Insurance Co. of North America v. State Farm Mut. Auto. Ins. Co.
| Decision Date | 20 May 1983 |
| Docket Number | No. 5700,5700 |
| Citation | 663 P.2d 953 |
| Parties | 11 Ed. Law Rep. 704 INSURANCE COMPANY OF NORTH AMERICA, Appellant, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Appellee. |
| Court | Alaska Supreme Court |
Kenneth P. Jacobus, Hughes, Thorsness, Gantz, Powell & Brundin, Anchorage, for appellant.
Kenneth R. Lamb, Lamb & Bowen, Anchorage, for appellee.
Before BURKE, C.J., and RABINOWITZ, MATTHEWS and COMPTON, JJ.
On January 24, 1973, James Mead, the basketball coach at Talkeetna School, was returning from a basketball game with students when the van he was driving collided with a vehicle owned by the Matanuska-Susitna Borough School District [School District], Mead's employer. A number of students were passengers in Mead's van. The students were injured in the accident which was caused by Mead's negligence.
The vehicle Mead was driving was owned by another School District employee, Verne Olson, principal of Talkeetna School. Olson had given Mead express permission to drive the van and it is undisputed that Mead was conducting School District business when the accident occurred.
Two insurance companies are parties to this appeal. State Farm Mutual Automobile Insurance Company [State Farm] was the insurer of the Olson vehicle, with policy limits of $50,000 per person and $100,000 per accident. The Insurance Company of North America [INA] was the School District's insurer. The limits of that policy were $100,000 per person and $300,000 per accident.
State Farm settled with the students in the collective amount of $103,000 1 and obtained releases effective as to Mead, Olson and the School District. It then filed suit against INA, alleging that the INA policy provided coverage of Mead's liability, and seeking contribution toward the settlements. On cross motions for summary judgment, the superior court determined that the INA policy did provide coverage and entered judgment against INA for a prorated share of $69,676.39. We reverse.
The INA policy provides that each of the following is an insured:
(a) the Named Insured:
(b) any partner or executive officer thereof, but with respect to a non-owned automobile only while such automobile is being used in the business of the Named Insured.
(c) any person while using an owned automobile or a hired automobile with the permission of the Named Insured, provided his actual operation or (if he is not operating) his other actual use thereof is within the scope of such permission, but with respect to bodily injury or property damage arising out of the loading or unloading thereof, such other person shall be an insured only if he is:
(1) a lessee or borrower of the automobile, or
(2) an employee of the Named Insured or of such lessee or borrower;
(d) any other person or organization but only with respect to his or its liability because of acts or omissions of an Insured under (a), (b) or (c) above.
It is apparent at the outset that Mead is neither the School District, insured under subparagraph (a), nor a partner or executive of the School District specified in subparagraph (b). The INA policy defines "hired automobile," used in subparagraph (c), as follows:
"[H]ired automobile" means an automobile not owned by the Named Insured which is used under contract in behalf of, or loaned to the Named Insured, provided such automobile is not owned by or registered in the name of (a) a partner or executive officer of the Named Insured or (b) an employee or agent of the Named Insured who is granted an operating allowance of any sort for the use of such automobile[.] (Emphasis added).
Olson, the registered owner of the van and a School District employee received five cents per mile from the School District for the use of the van. Reimbursement of operating expenses has been held to constitute an "operating allowance." See Western Casualty & Surety Co. v. Pacific Employers Insurance Co., 97 F.Supp. 956, 958-59 (N.D.Okl.1951).
In interpreting an insurance policy, courts follow the definitions provided in the policy itself. Dorrell v. State Fire and Casualty Co., 221 So.2d 5, 6 (Fla.App.1969). Where an insurance company limits the coverage of a policy issued by it in plain language, this court recognizes that restriction. See Ness v. National Indemnity Company of Nebraska, 247 F.Supp. 944, 947 (D.Alaska 1965); Werley v. United Services Automobile Association, 498 P.2d 112, 116 (Alaska 1972). We find that Olson's van was not a "hired automobile" under the policy...
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