Hammer v. Malkerson Motors, Inc.

• Decision Date: 18 December 1964
• Docket Number: No. 39458,39458
• Citation: 269 Minn. 563,132 N.W.2d 174
• Parties: Joseph HAMMER, Plaintiff, v. MALKERSON MOTORS, INC., and Robert J. Engman, Defendants and Third-Party Plaintiffs, Appellants, ST. PAUL FIRE AND MARINE INSURANCE COMPANY, Third-Party Defendant, Respondent.
• Court: Minnesota Supreme Court

Page 174

132 N.W.2d 174

269 Minn. 563

Joseph HAMMER, Plaintiff, v. MALKERSON MOTORS, INC., and Robert J. Engman, Defendants and Third-Party Plaintiffs, Appellants ST. PAUL FIRE AND MARINE INSURANCE COMPANY, Third-Party Defendant, Respondent.

No. 39458.

Supreme Court of Minnesota.

Dec. 18, 1964.

Syllabus by the Court

Where an automobile is brought to a garage for repairs and is involved in an accident while an employee of the garage is moving it from a parking lot to the garage, it is not being used in the automobile business within the meaning of an exclusionary clause in an automobile liability insurance policy.

Brenner & Harroun, Minnetonka, for appellants.

Meagher, Geer, Markham & Anderson, and M. J. Coyne and O. C. Adamson, II, Minneapolis, for respondent.

KNUTSON, Chief Justice.

This is an appeal from a judgment of the Hennepin County District Court entered pursuant to an order granting summary judgment in favor of third-party defendant, St. Paul Fire and Marine Insurance Company.

The facts are not in dispute. On October 19, 1960, Elsa P. Cooper brought her 1960 Oldsmobile automobile to Malkerson Motors, Inc., for servicing and repair. The automobile was parked in a lot outside the garage. While Robert J. Engman, a Malkerson employee, was driving the automobile into the garage to have it repaired, he struck and injured Joseph Hammer. Hammer commenced this action against Engman and Malkerson Motors, Inc., to recover damages for personal injuries.

Mrs. Cooper was insured under an automobile liability policy issued by St. Paul Fire and Marine Insurance Company. Asserting that they were omnibus insured under this policy of insurance, Malkerson Motors, Inc., brought third-party proceedings against St. Paul Fire and Marine Insurance Company. It denied liability under the provisions of the policy and moved for summary judgment on the basis of the pleadings, the provisions of the policy, and the provisions of a comprehensive liability policy carried by Malkerson with Universal Underwriters Insurance Company. The facts were stipulated. It was agreed that Malkerson is 'in the business of repairing and servicing automobiles'; that Mrs. Cooper brought her automobile to Malkerson for repair and servicing; and that at the time Engman was driving the Cooper automobile into the service department he was within the course and scope of his employment by Malkerson Motors, Inc.

The pertinent provisions of the policy carried by Mrs. Cooper are that the insurer agrees as follows:

'To pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of:

'A. bodily injury, sickness or disease, including death resulting therefrom, hereinafter called 'bodily injury' sustained by any person;

arising out of the ownership, maintenance or use of the owned automobile or any non-owned automobile, * * *.

'PERSONS INSURED

'The following are insureds under Part I:

'(a) With respect to the owned automobile,

'(1) the named insured and any resident of the same household,

'(2) any other person using such automobile, provided the actual use thereof is with the permission of the named insured;

'(c) Any other person or organization legally responsible for the use of

'(1) an owned automobile, or

'(2) a non-owned automobile, * * * provided the actual use thereof is by a person who is an insured under (a) or (b) above with respect to such owned automobile or non-owned automobile.

'DEFINITIONS

'Under Part I:

"named insured' means the individual named in Item 1 of the declarations and also includes his spouse, if a resident of the same household;

"insured' means a person or organization described under 'Persons Insured';

"owned automobile' means a private passenger, farm or utility automobile or trailer owned by the named insured, and includes a temporary substitute automobile;

"automobile businees' means the business or occupation of selling, repairing, servicing, storing or parking automobiles;

"use' of an automobile includes the loading and unloading thereof;

'EXCLUSIONS

'This policy does not apply under Part I:

'(g) to an owned automobile While used in the automobile business, but this exclusion does not apply to the named insured, a resident of the same household as the named insured, a partnership in which the named insured or such resident is a partner, or any partner, agent or employee of the named insured, such resident or partnership.' (Italics supplied.)

Under these provisions of the policy, it is obvious that Malkerson is an insured unless it is excluded by clause (g). The determination of this question rests on the interpretation of the clause 'used in the automobile business.' Essentially, it is the contention of third-party defendant that, while moving the automobile from the parking lot to the garage, Malkerson was using the automobile in the automobile business.

