New Hampshire Ins. Co. v. Schofield

• Decision Date: 20 August 1979
• Docket Number: No. 79-062,79-062
• Citation: 119 N.H. 692,406 A.2d 715
• Parties: NEW HAMPSHIRE INSURANCE COMPANY v. Jacqueline M. SCHOFIELD et al.
• Court: New Hampshire Supreme Court

Page 715

406 A.2d 715

119 N.H. 692

NEW HAMPSHIRE INSURANCE COMPANY v. Jacqueline M. SCHOFIELD et al.

No. 79-062.

Supreme Court of New Hampshire.

Aug. 20, 1979.

Hinkley & Donovan, Lancaster (Walter D. Hinkley, Lancaster, orally), for plaintiff.

Devine, Millimet, Stahl & Branch, Manchester (E. Donald Dufresne, Manchester, orally), for St. Paul Fire & Marine Ins. Co.

GRIMES, Justice.

The question in this declaratory judgment action is whether the trial court erred in ruling that the St. Paul Fire & Marine Insurance Co., and not the plaintiff company, provided coverage for the accident in which defendant Jacqueline M. Schofield was injured on premises owned by defendants Neil A. Cowan and Ross V. Deachman.

Neil A. Cowan and Ross V. Deachman, d.b.a. Nero Realty, owned a large set of buildings in the town of Rumney. Part of the premises was a large barn, the ground floor of which was converted to a restaurant. On the second floor of the barn were living quarters and above that an attic which was reached through a trap door in the ceiling of the hallway of the second floor.

In January 1975, the owners leased to Clifford Wallshein and Roger Beinish the "first and second floors of what was formerly the barn section of the buildings together with two rooms off the dining room area." The lessees were to have the use of certain equipment and of the walk-in and upright freezer. Article VI, paragraph G of the lease required the lessees to obtain public liability insurance with the lessors as additional insureds. Defendant St. Paul Fire & Marine Insurance Co. (hereinafter St. Paul) issued a policy to the lessees with the Description of Hazards designated "Premises Operations, Restaurant," and the lessors, Cowan and Deachman, were named as additional insureds.

Plaintiff issued to the owners an Owners', Landlords', and Tenants' liability policy on the whole premises. The policy contained an endorsement which provided: "In consideration of the premiums charged, it is hereby agreed that premises liability coverage as afforded by this policy does not apply to restaurant operations."

Wallshein was conducting a restaurant business on the leased premises on December 19, 1976. Defendant Jacqueline Schofield was employed in the restaurant and was living with Wallshein on the second floor of the leased premises. She was told to find the restaurant's Christmas decorations and decorate the restaurant. Believing that the decorations were in the attic on the third floor, where she and Wallshein kept both personal and restaurant items, she went to the trap door that led to the attic. She put up a ladder, which she found lying nearby, and pushed open the trap door and entered the attic. After failing to find the decorations, she began to climb down the ladder. She claims to have been injured when the trap door fell on her fingers. She brought suit against the owners alleging that the trap door was defective and unreasonably dangerous, and that the owners had failed to warn her of the door's dangerous condition.

Plaintiff filed this petition for declaratory judgment, RSA 491:22, seeking a decree that it was not obligated to defend or pay any judgment because of the restaurant operation exclusion. St. Paul answered and prayed that it be decreed that it was not obligated to defend or pay any verdict arising out of the accident, but that plaintiff be adjudged to be so obligated.

The matter was heard without a jury by Johnson, J. The court found that the owners could reasonably expect that the tenants would use the attic for storage of personal and restaurant effects, that Schofield was an employee of Wallshein, and that "she was engaged in restaurant operations at the time of her accident." The court granted plaintiff's request for a finding that "Miss Schofield's injury arose out of a restaurant operation," and ruled that St. Paul's policy provided coverage but that plaintiff's policy, because of its exclusion relating to "restaurant operations," did not. St. Paul's exceptions were transferred to this court.

I. Plaintiff's Coverage

The first issue presented is whether the trial court erred in ruling on the facts of this case that the restaurant operations exclusion in plaintiff's policy absolved plaintiff of all responsibility to the insureds Cowan and Deachman. A careful review of the record convinces us that the trial court did err.

It is well settled that the interpretation of an insurance policy is for this court and that the test in this jurisdiction is what a reasonable person in the position of the insured would understand the policy to mean." Sun Insurance Co. v. Hamanne, 113 N.H. 319, 321, 306 A.2d 786, 788 (1973); Hanover Insurance Co. v. Grondin, 119 N.H. ---, ---, 402 A.2d 174, 176 (1979). See generally R. Keeton, Insurance Law § 6.3(a) (1971). In the case of an express exclusion, the question is "whether the ordinary layman in the position of the insured could reasonably be expected to understand that certain exclusions qualified the policy's grants of coverage." Commercial Union Assurance Cos. v. Gollan, 118 N.H. 744, 745, 394 A.2d 839, 841 (1978); Brown v. City of Laconia, 118 N.H. 376, 386 A.2d 1276 (1978); See Olszak v. Peerless Insurance Co., 119 N.H. ---, 406 A.2d 711 (1979) (decided this day).

Plaintiff's policy states in typical fashion that it covers "all sums which the insured shall become legally obligated to pay damages because of bodily injury . . . to which this insurance applies, Caused by an occurrence and arising out of the ownership . . . of the insured premises." (Emphasis added.) The exclusion provides only that the premises liability coverage "does not apply to restaurant operations." Reading the two provisions together, we conclude that the "reasonable person in the position of the insured" would expect...