Hill v. Standard Mut. Casualty Co., 6958.

• Decision Date: 23 February 1940
• Docket Number: No. 6958.,6958.
• Citation: 110 F.2d 1001
• Parties: HILL v. STANDARD MUT. CASUALTY CO.
• Court: U.S. Court of Appeals — Seventh Circuit

110 F.2d 1001 (1940)

HILL v. STANDARD MUT. CASUALTY CO.

No. 6958.

Circuit Court of Appeals, Seventh Circuit.

January 17, 1940.

Rehearing Denied February 23, 1940.

Wm. M. Acton, of Danville, Ill., Bert C. Cheatham, of Evansville, Ind., and T. Morton McDonald, of Princeton, Ind., for appellant.

Ralph Rouse, Horace E. Gunn, and Harold F. Lindley, all of Danville, Ill., for appellee.

Before EVANS, TREANOR, and KERNER, Circuit Judges.

KERNER, Circuit Judge.

On July 16, 1936 the appellee issued to Barlow Hurst an automobile accident insurance policy, whereby it agreed to insure him against loss for the liability imposed upon him by law for damages on account of bodily injuries accidently suffered by any person by reason of the use of the automobile insured therein.

On October 30, 1936, while the policy was in force, Barlow Hurst, the assured, with the appellant as his guest, drove his automobile from the Whoopee Club in Evansville, Indiana into a tree and telephone pole, thereby severely injuring her. She sued the assured in the Circuit Court of Gibson County, Indiana and recovered a judgment for $10,000. It remains unpaid and in full force and effect. The present suit is an action upon the policy of insurance.

The complaint as amended alleged that on October 30, 1936 Barlow Hurst was driving his automobile on a public street in Evansville, Indiana, with appellant as his invited guest; that with reckless disregard of the rights of appellant he recklessly drove said automobile into a telephone pole and tree and that by reason of his said reckless act and conduct, appellant sustained severe injuries; that immediately after the injury to appellant, said assured gave notice to the appellee of said accident, whereupon appellee investigated the facts and, with full knowledge of the facts surrounding the accident, undertook and did direct and control the defense in said cause.

The complaint further alleged that at the time of issuance to the assured of the policy by appellee there was in force and effect in the State of Indiana a Motor Vehicle Financial Responsibility Law.¹ There was annexed to the complaint a copy of the policy and certain sections of the Motor Vehicle Financial Responsibility Law.

The appellee filed an answer denying liability on the ground that the conduct of the assured in driving his automobile and in injuring the appellant was "willful and wanton, or intentional," alleged that the claimed liability of the assured to appellant was based upon the guest statute of the State of Indiana² which provides that such a guest shall have no cause of action unless the injury shall have been intentional or caused by the "reckless disregard of the rights of others," and that the policy sued on expressly exempted from its coverage any liability occasioned or caused by the "willful and wanton, or intentional" act of the assured. Appellee moved to dismiss the complaint, the motion was sustained, the complaint was dismissed, judgment was entered against appellant in bar of the action and for costs, and appellant appeals.

By the policy the insurance company expressly agreed to pay on behalf of the assured the actual loss imposed upon the assured by law for legal liability arising or resulting from claims on account of bodily injury accidentally suffered by any person caused by an accident arising out of the use of the automobile insured therein. It was, however, subject to the condition that the insurance company would not be liable for damage "occasioned or caused by the willful and wanton, or intentional acts of the assured."

The only question calling for a solution on this appeal is one of law, the sufficiency of the complaint.

At the outset we are met with the contention that the provisions of the policy are ambiguous. The contention is this: Because one clause of the policy indemnifies the assured against loss imposed upon him by law for legal liability resulting from claims on account of bodily injury accidentally suffered by any person caused by an accident arising out of the use of his automobile, another clause exempts the appellee from liability for accidents occasioned or caused by the "willful and wanton, or intentional" acts of the assured, and still another that the policy shall conform to the provisions of the "motor vehicle financial responsibility law of any state with respect to any liability arising from the use of the automobile," which provides "that the liability of the insurance company shall become absolute whenever damage covered by such policy occurs," the contract is ambiguous.

