Aviation Emp. Ins. Co. v. Barclay

• Decision Date: 11 January 1965
• Docket Number: No. 121,121
• Citation: Aviation Emp. Ins. Co. v. Barclay, 206 A.2d 119, 237 Md. 318 (Md. 1965)
• Parties: AVIATION EMPLOYEES INSURANCE CO. v. Fred L. BARCLAY.
• Court: Maryland Court of Appeals

Page 318

237 Md. 318

206 A.2d 119

AVIATION EMPLOYEES INSURANCE CO. v. Fred L. BARCLAY.

No. 121.

Court of Appeals of Maryland.

Jan. 11, 1965.

E. Richard McIntyre, Silver Spring (Kardy, Brannan & Neumann, Silver Spring, on the brief), for appellant.

M. B. Spaulding, Jr., Rockville (Allen, Spaulding & Cave, Rockville, on the brief), for appellee.

Before PRESCOTT, C. J., and HORNEY, MARBURY, SYBERT and OPPENHEIMER, JJ.

PRESCOTT, Chief Judge.

This appeal involves the construction of an insurance policy issued by the Aviation Employees Insurance Company (also known as Avemco Insurance Company), the appellant, to Freestate Aviation, Inc. (Freestate) which insured a fleet of airplanes owned by Freestate.

The appeal has been submitted on an agreed statement of facts, which follows:

'On the date in question, Freestate Aviation, Inc. was operating an airport facility, called Montgomery County Airport, in Gaithersburg, Maryland. Included within the scope of Freestate's operation was the leasing of light aircraft for hire to qualified pilots. The appellant, Aviation Employees Insurance Company, insured the fleet of airplaines belonging to Freestate Aviation, Inc., a copy of which policy of insurance, together with all endorsements, appears in the Appendix at pages E5-E23.

'On August 25, 1962, the appellee, a qualified, licensed private pilot, rented a Beechcraft Debonair airplane from Freestate Aviation, Inc. for the purpose of making a pleasure flight to Deep Creek Lake in Garrett County, Maryland. The appellee, while piloting the aircraft, attempted to take off from Bowman Field in Garrett County, when an accident occurred which caused extensive physical damage to the aircraft. The aircraft was repaired under the terms of the Hull coverage portion of the policy of insurance [Coverage D]. Freestate Aviation, Inc. paid the sum of $300.00 representing the deductible amount, and the appellant, Aviation Employees Insurance Company, paid the balance of the repairs $9,090.21.

'The present litigation was then instituted by the appellant, as a subrogee, to recover from the appellee the costs of necessary repairs (less the deductible amount).'

The record does not disclose that these facts were agreed upon below.

It seems appropriate to mention here that the aircraft insurance industry apparently drew upon the experience of the automobile insurance industry, for generally the aircraft policies have a coverage analogous to the bodily injury and property damage liability in automobile policies, and, when desired, a coverage analogous to collision coverage in such policies.

The pertinent portions of the policy here involved follow: '* * * Avemco Insurance Company [the appellant] * * * agrees with the insured named in the declarations made a part hereof, in consideration of the payment of the premium * * * and subject to the limits of liability, exclusions, conditions and other terms of this policy:

'1. COVERAGE A--AIRCRAFT LIABILITY. To pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of injury to or destruction of property * * * [and] bodily injury * * * sustained by any person * * * caused by an occurrence and arising out of the ownership, maintenance or use of the aircraft.

* * *

* * *

'COVERAGE D--ALL RISKS FLIGHT. To pay for all physical loss of or damage to the aircraft while in flight * * *. [This clause provides for a deductible amount to be borne by the owner.]

* * *

* * *

'III. DEFINITION OF INSURED. With respect to the insurance for Coverage A, the unqualified word 'insured' includes the named insured and also includes any person while using the aircraft * * * provided the actual use of the aircraft is by the named insured or with his permission. * * *.

* * *

* * *

'EXCLUSIONS

[Under this heading, there are exclusions relating to Coverage A alone; others that relate to Coverages A and B alone; others to Coverages A and D alone; and others to Coverages C and D alone. These exclusions are not here involved other than to assist in discovering the intent of the contracting parties.]

