Bobich v. Oja

Decision Date17 June 1960
Docket NumberNo. 37995,37995
PartiesHenry A. BOBICH, a.k.a. Elwood Bobich, as trustee for the heirs and next of kin for Betty Jane Bobich, deceased, Plaintiff, v. Frank E. OJA, a.k.a. Ed Oja et al., Defendants, and Frank E. OJA, third-party plaintiff, Appellant, v. AMERICAN HARDWARE MUTUAL INSURANCE COMPANY, third-party defendant, Respondent.
CourtMinnesota Supreme Court

Syllabus by the Court

1. An insurer in an automobile liability policy is not obligated to defend a suit on a claim that is not within the coverage of the policy.

2. Parties to insurance contracts, absent legal prohibition or restriction, are free to contract as they see fit, and the extent of liability is governed by the contract they enter into.

3. Subject to the statutory law of the state, general principles of the law of contracts apply to a policy of insurance.

4. Inasmuch as the language of an insurance policy is that of the insurer, any reasonable doubt as to its meaning must be resolved in favor of the insured, but the court has no right to read an ambiguity into plain language of an insurance policy in order to construe it against the one who prepared the contract.

5. Where there is no ambiguity there is no room for construction. In such cases, the parties being free to contract, the language used must be given its usual and accepted meaning.

6. Contracts of insurance, like other contracts, must be construed according to the terms the parties have used, to be taken and understood, in the absence of ambiguity, in their plain, ordinary, and popular sense, so as to give effect to the intention of the parties as it appears from the entire contract.

7. Endorsements or riders attached to an insurance contract are part of the contract, and the endorsements and the policy must be construed together.

8. A policy and endorsements should be construed, if possible, so as to give effect to all provisions, but, where provisions in the body of the policy conflict with an endorsement or rider, the provision of the endorsement governs.

9. Exclusions in a policy or endorsements are as much a part of the contract as other parts thereof and must be given the same consideration in determining what is the coverage.

10. Where a policy expressly excludes liability for the ownership or use of an automobile owned by an officer of a corporation, the insurer in a policy covering the use and ownership of automobiles owned by the corporation is not obligated to defend an action predicated upon the use and ownership of an automobile owned by such officer.

11. Where there is no claim of mutual mistake, fraud, or other inequitable conduct which would justify a reformation of a written contract, the court did not abuse its discretion in denying a motion for leave to file a supplementary complaint seeking reformation of a written instrument.

Lewis, Hammer, Heaney, Weyl & Halverson, K. C. Weyl, Duluth, for appellant.

Hultstrand, Abate & Wivoda, James V. Abate, Hibbing, for respondent.

KNUTSON, Justice.

This is an appeal from a judgment entered pursuant to an order granting a motion of third-party defendant for summary judgment, and from an order denying third-party plaintiff's motion to vacate the judgment and for leave to file a supplementary complaint.

The facts are not seriously in dispute. Frank E. Oja is the president of Oja's, Inc., a Minnesota corporation engaged in operating a shopping center at Pengilly, Minnesota, including a general merchandise business, restaurant, garage, and service station. He is also the principal stockholder of the corporation, owning approximately 70 percent of the corporate stock. Frank E. Oja, personally, does not own any automobile. Oja's, Inc., owns a number of motor vehicles which are used principally in the business of the corporation. Among such motor vehicles on July 8, 1958, was a 1956 Chevrolet station wagon. The station wagon was being driven on that date by Betty Jane Bobich and Louise Bjork, employees of Oja's, Inc., in the course of their employment, and, while so driven, it was involved in a collision with a motor vehicle driven by Stuart D. Felix. Both Oja employees died as a result of injuries received in the collision.

At the time of this accident the Chevrolet station wagon was registered in the name of Oja's, Inc., and was covered by a comprehensive general and automobile liability policy of insurance issued by American Hardware Mutual Insurance Company as insurer.