It is true that the established rule is that insurance contracts should be liberally construed in favor of the insured, and equivocal expressions in the policy whereby the insurer seeks to narrow the range of its liability or renounce the liability purported to be assumed are to be construed most strongly against the insurer, Midwest Dairy Products Corp. v. Ohio Ins. Co., 356 Ill. 389, 190 N.E. 702; Aschenbrenner v. United States Fidelity & Guaranty Casualty Co., 292 U.S. 80, 54 S.Ct. 590, 78 L. Ed. 1137; Manufacturer's Acc. Ind. Co. v. Dorgan, 6 Cir., 58 F. 945, 22 L.R.A. 620, and where any reasonable construction can be placed on a policy that will prevent the defeat of the insured's indemnification for a loss covered by general language, that construction will be given, Terwilliger v. National Masonic Acc. Ass'n, 197 Ill. 9, 63 N.E. 1034; Masonic, etc., Co. v. Jackson, 200 Ind. 472, 164 N.E. 628, 61 A.L.R. 840, because the words are those of the insurer and the ambiguity is chargeable to it. When, however, there is no ambiguity in the terms, neither party is to be favored, Norwaysz v. Thuringia Ins. Co., 204 Ill. 334, 68 N.E. 551, and if the contract is one that the parties could lawfully make, it is the duty of the court to enforce it as the parties made it. Norwaysz' Case, supra, 204 Ill. at page 342, 68 N.E. 551; Schneider v. Autoist Mutual Ins. Co., 346 Ill. 137, 178 N.E. 466. In the instant case the contract was one the parties could lawfully make. Micca v. Wisconsin Nat. Life Ins. Co., 7 Cir., 75 F.2d 710, certiorari denied, 296 U.S. 580, 56 S.Ct. 90, 80 L.Ed. 410; Landau v. Travelers' Ins. Co., 315 Mo. 760, 287 S.W. 346; and Universal Indemnity Ins. Co. v. North Shore Delivery Co., 7 Cir., 100 F.2d 618.

We now consider appellant's contention that the phrase "willful and wanton" is ambiguous.

When a guest sues on the host's automobile liability insurance policy, as does the appellant here, the guest must stand or fall on the policy. Defenses available against the assured are available against the injured party, and the latter can have no greater rights than the former's policy can confer on him.

Moreover, we know that the insurer need not protect against all liabilities and that a clause exempting certain liabilities from coverage is valid. In this action the insurer reasons, and the District Court thus concluded, that the assured's liability, "caused by his reckless disregard of the rights of others," falls squarely within the exclusion language in the policy which excludes indemnification for liability "caused by the willful and wanton" misconduct of the assured.

On the other hand, appellant contends that the phrase "willful and wanton" as used in the exclusion clause is ambiguous as being "reasonably open to two constructions," and hence that construction "more favorable to the insured will be adopted." See Aschenbrenner v. United States Fidelity & Guaranty Co., supra, 292 U.S. at page 85, 54 S.Ct. at page 592, 78 L.Ed. 1137. Appellant reasons that the two constructions of this phrase are (1) that it refers to affirmative willful or intentional acts of the assured and (2) that it refers to grossly negligent and reckless acts to which courts have attached a mere constructive or implied willfulness.

As counsel for appellant puts it, "the fair construction is that the word `or' between `willful and wanton' and `intentional' (the complete exclusion language reads "willful and wanton, or intentional") was used for the purpose of making certain that the willful and wanton act must have been intentional." According to this construction, noncoverage is restricted to intentional injuries inflicted by the assured.

To give credence to this contention is in effect to strike the actual words "willful and wanton" from the policy as surplusage. The exclusion language reads "willful and wanton, or intentional": counsel would have us construe this language so as to make it read "intentional." Furthermore, we know that an express exclusion of "intentional" acts in a policy already confined to liability for injuries that may be described as accidental, adds nothing to the policy which would not otherwise be implied.³ Appellant's construction compels the conclusion that the controversial words in the exclusion language mean nothing at all.

It is true that too often, as here, the insurance money is the only available fund from which the injured party can obtain satisfaction of his judgment. This apparent harshness, however, will not lead us to adopt a construction which we think is unreasonable and inconsistent with the sense in which the words "willful and wanton" were used. To find that a word or phrase isolated from its context is susceptible to more than one meaning, or that a word or phrase in its context is susceptible to one reasonable and one unreasonable meaning, does not spell ambiguity.

The words "willful and wanton" refer to conduct bearing a high degree of culpability. Such conduct evinces an utter abandon for the consequences or a reckless disregard of the consequences, or perhaps indicates a desire to injure or an indifference to the occurrence of such injury. The words refer to such conduct as puts the wrongdoer in a class with the willful doer of wrong. The only respect in which his attitude is less blameworthy than that of the intentional wrongdoer, is that instead of affirmatively...