Gabrelcik v. National Indemnity Company

• Decision Date: 13 November 1964
• Docket Number: No. 39262,39262
• Citation: 269 Minn. 445,131 N.W.2d 534
• Parties: Mary GABRELCIK, d.b.a. Fridley Cab Co., Respondent, v. NATIONAL INDEMNITY COMPANY, Appellant, Donna Sarazin and Frank Sarazin, Respondents.
• Court: Minnesota Supreme Court

Page 534

131 N.W.2d 534

269 Minn. 445

Mary GABRELCIK, d.b.a. Fridley Cab Co., Respondent, v. NATIONAL INDEMNITY COMPANY, Appellant Donna Sarazin and Frank Sarazin, Respondents.

No. 39262.

Supreme Court of Minnesota.

Nov. 13, 1964.

Syllabus by the Court

Where an automobile liability insurance policy provided coverage for a 'temporary Substitute Automobile,' but excluded coverage when such vehicle was owned by the spouse of the named insured residing in the same household, no coverage was afforded to an automobile temporarily loaned by a husband to his wife, named as the insured and residing in his household, since the substitute automobile was owned by the husband even though registered in the name of the husband's business, which he owned and operated as a sole proprietorship.

Schermer & Gensler, Irvin E. Schermer, Minneapolis, for appellant.

J. Bertram Press, Minneapolis, Edward E. Coleman, Anoka, for respondent.

ROGOSHESKE, Justice.

Action for a declaratory judgment to determine whether the 'Temporary Substitute Automobile' provision of an automobile liability policy afforded protection to plaintiff during her operation of a nondescribed vehicle. Defendant National Indemnity Company appeals from a judgment in favor of plaintiff. The question of the coverage of the policy was submitted upon stipulated facts.

Plaintiff and her husband, Frank Gabrelcik, are residents of the same household. She operates a one-car taxi business under the name of Fridley Cab Company under a license from the city of Fridley. Her husband operates a used-car lot and service garage under the name of Frank's Used Cars. Both businesses are operated individually from the same premises. The policy named 'Mary Gabrelcik D/B/A Fridley Cab Company' as the insured and specifically described a 1952 Plymouth automobile as the insured vehicle. The declarations of the policy revealed that the automobile was to be used for commercial purposes as a taxi. Plaintiff was required to file, and did file, a copy of the policy with the city to secure her license to operate a taxi. The Plymouth automobile was owned by plaintiff's husband and registered in the name of Frank's Used Cars. It was, however, used exclusively by plaintiff in her taxicab business until February 13, 1962, when it became disabled and was taken to her husband's garage for repairs. A 1953 Ford automobile, owned by her husband and also registered in the name of Frank's Used Cars, was loaned to plaintiff for temporary use in her business. This vehicle was a part of her husband's stock of used cars. While the Plymouth was still disabled, the Ford automobile was involved in an accident when being used as a taxicab. A passenger in the taxicab claimed injury and instituted an action against plaintiff for damages.

The action before us was commenced upon the claim that the policy provided coverage for the Ford automobile under its 'Temporary Substitute Automobile' clause, which extended coverage to the insured for the operation of--

'* * * an automobile not owned by the named insured or his spouse if a resident of the same household, while temporarily used as a substitute for the described automobile when withdrawn from normal use because of its breakdown, repair, servicing, loss or destruction.'

The defendant insurer refused coverage on the ground that the Ford was not a 'Temporary Substitute Automobile' within the meaning of the foregoing clause since the vehicle was owned by a spouse of the named insured who resided in the same household.

The trial court found for the plaintiff upon the grounds that borrowing the vehicle represented a commercial transaction between the husband and wife; that the insurer's risk was not increased thereby; and that Frank's Used Cars is a separate legal entity so that the ownership of the vehicle by the husband does not come within the meaning of the clause excluding coverage on a vehicle owned by the spouse of the named insured.

