Eis v. Hawkeye-Security Ins. Co.

• Decision Date: 02 November 1963
• Docket Number: No. 43241,HAWKEYE-SECURITY,43241
• Citation: 386 P.2d 206,192 Kan. 103
• Parties: Harold EIS, Appellant, v.INSURANCE CO., Appellee.
• Court: Kansas Supreme Court

Page 206

386 P.2d 206

192 Kan. 103

Harold EIS, Appellant, v. HAWKEYE-SECURITY INSURANCE CO., Appellee.

No. 43241.

Supreme Court of Kansas.

Nov. 2, 1963.

Syllabus by the Court

1. A garage liability insurance policy, excluding theft by one to whom the insured voluntarily surrendered custody, construed and held to exclude the theft of an automobile under the facts as stipulated by the parties.

2. Where an insurance policy provides for the attachment of a false pretense endorsement but such endorsement is not attached to the policy and, where a subsequent special endorsement amends the policy so that false pretense is not included in the amended coverage and no premium is paid therefor, false pretense is not covered by the policy.

3. An insurance policy insuring against malicious mischief or vandalism does not cover damages which occurred while a stolen automobile was in the possession of the thief under the facts in this case.

4. Attorney fees cannot be recovered under G.S.1961 Supp. 40-256, where the insured fails to recover in his action on an insurance policy.

Patrick L. Connolly, Topeka, argued the cause, and Stanley R. Roose, and Milford M. Magee, Topeka, were with him on the briefs for appellant.

Charles L. Davis, Jr., Topeka, argued the cause, and Byron M. Gray, and Maurice D. Freidberg, Topeka, were with him on the briefs for appellee.

PARKER, Chief Justice.

This appeal involves the construction of an insurance policy, designated as a 'Garage Liability Policy.'

The construction, placed upon the policy by the district court, excluded plaintiff's claim as to defendant's liability and plaintiff has appealed.

The case was submitted to the lower court on a stipulated statement of fact which will be summarized.

Appellee issued a garage liability insurance policy to the appellant which included a physical damage supplement covering theft. The policy also contained an endorsement excluding theft under particular circumstances. The basic policy is not presented in the record.

The physical damage supplement to the policy contained a schedule of coverages and spaces for the insertion of the amounts of premiums. On this schedule were typewritten the words '$25.00 See False pretense End. attached.' However, no false pretense endorsement was ever attached to the policy and no premium was paid for such an endorsement.

Subsequent to the issuance of the original policy containing the endorsements, and prior to the occurrence of the loss which is the subject matter of this action, a special endorsement was attached to the policy amending the schedule of coverage and premiums. The amended schedule showed the charge of $25.00 for 'Dealers' Supplemental Coverage' instead of for false pretense and no mention was made in the special endorsement of the false pretense endorsement.

A dealer's supplemental coverage endorsement, insuring the appellant against malicious mischief or vandalism, was also attached to the policy.

The appellant did not pay the premium of $174.90, set out in the original schedule of premiums which included the charge for a false pretense endorsement, but did pay the $134.00 premium for the amended schedule of premiums which included coverage for malicious mischief or vandalism. This coverage was added to the original policy subsequent to its issuance.

Appellant was the owner of a 1960 Buick convertible automobile which was insured under the policy. The stipulation states:

'That on November 21, 1960, the plaintiff voluntarily surrendered mere custody of the insured vehicle to a Mr. Dockery although not surrendering possession of or title to the insured vehicle (as defined by law); and that thereafter said Dale Dockery committed a theft of the insured vehicle.

'That the insured automobile was recovered some months later with damage which included cigarette burns, blood stains, motor damage, tire cuts, broken glass, and body damage on all four quarters.'

The action was to recover the reasonable cost of repairs to the automobile in the amount of $700.00.

The first question presented is whether the exclusionary provision, in the special endorsement, excluded coverage for the theft under the facts as stipulated. The special endorsement attached to the policy contained the following exclusion:

'The Policy does not apply:

'Under any coverage, to loss resulting from the insured voluntarily parting with title to or possession of any automobile, if induced to do so by any fraudulent scheme, trick, device, false pretense or from embezzlement, conversion, secretion, theft, larceny, robbery or pilferage committed by any person entrusted by the insured with custody or possession of the automobile.' (Numbers supplied to identify separate clauses.)

The appellant seeks to apply a strained and unusual construction to the sentence. He admits that the sentence contains two exclusions but in his brief suggests:

'Comparison of the two exclusions show in appellant's opinion that coverage is afforded unless either one of two conditions exist, namely a voluntary parting by the insured with title to the insured vehicle or secondly the parting by him with possession of the insured automobile. The word 'custody' appearing in the instant exclusion is, * * *, merely a part of the adverbial clause, modifying the word 'parting'. Treating the instant exclusion as a complete sentence and reducing it to its basic idea, it reads as follows: 'The policy does not apply to loss resulting from insured's parting with title or possession of automobile.''

The appellant ignores the fact that the words 'or from' separate the two parts of the sentence in the disjunctive. The coordinating conjunction 'or' introduces and connects the second clause of the introductory phrase 'the policy does not apply under any coverage to loss resulting * * *.' The second clause is entirely independent of the first.

Insofar as here material the exclusion states, 'The policy does not apply: Under any coverage, to loss resulting from * * *, theft, * * * committed by any person entrusted by the insured with custody * * * of the automobile.'

Appellant's construction would render the second clause meaningless. An owner of an automobile does not part with title as the result of conversion, theft, larceny, robbery, etc.

Appellant directs our attention to Hill-Howard Motor Co. v. North River Insurance Co., 111 Kan. 225, 207 P. 205, which holds that the action of a swindler who obtained an automobile by means of trick or artifice constituted 'a species of 'theft' for which the insurance company was liable.'; Tripp v. United States Fire Ins. Co., 141 Kan. 897, 44 P.2d 236, which holds that the taking of an automobile by one who presented himself as a prospective purchaser constituted a theft; and Baker v. Continental Ins. Co., 155 Kan. 26, 122 P.2d 710, holding that even a temporary taking of the insured vehicle constituted a theft under automobile policies insuring against theft.

The cases are not helpful here for two reasons. First, the record does not inform us of the nature and purpose of the thief's custody of the automobile. Second, it is admitted that there was a theft of the automobile. The question is whether theft by a custodian was excluded from the policy.

Appellant insists Tripp v. United States Fire Ins. Co., supra, supports his contention. That case is clearly distinguishable from the case at bar. In Tripp the exclusion excluded theft by a person to whom possession had voluntarily been surrendered. The court held that mere custody was not equivalent of possession and therefore theft by a mere custodian was not excluded. In the opinion the court stated:

'* * *; that plaintiff in letting Hanson drive the car to try it was not intending to and did not part with the possession of it; that had the insurance company wanted to make an exception with reference to change of custody resulting from fraudulent scheme, trick, device, or false pretense, it could...