Dundee Mut. Ins. Co. v. Balvitsch

• Decision Date: 30 November 1995
• Docket Number: No. 950068,950068
• Citation: 540 N.W.2d 609
• Parties: DUNDEE MUTUAL INSURANCE COMPANY, Plaintiff, Appellee and Cross-Appellant, v. Sandra BALVITSCH and Frank Balvitsch, Defendants, Vernon Hoyt as Personal Representative of the Estate of Corey Hoyt, deceased, and Vernon R. Hoyt as Trustee of the heirs at law of Corey Hoyt, deceased, Defendant, Appellant and Cross-Appellee. Civ.
• Court: North Dakota Supreme Court

Page 609

540 N.W.2d 609

DUNDEE MUTUAL INSURANCE COMPANY, Plaintiff, Appellee and Cross-Appellant, v. Sandra BALVITSCH and Frank Balvitsch, Defendants Vernon Hoyt as Personal Representative of the Estate of Corey Hoyt, deceased, and Vernon R. Hoyt as Trustee of the heirs at law of Corey Hoyt, deceased, Defendant Appellant and Cross-Appellee.

Civ. No. 950068.

Supreme Court of North Dakota.

Nov. 30, 1995.

Thomas E. Rutten (argued) of Traynor, Rutten & Traynor, Devils Lake, for plaintiff, appellee and cross-appellant.

Paul R. Oppegard (argued) of Smith Bakke Hovland & Oppegard, Moorhead, MN, for defendant, appellant and cross-appellee.

MESCHKE, Justice.

Vernon Hoyt, as personal representative of the estate of Corey Hoyt (Estate), appealed a judgment declaring that a farm liability policy issued by Dundee Mutual Insurance Company to Frank and Sandra Balvitsch covered their pickup in a collision that killed Corey, and that Dundee had not waived its right to assert other defenses to a settlement between the Estate and the Balvitsches. We direct the trial court to modify the judgment by striking the clause about no waiver of other defenses to the settlement and, as modified, we affirm the judgment.

The collision occurred in August 1992 at the intersection of State Highway 200 and a township road adjoining the Balvitsches' farm. Sandra Balvitsch was driving lunch to her husband, Frank, who was doing farm work in a nearby field. Sandra's pickup and Hoyt's motorcycle collided, killing Rhonda Hoyt and Corey Hoyt.

Corey's Estate sued Balvitsches for his wrongful death. The Balvitsches had automobile insurance for the pickup with State Farm Insurance and liability insurance for their farming operations with Dundee. State Farm accepted a tender of the Balvitsches' defense; however, Dundee denied coverage and did not defend the Balvitsches.

In September 1993, the Estate and the Balvitsches settled the wrongful death action for $600,000, agreeing that the Estate would "accept $100,000 from State Farm and [would] seek payment of the remaining $500,000 in damages solely from [the Balvitsches'] insurer, Dundee ... and not from [the Balvitsches] personally nor from State Farm." The agreement said it was intended to serve the purposes of the settlements in Miller v. Shugart, 316 N.W.2d 729 (Minn.1982) and Sellie v. North Dakota Ins. Guar. Ass'n, 494 N.W.2d 151 (N.D.1992). A $600,000 stipulated judgment was entered in Cass County in the wrongful death action.

The parties tell us that the Estate served a garnishment summons on Dundee in October 1993 and that Dundee there disclosed that it did not owe the Balvitsches anything. However, the garnishment summons, disclosure, and subsequent proceedings are not part of this record.

In November 1993, Dundee sued the Estate and the Balvitsches in Foster County, for a declaratory judgment that its farm liability policy with the Balvitsches did not cover the collision and death of Corey Hoyt. The trial court granted summary judgment for the Estate, concluding that Dundee's policy covered the collision. The judgment also declared "that Dundee Mutual has not waived and is not estopped from asserting defenses it may have against the enforcement or validity of the judgment rendered against its insureds, Sandra and Frank Balvitsch, which was entered pursuant to the Miller-Shugart settlement agreement" between the Estate and the Balvitsches. The Estate appealed, and Dundee cross-appealed.

Dundee's cross-appeal contends the trial court erred in holding its farm liability policy with the Balvitsches covered this collision. Dundee asserts that a limitation of its organizational act in NDCC 26.1-13-16 is part of its insurance contract under state law, and that this limitation on its powers prohibits it from insuring a motor vehicle operated upon any highway. Dundee concedes, absent that statutory prohibition against a county mutual insurance company issuing automobile liability coverage, its farm liability policy would cover this collision.

