U.S. Fidelity & Guaranty Corp. v. Elba Wood Products, Inc.

• Decision Date: 01 October 1976
• Citation: 337 So.2d 1305
• Parties: UNITED STATES FIDELITY AND GUARANTY CORPORATION, a corporation v. ELBA WOOD PRODUCTS, INC., a corp., et al. Rachel COOK, as Executrix, etc. v. ELBA WOOD PRODUCTS, INC., a corporation, et al. SC 1652 and SC 1652X.
• Court: Alabama Supreme Court

Page 1305

337 So.2d 1305

UNITED STATES FIDELITY AND GUARANTY CORPORATION, a corporation v. ELBA WOOD PRODUCTS, INC., a corp., et al.

Rachel COOK, as Executrix, etc. v. ELBA WOOD PRODUCTS, INC., a corporation, et al.

SC 1652 and SC 1652X.

Supreme Court of Alabama.

Oct. 1, 1976.

Cassady & Fuller, Enterprise, for United States Fidelity and Guaranty Co., a Corp.

Alton L. Turner, Luverne, for appellee and cross-appellant, Rachel Cook, as Executrix of the estate of Mace Cook, deceased.

Pittman & Whittaker, Enterprise, for appellees Jerry Wayne Grissett and W. C. Grissett.

ALMON, Justice.

Appellant, United States Fidelity and Guaranty Company, appeals from a declaratory judgment rendered in the Circuit Court of Coffee County in which appellant requested the interpretation of the following insurance contract clause:

'It is understood and agreed that no coverage is afforded under the policy for any unit which is driven by or in the custody of Joe Robert (Buddy) Beck.'

Appellee, Rachel Cook as executrix of the estate of Mace Cook, deceased, cross-appealed, contending the circuit judge erred in refusing to determine the coverage under the policy of a party to the accident, Jack Michael Holmes.

According to the facts as agreed to by the parties, appellant had issued a liability insurance policy to Elba Wood Products, a corporation, on February 25, 1974. The policy was in full force and effect on April 4, 1975, the date of the accident which is the basis of two law suits ¹ for which coverage is claimed and which are now stayed pending the rendering of this decision. The policy provided coverage for a van type trailer involved in the accident along with other equipment not involved in the accident.

The accident leading to the request for declaratory judgment occurred in Enterprise, Coffee County, Alabama. Jack Michael Holmes was driving a tractor truck owned by Joe Robert (Buddy) Beck. The truck was pulling a trailer owned by Elba.

Beck, who was in the trucking business, had an oral agreement with Elba to provide trucks to pull trailers loaded with wood chips to Cedar Springs, Georgia. Beck employed drivers to haul the loads and only occasionally drove a load himself. At no time had Beck owned any of the trailers. All of the trailers, including the one in the accident, were owned by Elba. Beck was paid on a per load basis and he paid his drivers on a per load basis.

According to a deposition of Beck taken by Cook in Civil Action No. 132--74 and entered as part of the record (the appellant was not at the deposition), Beck and Elba had a history of prior dealings beginning just before Christmas in 1972 when they entered into an oral agreement. Beck did not own a truck at that time but subsequently bought a Mack truck. Title to the truck was in his name but with Elba's consent he put the license in Elba's name to avoid problems of 'rights' from the Alabama Public Service Commission. Insurance for the truck was in Beck's name but was paid for by Elba. During the first part of 1973 Beck sold the Mack truck and bought the Chevrolet truck involved in the accident. Approximately a year prior to the accident Beck had a disagreement with Elba, left the company, and leased his truck to Watkins Truck Lines. Within six months after leaving Elba, Beck rejoined the company.

One reason Beck left the company was that they wanted him to reimburse them for the insurance. When he returned to work for Elba, he told them he could not afford the insurance. His understanding was that the truck was to be included in Elba's policy, though the owners of Elba never specifically stated it would be.

After the accident the following conversation transpired between Beck and one of the owners of Elba, as told by Beck:

'A. I come from the wreck, come back to Mace's, and told them that if there was anything I could do just to call me. Then, I come from there to the drugstore over there (indicating) looking for Tatum. He was parked in front of the store there and he was coming down the street with a boat paddle in his hand, so anyway I said, 'Ray, we have had a bad wreck. We had better get all of our ducks in line, because the insurance is going to have to be paid,' and he said, 'What insurance?'

