Kelley v. Royal Globe Ins. Co.

• Decision Date: 19 August 1977
• Citation: 349 So.2d 561
• Parties: Kendall E. KELLEY, a minor, 17 years of age, who sues by and through his guardian ad litem, J. Gorman Houston, Jr. v. ROYAL GLOBE INSURANCE COMPANY, INC., a corporation. SC 2324.
• Court: Alabama Supreme Court

Page 561

349 So.2d 561

Kendall E. KELLEY, a minor, 17 years of age, who sues by and through his guardian ad litem, J. Gorman Houston, Jr. v. ROYAL GLOBE INSURANCE COMPANY, INC., a corporation.

SC 2324.

Supreme Court of Alabama.

Aug. 19, 1977.

Rehearing Denied Sept. 9, 1977.

J. Gorman Houston, Jr., Eufaula, Guardian ad Litem for Kendall E. Kelley, a minor.

John M. Milling, Jr. and Harry Cole of Hill, Hill, Carter, Franco, Cole & Black, Montgomery, for appellee.

JONES, Justice.

This case involves a declaratory judgment rendered in favor of Royal Globe Life Insurance Company concerning the applicability of an employee exclusion clause in a public liability insurance policy. We affirm.

In connection with a high school vocational education program, Kendall Kelley, a seventeen-year-old student, was employed several afternoons a week in Bickley's Grocery Store. His duties included bagging groceries, stocking shelves, cleaning, and assisting in the store's meat department. In December of 1975, while grinding meat at the store, Kelley sustained personal injuries resulting in the traumatic amputation of his right hand. Because the store employed only three persons, workmen's compensation was not required. Furthermore, the owner had not elected to voluntarily procure such coverage. Suit was filed and, as amended, named Bobby Ray Bickley, individually, as a defendant. Royal Globe sought a declaratory judgment action to determine whether it must defend Bickley in the original action.

The Circuit Court of Barbour County sua sponte reformed the insurance policy so that its named insured was Bickley's Grocery, a partnership composed of Bobby Ray Bickley and his wife. It further found that Kelley was an employee of Royal Globe's named insured and that the employee exclusion provision of the policy precluded Kelley's coverage. Thus, Royal Globe had no obligation to defend Bickley in the pending litigation.

Kelley's main contention is grounded upon the premise that, because his suit is against Bickley individually, the employee exclusion does not apply to him because he is employed by the partnership. Thus framed, the issue for our consideration is whether, for purposes of an employee exclusion provision in a public liability insurance policy, an employee of a partnership is an employee of the individual partners.

In urging a negative answer to this query, Kelley cites United States Fire Insurance Co. v. McCormick, 286 Ala. 531, 243 So.2d 367 (1970). In McCormick, an injured employee and the personal representatives of a deceased employee were permitted to bring suit against the president, vice-president and foreman of a corporation, notwithstanding an employee exclusion clause similar to the one before us. The Court pointed out that the corporate officers were additional insureds and, because the plaintiffs were employees of the corporation and not employees of its officers, a severability of interest clause permitted plaintiffs' coverage under the policy, despite the employee exclusion clause. See 3 Cum.-Sam.L.Rev. 532 (1972).

The McCormick Court stated:

"The severability of interests provision requires consideration of each insured separately, independently of every other insured. . . . Applying this provision, the exclusion of an employee must mean that the exclusion of an employee of the insured must be limited to an employee of that particular insured who claims coverage under the policy." 286 Ala. at 540, 243 So.2d at 375.

Royal Globe's policy includes a severability of interest clause which provides in pertinent part:

"The insurance afforded applies separately to each insured against whom a claim is made or a suit is brought except with respect to the limits of the company's liability."

Kelley urges this Court to apply the rationale of McCormick and permit suit under the theory that, because Kelley is employed by the partnership, a suit against the partner individually avoids the employee exclusion; and this for the reason that the exclusion applies only to the "insured" employer the partnership.

This is a strained interpretation and overlooks two important points. First, the term "insured" should be interpreted consistently throughout the policy because the policy must be read as a whole. Smith v. Kennesaw Life and Accident Insurance Co., 284 Ala. 12, 221 So.2d 372 (1969); Southern Guaranty Insurance Co. v. Wales, 283 Ala. 493, 218 So.2d 822 (1969); and State Farm Mutual Automobile Insurance Co. v. General Mutual Insurance Co., 282 Ala. 212, 210 So.2d 688 (1968).

While it is well-settled that any ambiguities or uncertainties in an insurance policy must be resolved against the insurer, ambiguities are not to be inserted by strained or twisted reasoning. Michigan Mutual Liability Co. v. Carroll, 271 Ala. 404, 123 So.2d 920 (1960); and Insurance Company of North America v. Thomas, 337 So.2d 365 (Ala.Civ.App.1976).

Three provisions in the policy must be read together:

"Each of the following is an insured under this insurance to the extent set forth below:

(b) if the named insured is designated in the Declarations as a partnership or joint venture, the partnership or joint venture so designated and any partner or member thereof, but only with respect to his liability as such . . ." (Emphasis added.)

"This insurance does not apply to bodily injury or property damage arising out of the conduct of any partnership or joint venture which the insured is a partner or member and which is not designated in this policy as a named insured." (Emphasis added.)

"This insurance does not apply to a bodily injury to an employee of the insured arising out of...