Grayson v. Aetna Insurance Company, Civ. A. No. 68-289.

• Citation: 308 F. Supp. 922
• Decision Date: 23 January 1970
• Docket Number: Civ. A. No. 68-289.
• Parties: Robert GRAYSON, Plaintiff, v. AETNA INSURANCE COMPANY, Defendant.
• Court: United States District Courts. 4th Circuit. United States District Court of South Carolina

308 F. Supp. 922

Robert GRAYSON, Plaintiff, v. AETNA INSURANCE COMPANY, Defendant.

Civ. A. No. 68-289.

United States District Court, D. South Carolina, Aiken Division.

January 23, 1970.

COPYRIGHT MATERIAL OMITTED

Sol Blatt, Jr., Blatt & Fales, Barnwell, S. C., for plaintiff.

Nelson, Mullins, Grier & Scarborough, Columbia, S. C., for defendant.

ORDER

SIMONS, District Judge.

This action, which is a suit seeking the interpretation of a farm owner's liability insurance policy issued by defendant to one Grover Hutson, a farm owner and plaintiff's employer, was first before the court upon motions for summary judgment on behalf of plaintiff and defendant on the ground that there was no genuine issue as to any material fact.

The sole question before the court was the proper legal interpretation to be given the following exclusionary clause contained in said policy which provided as follows:

"`(d) under Coverage G, to bodily injury to any farm employee, arising out of and in the course of his employment by the Insured, and under Coverages G and H, to any person, including any residence employee or insured farm employee, (1) if the Insured has in effect on the date of the occurrence a policy providing workmen's compensation or occupational disease benefits therefor, or (2) if benefits therefor are in whole or in part either payable or required to be provided under any workmen's compensation or occupational disease law; but this subdivision (2) does not apply with respect to Coverage G unless such benefits are payable or required to be provided by the Insured * *'"

The admitted facts were that defendant's policy issued to one Grover Hutson was in full force and effect on the date when plaintiff, Robert Grayson, was injured while employed in the scope and course of his employment on Mr. Hutson's farm; that plaintiff brought suit in the state court against his employer resulting in a judgment in his favor in the amount of $25,000, which Defendant Aetna Insurance Company failed and refused to pay upon the ground that plaintiff's injury was excluded from the coverage of its policy issued to Mr. Hutson under the above exclusionary provision.

By its order dated November 1, 1968, this court denied both parties' motions for summary judgment upon the following basis:

"After having studied the contentions of the parties and having reviewed the authorities cited by them, the court concludes that the language and punctuation of the exclusionary clause gives rise to conflicting reasonable inferences that may be drawn as to the meaning thereof. Therefore, summary judgment is not the answer. The court will be in a much better position to determine the question at issue after a trial of the case on the merits rather than at this stage.

"Accordingly, both plaintiff's and defendant's motions for summary judgment are denied." Grayson v. Aetna Insurance Company, D.C., 291 F.Supp. 720 (1968).

Subsequent to the foregoing order, the case was placed on the trial calendar in the Aiken Division, and was set down for trial at the next non-jury term. The matter was then scheduled for pretrial conference preliminary to a trial on the merits. At such conference counsel for both parties stated that in their judgment a full evidentiary hearing was not necessary; that the sole issue to be determined was the proper legal construction of the foregoing exclusionary clause; that there was no genuine issue of fact to be decided; and that both parties therefore should be permitted to renew their motions for summary judgment. Plaintiff's counsel requested permission, which was granted, to submit affidavits in support of plaintiff's renewed motion for summary judgment. Defense counsel was also given the same permission but advised that, in view of defendant's position that such exclusionary clause was clear and unambiguous, he did not deem it proper for the court in determining the issue to consider any affidavits or other evidence outside of the policy provisions. Accordingly defendant rested its case on the premise that the only logical and reasonable interpretation of the exclusionary clause was that plaintiff's injury which admittedly occurred while engaged as a farm employee for defendant's insured, Mr. Hutson, in the course and scope of his employment was clearly excluded from coverage under the policy.

Thereafter, in due course plaintiff, through his counsel, renewed his motion for summary judgment by formal written motion which was supported by affidavits of Dr. John Guilds, Head of the English Department of the University of South Carolina in Columbia and of plaintiff's employer, Grover Hutson, together with a "Stipulation of Facts" signed and consented to by counsel for plaintiff and defendant, copy of which is hereto appended and by reference made a part hereof.

