Cagle v. Home Ins. Co.

• Decision Date: 13 April 1971
• Docket Number: CA-CIV,No. 1,1
• Citation: 14 Ariz.App. 360,483 P.2d 592
• Parties: Ray E. CAGLE and Forrest L. Cagle, dba Cagle Bros. Trucking Service, a co-partnership, Appellants, v. The HOME INSURANCE CO., Appellee. 1169.
• Court: Arizona Court of Appeals

Page 592

483 P.2d 592

14 Ariz.App. 360

Ray E. CAGLE and Forrest L. Cagle, dba Cagle Bros. Trucking Service, a co-partnership, Appellants, v. The HOME INSURANCE CO., Appellee.

No. 1 CA-CIV 1169.

Court of Appeals of Arizona, Division 1, Department B.

April 13, 1971.

Rehearing Denied May 14, 1971.

Review Denied June 22, 1971.

Lutich, D'Angelo & Wilson by Richard A. Wilson, Phoenix, for appellants.

Jack M. Anderson and Paul W. Holloway, Phoenix, for appellee.

EUBANK, Judge.

In this appeal a contractor's tractor and backhoe was totally destroyed while it was being transported to a construction site on a truck and trailer owned by the appellant-motor carrier. The appellant-motor carrier's insurance company settled the claim by paying the contractor the purchase price of a new tractor and backhoe, while specifically agreeing with the contractor that the settlement covered, 'property damage only and does not constitute a release of any loss of services.' The contractor then brought suit against the appellant for the rental value of replacement equipment and recovered a judgment. Appellant then sued the insurance carrier in the case at bar and lost when the trial court entered summary judgment in favor of the Insurance Co. The question for review is whether the insurance contract did, in fact, include coverage for the loss of services of the tractor and backhoe. We hold that it did not and affirm the summary judgment entered by the trial court.

Other aspects of the facts involved in this case have been the subject of prior decisions in the appellate courts. See our opinion Cagle v. Carr, 3 Ariz.App. 285, 413 P.2d 795 (1966), which was vacated by the Supreme Court's decision in 101 Ariz. 225, 418 P.2d 381 (1966). The facts are fully set out in these prior decisions and will not be repeated here, except where necessary to the disposition of this matter.

In the case at bar, the appellants Ray E. Cagle and Forrest L. Cagle, doing business as Cagle Brothers Trucking Service, a partnership, and hereafter referred to as the 'plaintiffs', filed their complaint in the Superior Court against appellee, The Home Insurance Co., hereafter referred to as the 'Insurance Co.', alleging generally in Court One that they were insured by the the Insurance Co. through policy No. TM 401088; that a loss occurred; that they notified the Insurance Co. which refused to defend them; that following extensive litigation a judgment in the sum of $4806.40 was awarded against them in Cagle v. Carr, supra; that they made demand upon the Insurance Co. to pay the judgment but the Insurance Co. refused to do so, resulting in their damage. Count Two of the complaint alleges generally that the Insurance Co. in settling with the shipper, Carr, caused its damage in Cagle v. Carr, supra, and, in turn, constituted a breach of the insurance contract by their failure to defend. Count Three is still before the trial court and not subject to this review. The Insurance Co. answered denying all of plaintiffs' allegations relating to its breach of a duty under the insurance contract and set up as an affirmative defense the following:

'1. That prior to the filing of Cause No. 141907 referred to in paragraph III of plaintiff's complaint, defendant (Insurance Co.) paid to the claimant John Carr (contractor) the sum of $9,120.80, said sum having been agreed to as the full cash value of the Bucyrus-Erie tractor and backhoe which was completely destroyed in the accident.

2. That notwithstanding the release executed by John Carr contained a provision that it released property damage only and did not constitute a release of any loss of use, payment of the full cash value discharged all of the liability of this answering defendant under the terms and provisions of its policy contract. Said policy No. TM 401088 expressly provides in part as follows:

4. This company shall not be liable for more than the amount of invoice or if not under invoice, then at actual cash market value at the place of shipment: it is agreed however, that this Company shall not be liable for more than $25,000 in any one loss or catastrophe, casualty or disaster involving one or more pieces of equipment, and

* * *

* * *

6. This Policy Does Not Insure Loss or Damage

(e) Caused by delay or loss of market.'

These pleadings set the stage wherein both parties filed motions for summary judgment based upon the express provisions of the insurance contract. The trial court, finding that there was no issue as to any material fact, granted summary judgment in the Insurance Co.'s favor and the plaintiffs appeal from that award raising five questions as follows:

'1. Are damages awarded against Appellants for rental of replacement equipment excluded under Appellee's contract of insurance?

