as a result of a collision of his automobile with an automobile being driven by Harley Abodes.
Thereupon Kidwell brought suit against Harley Rhodes, Workman and Sayles in the Common Pleas Court of Knox county. The basis of the action against Workman and Sayles was the claim that the automobile driven by Harley Rhodes, which the day prior to the accident had been purchased from Workman and Sayles, was in poor mechanical condition when it was sold by Workman and Sayles, and that they knew when the automobile was sold and delivered it was unsafe and would endanger the life and property of others in the lawful use of the highways over which it might be driven.
The defendant insurance company was duly notified of the accident and the filing of the suit and, although it undertook to and did defend Workman and Sayles in the action, it specifically reserved the right to refuse to defend, and to deny any liability under the insurance policy. In that action Kidwell recovered a judgment against the defendants in that case in the sum of $6,780, which was entered December 1, 1942. However, on November 25, 1942, the insurance company had notified Workman and Sayles that it was withdrawing from further defense of the suit; that it would not appeal the judgment, or pay the expenses incident thereto, including the expense of an appeal bond; that it would pay no part of the costs theretofore or thereafter taxed against Workman and Sayles; and that it would not pay any part of the judgment so rendered against them, in the event the same become final.
Thereupon, Workman and Sayles filed the present action, seeking a declaratory judgment determining that The Republic Mutual Insurance Company is under obligation to further defend the action and to pay expenses and costs incident thereto, and that the defendant insurance company is liable to pay the judgment so rendered "in the event the same becomes final, to the extent of the limits of said policy."
Plaintiffs in a second cause of action seek in the alternative a reformation of the policy so as to express the true intent and meaning of the parties entering into the contract. Plaintiffs contend that the agent of the insurance company intended to sell and plaintiffs intended to buy insurance coverage against liability imposed by law upon them arising out of their operations incident to the business of automobile dealer and repair garage.
Issue was made by separate answers of the defendants and a reply. Upon trial, the Court of Common Pleas found that under the policy it was "the duty of said, The Republic Mutual Insurance Company, to defend said action so brought by said defendant, Charles Kidwell against plaintiff's in the Common Pleas Court of Knox county, Ohio, and to conduct the appeal thereof from the judgment so rendered, paying the entire cost and expense thereof, and declaring that said, The Republic Mutual Insurance Company is obligated to pay, to the extent of the limits of its said policy, the judgment so returned against plaintiffs in favor of said Charles Kidwell in event said judgment becomes final."
The case was thereupon appealed to the Court of Appeals, which reversed the Court of Common Pleas and dismissed the petition at the cost of plaintiffs.
The material portion of the court's entry is as follows:
"The said Court of Common Pleas erred in finding on the issues joined on the first cause of action, for the reason stated in the opinion filed herein, that there was coverage available to the plaintiff-appellees under the policy of insurance issued by the defendant-appellant to the plaintiff-appellees; in the finding that the defendant-appellant was obligated to pay to the extent of the limits of its policy, the judgment returned against plaintiff-appellees in favor of said Charles Kidwell, and in finding that it was and is the duty of plaintiff [defendant]-appellant to conduct the appeal from said judgment and to pay the entire costs and expenses thereof to the extent of the limits of its policy.
"This court finds that there is no coverage available to plaintiff-appellees under the policy of insurance set up in the petition and the defendant-appellant is not required to pay said judgment nor to pay the costs of said appeal.
"Since the announcement of the court's opinion, attorneys for the plaintiff-appellees G.R. Workman and A.E. Sayles and for the defendant-appellee Charles Kidwell, appeared before the court; advised the court that they had no evidence, other than that contained in the bill of exceptions, to offer; and requested the court to finally dispose of the issues joined on the second cause action. The court finds that the evidence offered in support of the issues joined on the second cause of action is not in substantial conflict; and, on consideration thereof, the court finds that plaintiff-appellees are not entitled to a reformation of said contract of insurance as prayed for."
The case was certified to this court upon a finding that the judgment of the Court of Appeals was in conflict with a judgment of the Court of Appeals of Knox county in the case of Charles Kidwell v. G.R. Workman and A.E. Sayles d. b. a. Workman Sayles, No. 448.
Mr. Wilbur E. Benoy and Mr. Arthur M. Sebastian, for appellants G.R. Workman and A.E. Sayles.
Mr. W. Thurman Todd, for appellant, Charles Kidwell.
Mr. Luther L. Boger, for appellee.
The single question presented to this court is whether the policy of insurance issued to the plaintiffs obligated the defendant insurance company to defend the action brought against the plaintiffs and to satisfy the judgment rendered.