Dundee's farm liability policy covers "[a]ll operations of the insured which are necessary or incidental to farming." This policy excludes coverage for "the ownership, maintenance or use of automobiles while away from the premises or the ways immediately adjoining" the premises. The scope of that exclusion, "while away from the premises or the ways immediately adjoining" the premises, does not exclude overage for use of a vehicle on the premises and on the immediately adjoining "ways." This creates an exclusion from the exclusion of coverage for the use of automobiles. In Applegren v. Milbank Mut. Ins. Co., 268 N.W.2d 114 (N.D.1978), we held that, when an insurance policy contains an exclusion to an exclusion from coverage, coverage exists for the exclusion to the exclusion. Under Applegren, Dundee's farm liability policy with the Balvitsches thus insures the use of automobiles for "operations ... incidental to farming" on the "premises or the ways immediately adjoining" them. We therefore agree with Dundee that the farm liability policy covers this collision at the intersection of ways immediately adjoining Balvitsches' farm, and our analysis turns to the statutory prohibition against a county mutual insurance company issuing automobile liability coverage.

Dundee is organized under NDCC ch. 26.1-13 regulating the organization and activities of county mutual insurance companies. NDCC 26.1-13-16 says:

Any county mutual insurance company may make insurance contracts against loss, expense, or liability by reason of bodily injury or death by accident, disability, sickness, or disease suffered by others for which the insured may be liable or may have assumed liability, except no liability insurance contracts against any or all loss or expense resulting from the ownership, maintenance, or use of any motor vehicle normally operated, intended to be operated, or designed for use, upon any highway, road, or street in this state, may be made.

(Emphasis added). Dundee relies on this statutory prohibition that circumscribes its insuring activities.

The interpretation of a statute is a question of law. Continental Casualty Co. v. Kinsey, 499 N.W.2d 574 (N.D.1993). We construe statutes to ascertain the intent of the Legislature. Id. Statutes must be considered as a whole and in relation to other provisions, with each provision harmonized, if possible, to avoid conflicts. Id. When read together, the provisions of NDCC ch. 26.1-13 do not preclude a county mutual insurance company from insuring against liability for loss or damage by a vehicle incidental to farming operations.

A county mutual insurance company is largely restricted to insuring property in rural areas outside of an incorporated city. See NDCC 26.1-13-15. Despite the limitation of NDCC 26.1-13-16, "[a] county mutual insurance company may insure against loss or damage by ... vehicles." NDCC 26.1-13-14. When construed together, we believe the provisions of NDCC ch. 26.1-13 do not preclude a farm liability policy from covering loss or damage by vehicles incidental to a farming operation.

Furthermore, NDCC 26.1-13-12 says that, subject to exceptions not applicable here, "[a] county mutual insurance company possesses the powers and is subject to the liabilities and duties of other insurance companies." NDCC 26.1-13-13 declares that "[i]n all respects not specifically provided for in this chapter, county mutual insurance companies are subject to the provisions of this title relating to insurance companies generally." NDCC 26.1-05-01 directs in part that "[t]he general law governing profit corporations applies to an incorporated domestic insurance company so far as the provisions are pertinent and not in conflict with provisions contained in this title relating to the company." NDCC 10-19.1-28, governing profit corporations, directs in part that "[n]o act of a corporation ... is invalid by reason of the fact that the corporation was without capacity or power to do such act ...." except under circumstances not here applicable. Cf., NDCC 26.1-02-07 ("failure of an insurance company transacting business in this state to obtain a certificate of authority does not impair the validity of any act or contract of the company"). Dundee's insurance contract with the Balvitsches is an "act" within the meaning of NDCC 10-19.1-28. Cf., NDCC 26.1-02-06 (act of making insurance contract effected by mail or otherwise constitutes the transaction of insurance business in this state). We find no specific statute that removes a county mutual insurance company from the application of NDCC 26.1-13-12, 26.1-13-13, 26.1-05-01 and 10-19.1-28. Therefore, Dundee cannot claim that the terms of its insurance policy covering liability for motor vehicles on the premises or ways immediately adjoining the premises are invalid. We affirm the declaratory judgment of coverage.

In its appeal, the Estate contends that the trial...