Bailey v. Federated Mut. Ins. Co.

• Decision Date: 12 October 2004
• Docket Number: No. WD 63419.,WD 63419.
• Citation: Bailey v. Federated Mut. Ins. Co., 152 S.W.3d 355 (Mo. App. 2004)
• Parties: Jacob BAILEY, Respondent, v. FEDERATED MUTUAL INSURANCE COMPANY, Appellant.
• Court: Missouri Court of Appeals

152 S.W.3d 355

Jacob BAILEY, Respondent, v. FEDERATED MUTUAL INSURANCE COMPANY, Appellant.

No. WD 63419.

Missouri Court of Appeals, Western District.

October 12, 2004.

Motion for Rehearing and/or Transfer to Supreme Court Denied November 23, 2004.

Application for Transfer Denied January 25, 2005.

Gary Willnauer, Michael Moulder, Kansas City, for Appellant.

Christian Faiella, Moberly, for Respondent.

PAUL M. SPINDEN, Judge.

The primary issue in this case is whether or not 16-year-old Terry Ehler was a customer of Forrest Chevrolet-Oldsmobile, Inc., in Columbia when in 1999 he crashed the dealership's pickup into another automobile. If Ehler was Forrest Chevrolet-Oldsmobile's customer, the dealership's insurer, Federated Mutual Insurance Company, was not liable as insurer of the loss because its policy excluded coverage of customers. The circuit court concluded that Ehler was not a customer because he was not the pickup's purchaser — his grandmother was. The circuit court erred in ruling that Ehler was not a customer. We, therefore, reverse its judgment.

The undisputed facts established that, a few days before the crash, Ehler visited Forrest Chevrolet-Oldsmobile with his grandfather and drove the pickup for a test before buying it. Ehler returned with his parents the next day and negotiated its purchase. Neither Ehler nor his parents could afford the purchase, but, because Ehler's grandmother, Darlene Kilburn, had told Ehler that she would lend him money to buy a vehicle, Forrest Chevrolet-Oldsmobile's business manager called her to discuss financing the purchase. After this conversation, Ehler wrote a personal check for $2000 towards the pickup's purchase price with the understanding that Kilburn was to finance the remainder. Forrest Chevrolet-Oldsmobile's personnel accepted Ehler's check but indicated on the receipt that the payment was from Ehler and Kilburn jointly. The dealership's personnel also included Kilburn's name as purchaser along with Ehler on several documents, including purchase and security agreements. Kilburn testified that she did not agree to have her name placed on sales documents, and she never considered herself to be purchasing the truck — she merely was providing financing for the purchase.

With financing arranged through Kilburn, Forrest Chevrolet-Oldsmobile personnel authorized Ehler to drive the pickup to Kilburn's house, accompanied by his father, to get Kilburn's check. Ehler crashed the pickup into another car while driving to Kilburn's house. Ehler's father died in the crash, and occupants of the other car, Diane and Jacob Bailey, were seriously injured.

The Baileys sued Ehler, and the parties entered into a consent judgment of $1 million against Ehler. The Baileys agreed to pursue only insurance proceeds in enforcing the judgment. The Baileys recovered $100,000 from an insurance policy issued to Ehler's father, and they sought to recover the remainder from Federated Mutual, which insured Forrest Chevrolet-Oldsmobile under a general garage policy. Federated Mutual refused to pay on the grounds that Ehler was Forrest Chevrolet-Oldsmobile's customer and was, therefore, expressly excluded from coverage by the policy. The Baileys filed an equitable garnishment action against Federated Mutual. The circuit court found that Ehler was not a customer of Forrest Chevrolet-Oldsmobile and thus was covered under the garage policy. Federated Mutual appeals.

Because this was a court-tried case, the standard set forth in Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976), governs our review. Under that standard, we must affirm the judgment unless it is not supported by substantial evidence, is against the weight of evidence, erroneously declares the law, or erroneously applies the law. Because the circuit court did not make findings of fact, we deem it to have resolved factual disputes in accord with its judgment. Weaks v. Rupp, 966 S.W.2d 387, 392 (Mo.App.1998). We view the evidence in the light most favorable to the prevailing party, but we "`do not ... give the [party] the benefit of unreasonable, speculative or forced inferences.'" Gray v. White, 26 S.W.3d 806, 820 n. 10 (Mo.App.1999) (quoting Steward v. Goetz, 945 S.W.2d 520, 528 (Mo.App.1997)).

We conclude that the circuit court erred in concluding that Ehler was not Forrest Chevrolet-Oldsmobile's customer. Viewing the evidence in the light most favorable to the Baileys — even assuming, as the circuit court seemed to do, that Kilburn was the pickup's primary purchaser — the only reasonable inference to be drawn from Ehler's negotiating the pickup's purchase and his paying part of the purchase price as a co-purchaser was that he was a customer.

The cardinal rule for the courts in interpreting a contract, including an insurance policy, is to effectuate the parties' intent at the time of contracting. Butler v. Mitchell-Hugeback, Inc., 895 S.W.2d 15, 21 (Mo. banc 1995). When a contract's language is clear, we discern the parties' intent from the document alone. J.E. Hathman, Inc. v. Sigma Alpha Epsilon Club, 491 S.W.2d 261, 264 (Mo. banc 1973). In considering the contract's language, we understand it according to the plain and ordinary meaning of the words used, or the meaning that a person of average intelligence, knowledge, and experience would deem reasonable. Farmland Industries, Inc. v. Republic Insurance Company, 941 S.W.2d 505, 508 (Mo. banc 1997). The dictionary is a good source for finding the plain and ordinary meaning of contract language. Shahan v. Shahan, 988 S.W.2d 529, 535 (Mo. banc 1999). But we must be careful to consider the contract's context in applying the appropriate dictionary definition. Wilshire Construction Company v. Union Electric Company, 463 S.W.2d 903, 906 (Mo.1971).

We do not apply rules of construction unless a contract's language is ambiguous. Shahan, 988 S.W.2d at 535. If a contract's language is not ambiguous, we enforce it as written. Williams v. National Casualty...