Michigan Mut. Liability Co. v. Carroll
| Decision Date | 08 September 1960 |
| Docket Number | 6 Div. 433 |
| Citation | 271 Ala. 404,123 So.2d 920 |
| Parties | MICHIGAN MUTUAL LIABILITY CO. v. Eugene D. CARROLL et al. |
| Court | Alabama Supreme Court |
Jas. E. Clark and London, Yancey, Clark & Allen, Birmingham, for appellant.
Cabaniss & Johnston and Leigh M. Clark, Birmingham, for appellee American Fidelity & Cas. Co.
Rives, Peterson, Pettus & Conway, Birmingham, for appellee Carolina Cas. Ins. Co. SIMPSON, Justice.
Bill for declaratory judgment. This is an appeal by Michigan Mutual Liability Company, the complainant in the court below, from an adverse ruling by the trial court sustaining demurrers of the respondents to the bill of complaint.
There seems to be no factual controversy presented by the pleadings. Only questions of law are presented for decision and counsel have argued the case on the basis that a decision will settle the controversy and are desirous of a final decision on demurrer. The court will, therefore, proceed accordingly. Shew v. City of Gadsden, 265 Ala. 253, 90 So.2d 768; Darling Shop of Birmingham v. Nelson Realty Co., 255 Ala. 586, 52 So.2d 211; Ala.Dig.7A, Declaratory Judgments, k325.
The facts shown by the bill are: On November 24, 1955, at the terminal of B & M Express, Inc. (hereinafter referred to as B. & M) Carroll, an employee of A. A. A. Motor Lines, Inc. (hereinafter referred to as Triple A) was injured in an accident which occurred during the loading of a motor transport truck belonging to Triple A caused by the negligence of an employee of B. & M. Carroll brought suit against B & M for the injuries that he sustained. Michigan Mutual Liability Co. (hereinafter referred to as Michigan), the public liability carrier for B & M, defended the action and later paid a consent judgment to Carroll on behalf of B & M.
The complainant, Michigan, contends B & M is entitled to the benefits of insurance protection not only from Michigan, as its public liability carrier, but also from the American Fidelity and Casualty Co. (hereinafter referred to as American), as its automobile insurer, and from Carolina Casualty Ins. Co. (hereinafter referred to as Carolina), as the carrier covering the motor vehicle owned by Triple A, which was in the process of being loaded by the employee of B & M when the injury to Carroll occurred.
The right through which Michigan seeks its claims is by reason of the subrogation stipulations contained in the Michigan policy with B & M. More specifically, this right of subrogation appears under Chapter 13 of the Michigan policy wherein it is stated:
'In the event of any payment under this policy, the company shall be subrogated to all the insured's rights of recovery therefor against any person or organization * * *.'
As to that phase of the case concerning the extent of coverage under the Carolina policy, the following provisions are pertinent:
'I.
'To pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of bodily injury * * * sustained by any person, caused by accident and arising out of the ownership, maintenance or use of the automobile.
'III.
'With respect to the insurance for bodily injury liability * * * the unqualified word 'insured' includes the named insured and also includes any person while using the automobile and any person or organization legally responsible for the use thereof, provided the actual use of the automobile is by the named insured or with his permission.
'This policy does not apply:
'(d) * * * to bodily injury to * * * any employee of the insured while engaged in the employment, other than domestic, of the insured or in domestic employment if benefits therefor are either payable or required to be provided under any workmen's compensation law.
'(e) * * * to any obligation for which the insured or any company as his insurer may be held liable under any workmen's compensation law.'
Appellant maintains that B & M is an additional insured under Clause I of the policy as set out above. This point is not controverted by Carolina; both sides agree that loading the truck constituted 'use of the automobile'. It is the position of Carolina that even if in so loading the truck, B & M was 'using' the truck, there is no coverage where the injury is to an employee of the 'insured', which is defined in Clause III of the policy to include the named insured, and since Carroll was an employee of the 'named insured', there is no coverage. Appellant contends further that the term 'insured' in the exclusion clause is ambiguous, since it can be construed to mean, not only the named insured, but also the insured claiming protection under the policy--in this case the named insured. If the policy is then ambiguous, appellant states, it must be construed in a manner favorable to the insured, i. e., 'insured' meaning the insured claiming protection under the policy.