* * *

* * *

'CONDITIONS

* * *

* * *

'14. RIGHTS AGAINST CARRIERS, BAILEES OR OTHER THIRD PARTIES--COVERAGES C AND D

'The insurance afforded by this policy shall not enure directly or indirectly to the benefit of any carrier or other bailee. Any act or agreement by the insured, prior or subsequent hereto, whereby any right of the insured, to recover the full value of, or amount of damage to, any property lost or damaged * * * from any carrier, bailee or other party liable therefor, is released, repaired or lost, shall relieve the company of any liability under this policy * * *.

* * *

* * *

'17. SUBROGATION--COVERAGES A, C AND D. In the event of any payment under this policy the company shall be subrogated to all the insured's rights of recovery therefor against any person or organization and the insured shall execute and deliver instruments and papers * * * to secure such rights. * * *.'

Appellant filed its declaration as subrogee upon the theory of a breach of the bailment contract. ¹ The appellee filed pleas alleging that Freestate did not lease the aircraft to the plaintiff (apparently meant to be defendant); that an aircraft was furnished to defendant as a substitute aircraft, while his was being repaired; that defendant was an insured person under the insurance policy; and that defendant is not indebted to plaintiff. Later defendant filed general issue pleas, which he designated as an 'amended plea.' Still later he filed a motion for a summary judgment on the ground 'that there is no genuine dispute between the parties as to any material fact and that defendant is entitled to judgment as a matter of law inasmuch as defendant was an additional assured under the terms of [the] insurance policy * * *.' A deposition was thereafter taken at a law office, but it is not contained in the record extract, nor does the record extract disclose that it was presented to the lower court. No affidavits in support of, or in opposition to, the granting of the motion were filed. The trial court signed a short order which 'granted' the motion for a 'summary judgment.' The lawyers did not request the judge to set forth the grounds of her decision (Maryland Rule 18 c), nor did the judge do so; hence we do not have the adventage of having the trial court's reasons for the actions taken.

No question is raised as to the propriety of Summary Judgment Proceedings here (Maryland Rule 610). And both sides agree that the trial court determined as a matter of law that the appellee was an 'additional insured' under the insurance policy, and both sides also agree if that ruling be correct, the appellant cannot recover. Hence the answer to the question as to whether appellee was or was not an 'additional insured' under the insurance policy is determinative of this appeal; and possible additional questions involved will have to be resolved initially in the trial court.

A policy of insurance is a contract, and, in the absence of constitutional or statutory barriers, the parties thereto are at liberty to make their own agreement. It needs no citation of authority to assert that where there is ambiguity in the terms of an insurance policy, they should be liberally construed in favor of the insured and against the drafter of the policy; but this does not mean that a strained or unjustified construction of the policy is to be adopted, which disregards the plain meaning and intent of the parties. We find no ambiguity in the pertinent terms of the policy here involved, so we shall give them their plain and ordinary meaning in determining whether the appellee was an additional insured.

The parties agree (as indeed they should) that when the appellee rented the airplane from Freestate on August 25, 1962, the relationship of bailor and bailee arose. Schleisner Co. v. Birchett, 202 Md. 360, 96 A.2d 494; Fast Bearing Co. v. Koppers Co., 181 Md. 203, 29 A.2d 289, 144 A.L.R. 1022; 8 Am.Jur.2d, Aviation, § 28.

We now examine the precise terms of the policy. We find that the appellant agreed with Freestate (under Coverage D, which is here involved) to pay for all physical loss of or damage to the aircraft (subject to the deductible amount) while in flight; but this provision was 'subject to the * * * exclusions, conditions and other terms of this policy.' One of those conditions (14) stated that under Coverages C and D the insurance afforded by the policy should not enure, directly or indirectly, to the benefit of any bailee (which as we pointed out above was the status of the appellee); and then went on to provide that any agreement by Freestate, whereby Freestate released or impaired its right to recover against a bailee the full amount of damages for which the bailee was liable, should release the appellant from liability under the policy. Another Condition (17) provides that in the event of payments by the insurer under Coverages A, C and D the insurer should be subrogated to all of the insured's rights of recovery against any person.

The appellee, in his brief, contends 'that the policy in question here is ambiguous, and hence should be construed against the drafter,' and argues that 'if appellee is to be excluded from coverage of the policy [under Coverage D] * * *, he must be excluded specifically, either by an exclusion or by a...