Farmers Home Mut. Ins. Co. v. Lill

• Decision Date: 15 April 1983
• Docket Number: No. C2-82-1056.,C2-82-1056.
• Citation: 332 NW 2d 635
• Parties: FARMERS HOME MUTUAL INSURANCE COMPANY, Appellant, v. George LILL, Lowell Knoll and Michael Scott Knoll, Respondents.
• Court: Minnesota Supreme Court

332 N.W.2d 635 (1983)

FARMERS HOME MUTUAL INSURANCE COMPANY, Appellant, v. George LILL, Lowell Knoll and Michael Scott Knoll, Respondents.

No. C2-82-1056.

Supreme Court of Minnesota.

April 15, 1983.

Christianson & Christianson and Marcus J. Christianson, Minneota, for appellant.

Blaufuss & Stoneberg and Cecil Naatz, Marshall, for Lill.

Richard S. Roberts, Wheaton, for respondents.

Considered and decided by the court en banc without oral argument.

OPINION

SIMONETT, Justice.

Plaintiff Farmers Home Mutual Insurance Company appeals from a decision of the trial court declaring that insurance coverage existed for injury to defendant Michael Knoll under a policy purchased by defendant George Lill. The sole issue on appeal is whether the trial court erred by concluding that the declarations sheet of the farm liability policy was ambiguous as to whether a premium had been charged for coverage for farm employees. We hold that there was no ambiguity and reverse.

In 1978 Michael Knoll, age 15, was injured in a baling accident on George Lill's farm. Michael and his father brought suit against Lill for damages due to negligence. Lill tendered defense of the action to Farmers Home Mutual, his liability carrier. Farmers Home Mutual denied coverage and brought this declaratory judgment action to determine the issue.

It is undisputed that at the time of the accident Michael Knoll was working as a farm employee of George Lill. The policy of Farmers Home Mutual provides coverage for a farm employee injured in the course and scope of his employment only if the employee is an "insured farm employee." An "insured farm employee" is defined in the policy as "any farm employee, if a premium charge is shown in the declarations with respect to farm employees." The dispute centers on whether the declarations sheet shows such a charge. (There is no claim of mistake or misrepresentation relating to Lill's purchase of the policy.) Because it is difficult to describe the declarations page clearly, especially with respect to the critical juxtaposition of various items, the relevant portion is reproduced below.¹

The trial court was persuaded that the declarations page was ambiguous as to whether coverage had been purchased for farm employees. The judge applied the principle that ambiguities are resolved against the drafter of the policy in insurance cases and granted judgment in favor of the insured. The insurer appeals.

Farmers Home Mutual contends that the declarations page unambiguously depicts the types of insurance coverages in force under Lill's policy. Farmers Home Mutual reads the page as consisting of two tiers of insurance coverage options, each option being separately entitled with a space below it for designating the limits of the particular coverage and the premium paid therefor. In bold print on the far left side of the page, the words "COVERAGES," "LIMITS" and "PREMIUM" appear, repeated twice, for both the top and bottom tiers. So reading from left to right along the top tier, Lill had purchased $50,000 of Coverage G, "PERSONAL LIABILITY," for $23. Continuing to the right along the top tier, Lill had extended his personal liability coverage to his acreage in excess of 160 acres for an additional premium of $5. Lill also had purchased Coverage H, "PERSONAL MEDICAL PAYMENTS," with limits of $500 per person and $25,000 per accident. The premium for this coverage was included in the basic policy premium, hence the letters "INCL." on the premium line. When, however, one goes to the lower tier of coverages there is nothing typed in in the space below the heading "FARM EMPLOYEES." Since this column has been left blank, Farmers Home Mutual insists it is clear that the requisite premium to insure farm employees was not charged.

We agree that Farmers Home Mutual's interpretation of the declarations is eminently reasonable. However, if there is a competing reasonable interpretation, there is ambiguity and the insurer's reading must give way to the insured's. The trial court concluded that an alternative reasonable interpretation could be made using the following analysis:

Just above the farm employee section which is part of Section "H" (Personal Medical Payments) is typed the word "INCL." (All parties agree that

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