Crane v. State Farm Fire & Cas. Co.

• Citation: 48 A.L.R.3d 1089,485 P.2d 1129,5 Cal.3d 112,95 Cal.Rptr. 513
• Decision Date: 17 June 1971
• Docket Number: S.F. 22804
• Court: United States State Supreme Court (California)
• Parties: , 485 P.2d 1129, 48 A.L.R.3d 1089 Norma K. CRANE, Plaintiff and Appellant, v. STATE FARM FIRE AND CASUALTY COMPANY, Defendant and Respondent.

Page 513

95 Cal.Rptr. 513

5 Cal.3d 112, 485 P.2d 1129, 48 A.L.R.3d 1089

Norma K. CRANE, Plaintiff and Appellant, v. STATE FARM FIRE AND CASUALTY COMPANY, Defendant and Respondent.

S.F. 22804.

Supreme Court of California,

In Bank.

June 17, 1971.

Bennet Olan, David Manning Chodos, Beverly Hills, and harvey A. Schneider, Pasadena, for plaintiff and appellant.

Berry, Davis & McInerney, Samuel H. Berry, Oakland, and Richard J. Kohlman, San Francisco, for defendant and respondent.

MOSK, Associate Justice.

Andrea Crane, plaintiff's minor daughter, was injured while under care for compensation in the home of Janet Chamberlain. At the time of the injury a homeowner's policy was in effect, issued by defendant company to Mrs. Chamberlain and her husband, providing that defendant would pay up to $500 for medical expenses incurred as a result of injuries sustained on their premises. ¹ The policy contained an exclusion relating to business activities of the insured but there was an exception to the exclusion, which will be discussed Infra. Plaintiff brought an action for declaratory relief to establish that defendant was liable for medical expenses incurred on account of Andrea's injuries. The trial court found in favor of defendant. On this appeal from the ensuing judgment, the sole issue is whether the exclusion is applicable.

About two months before the accident, Mrs. Chamberlain agreed to provide child care services for plaintiff's two young children during the hours plaintiff was employed. Andrea was two and one-half years old at the time. Plaintiff left the children with Mrs. Chamberlain at the later's home five days a week for approximately eight hours a day and initially paid $20 for these services; after a week the remuneration was increased to $25 weekly plus a quantity of groceries. Mrs. Chamberlain was a housewife who had two young children of her own, aged 14 months and 3 1/2 years. She had no business activities outside her home and while she cared for plaintiff's children she was simultaneously supervising her own. The arrangement between the two mothers was for an indefinite duration. Andrea suffered burns to her left hand, wrist, and fingers in the accident. ²

Plaintiff incurred medical expenses in the sum of $500 for Andrea and defendant refused to reimburse her therefor, relying upon the exclusion in the policy. The clause provides that the policy does not apply 'to any business pursuits of an Insured, other than activities therein which are ordinarily incident to non-business pursuits. * * *' The trial court concluded that the amounts expended by plaintiff for Andrea's medical care were reasonable but that the injuries arose out of a business pursuit of Mrs. Chamberlain and did not originate in activities ordinarily incident to nonbusiness pursuits.

We need not decide whether the trial court was correct in its determination that Mrs. Chamberlain was occupied an a business pursuit at the time Andrea was injured because we conclude that, even if this were so, the exception within the exclusionary clause is applicable and that as a matter of law Mrs. Chamberlain was engaged in activities which are ordinarily incident to nonbusiness pursuits at the time of the accident.

In analyzing the extent of the exclusion, our boundaries are the rules to be applied in the interpretation of insurance policies. Any ambiguity or uncertainty in an insurance policy is to be resolved against the insurer. If semantically permissible, the contract will be given such construction as will fairly achieve its manifest object of securing indemnity to the insured for the losses to which the insurance relates. Any reasonable doubt as to uncertain language will be resolved against the insurer whether that doubt relates to the peril insured against or other relevant matters. (Continental Cas. Co. v. Phoenix Constr. Co. (1956) 46 Cal.2d 423, 437--438, 296 P.2d 801.) The policy should be read as a layman would read it and not as it might be analyzed by an attorney or an insurance expert. (Hobson v. Mutual Benefit H. & A. Assn. (1950) 99 Cal.App.2d 330, 333, 221 P.2d 761.) An exclusionary clause must be conspicuous, plain and clear (Gray v. Zurich Insurance Co. (1966) 65 Cal.2d 263, 273, 54 Cal.Rptr. 104, 419 P.2d 168) and must be construed strictly against the insurer and liberally in favor of the insured (Paramount Properties Co. v. Transamerica Title Ins. Co. (1970) 1 Cal.3d 562, 569, 83 Cal.Rptr. 394, 463 P.2d 746; Brinkmann v. Liberty Mutual etc. Ins. Co. (1965) 63 Cal.2d 41, 45, 45 Cal.Rptr. 8, 403 P.2d 136).

We start with the proposition that the policy covers activities which, although they occur while the insured is engaged in a business pursuit, are ordinarily incident to a nonbusiness pursuit. This interpretation is compelled by the language of the provision: the exclusion applies to any business pursuit of an insured other than 'activities Therein' which are ordinarily incident to nonbusiness pursuits. The result is also in accord with decisions which have involved construction of the clause. (See Dieckman v. Moran (Mo.1967) 414 S.W.2d 320, 322; Gulf Insurance Company v. Tilley (N.D.Ind.1967) 280 F.Supp. 60, 64--65.)

Our only problem, therefore, is whether Mrs. Chamberlain's care of Andrea may be classified as an activity which, although a business venture, would ordinarily be incident to a nonbusiness pursuit. Defendant claims, first, that Andrea's injuries might have resulted from an accident caused by a dangerous condition in Mrs. Chamberlain's home and that if this were the case there would be no coverage because the child's injuries would not arise out of any 'activities' of Mrs. Chamberlain.

There was no showing as to the manner in which the accident occurred, but the complaint alleges that Andrea was injured as the result of the 'negligence and improper supervision and care' exercised by Mrs. Chamberlain. The gravamen of this allegation is that Mrs. Chamberlain was negligent either in failing to protect Andrea from some danger on the premises or that the injuries resulted from some other omission or some affirmative conduct of Mrs. Chamberlain. Even if we assumed the first of these alternative interpretations, it cannot be said,...