Kendall Plumbing, Inc. v. St. Paul Mercury Ins. Co.

• Decision Date: 07 April 1962
• Docket Number: No. 42611,42611
• Citation: 370 P.2d 396,189 Kan. 528
• Parties: KENDALL PLUMBING, INC., Appellant, v. ST. PAUL MERCURY INSURANCE COMPANY, Appellee.
• Court: Kansas Supreme Court

Page 396

370 P.2d 396

189 Kan. 528

KENDALL PLUMBING, INC., Appellant, v. ST. PAUL MERCURY INSURANCE COMPANY, Appellee.

No. 42611.

Supreme Court of Kansas.

April 7, 1962.

Syllabus by the Court.

1. A property damage liability policy, containing a clause excluding 'damage to or destruction of--any goods or products * * *, sold, handled, * * * or work completed by or for the insured out of which the accident arises,' does not cover damage to any item installed by the insured resulting from the negligent installation or adjustment of another item by the insured.

2. Although ambiguities in the wording of an insurance contract are to be construed in favor of the insured, such rule has no application to language which is clear in its meaning.

Marvin J. Martin, Wichita, argued the cause, and John D. McBride, Wichita, was with him on the briefs, for appellant.

William Tinker, Wichita, argued the cause, and Arthur W. Skaer, Jr., Hugh P. Quinn, William Porter, Alvin D. Herrington, and Darrell E. Kellogg, Wichita, were with him on the briefs, and Richard T. Foster and W. Getto McDonald, Wichita, of counsel, for appellee.

PARKER, Chief Justice.

This action involves the construction of exclusion provisions of an insurance policy covering property damage liability. The district court found in favor of the insurance carrier and the insured has appealed.

The facts, all of which are stipulated or admitted by the pleadings, may be summarized as follows:

The Kendall Plumbing, Inc., entered into a contract to install a complete heating and air conditioning system in the Brown Building, Wichita, Kansas. In the prosecution of the work Kendall purchased, from two separate manufacturers, and installed a refrigerator unit and a Square D Starter. The only connection between the refrigerator unit and the Square D Starter was electrical wires.

At the time of the installation Kendall negligently failed to make the necessary pressure settings to the spring unit within the Square D Starter. About two months after the construction was completed the starter was disengaged by a Brown Building employee in the regular course of his duties and, because of insufficient spring pressure to push back the contactor within the Square D Starter, the electricity arched across and welded the contactors together. The power provided through the starter not being shut off the refrigerator unit ran without lubrication and was damaged in the sum of $2,711.73.

During all times material to this controversy Kendall had a property damage liability insurance policy with the appellee, The St. Paul Mercury Insurance Company, which was in full force and effect. It contained the following provision:

'The Company agrees to pay on behalf of the Insured all sums which the Insured shall become obligated to pay by reason of the liability imposed upon him by law or contract for damages because of damage to or destruction of property, including the loss of use thereof, caused by accident.'

The policy also contained an exclusion provision which excluded, from the coverage above mentioned, damage to or destruction of----

'Any goods or products manufactured, sold, handled, or distributed by the Insured or work completed by or for the Insured out of which the accident arises.'

Kendall paid for the damages to the Square D Starter and the refrigerator unit. It admits there is no liability on the part of the insurance carrier for damages to the Square D Starter but seeks to recover from such carrier the damage to the refrigerator unit. There was no other property damage caused by the defective installation of the Square D Starter. The district court found as follows:

'In this case, Kendall installed the starter negligently; that he also installed the refrigerator machine, the Worthington machine, and the faulty installation of the starter resulted in damage to the refrigeration machine. They were both separate units, but they were both installed by the plaintiff.

'It is admitted here that the damage to the starter would not be covered under the policy and that no request has been made for damages to the starter.

'It seems to me that since both units, the starter and the refrigeration machine were installed by the plaintiff under a general contract with the Brown Building, that if the exclusion applies to the starter it would also apply to the refrigeration machine.'

Judgment was rendered accordingly. Kendall appeals.

The insurance carrier (hereinafter referred to as the appellee) contends that the exclusion provision excludes coverage damage to any item or part handled by Kendall (hereinafter referred to as the appellant) whether or not such item or part contributed to the injury.

Appellant contends that the exclusion provision excludes only the defective part which caused the injury but does not exclude other items handled or installed by it which were damaged by the defective item. This contention cannot be sustained. The exclusion provision definitely states that any goods or products handled or work completed by the insured are excluded. It is clear that the policy was intended to cover only damage to property or items which had not been handled by appellant. Goods or products handled by it, or work completed by it, were specifically excluded.

This court has not heretofore been called upon to place an interpretation on an exclusion provision such as the one now before us. However, similar provisions have been considered by courts of other states. In the case of Liberty Bldg. Co. v. Royal Indem. Co., 177 Cal.App.2d 583, 2 Cal.Rptr. 329, 346 P.2d 444, the court had under consideration a similar exclusion provision where a building contractor had constructed a large number of dwelling houses and many of the houses developed defects in the outside stucco walls. We quote from the opinion at some length because it makes reference to earlier decisions from other courts which will not need further mention. In the opinion the court said:

'* * * This Exclusion means that if the insured becomes liable to replace or repair any 'goods or products' or 'premises alienated' or 'work completed' after the same has caused an accident because of a defective condition, the cost of such replacement or repair is not recoverable under the policy. However, if the accident also caused damage to some other property or caused personal injury, the insured's liability for such damage or injury becomes a liability of the insurer under the policy, and is not excluded. For example, if a contractor builds a house and as a result of an improper mixture of the stucco, water is absorbed into the walls and the stucco cracks and falls off and a child is injured by the falling stucco, the injury to the child would not be excluded under Exclusion (f) but the replacement cost of the stucco would be excluded. Also, if the water absorbed into the walls should reach the interior walls and injure a valuable painting hanging there, the damage to the painting would be recoverable under the policy while the damage to the walls would not. The principle here applicable is well stated in Heyward v. American Casualty Company of Reading, Pa., D.C., 129 F.Supp. 4. At page 8 the court said: 'This Exclusion means that the policy will not protect the insured if he has to repair or replace some product or work which proved defective and caused an...