Melton v. Ranger Ins. Co.

• Decision Date: 18 October 1974
• Docket Number: No. 17543,17543
• Citation: 515 S.W.2d 371
• Parties: Nancy Boyd MELTON et al., Appellants, v. RANGER INSURANCE COMPANY, Appellee.
• Court: Texas Court of Appeals

Page 371

515 S.W.2d 371

Nancy Boyd MELTON et al., Appellants, v. RANGER INSURANCE COMPANY, Appellee.

No. 17543.

Court of Civil Appeals of Texas,

Fort Worth.

Oct. 18, 1974.

Rehearing Denied Nov. 15, 1974.

Atkins & Duke, Arlington, Byrd, Davis, Eisenberg & Clark, Don L. Davis and Tom H. Davis, Austin, for appellants.

Anderson, Henley, Shields, Bradford & Pritchard and L. W. Anderson, Dallas, for appellee.

OPINION

BREWSTER, Justice.

This is a suit on an aviation liability insurance policy issued by defendant, Ranger Insurance Company. Both the plaintiffs and the defendant filed motions for summary judgment. The plaintiffs' motion was denied. The defendant's motion for summary judgment was granted and this is an appeal by plaintiffs from that summary judgment which denied them a recovery in the case.

The facts in the case are undisputed. On May 2, 1969, and prior thereto Ranger Insurance Company had in full force an aviation liability insurance policy which it had issued to Van Enterprises, Inc., d/b/a St. Louis Flying Service and to some other named insureds that are not involved here. On May 2, 1969, Donald S. Melton entered into an aircraft rental agreement with the St. Louis Flying Service, Inc., whereby Melton, for a fee payable to lessor, rented a Piper Cherokee aircraft from St. Louis Flying Service, Inc. Later that day this aircraft ran out of gas and crashed, fatally injuring the pilot, Melton, and six passengers. Thereafter, the estates of the passengers sued the pilot's (Melton's) estate for damages in the 96th District Court. Although requested to do so, the Ranger Insurance Company refused to defend the Melton Estate in that case. Thereafter the plaintiffs in that case, on February 10, 1972, obtained a judgment against the Melton Estate and then filed this suit against the defendant Ranger Insurance Company, seeking to collect under the terms of the liability policy, the amount of the judgment they had obtained in the other case against the Melton Estate.

The plaintiffs' claim is that Ranger Insurance Company is liable to them for the payment of the judgment they obtained against the Melton Estate because the renter pilot, Melton, was an omnibus insured under the liability insurance policy that Ranger Insurance Company had issued to Van Enterprises, Inc., d/b/a St. Louis Flying Service.

In the plaintiffs' only point of error they contend that the trial court erred in granting the insurance company's motion for summary judgment and in refusing to grant their motion for summary judgment because (a) the pilot, being a permissive user of the aircraft for one of the designated purposes of use in the policy, was an omnibus insured, and (b) the policy does not exclude coverage for renter pilots who carry passengers for hire.

We overrule this point and affirm the trial court's decree.

By the terms of the policy involved the insurer agreed to pay on behalf of the insured all sums that the insured became legally obligated to pay as damages because of bodily injury to persons or because of injury to or destruction of property caused by an occurrence and arising out of the ownership, maintenance or use of the insured aircraft. Under coverages F and G of the policy the insurer also agreed to pay for loss or damage to the aircraft itself .

Item 1 of the Declarations of the policy, entitled 'Name of Insured,' names the insureds as Van Enterprises, Inc., d/b/a St. Louis Flying Service and three other named firms that are not involved here.

Article III of the policy under the part of the policy entitled 'Insuring Agreements' provides: 'The unqualified word 'Insured' wherever used in this Policy with respect to Coverage A, B, C and D, includes not only the Named Insured but also any person while using or riding in the aircraft and any person or organization legally responsible for its use, provided the actual use is with the permission of the Named Insured.

'The provisions of this paragraph do not apply:

'(c) To any person operating the aircraft under the terms of any rental agreement or training program which provides any remuneration ot the Named Insured for the use of said aircraft.' (Emphasis supplied.)

It was undisputed that at the time the plane involved crashed it was being operated by the pilot, Melton, under an aircraft rental agreement that provided a remuneration to the named insured, St. Louis Flying Service, Inc.

Section 6 of the part of the policy that is entitled 'Declarations,' is entitled 'Purpose(s) of Use.' This part of the policy is printed and it has subdivisions (a) through (g), and each of those subdivisions has in front of it a box that is to be checked or otherwise designated, if applicable. The policy here had an X in the box in front of Subdivision (e) of that Section 6 of the Declarations. This X had been placed in the box with a typewriter. This Subdivision (e) reads as follows: "Commercial.' The term 'Commercial' is defined as including all the uses permitted under (c) and (d) above.'

Under Subsection (c) of Section 6, just referred to, it is provided that a permitted use is 'for rental to pilots.' This is the only part of (c) or (d) that is material here.

The plaintiffs argue that since the provisions of the declarations of the policy just referred to make 'rental to pilots' a permitted use of the aircraft an ambiguity was thereby created as to whether or not a 'renter pilot' was an omnibus insured under the terms of the policy and that the court in construing the policy should construe it to mean that the 'renter pilot,' Melton, was an omnibus insured under the policy at the time he crashed.

The question before us is one of construction.

We hold that the policy provisions involved are not ambiguous.

Some of the settled rules of law that govern us in deciding this case are set out in the case of Fruhman v. Nawcas Benevolent Auxiliary, 436 S.W.2d 912 (Dallas Civ.App., 1969, ref., n.r.e.) as follows:

'Since insurance policies are contracts, they are governed by the rules of interpretation that are applicable to contracts generally and this notwithstanding the rule that contracts of insurance are to be strictly construed in favor of the insured. . . . United American Ins. Co. v. Selby, 161 Tex. 162, 338 S.W.2d 160, 84 A.L.R.2d 367 (1960); . . . (cases cited). Courts may only construe a contract of insurance as it was made; they are not authorized to make a new contract for the parties. Republic Nat. Life Ins. Co. v. Spillars, 368 S.W.2d 92, 5 A.L.R.3d 957 (Tex.Sup.1963); . . . (cases cited). Courts are without authority to needlessly reject any words or terms used in contracts of insurance by parties or delete any clause therein as surplusage. Unless that action is judicially mandatory. Williams v. J. & C. Royalty Co., 254 S.W.2d 178 (Tex.Civ .App., San Antonio 1952, writ ref'd); . . . (cases cited). If words used in an insurance policy are plain and unambiguous, it is the court's duty to give effect to that language in accordance with its plain, ordinary meaning, and not create a new contract by arbitrary judicial construction. Vaughn v. Atlantic Ins. Co., 397 S.W.2d 874 (Tex.Civ.App., Tyler 1966, writ ref'd n.r.e.). All parts of the insurance contract are to be taken and considered together, and such meaning shall be given to them as will carry out and effectuate to the fullest extent the true intention of the parties. . . . In construing the contract the policy should be viewed as a whole, and not isolated portions thereof, and giving the effect of each part where that can be done with reasonable certainty. An implication cannot be allowed to override an...