Farm Bureau Mut. Ins. Co., Inc. v. Horinek

• Decision Date: 26 March 1983
• Docket Number: No. 55071,55071
• Citation: 233 Kan. 175,660 P.2d 1374
• Parties: FARM BUREAU MUTUAL INSURANCE COMPANY, INC., Appellee, v. Anton HORINEK and Stanley Smith, Appellants.
• Court: Kansas Supreme Court

Page 1374

660 P.2d 1374

233 Kan. 175

FARM BUREAU MUTUAL INSURANCE COMPANY, INC., Appellee, v. Anton HORINEK and Stanley Smith, Appellants.

No. 55071.

Supreme Court of Kansas.

March 26, 1983.

Syllabus by the Court

1. As a general rule, the construction and effect of a contract of insurance is a matter of law to be determined by the court. If the facts are admitted, then it is for the court to decide whether they come within the terms of the policy.

2. A court must look to the entire contract of insurance for a true understanding of what risks are assumed by the insurer and what risks are excluded. Scott v. Keever, 212 Kan. 719, Syl. p 2, 512 P.2d 346 (1973).

3. In construing an insurance policy a court should consider the instrument as a whole and endeavor to ascertain the intention of the parties from the language used, taking into account the situation of the parties, the nature of the subject matter and the purpose to be accomplished. Bramlett v. State Farm Mutual Ins. Co., 205 Kan. 128, Syl. p 1, 468 P.2d 157 (1970).

4. Ambiguity is not to be derived from or created by fragmentation of an insurance contract. An ambiguity cannot be created by taking a certain provision of a policy or endorsement out of context.

5. A Farm-Master Policy is designed to provide protection against risks that are peculiar to farming activities. A Farm-Master Policy which excludes all bodily injury or property damage except that which occurs on the insured's premises if the motor vehicle is not subject to motor vehicle registration because it is used exclusively on the insured's premises or kept in dead storage on the residence premises, is not a motor vehicle liability insurance policy within K.S.A. 40-3107 and is not in violation of the Kansas Automotive Injury Reparations Act. K.S.A. 40-3101 et seq.

Ronald S. Shalz, of Shalz, Taylor & Schiffner, Colby, argued the cause, and John D. Gatz, of the same firm, Colby, was with him on the brief for Anton Horinek, appellant.

H.E. Jones, of Hershberger, Patterson, Jones & Roth, Wichita, argued the cause, and Jeff A. Roth, Wichita, of the same firm, and Whalen & Fairbanks, P.A., Goodland, were with him on the brief for appellee.

LOCKETT, Justice:

This is a declaratory judgment action brought by the plaintiff, Farm Bureau Mutual Insurance Company, Inc. (Farm Bureau), versus the defendants, Anton Horinek and Stanley Smith. The case was submitted to the trial court on motions for summary judgment. The trial court sustained the plaintiff Farm Bureau's motion for summary judgment and denied the defendant Anton Horinek's motion for summary judgment. The defendant appeals.

The pertinent facts are: On April 13, 1981, Anton Horinek, defendant, was the owner of a 1952 Ford truck which was properly licensed and registered. Defendant Horinek was insured under two policies of insurance written by the plaintiff, Farm Bureau, an automobile liability insurance policy and a Farm-Master Policy. On April 13, 1981, defendant Horinek was operating the 1952 truck hauling dirt from a grain bin construction site on his farm property to his farmyard. The trips necessitated his use of Kansas Highway K-25. Approximately three miles north of Atwood, Kansas, defendant Horinek's farm access road to the grain bin site intersects K-25. While attempting to execute a right-hand turn onto his farm property, defendant Horinek was involved in a motor vehicle accident with the defendant, Stanley Smith. Defendant Smith instituted an action against the defendant Horinek in the United States District Court for the District of Kansas for personal injuries received in the accident.

Horinek claimed that plaintiff, Farm Bureau, afforded liability coverage under both the automobile liability insurance policy and the Farm-Master Policy. Farm Bureau denied The Farm-Master Policy is a combination property and liability policy divided into two major sections. "Section I" of this policy consists of seven (7) pages, and covers losses peculiar to farm structures and operations. Covered under Section I are: dwellings, household and personal effects, farm personal property, outbuildings and livestock. "Section II" covers the farmer's comprehensive liability.

coverage under the Farm-Master Policy, acknowledged coverage under the motor vehicle liability policy and is supplying a defense to defendant Horinek under the terms of the motor vehicle policy. Farm Bureau filed the present declaratory judgment action to determine whether or not the Farm-Master Policy afforded liability coverage to the defendant Horinek.