Appellant bases its claim against American, the automobile insurer of B & M, on the following clauses in American's policy:
'To pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of bodily injury * * * sustained by any person, caused by accident and arising out of the ownership, maintenance or use of the automobile.'
Under Item 4 of the policy, there is space for description of the automobile that is to be covered under the policy. In this space is found the notation 'Description of Equipment Waived'.
Item 5 of the policy provides 'The purposes for which the automobile is to be used are See endorsement.' The endorsement reads as follows:
'It is understood and agreed hereunder that Item 5 of the undermentioned policy hereby reads as follows:
"Transportation of merchandise for compensation over route within the Continental United States."
Item 5(c) of the policy provides:
'Use of the automobile for the purposes stated includes the loading and unloading thereof.'
Appellant asserts that loading the truck owned by Triple A by an employee of B & M is 'use' of the automobile as contemplated in the coverage clause of Item 5 and 5(c) above, extending coverage under the American policy to the accident in question. Appellant seeks to avoid the fact that the truck in question was neither owned nor leased by the insured on the grounds that the description of the equipment covered was waived and that there was no provision in the policy which said that vehicles to be covered has to be either owned or leased by the insured.
The final contention of the appellant, applying to both appellees, arises under Code of Alabama 1940, Tit. 48, § 301(16) as amended, which provides that a carrier in order to secure a certificate must file insurance policies (or other evidences of security) conditioned to pay any judgments against the carrier 'resulting from the negligent operation, maintenance, or use of motor vehicles under certificate or permit'. Both the American and Carolina policies were filed with the Public Service Commission pursuant to this act. It is the appellant's contention that in filing these policies neither Carolina nor American may rely on any exclusions or conditions that would defeat the purposes of the statute, which is the protection of the public.
The trial court in its decree sustained the demurrer of each appellee separately and severally to the bill of complaint as a whole and to each and every aspect thereof. Appellant rests its appeal here on the contention that insofar as Carolina is concerned 'the employee of the insured' exclusion has no force and effect to deny coverage to B & M, and that insofar as American is concerned by waiving the description of the vehicle, it granted coverage to B & M even when they were using a truck belonging to Triple A.
These questions are then before the court:
I.
Where an additional insured under a public liability policy negligently injures the employee of the named insured, is the additional insured prevented from claiming coverage under the policy because of a provision in the policy which excludes from coverage all injuries to an employee of the 'insured'?
II.
In an automobile liability policy which expressly waives description of the vehicles covered, is the unloading of a vehicle by employees of the insured 'use' of the vehicle for the stated purpose of 'transportation of merchandise for compensation' even though the vehicle being unloaded is not owned or leased by the insured?
III.
Does Tit. 48, § 301(16), Code of Alabama 1940 as amended bring under the coverage of the policies of American and Carolina the accident in question?
I.
Interpretation of the employee exclusion clause to determine what is meant by the term 'employee of the insured' seems to be a question of first impression in Alabama. The decisions of those states that have been presented with the problem are irreconcilably contradictory. See Annotation, 50 A.L.R.2d 78, 97, § 6(a); 7 Appleman, Insurance Law and Practice, § 4413.
Appellant urges that the phrase 'employee of the insured' is ambiguous and should be construed most favorably to the insured. The favorable construction that is sought by the appellant is to construe the phrase to mean 'employee of the insured against whom suit is being brought'. In this contention we cannot concur.
The policy provision is not ambiguous and the policy has gone to considerable lengths to define what is meant by the word 'insured'. In Clause III of the policy it is stated, 'The unqualified word 'insured' includes the named insured and also any person while using the automobile'. (Emphasis supplied.) The meaning is clear: Carroll was an employee of the named insured; there is no coverage under the policy for injury to employees of the insured; the named insured was defined by the parties to come within the unqualified term 'insured'.
Contracts of insurance, like any other contract, must be construed to give effect to the intention of the parties. If the terms used are clear...
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