Commercial Union Assur. Companies v. Town of Derry

Decision Date27 June 1978
Docket NumberNo. 7959,7959
Citation387 A.2d 1171,118 N.H. 469
PartiesCOMMERCIAL UNION ASSURANCE COMPANIES v. TOWN OF DERRY, Edwin C. Simonsen, Bellefonte Insurance Company.
CourtNew Hampshire Supreme Court

Devine, Millimet, Stahl & Branch, Manchester (David H. Barnes, Manchester, orally), for plaintiff.

Soule, Leslie & Bronstein, Salem (Gerald M. Zelin, Salem, orally), for defendant.

DOUGLAS, Justice.

This case concerns the interpretation of a liability insurance policy clause that limits coverage to accidents not intended or expected by the insured. The issue is whether the clause suspends the insurer's obligation to defend or indemnify the town of Derry in a suit arising from an allegedly intentional tort committed by a town employee who is also an insured under the policy. We find no suspension of coverage.

In 1974 a car driven by Edwin C. Simonsen collided with a police cruiser driven by Derry police officer Larry Hamer. Simonsen subsequently sued the town of Derry. The complaint alleged injury to person and property and claimed that Officer Hamer acted both negligently and intentionally. Commercial Union Assurance Companies insured the town under a comprehensive automobile liability policy, that limited coverage to accidents resulting in "bodily injury of property damage neither expected nor intended from the standpoint of the insured." On receipt of Simonsen's complaint, the town turned the matter over to its insurer, Commercial Union. Commercial agreed to defend the negligence allegation but refused to cover the alleged intentional torts. In May 1975 the insurer petitioned Rockingham County Superior Court for a declaratory judgment under RSA 491:22 on the issue of coverage. The Master (Leonard C. Hardwick, Esq.) ruled that the policy did not cover intentional torts like those alleged in Simonsen's complaint. Perkins, J., approved the ruling and denied the town's motion for a rehearing. All exceptions were reserved and transferred to this court. We reverse.

This court will interpret ambiguous contract clauses. See Protective Check Writer Co. v. Collins, 92 N.H. 27, 30, 23 A.2d 770, 773 (1942). A clause is ambiguous when the contracting parties reasonably differ as to its meaning. See 3 A. Corbin, Contracts § 543A (Supp. 1971). When an insurance policy clause is ambiguous, we interpret that clause as would a reasonable and ordinarily intelligent layman in the position of the insured. Brown v. Laconia, 118 N.H. ---, ---, 386 A.2d 1276, 1277 (1978); Aetna Ins. Co. v. State Motors, Inc., 109 N.H. 120, 125, 244 A.2d 64, 67 (1968); Peerless Ins. Co. v. Clough, 105 N.H. 76, 79, 193 A.2d 444, 446 (1963).

The ambiguous phrase at issue here is "the insured." It appears in the clause limiting coverage to accidents not intended or expected by "the insured." Commercial and Derry differ as to which "insured" parties are contemplated by the ambiguous phrase. Section II of the policy lists the "insured" parties.




The town of Derry is the named insured, and Officer Hamer is clearly an additional insured under the omnibus clause, section II(c) of the policy.

Commercial Union interprets "the insured" to mean any insured. It would deny coverage whenever an intentional tort is alleged against any single insured. Derry contends that "the insured" refers only to the specific insured who was both involved in the alleged intentional tort and claims policy protection. Derry's interpretation excludes the alleged wrongdoer from coverage, but it continues coverage of those insureds who are innocent of the tort but are vicariously liable for the acts of the tortfeasor. A reasonable insured would have understood the policy to provide coverage under the facts of this case.

In Pawtucket Mut. Ins. Co. v. Lebrecht, 104 N.H. 465, 190 A.2d 420 (1963), we first examined the phrase "the insured." In that case a homeowner's liability policy listed the householders, as named insureds, and included their minor son as an additional insured under a clause that extended coverage to minor children living in the household. That policy excluded coverage for "injury caused . . . intentionally by or at the direction of the insured." As a result of an intentional tort allegedly committed by the named insureds' son, suit was brought against the named insureds, alleging negligence in their controlling and upbringing of the minor. The insurer, citing the intentional injury exclusion clause, refused to defend or indemnify. The dispute focused on the phrase "the insured," and the interpretations of the phrase offered by the parties were precisely those now advanced by Commercial Union and Derry. This court determined that " 'the Insured' was meant to refer to a definite, specific insured, namely the insured who is involved in the occurrence which caused the injury and who is seeking coverage under the policy." Id. at 468, 190 A.2d at 423. The facts here are essentially the same as those in Pawtucket, and we reach the same result.

In interpreting an ambiguous phrase as it would be understood by the reasonable layman in the position of the insured, this court considers the instrument as a whole. See Kilroe v. Troast, 117 N.H. ---, ---, 376 A.2d 131, 133 (1977); Griswold v. Heat Corp., 108 N.H. 119, 123, 229 A.2d 183, 186 (1967). We have said that "in construing a contract or other written instrument, we must assume that the words were used advisedly and for the purpose of conveying some meaning." McGinley v. John Hancock Mut. Life Ins. Co., 88 N.H. 108, 111, 184 A. 593, 595 (1936). An examination of Derry's policy reveals that "the insured" is not uniformly used to refer to insured parties; other clauses contain such phrases as "an insured" and "the named insured." This was...

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