Ivy Nelson Grain Co. v. Commercial Union Ins. Co. of New York

• Decision Date: 28 April 1969
• Docket Number: No. 8689,8689
• Citation: 80 N.M. 224,1969 NMSC 48,453 P.2d 587
• Parties: IVY NELSON GRAIN COMPANY, a corporation, Plaintiff-Appellant, v. COMMERCIAL UNION INSURANCE COMPANY OF NEW YORK, Defendant-Appellee.
• Court: New Mexico Supreme Court

Page 587

453 P.2d 587

80 N.M. 224

IVY NELSON GRAIN COMPANY, a corporation Plaintiff-Appellant, v. COMMERCIAL UNION INSURANCE COMPANY OF NEW YORK Defendant-Appellee.

No. 8689.

Supreme Court of New Mexico.

April 28, 1969.

Krehbiel & Alsup, Clayton, for plaintiff-appellant

Robertson & Robertson, Raton, for defendant-appellee.

OPINION

CARMODY, Justice.

This suit was instituted to recover the value of a piece of machinery which the plaintiff contended was covered by insurance. The trial court, upon facts most of which were stipulated, concluded that the machine was not covered by the policy and denied recovery.

The only question involved is whether the policy, together with its endorsements, is ambiguous. We believe there is an ambiguity which requires a reversal.

The facts are not in contest. Plaintiff operated a grain storage warehouse and elevator. It had purchased from the defendant a policy of insurance with extended coverage. The face of the policy described the property insured as follows:

'On one story steel and concrete iron clad, grain warehouse building and machinery, located at 115 1/3 North Front Street, Clayton, New Mexico.'

One of the endorsements to the policy was for 'Elevator Building and Grain Form.' This endorsement stated that the building coverage was for the buildings generally as described on the first page of the policy and 'fixed and movable machinery, spouts, conveyors, * * * if the property of the building owner; all only while contained in or attached to such buildings or structures.' (Emphasis added.) The machine was a specialized grain loader of a movable type, which was used for loading and unloading grain in or outside the warehouse building, but was usually left outside. On the morning when the loss occurred, the machine was standing outside of the building but close thereto, and the doors of the warehouse were closed. A stolen car crashed into the building, and in so doing also ran into the machine, totally destroying the same. The machine was not in use at the time and was not attached to the building in any way, although the testimony is to the effect that the attachments or extension pipes which were used for the operation of the machine had been detached and were inside of the building.

There are certain rules of insurance law which we must consider in deciding this case. First, the words in a contract of insurance are given their ordinary meaning, and, where there is ambiguity, the test is not what the insurer intended its words to mean, but what a reasonable person in the position of the insured would understand them to mean. Morton v. Great American Insurance Company, 77 N.M. 35, 419 P.2d 239 (1966); Miller v. Mutual Benefit Health & Acc. Ass'n of Omaha, 76 N.M. 455, 415 P.2d 841, 19 A.L.R.3d 1421 (1966); Scott v. New Empire Insurance Company, 75 N.M. 81, 400 P.2d 953 (1965); and Fowler v. First National Life Insurance Co. of America, 71 N.M. 364, 378 P.2d 605 (1963). Secondly, an insurance contract must be considered as a whole; and if the policy is clear and is not ambiguous, the courts have no occasion to construe the terms thereof. Gray v. International Service Insurance Company, 73 N.M. 158, 386 P.2d 249 (1963); and Rigsby v. Mutual of New York, 331 F.2d 353 (10th Cir.1964). Thirdly, that under certain circumstances, the retention and non-objection to the policy by the insured is considered to be an acceptance of its terms. Western Farm Bureau Mutual Ins. Co. v. Barela, 79 N.M. 149, 441 P.2d 47 (1968); Porter v. Butte Farmers Mutual Insurance Company, 68 N.M. 175, 360 P.2d 372 (1961); and Gendron v. Calvert Fire Ins. Co., 47 N.M. 348, 143 P.2d 462, 149 A.L.R. 1310 (1943). Lastly, where an insurance contract is ambiguous, the ambiguity is resolved against the insurer. Vargas v. Pacific National Life Assurance Co., 79 N.M. 152, 441 P.2d 50 (1968); Couey v. National Benefit Life Insurance Company, 77 N.M. 512, 424 P.2d 793 (1967); Fowler v. First National Life Insurance Co. of America, supra; Erwin v. United Benefit Life Insurance Company, 70 N.M. 138, 371 P.2d 791 (1962).

With these rules in mind, we examine the policy before us.

As is usual with insurance contracts, this one is somewhat complex and contains not only the policy itself but two endorsements, which, although perhaps easily...