2. Was Appellee, under its contract of insurance, required to provide Appellants with attorneys and a defense against Carr even though Appellee claims the loss sued for is excluded under its policy?

3. If Appellee was obligated to defend Appellants under the contract of insurance, are Appellants now entitled to recover from Appellee the cost of said defense, including attorneys' fees and court costs?

4. When a count in a complaint states a cause of action, may a trial court grant summary judgment or a motion to dismiss to the Defendant upon its bare motion unsupported by controverting affidavit of points of law?

5. Did the trial court commit error in not granting Appellants' Motion for Partial Summary Judgment or, in the alternative, in granting Appellee's Motion for Summary Judgment?'

THE CONTRACT OF INSURANCE

The first three questions on appeal are resolved be reference to the contract of insurance, consequently they will be dealt with together.

Plaintiffs' position regarding the contract of insurance is, '* * * that, under the policy and general laws of the State of Arizona, appellee (Insurance Co.) is liable on appellants' (plaintiffs) legal liability as a common carrier or a contract carrier for loss or damage caused by the perils insured against under the contract of insurance.' Plaintiffs then specifically refer to three provisions of the contract which form the basis for their position: Item numbered '1' which reads:

'1. Loss, if any, Payable to Assured or Order.'

A portion of Item numbered '2', which is a provision in the 'Arizona Rider' defined hereafter, which reads:

'2. On the Assured's legal liability as common carrier or Assured's liability as a contract carrier for loss or damage caused directly by perils insured against hereunder, * * *.'

and a portion of Item '5' entitled, 'THIS POLICY INSURES', which reads:

'The legal liability of the Assured as a common or contract carrier for loss or damage directly caused by: * * *.'

It is plaintiffs' contention that the use of the term 'legal liability' in the contract extends the Insurance Co.'s coverage to include not only the $9,120.80 settlement with the shipper Carr for the destroyed tractor and backhoe, but also the $4806.40 judgment, for the rental of a replacement backhoe for the period May 12, 1962 through August 7, 1962, rendered against the plaintiffs in Cagle v. Carr, supra.

We have carefully scrutinized the contract of insurance and we cannot agree with the plaintiffs' construction of the contract. The Supreme Court has concisely set out the rules of construction applicable to an insurance contract as follows:

'In the absence of a statutory provision which will be read into each policy issued thereunder and cannot be contracted away by either party, United States Fidelity and Guaranty Company v. Hirsch, 94 Ariz. 331, 385 P.2d 211 (1963), the principles to be applied in construing an insurance policy have been stated by this Court, in a series of decisions and may be summarized as follows: The cardinal principle pertaining to the construction and interpretation of insurance contracts is that the intention of the parties should control. An insurance policy is a contract, and in an action based thereon the terms of the policy must govern. * * * (W)here the provisions of the contract are plain and unambiguous upon their face, they must be applied as written, and the court will not pervert or do violence to the language used, or expand it beyond its plain and ordinary meaning or add something to the contract which the parties have not put there. (Citation of cases.)' D.M.A.F.B. Federal Credit Union v. Employers Mut. Liability Ins. Co. of Wis., 96 Ariz. 399, 396 P.2d 20.

See also Dairyland Mutual Ins. Co. v. Andersen, 102 Ariz. 515, 517, 433 P.2d 963, 965 (1967).

The Insurance Co.'s policy No. TM 401088, we believe, sets forth a clear intention of the parties to insure the cargo or personal property carried in plaintiffs' trucks. On the first page of the policy we find the Insurance Co.' § obligation set out as follows:

'The Home Insurance Company * * * BY THIS POLICY OF INSURANCE * * * Does Insure (Plaintiffs) * * *. To an amount not exceeding TWENTY-FIVE THOUSAND AND NO/100 * * * Dollars against loss resulting from the liability of the assured (plaintiffs) to others for loss or damage to lawful goods and merchandise consisting principally of COTTON, SEED, MACHINERY, EQUIPMENT, FABRICATED STEEL PRODUCTS, CONSTRUCTION TOOLS, FARM PRODUCTS, HOUSEHOLD FURNITURE AND GENERAL MDSE. caused by any of the perils enumerated below for which loss or damage the assured is liable, either in the absence of or under bills of lading or other shipping receipts. This insurance attaches and covers the assured's liability with respect to ascertained merchandise only when the same is loaded for shipment and in due course of transit within the limits of the United States * * *.' (emphasis added)

On the second page of the Insurance Contract, its purpose is stated:

'It is the Purpose of this insurance To indemnify the Assured (plaintiffs) For their liability as a carrier only to the amount which they are obliged to pay and do pay On such merchandise by reason of...