Harris v. Glens Falls Ins. Co.

• Decision Date: 25 February 1972
• Docket Number: S.F. 22853
• Citation: 6 Cal.3d 699,493 P.2d 861,100 Cal.Rptr. 133
• Court: California Supreme Court
• Parties: , 493 P.2d 861, 1973 A.M.C. 1025 Linton HARRIS, Plaintiff and Respondent, v. GLENS FALLS INSURANCE CO., Defendant and Appellant. In Bank

Page 133

100 Cal.Rptr. 133

6 Cal.3d 699, 493 P.2d 861, 1973 A.M.C. 1025

Linton HARRIS, Plaintiff and Respondent, v. GLENS FALLS INSURANCE CO., Defendant and Appellant.

S.F. 22853.

Supreme Court of California,

In Bank.

Feb. 25, 1972.

Derby, Cook, Quinby & Tweedt, and Carter Quinby, San Francisco, for defendant and appellant.

Hoberg, Finger, Brown & Abramson, and Stephen T. Cox, San Francisco, for plaintiff and respondent.

MOSK, Justice.

The sole issue in this case is whether a yacht insurance policy purchased by plaintiff provided coverage for his vessel while it was at sea, a few miles from San Francisco Bay.

Plaintiff acquired a 28-foot ketch in October 1967 for $5,400 and shortly thereafter the vessel was taken to a repair yard in Sausalito for an extensive overhaul. On November 17, he purchased a policy from defendant which provided hull insurance, protection and indemnity insurance, and medical payments insurance for a period of one year. The following March 5, in order to determine the adequacy of the repairs under conditions prevailing on the ocean, plaintiff sailed his boat on a trial trip from Sausalito to Monterey. During the return voyage, the boat was struck by a wave and sank approximately three miles off Ocean Beach, California.

Defendant, in declining to make payment under the policy, claimed that plaintiff had exceeded the territorial limits set forth therein. The trial court found that the policy was ambiguous and rendered judgment for plaintiff. Defendant appeals.

In a printed provision headed 'Navigation Limits,' the policy provided as follows:

'Warranted by the Assured that the vessel be confined to _ _ during the currency of this Policy, but with leave to proceed and sail to and touch and stay at any Port or Places, if thereunto obliged by stress of weather or other unavoidable accident, without prejudice to this insurance; to sail with or without pilots, to tow and be towed and to assist vessels and/or craft in all situations and to any extent, to render salvage services and To go on trial trips, all within the specified waters.' (Emphasis added.)

The blank was filled in with the typed words, 'LAID UP AND OUT OF COMMISSION IN SAUSALITO, CALIFORNIA.'

The trial court found the policy was ambiguous in that it covered trial trips within specified waters but failed to specify any waters. We agree.

In reaching this conclusion, we follow the settled rule that any ambiguity or uncertainty in an insurance policy is to be resolved against the insurer and that if semantically permissible, the contract will be given such construction as will fairly achieve its object of providing indemnity for the loss to which the insurance relates. (Century Bank v. St. Paul Fire & Marine Ins. Co. (1971) 4 Cal.3d 319, 325, 93 Cal.Rptr. 569, 482 P.2d 193; Gray v. Zurich Insurance Co. (1966) 65 Cal.2d 263, 269, 54 Cal.Rptr. 104, 419 P.2d 168.) This rule is particularly applicable to exclusions, since the burden rests upon the insurer to phrase exceptions and exclusions in clear and unmistakable language. (Cal. Comp. & Fire Co. v. Ind. Acc. Com. (1965) 62 Cal.2d 532, 534, 42 Cal.Rptr. 845, 399 P.2d 381.)

Defendant contends the mere inclusion of the word 'Sausalito' in the typed clause ipso facto renders the policy meaning clear and unambiguous. It is asserted that Sausalito contains navigable waters, ¹ and that when this fact is taken into account the provision in question means that the insured vessel may take trial trips and undertake the other tasks specified, but only within the waters of Sausalito. Defendant does not maintain the reference to the vessel being 'laid up and out of commission in Sausalito' authorizes no insured use of the boat and that coverage was provided only while the boat was out of commission, but, rather, that the quoted phrase means the boat was to be confined to the waters of Sausalito. It is asserted that it is not necessary to use the word 'waters' to describe the territorial limits of the policy and that mere reference to Sausalito is a sufficient description to satisfy the requirement of clarity.

We are unable to interpret the policy issued to plaintiff as containing any language which could properly be construed as setting forth a geographical area within which plaintiff's boat was permitted to journey. ² Whatever other possible interpretations of the quoted language are possible, it cannot be interpreted to mean, as defendant claims, that the vessel could be employed for all the purposes set forth in the policy, but only within the strict confines of Sausalito.

If any confirmation of an ambiguity in the provision is required, it was provided at trial by defendant itself. The representative of defendant whose agency sold the policy to plaintiff testified that, contrary to defendant's version, he interpreted the policy as prohibiting the use of the vessel except for trips between its berth and a repair yard. Thus the agent, reading the same policy, finds it different, albeit more restricted, than the defendant company. ³

In view of the conclusion that the policy was ambiguous in the respect noted above, we are not required to determine whether it contains a second ambiguity. In a printed portion of the contract, headed 'Hull Insurance,' under the subheading 'Privileges,' it is provided that the vessel may be taken on trial trips. This reference to trial trips, unlike the clause contained in the 'Navigation Limits' paragraph, did not confine the vessel to the 'specified waters.'

The trial court found that the discrepancy between these two provisions also rendered the policy ambiguous.

The parties devote much of their briefs to...