Milbank Mut. Ins. Co. v. Dairyland Ins. Co.

Citation373 N.W.2d 888
Decision Date04 September 1985
Docket NumberNo. 10846,10846
PartiesMILBANK MUTUAL INSURANCE COMPANY, Plaintiff and Appellee, v. DAIRYLAND INSURANCE COMPANY, Garry Hagstrom and Sylvia Sabot, Individually and as Personal Representative of the Estate of Robert Sabot, deceased, Defendants and Appellants. Civ.
CourtUnited States State Supreme Court of North Dakota

Zuger & Bucklin, Bismarck, for plaintiff and appellee; argued by Thomas O. Smith, Bismarck.

O'Grady, Morley & Morley, Grand Forks, for defendant and appellant Dairyland Insurance Company; argued by Michael J. Morley, Grand Forks.

ERICKSTAD, Chief Justice.

Dairyland Insurance Company [Dairyland] appeals from a summary judgment entered in a declaratory judgment action in which the district court determined that Dairyland had an obligation of coverage and a duty to defend under an automobile insurance policy issued by it to Garry Hagstrom and that Milbank Mutual Insurance Company [Milbank] did not have an obligation of coverage or duty to defend under a farm owners--ranch owners policy issued by it to Hagstrom. We affirm.

Robert Sabot was allegedly injured in an accident on Hagstrom's farm near Wilton, North Dakota, on October 15, 1980. The accident occurred when Hagstrom was unloading hay bales from his 2 1/2-ton Ford truck to feed his cattle and one of the hay bales fell off the truck and struck Sabot. In order to feed the cattle, Hagstrom used his 2 1/2-ton Ford truck to haul four 1500-pound cylindrical-shaped hay bales to a field where the cattle were pastured. The truck had a twenty-foot grain box with four-foot sides. Three bales were loaded in the box of the truck and the fourth bale was loaded on top of and in between two of the lower bales. The tailgate of the truck was removed to haul the bales, and a rope was tied at the back of the truck to keep the bales from falling out the back.

When Sabot arrived at Hagstrom's farm, Hagstrom was preparing to feed the cattle, and Hagstrom requested Sabot to help him. The extent of Hagstrom's request for Sabot's help is unclear. Hagstrom's deposition reflects that the fields were muddy and he asked Sabot to follow him in a four-wheel drive pickup in the event the truck became stuck. A statement by Sabot reflects that he was asked by Hagstrom to help move some equipment and feed some cattle.

In any event, Hagstrom drove the 2 1/2-ton truck and Sabot drove Hagstrom's four-wheel drive pickup to the field where the hay bales were to be unloaded. When they arrived at the field, both Sabot and Hagstrom got out of the respective vehicles. Hagstrom's deposition reflects that he untied the rope at the back of the truck; however, a statement given by him after the accident reflects that Sabot untied the rope. Hagstrom returned to the truck and as he raised the hoist, he looked in the rear view mirror and saw that the top bale had fallen off the side of the truck and had struck Sabot. There is no dispute that, at the time of the accident, Hagstrom was unloading the bales from the truck.

At the time of the accident, Dairyland had issued an automobile insurance policy to Hagstrom which named the 2 1/2-ton Ford truck as the insured vehicle, and Milbank had issued a farm owners--ranch owners insurance policy to Hagstrom.

As a result of the accident, Sabot allegedly suffered severe injuries to his head and back, including a broken back, a broken right leg, an injury to his bladder, and internal injuries. Sabot ultimately died of leukemia in 1981 and not from the alleged injuries sustained from the accident. Sabot's surviving spouse, Sylvia, initiated a negligence action, individually and as a personal representative of Sabot's estate, against Hagstrom to recover damages for Sabot's alleged injuries. Both Milbank and Dairyland denied an obligation to provide coverage or a defense because of the terms of their respective policies. However, Milbank undertook the defense of Hagstrom under a reservation of rights agreement.

Thereafter, Milbank commenced the instant declaratory judgment 1 action against Dairyland, Hagstrom, Sylvia Sabot, and Sabot's estate seeking a declaration of its rights and obligations under its policy and a declaration of the rights and obligations of Dairyland under its policy. The parties submitted the case to the district court on cross-motions for summary judgment. The district court concluded that Milbank had no obligation of coverage or duty to defend Hagstrom in the underlying tort action, and that Dairyland had a duty of defense and coverage under the terms of its policy. Judgment was entered accordingly and Dairyland, Hagstrom and Sylvia Sabot, individually and as personal representative of Robert Sabot's estate, appealed. 2

The issues presented in this case must be resolved within the context of a motion for summary judgment. Summary judgment is a procedural device available for the prompt and expeditious disposition of a controversy without a trial if there is no dispute as to either the material facts or the inferences to be drawn from undisputed facts, or if only a question of law is involved. Herman v. Magnuson, 277 N.W.2d 445 (N.D.1979). If different factual inferences may be drawn, they must be drawn in favor of the party opposing the motion for summary judgment. Sigurdson v. Lahr & Lahr, Inc., 299 N.W.2d 792 (N.D.1980).