Sometime subsequent to this accident separate actions were started by the trustees for the heirs and next of kin of each employee against the special administrator of the estate of the other, each trustee alleging that the other employee had been the driver of the automobile at the time of the collision. Frank E. Oja, personally, was joined as a defendant in these actions, plaintiffs alleging that he was the owner of the Chevrolet automobile. The defense of these actions was tendered to American Hardware Mutual Insurance Company, and it refused to defend on the ground that the policy of insurance issued to Oja's, Inc., did not cover automobiles owned personally by Frank E. Oja and that there was no coverage under these policies for any liability which might result from the actions so instituted. Thereupon American Hardware Mutual Insurance Company was brought in as a third-party defendant in order to litigate whether this insurer was obligated to defend these actions.

The policy of insurance involved consists of a basic policy and a number of endorsements. The basic policy is in the usual form of such insurance and includes insuring agreements, exclusions, conditions, and schedule of declarations. The provisions thereof which are of importance here are as follows:

Under the heading 'INSURING AGREEMENTS' in the basic policy appear these provisions:

'I Coverage A--Bodily Injury Liability: To pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of bodily injury, sickness or disease, including death at any time resulting therefrom, sustained by any person and caused by accident.

'II Defense, Settlement, Supplementary Payments: With respect to such insurance as is afforded by this policy, the company shall:

'(a) defend any suit against the insured alleging such injury, sickness, disease or destruction and seeking damages on account thereof, even if such suit is groundless, false or fraudulent; * * *

'III Definition of Insured: The unqualified word 'insured' includes the named insured and also includes (1) under coverages A and C, except with respect to the ownership, maintenance or use of automobiles while away from premises owned, rented or controlled by the named insured or the ways immediately adjoining, any executive officer, director or stockholder thereof while acting within the scope of his duties as such, * * * and (2) under coverages A and B, any person while using an owned automobile or a hired automobile and any person or organization legally responsible for the use thereof, provided the actual use of the automobile is by the named insured or with his permission, and any executive officer of the named insured with respect to the use of a non-owned automobile in the business of the named insured. The insurance with respect to any person or organization other than the named insured Does not apply under division (2) of this insuring agreement:

'(e) with respect to any non-owned automobile, to any executive officer If such automobile is owned by him or a member of the same household.' (Italics supplied.)

Under the heading 'EXCLUSIONS' in the basic policy appears this provision:

'This policy does not apply: LN * * *

'(f) under Coverage A, to any obligation for which the insured or any carrier as his insurer may be held liable under any workmen's compensation, unemployment compensation or disability benefits law, or under any similar law;'

Under the term 'Definitions' in the basic policy we find the following:

'(b) Automobile. Except where stated to the contrary, the word 'automobile' means a land motor vehicle or trailer as follows:

'(1) Owned Automobile--an automobile owned by the named insured;

'(2) Hired Automobile--an automobile used under contract in behalf of, or loaned to, the named insured provided such automobile is not owned by or registered in the name of (a) the named insured or (b) an executive officer thereof or (c) an employee or agent of the named insured who is granted an operating allowance of any sort for the use of such automobile '(3) Non-Owned Automobile--any other automobile.'

In endorsement GL--130, which became effective March 1, 1958, we find, among other things, the following:

'B. DEFINITION OF INSURED.

'The unqualified word 'insured' includes the named insured and also includes (1) any partner, employee, director or stockholder thereof while acting within the scope of his duties as such, and any person or organization having a financial interest in the business of the named insured covered by this endorsement, and (2) any person while using an automobile covered by this endorsement, and any person or organization legally responsible for the use thereof, provided the actual use of the automobile is by the named insured or with his permission, this definition does not include:

'(b) any partner, employee, director, stockholder or additional insured With respect to any automobile owned by him, or by a member of his household other than the named insured;' (Italics supplied.)

Endorsement GL--74 contains the provision that 'All conditions and provisions of the policy not amended herein remain unchanged,' and, while this endorsement names Frank E. Oja and Robert Oja individually within the definition of insured, it contains the following exclusion:

'2. Exclusions. This endorsement does not apply:

'(e) To any automobile owned by or furnished for regular use to Such named...

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