Farm-Master policies are designed to provide protection against risks that are peculiar to farming activities. Certain limitations are contained within the policy to decrease risk in order to reduce premium cost. Farm Bureau claims injuries or property damage arising from the maintenance, operation or use of a motor vehicle on the public highway is one of the exclusions of this policy.

The construction and effect of insurance contracts are questions of law to be determined by the court. None of the facts are disputed by the parties. If the facts are admitted, then it is for the court to decide whether they come within the terms of the policy, and the function of the appellate court is the same as the trial court. Scott v. Keever, 212 Kan. 719, 721, 512 P.2d 346 (1973). Each of the questions raised by defendant Horinek in his appeal deal with the exclusions contained in Section II, Coverage K--Medical Payments--Other Than Named Insured and Family and Employees Exclusions (5)(b).

"SECTION II

FARMERS COMPREHENSIVE LIABILITY

COVERAGE G--LIABILITY

"This Company agrees to pay on behalf of the Insured all sums which the Insured shall become legally obligated to pay as damages because of

Bodily Injury or Property Damage

to which this insurance applies, caused by an occurrence. This Company shall have the right and duty, at its own expense, to defend suits against the Insured seeking damages on account of such bodily injury or property damage even if any of the allegations of the suit are groundless, false or fraudulent, but may make such investigation and settlement of any claim or suit as it deems expedient. This Company shall not be obligated to pay any claim or judgment or to defend any suit after the applicable limit of this Company's liability has been exhausted by payment of judgments or settlements.

"COVERAGE K--MEDICAL PAYMENTS--OTHER THAN NAMED INSURED AND FAMILY AND EMPLOYEES

"To pay all reasonable medical expenses for treatment rendered within one year from the date of the accident, to or for each person who sustains bodily injury caused by an accident to which this insurance applies, while such person is:

"1. On an insured premises with the permission of any Insured; or

"2. Elsewhere, if such bodily injury:

a. arises out of a condition in the insured premises or the ways immediately adjoining.

b. is caused by the activities of any Insured, or by a resident employee or farm employee in the course of his employment by any Insured.

c. is caused by an animal owned by or in the care of any Insured.

"EXCLUSIONS

UNDER COVERAGE G LIABILITY AND COVERAGE K MEDICAL PAYMENTS--OTHER THAN NAMED INSURED AND FAMILY AND EMPLOYEES, THIS POLICY DOES NOT APPLY TO:

"1. Any business pursuit of any Insured except activities therein which are ordinarily "2. The rendering of or failing to render professional services;

incident to non-business pursuits or farming;

"3. Loss arising out of any premises, other than an insured premises, owned, rented or controlled by any Insured;

"4. The handling or use of or the existence of any condition in goods, products, or containers thereof manufactured, produced, sold, handled or distributed by an Insured, if the occurrence takes place after the Insured has relinquished possession thereof to others and away from the insured premises or work completed by or for the Insured out of which the accident arises;

"5. The maintenance, operation, use, loading or unloading of, or instructions for use of:

a. aircraft owned, borrowed, or hired by an Insured, including damage to property arising out of any substance released or discharged from any aircraft;

b. any motor vehicle owned or operated by, or rented or loaned to any Insured; but this subdivision (b) does not apply to bodily injury or property damage occurring on the insured premises if the motor vehicle is not subject to motor vehicle registration because it is used exclusively on the insured premises or kept in dead storage on the residence premises;

c. any recreational motor vehicle owned by any Insured if the bodily injury or property damage occurs away from the insured premises; but this subdivision (c) does not apply to golf carts while used for golfing purposes;

d. watercraft exceeding twenty-six feet in over-all length or if with inboard motor power exceeding fifty horsepower;

e. motor vehicles, trailers or semi-trailers towed by motor vehicles while away from the premises or the ways immediately adjoining;

"6. Liability assumed by the Insured under any contract or agreement, but this exclusion shall not apply to liability assumed by the Insured under any written contract relating to the business of farming;

"7. Loss which is expected or intended by an Insured;

"8. Bodily injury to or sickness, disease or death of any employee of an Insured, if benefits therefore are either payable or required to be provided under any workmen's compensation law;

"9. Damages because of injury to or destruction of property owned, used, or in the care, custody, or control of an Insured;

"10. Custom farming operations, in excess of $1000 gross receipts in any one policy year unless specified in the Declarations;

"11. The operation of any motor vehicle, recreational motor vehicle, or watercraft while being operated in any prearranged race or competitive speed test, or while hired or chartered or used as a public livery conveyance;

"12. Loss or...