Dairyland's policy issued to Hagstrom promised to pay damages for bodily injury for which the law held him responsible because of a "car accident" involving the 2 1/2-ton Ford truck. The Dairyland policy defines car accident as "an unexpected and unintended event that causes bodily injury or property damage and arises out of the ownership, maintenance or use of a car or other motor vehicle." However, Dairyland's policy does not define the phrase "arises out of the ownership, maintenance or use of a car or motor vehicle." Dairyland contends that, in the absence of a definition for that term in its policy, Section 26-41-03(11), N.D.C.C., must be read into the policy and that, based on that statute, the district court erred in concluding that Dairyland must provide coverage and defense to Hagstrom under its automobile liability insurance policy.

Section 26-41-03(11), N.D.C.C., provides as follows:

"As used in this chapter, the following definitions shall apply:

* * *

* * *

"(11) 'Operation of a motor vehicle' means operation, maintenance, or use of a motor vehicle as a vehicle. Operation of a motor vehicle does not include conduct within the course of a business of repairing, servicing, or otherwise maintaining motor vehicles unless the injury occurs off the business premises, or conduct in the course of loading and unloading the vehicle unless the injury occurs while occupying it." [Emphasis added.]

Dairyland contends that the undisputed facts establish that the accident occurred while Hagstrom and Sabot were unloading the 2 1/2-ton Ford truck and that, therefore, the accident did not occur during the "operation of a motor vehicle" as that term is defined in Section 26-41-03(11), N.D.C.C.

Milbank contends that Section 26-41-03(11), N.D.C.C., does not apply to this case because that chapter relates to automobile no-fault insurance and the provisions of that chapter are not, as a matter of law, applicable to the liability provisions of an automobile insurance policy.

Dairyland cites several authorities for the proposition that statutory provisions and definitions must be read into its automobile insurance policy and that, therefore, Section 26-41-03(11), N.D.C.C., must be read into its policy. See 7 Am.Jur.2d, Automobile Insurance, § 4 (1980); 7 Blashfield Automobile Law and Practice, § 292.9 (1966); 12 Couch on Insurance 2d, § 45:13 (1981).

We have reviewed the authorities relied upon by Dairyland and the cases cited therein and we do not believe those authorities mandate the incorporation of Section 26-41-03(11), N.D.C.C., into Dairyland's policy. Initially, we note that these authorities reflect that the particular statutory provisions must be applicable to the insurance policy in order to be incorporated into the policy. 7 Am.Jur.2d, Automobile Insurance, § 4 (1980). These authorities further reflect that whether or not a statutory provision is incorporated into an insurance policy depends on the intent of the legislature as ascertained from the language of the statute or applicable public policy. See Wildman v. Government Employee's Insurance Co., 48 Cal.2d 31, 307 P.2d 359 (1957) [provisions of vehicle code set forth public policy of state and were intended by legislature to be a part of every motor vehicle liability insurance policy]; Taub v. Motor Vehicle Accident Indemnification Corp., 31 A.D.2d 378, 298 N.Y.S.2d 212 (1969) [by terms of statute automobile insurers were mandated to include provisions in policy to give protection in situations enumerated in statute]; Galkin v. Lincoln Mutual Casualty Co., 279 Mich. 327, 272 N.W. 694 (1937) [Mandatory statutory provisions of insurance law should be read into insurance contract]; Crisp v. State Farm Mutual Automobile Insurance Co., 256 N.C. 408, 124 S.E.2d 149 (1962) [If statute is applicable to insurance policy, the provisions of the statute are incorporated into the policy]. Thus, we must initially look to the statutory language and public policy to ascertain whether or not Section 26-41-03(11), N.D.C.C., may be incorporated into Dairyland's policy.

In resolving this question of statutory construction, our duty is to ascertain the intent of the Legislature. State v. Moore, 286 N.W.2d 274 (N.D.1979), cert. denied, 446 U.S. 943, 100 S.Ct. 2170, 64 L.Ed.2d 799 (1980). The Legislature's intent must be sought initially from the language of the statute. Morton County v. Henke, 308 N.W.2d 372 (N.D.1981). If a statute is clear and unambiguous, the letter of the statute cannot be disregarded under the pretext of pursuing its spirit because the Legislative intent is presumed clear from the face of the statute. Section 1-02-05, N.D.C.C.; County...

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