'Q. That's the only statement he made to you?

'A. Yes, that surprised me. It really surprised me. He said, 'I think there's a letter in the file from Robert Morrison's to the effect that you would not be insured by Elba Wood Products.' So I jumped on around to Mr. Marsh's, and he more or less said the same thing.'

The issue is whether the trailer was 'driven by or in the custody of Joe Robert (Buddy) Beck'. The truck pulling the trailer was not one of the units listed in the insurance policy and none of the parties argues that it is covered by the policy. Beck was not driving the trailer; technically, a trailer could not be driven by anyone, only pulled. Therefore, if the exclusion is to apply to the accident in question, the trailer must have been in the custody of Beck as it was being pulled by Holmes, Beck's employee.

The cardinal principle in the interpretation of any contract is that the intention of the parties should control. 43 Am.Jur.2d, § 260 at 318; Alabama Farm Bureau Mutual Casualty Insurance Company v. Goodman, 279 Ala. 538, 188 So.2d 268 (1966). In ascertaining the intent of the parties, the terms used are to be taken in their plain, ordinary and popular sense if they are clear and unambiguous and have not acquired a technical meaning. 43 Am.Jur.2d, § 265 at 324; Franklin Life Ins. Co. v. Lewis, 36 Ala.App. 313, 55 So.2d 518 (1951); Universal Underwriters Ins. Co. v. Marriott, 286 Ala. 231, 238 So.2d 730 (1970); Alabama Farm Bureau Mutual Cas. Ins. Co. v. Goodman, supra. If doubt arises as to the meaning of the terms used, then they will be interpreted against the party who has drawn the contract. 43 Am.Jur.2d, § 271 at 329; Trans-Continental Mutual Insurance Company, Inc. v. Harrison, 262 Ala. 373, 78 So.2d 917 (1955); State Farm Mutual Automobile Insurance Co. McInnish, 284 Ala. 492, 226 So.2d 149 (1969).

'The rule is well established that if exceptions, exclusions, and exemptions from, or limitations of, the liability of an insurer are not expressed plainly and without ambiguity, they will be construed strictly against the insurer, and liberally in favor of the insured, in order that the purpose of insurance shall not be defeated.' 43 Am.Jur.2d, § 279 at 340--341.

However, that is not to say that insurance companies cannot write their contracts in any legal form they wish. 43 Am.Jur.2d, § 279 at 341; Alabama Farm Bureau Mutual Cas. Ins. Co. v. Goodman, supra.

'Custody' as defined by Webster's New Collegiate Dictionary, 1975 ed., is 'immediate charge and control exercised by a person or an authority.' According to Black's Law Dictionary, Revised 4th Ed., 1968,

'The word is defined as the care and possession of a thing, and means the keeping, guarding, care, watch, inspection, preservation or security of a thing, and carries with it the idea of the thing being within the immediate personal care and control of the person to whose custody it is subjected; charge; immediate charge and control, and not the final, absolute control of ownership, implying responsibility for the protection and preservation of the thing in custody.'

The appellant submits the following definition of custody:

"Custody' . . . 'means to have in charge or safe keeping, connotes control, and includes as well, although it does not require, the element of physical or manual possession, implying a temporary physical control merely, and responsibility for the protection and preservation of a thing in custody. * * * The term * * * carries with it the idea of thing being within the immediate personal care and control of the person to whose custody it is subjected; charge; charge to keep, subject to order or direction; immediate charge, and control and not the final absolute control of ownership." National Fire Insurance Company v. Davis, Tex.Civ.App., 179 S.W.2d 316 (1944).

By all these definitions Holmes had custody, not Beck. Holmes was pulling the trailer. Only he could have immediate charge and control over it; only he could keep, guard, care for and preserve it as it was being pulled down the highway.

Appellant argues that the clause should be interpreted in light of the history of dealings with Elba and Beck. 'It has been said in this connection that one of the most satisfactory tests for the ascertainment of the true meaning of an insurance contract is to place oneself in the position of the contracting parties and to view all of the facts and...