Interpretation of this clause is an open question in Minnesota. The exclusionary clause involved is a comparatively new one in automobile insurance. In Wendt v. Wallace, 185 Minn. 189, 190, 240 N.W. 470, 471, we had occasion to construe a clause which was formerly quite common. It read:

'This agreement shall exclude any obligation of the company * * * to any person or organization, other than the name(d) Assured, operating an automobile repair shop, public garage, sales agency or service station, and arising out of the operation thereof.' ¹

Some of the courts that have considered the two types of exclusionary clauses have noted that there is a difference. Thus, in LeFelt v. Nasarow, 71 N.J.Super. 538, 549, 177 A.2d 315, 322, affirmed, 76 N.J.Super. 576, 185 A.2d 217, the court said:

'Unlike the clause in Berry (Berry v. Travelers Ins. Co. 118 N.J.L. 571, 194 A. 72), the exclusionary clauses in the liability insurance part of defendants' policies do not purport to exclude an 'insured' from coverage because of his business or occupation. The exclusion relates to the use to which the automobile is being put, not to the identity or occupation of the person driving it.'

In Chavers v. St. Paul Fire & Marine Ins. Co. (N.D.Ohio) 188 F.Supp. 39, 42, the court said:

'* * * Thus, the business the Car was being used in, not the business or occupation of the person using the car, be he a claimant under the policy or not, is the important consideration.'

In Goforth v. Allstate Ins. Co. (W.D.N.C.) 220 F.Supp. 616, 619, the court said:

'* * * It is beyond argument that Melton's occupation was that of a garageman in the automobile repair business, but that is not to say that the automobile itself was being used in such business at the time of the collision.'

In Commercial Standard Ins. Co. v. Sanders (Tex.Civ.App.) 326 S.W.2d 298, 300, the court said:

'The exclusion in question is relatively new, and has not been considered in any reported case as far as we can ascertain. Previously, the standard basic automobile policy contained a similar limitation on additional insureds under the omnibus clause for accidents 'arising out of the operation of an automobile sales agency.' This was to prevent concurrent or overlapping coverage with the garage liability policy specifically designed for such risks.'

In 393 Ins.L.J. 647, 648, in an article by John P. Faude entitled The New Standard Automobile Policy: Coverage (Insuring Agreements and Exclusions), we find the following:

'The policy in the past has contained an exclusion as to any additional ('omnibus') insured for an accident arising out of the operation of an automobile sales agency or repair shop. (This exclusion is present in order to avoid concurrent or overlapping coverage with the special garage liability policy which is specially designed for such risks.)'

7 Appleman, Insurance Law and Practice, § 4372, discusses the older type of exclusion. In the 1964 Pocket Part, by Professor Ross C. Tisdale, § 4372, the newer type of exclusion is recognized. We there find the following:

'A clause excluding automobiles used in the * * * automobile business, is to be distinguished from clauses discussed heretofore. An automobile brought in to be parked or to be repaired is not being used in the parking or automobile business.'

See, also, Annotations, 47 A.L.R.2d 556, as to the older type of exclusion, and 71 A.L.R.2d 964, as to the newer type.

Clauses identical or similar to the one involved here have been construed in a few other jurisdictions. Some of these decisions are helpful and some are reconcilable. In McCree v. Jenning, 55 Wash.2d 725, 349 P.2d 1071, an accident occurred while an agent of a repairman was returning the car to the owner after it had been repaired. In holding that an exclusionary clause identical to that before us was inapplicable, the court said (55 Wash.2d 727, 349 P.2d 1072):

'It would appear evident, therefore, that an automobile 'used in the automobile business,' would be one which was employed for some purpose in connection with that business. For example, a tow truck, an automobile used for demonstration purposes, or a vehicle used for securing or delivering equipment and supplies would be 'used in the business.' But the Jenning automobile was not turned over to Miller to be used by him for his business purposes. It was simply brought to him to be repaired.'

In LeFelt v. Nasarow, supra, an accident occurred while the automobile was driven on a test run after having been repaired. In holding that it was not used in the automobile business while being so driven, the court, following McCree v. Jenning, supra, said (71 N.J.Super. 555, 177 A.2d 325):

'* * * (A) customer's automobile in the custody or possession of an automobile repairman who drives it for the purpose of testing the repairs which he has made is not being used in the automobile business within the meaning of the exclusion clauses in defendants' policies.'

Goforth v. Allstate Ins. Co. (W.D.N.C.) 220 F.Supp. 616, involved an exclusionary clause identical to that before us. An accident...