Thus, the sole issue presently before the court is identical to that which the court dealt with in its former opinion in Grayson v. Aetna Insurance Company, supra, to wit: Whether plaintiff's personal injury which occurred while engaged as a farm employee of defendant's insured, Grover Hutson, in the course and scope of his employment was covered by defendant's policy; or whether such injury was excluded from coverage by virtue of the above quoted exclusionary clause.

Plaintiff's contentions are twofold. His first position is that he is entitled to summary judgment in his favor under recent controlling South Carolina Supreme Court decisions, since this court's original order concluded that the language and punctuation of the exclusionary clause give rise to conflicting, reasonable inferences as to the meaning thereof, one such reasonable inference being that plaintiff's injuries were not excluded from coverage of the policy by such clause; and that under the authority of Hann v. Carolina Casualty Ins. Co., S.C., 167 S.E.2d 420 (1969), this court must adopt that construction which will permit recovery by the plaintiff in the instant case. Secondly he asserts that the affidavits of Dr. John Guilds and Grover Hutson set forth the proper rules of grammar and punctuation interpretation applicable to those contained in the exclusionary clause, and show the circumstances under which the policy was purchased by plaintiff's employer from defendant's agent, which clearly require the conclusion that there is a patent ambiguity in defendant's exclusionary clause. He thus contends that such ambiguity must be resolved against the insurer and in favor of plaintiff's coverage by the policy. Plaintiff further asserts that a consideration of these affidavits does not violate the Parol Evidence Rule since the exclusionary clause has been found to contain a patent ambiguity.

Defendant also renewed its motion for summary judgment by its counsel's letter to the court in which its position in support of its original summary judgment motion was reiterated and affirmed, namely, that the exclusionary provision when considered as a whole is unambiguous and clearly requires the conclusion that plaintiff's personal injuries were thereby excluded from coverage under the policy. Defendant also advised that it did not intend to submit any affidavits setting forth any parole or extrinsic evidence, and it further objected to the court's consideration of the affidavits submitted by plaintiff as violating the Parol Evidence Rule.

Defendant further contends that a contract must be construed as a whole to carry out the intention of the parties; that every word and clause of the contract, if possible, must be given some effect and the court must assume that the parties intended such word or clause to accomplish some specific purpose, and that it is not proper to assume that such word or clause is without meaning; further that where the terms and conditions of an insurance policy are clear and unambiguous there is no room for construction, and the court must apply such terms according to their literal meaning, citing Gunnells v. American Liberty Insurance Company, 251 S.C. 242, 161 S.E.2d 822 (1968). Defendant further alleges that for the court to apply the construction to the exclusionary clause as contended for by plaintiff would do violence to the above rule, and would make meaningless the first phrase of the exclusionary clause. It further asserts that punctuation may be resorted to as an aid in construction of a contract only when it tends to throw light on the true meaning thereof, and that punctuation will not control or change a meaning which is plain from a consideration of the whole document, citing Walker v. Commercial Casualty Ins. Co., 191 S.C. 187, 4 S.E.2d 248 (1939).

The proper legal principles under South Carolina law governing the construction of insurance contracts in this state by which this court is bound under the Erie doctrine¹ are quite clear and well settled. The court recognizes that the terms of an insurance policy must be construed most liberally in favor of the insured, and if the language, words and punctuation of the policy when considered as a whole give rise to a patent ambiguity, or are capable of two or more reasonable interpretations, at least one of which favors coverage, that construction which is most favorable to the insured must be adopted. Further, in construing an insurance policy the court must determine the intent of the parties and the meaning of the document by reviewing the entire contract. Also, under South Carolina law in cases involving patent ambiguities in insurance contracts, the construction of the policy is a proper matter for determination by the court as a matter of law, and no jury issue is involved. Also, under Section 37-233 of the 1962 S.C. Code of Laws,² any person who solicits an insurance policy and delivers an application to insurer and in turn the policy to the insured "shall be held to be acting as the agent of such insurance company for which such act is done or risk is taken."

It is equally well settled that insurers have the right to...