The issue of reformation was disposed of by the Court of Appeals upon the evidence adduced relating to the conversations had at the time the contract of insurance was entered into. We deem it sufficient to state that the record fails to disclose evidence of a clear and convincing character such as is required to entitle the plaintiffs to the remedy of reformation. See 35 Ohio Jurisprudence, 201 and 212, Sections 63 and 73.
The insurance policy in question was designated "Automobile Policy," to which was attached an endorsement designated "Garage Liability Endorsement (Payroll Basis)." This endorsement provided in part as follows:
"Coverage — The Bodily Injury Liability and Property Damage Liability as afforded under Coverages A and B in the Declarations of the policy are hereby adopted and made effective for the purpose of this endorsement. * * *
"Definition of Insured — The Insured named in Item I of the Declarations of the policy may include not only the Named Insured but also any member of the firm if the Named Insured is a partnership; or the president, vice-president, secretary, treasurer and general manager of the corporation if the Named Insured is a corporation, providing, however, that such partners or officers appear as Additional Insureds in this endorsement.
"Automobile Liability — The policy shall cover the operation of any automobile or trailer owned by or in charge of the Named Insured for purposes necessary to the Conduct of the Named Insured's business classified as Automobile Sales Agency or Garage and use of such automobile for pleasure purposes * * *.
"Premises Liability — Coverage A of the policy, Bodily Injury Liability, is extended, subject to the conditions and limitations of this policy, to cover injuries including death at any time resulting therefrom sustained by any person or persons (not employed by the Insured) on or about the premises described in Item 1 of the Declarations and caused by the operations which are necessary to the conduct of the Named Insured's business as described herein.
"Premium Computation — The premium for this endorsement and the policy of which it forms a part is based upon the entire compensation of all proprietors, active executive officers, managers, salesmen, clerical force, mechanics, chauffeurs and other employees of the Insured, except that no premium charge shall be made upon any portion of the compensation of any proprietor, active executive officer, manager or salesman, in excess of two thousand dollars ($2,000.00) per annum; all other employees shall be included at the actual paid remuneration (including commission, bonuses and other compensation).
"The advance premium for this insurance is $70.00, based on the estimated annual payroll of $5,000.
"The agreed rate for this insurance is $1.10 for Bodily Injury Liability and $0.30 for Property Damage Liability, for each $100 of annual payroll.
"If during the policy period, the entire compensation of payroll thus computed exceeds the advance premium set forth herein, the Insured shall immediately pay the company the additional premium earned; if such entire compensation or payroll thus computed be less than the premium herein set forth, the company will return the unearned premium when determined but will retain $70.00, which amount shall be the minimum premium.
"Customers — In consideration of an additional premium of $6.25 it is understood and agreed that this policy is extended subject to all its limitations and conditions to cover customers of the Named Insured while riding in or operating an automobile owned by the Named Insured while being used for the purposes described in this policy. Coverage shall not extend to customers with respect to automobiles which such customers have purchased on an installment payment plan.
"This endorsement is subject to the terms, conditions, limitations and agreements of the policy to which it is attached in so far as the same are not inconsistent with the specific undertakings of this endorsement.
"This endorsement when countersigned by a duly authorized agent of the company and attached to Policy No. A32994 issued to Workman and Sayles shall be valid and form a part of said policy."
Coverages A and B as set forth in the Declarations are defined in the policy as follows:
"The Republic Mutual Insurance. Co., Columbus, Ohio, a legal Reserve Mutual Insurance Company herein called the company, hereby agrees with the insured, named in the declarations and application, which application and declarations are made a part hereof, in consideration of the payment of the premium and of the statements contained in the application and declarations and subject to the limits of liability, exclusions, conditions and other terms of the policy;
"Damage by the Automobile —
"1. Coverage A — Bodily Injury Liability — To pay on behalf of the insured all sums which the insured shall become obligated to pay by reason of the liability imposed upon him by law for damages, including damages for care and loss of services because of bodily injury, including death resulting therefrom, sustained by any person or persons other than the Named Insured, caused by accident and arising out of the ownership, maintenance, or use of the described automobile.
"2. Coverage B — Property Damage Liability — To pay on behalf of the insured all sums which the insured shall become obligated to pay by reason of the liability imposed upon him by law for damages because of injury to or destruction of property, including the loss of use thereof, caused by accident and arising out of the ownership, maintenance or use of the described automobile.
"3. Supplementary Provisions — The company agrees in event of such injury or damage:
"(a) To defend in his name and behalf any suit against the insured alleging such injury or damages, even if such suit is groundless, false or fraudulent; but the company shall have the right to settle any claim or suit and to make such investigation or negotiation as may be deemed expedient by the company;
"(b) To pay all premiums on bonds to release attachments not in excess of the applicable policy limits, all premiums on appeal bonds required on the appeal from a judgment which is not in excess of the policy limits, or a prorata amount of the premium on appeal bonds required on the appeal from a judgment in excess of the limits, all costs taxed against the insured in any such suit, all expenses incurred by the company, all interest accruing after entry of judgment until the company has paid, tendered, or has deposited in court the amount of the company's liability thereon;
"(c) To pay any expense incurred by the insured, in the event of bodily injury, for such immediate medical and surgical relief to others as shall be imperative at the time of the accident."