There are two obvious purposes for the language of the policy which excludes coverage on a substituted automobile if it is owned by the spouse of the named insured who resides in the same household. One purpose is to prevent the same policy from being used to provide coverage for vehicles other than those for which a premium has been paid. The second purpose is to avoid the potentiality of factual disputes, as in the case before us, concerning coverage for other vehicles that are owned by the named insured's spouse. ¹

We recognize that the overall purpose of a substituted-vehicle clause in an insurance policy is to benefit the insured and that the clause is to be construed liberally in favor of the insured. ² However, the insurer is entitled to rely upon language of the policy designed to accomplish reasonable and justifiable objectives. ³

The insurance contract represents the entire agreement between the parties. When the language of the policy is unambiguous, courts are not at liberty to use a process of judicial construction to graft into the plain language of a policy an intention to afford coverage when no such intention appears from the language of the policy or otherwise. ⁴ Any construction of the policy must do no more than give effect to the plain meaning of the language. ⁵

Plaintiff does not contend that the 'Temporary Substitute Automobile' clause is ambiguous, as such a claim would be unreasonable in view of the language of the clause. Moreover, plaintiff concedes that if the Ford automobile were registered in the name of her husband rather than in the name of Frank's Used Cars, the clause would exclude coverage for the automobile in question. Thus, plaintiff by her choice presents the narrow issue of whether the manner of registering permits the substitute vehicle to be regarded as not owned by plaintiff's spouse within the contemplation of the policy.

We fail to see how the fact that plaintiff's spouse is the owner of the vehicle in question is changed for insurance purposes by the manner in which it is registered with the state. Whether the vehicle is registered in the husband's name or in the name of the business which he owns and operates as a sole proprietorship, the result is the same; namely, that this vehicle was owned by the insured's spouse who resided in the same household. ⁶ The only plausible theory upon which the policy could be held to afford coverage is that under the circumstances it should be declared void as against public policy. The provisions of the city ordinance under which a copy of the policy was filed are not before us. Plaintiff neither advanced this theory below nor here and we find no cases involving similar facts where such a theory was applied. Were the action brought by the injured party after judgment, considerations of public policy might well dictate a different result. ⁷ On the narrow question presented and the arguments advanced by plaintiff we are asked to ascertain the intention of the parties to the contract from the language of the clause in question. No one associated with defendant was called to testify. The record is silent as to defendant's knowledge of the nature of plaintiff's business, the requirements of the city ordinance, or as to who filed the policy with the licensing authority. While the stipulated facts strongly suggest that in fairness the defendant ought to afford plaintiff the insurance protection she believed she had purchased, the contractual language restricting coverage when applied to the relevant facts compels the conclusion that any vehicle owned by plaintiff's spouse was not thereby intended to be covered. Even though the policy covered a commercial operation and no prejudice resulted through simultaneous operation of two vehicles, settled principles of contract law require us to give effect to the plain meaning of the language of the policy.

Reversed.

KNUTSON, Chief Justice (concurring).

I concur for the simple reason that there is no ambiguity in this policy and the dissent writes something into the policy that is simply not there. People have a right to contract as they see fit in the field of insurance as elsewhere and it is not our prerogative to rewrite the contract for them after a loss has occurred.

SHERAN, Justice (concurring specially).

The only issue presented by the appeal is whether the 1953 Ford was Owned by the spouse of the named insured at the time of the accident. It was, unless the facts that it (a) was registered in the name of Frank's Used Cars, and (b) was part of a stock acquired for sale in the husband's business make a difference. In my opinion, the ownership of the vehicle by the husband could not be affected by the use of a business style or by the purpose for which the car was acquired.

A contract which does not express the intent of the parties can be reformed. See, Gartner v. Gartner, 246 Minn. 319, 74 N.W.2d 809; Mosiman v. Rapacz, 250 Minn. 464, 84 N.W.2d 898; Preferred Acc. Ins. Co. v. Onali (8 Cir.) 125 F.2d 580, affirming (D.Minn.) 43 F.Supp. 227. Even without reformation, a person damaged by reason of the ownership and maintenance of the vehicle may have rights against the insurer which will not be affected by this decision. Consequently, I do not believe that there are any considerations of public policy which compel the declaratory judgment sought by the plaintiff.

MURPHY, Justice (dissenting).

I must respectfully dissent from the majority opinion. It denies to plaintiff the insurance protection for which she paid. We have said, 'Liability insurance contracts should, if possible, be construed so as not to be a delusion to those who have bought them.' Motor Vehicle Cas. Co. v. Smith, 247 Minn. 151, 157, 76 N.W.2d 486, 490.

In construing the policy in question we are required to keep in mind the purpose and necessity of the policy and to attempt to carry out the intention of the parties by a fair, reasonable, and sensible interpretation rather than by a strict or technical...