In the "Exclusions" said policy provided:
"10. Exclusions — This policy under Coverages A and B excludes any obligation of the company:
"(b) For any accident which occurs after the Named Insured's interest in the automobile has been transferred without the written consent of the company."
Plaintiffs contend there is ambiguity in the contract in that the provisions of the endorsement and the provisions of the policy are in conflict. Neither the Court of Common Pleas nor the Court of Appeals announced a finding of any such ambiguity. The right of the insured must arise from the terms of the contract, and the policy and the endorsement are to be considered as component parts of a single contract. The endorsement must be regarded as a modification of the terms of the original contract of insurance if a clear inconsistency appears.
It is to be observed that the endorsement provides as follows:
"This endorsement is subject to the terms, conditions, limitations and agreements of the policy to which it is attached in so far as the same are not inconsistent with the specific undertakings of this endorsement."
It can scarcely be contended that the ordinary automobile liability insurance policy to which the endorsement was affixed would cover the liability here sought to be imposed, for such policies usually designate the specific automobiles covered. It follows that if Workman and Sayles are afforded indemnity, such must come within the provisions of the endorsement denominated "Garage Liability Endorsement." The liability clauses in such endorsement (excluding customers' liability which is not here involved) are two:
1. "Automobile Liability — The policy shall cover the operation of any automobile or trailer owned by or in charge of the named insured for purposes necessary to the conduct of the named insured's business classified as automobile sales agency or garage and use of such automobile for pleasure purposes * * *."
2. "Premises Liability — Coverage A of the policy, bodily injury liability, is extended, subject to the conditions and limitations of this policy, to cover injuries including death at any time resulting therefrom, sustained by any person or persons (not employed by the insured) on or about the premises described in item 1 of the declarations and caused by the operations which are necessary to the conduct of the named insured's business as described herein."
It is claimed that the injury for which liability is sought to be imposed resulted from negligence which took place on the premises of the insured, and therefore that the provisions of the "Premises Liability" clause apply. However, by the express language of the clause, it applies only to "injuries * * * sustained by any person or persons (not employed by the insured) on or about the premises described in item 1 of the declarations and caused by the operations which are necessary to the conduct of the named insured's business as described therein."
No injuries were sustained by Kidwell "on or about the premises described." This court cannot so extend this provision of the insurance contract as to make it apply to injuries sustained elsewhere. The liability covered is clearly designated "Premises Liability" and cannot be otherwise construed. There is no language in the insurance contract which can be construed to insure against liability for injuries resulting from defective parts or inefficient workmanship.
The "Automobile Liability" provision of the endorsement covers "any automobile or trailer owned by or in charge of the named insured for purposes necessary to the conduct of the named insured's business * * *." (Italics ours.)
No claim is made that the automobile which was driven by Harley Rhodes was in charge of the named insured at the time of the accident. But it is claimed that the automobile was owned by the insured by reason of the single fact that the title thereto had not been actually transferred to the purchaser thereof in accordance with Section 6290-2 et seq., General Code.
The policy to which the endorsement is attached expressly excludes liability for damages resulting from "any accident which occurs after the named insured's interest in the automobile has been transferred without the written consent of the company." This exclusion is not applicable here, for this endorsement covers automobiles though not owned by the insured but which the insured has "in charge."
The only remaining question is whether the automobile was owned by the insured at the time of the injury. It is undisputed that on June 27, the automobile was delivered to Mrs. Rhodes, mother of Harley Rhodes, she being the purchaser of the automobile; and that she had signed an installment note to evidence the purchase price in the sum of $118, executed a chattel mortgage securing same and signed an application for transfer of the certificate of title which plaintiffs as vendors had delivered to her. This application she then redelivered to Sayles, one of the plaintiffs, for filing with the clerk of courts of Holmes county within the three days permitted by law. The accident and consequent injury occurred the next day after completion of the transaction.
Without deciding whether the legal title had passed, actual ownership with complete possession and control had certainly passed to Mrs. Rhodes, and if legal title had not been transferred as agreed, her right to a certificate of title was enforceable. Automobile Finance Co. v. Munday, 137 Ohio St. 504, 30 N.E.2d 1002.
Since the policy does not by its terms cover an accident such as that involved in this controversy, the judgment of the Court of Appeals is in all respects affirmed.
Judgment affirmed.
WEYGANDT, C.J., HART, ZIMMERMAN and BELL, JJ., concur.
WILLIAMS and TURNER, JJ., not participating.