Moss v. Mid-American Fire and Marine Ins. Co.

• Decision Date: 30 June 1982
• Docket Number: No. 13549,MID-AMERICA,13549
• Citation: 647 P.2d 754,103 Idaho 298
• Parties: Norman Kay MOSS, Plaintiff-Appellant, v.FIRE AND MARINE INSURANCE COMPANY, Defendant-Respondent.
• Court: Idaho Supreme Court

Page 754

647 P.2d 754

103 Idaho 298

Norman Kay MOSS, Plaintiff-Appellant, v. MID-AMERICA FIRE AND MARINE INSURANCE COMPANY, Defendant-Respondent.

No. 13549.

Supreme Court of Idaho.

June 30, 1982.

Mark B. Clark, Pocatello, for plaintiff-appellant.

Gary T. Dance of Merrill & Merrill, Pocatello, for defendant-respondent.

SHEPARD, Justice.

This is an appeal from an order granting defendant's motion for summary judgment in an action to recover under an insurance policy. We reverse.

Plaintiff appellant Norman Moss purchased an insurance policy from defendant-respondent Mid-America Fire and Marine Insurance Company on September 17, 1977. Moss was a farmer who also used his truck to haul grain and coal in southeastern Idaho and northeastern Utah. This policy with Mid-America was issued to cover this commercial hauling. It included a "radius endorsement" which excused Mid-America from liability if Moss made "regular or frequent" business trips to locations more than 300 miles from his residence in Rockland, Idaho.

Moss, or his son, made 135 commercial hauling trips. Of these, thirteen were outside the 300 mile radius endorsement. On July 21, 1978, on the last of these thirteen trips, Moss was involved in an accident in Avondale, Arizona. The owners of the other vehicles involved in the accident filed suit against him. Mid-America then denied liability. Moss filed suit in the district court of Bannock County seeking a declaratory judgment that Mid-America's policy covered his accident and that the company was liable for the damages to his own truck. Mid-America answered and counterclaimed, also seeking declaratory relief. In August 1979, Moss moved for partial summary judgment; then three weeks later Mid-America filed a motion seeking summary judgment.

The trial court ruled that the terms "regular or frequent" were not ambiguous and concluded that Moss had made "regular or frequent" trips outside the radius endorsement. Accordingly, the court granted Mid-America's motion for summary judgment and denied Moss' motion.

On appeal appellant renews his argument that the terms "regular or frequent" are ambiguous. With this contention we agree. Hence, the order of summary judgment must be reversed.

This Court has long recognized that insurance policies are contracts of adhesion, not subject to negotiation between the parties, and hence must be construed most strongly against the insurer. Abbie Uriguen Olds. Buick, Inc. v. United States Fire Ins. Co., 95 Idaho 501, 511 P.2d 783 (1973); Stephens v. New Hampshire Ins. Co., 92 Idaho 537, 447 P.2d 14 (1968); Scharbach v. Continental Cas. Co., 83 Idaho 589, 366 P.2d 826 (1961); Rollefson v. Lutheran Brotherhood, 64 Idaho 331, 132 P.2d 758 (1942). The provision at issue today is one which seeks to exclude the insurer's coverage. Such an exclusion must be strictly construed in favor of the insured. Hahn v. Alaska Title Guaranty Co., 557 P.2d 143 (Alaska, 1976); Mission Ins. Co. v. Nethers, 119 Ariz. 405, 581 P.2d 250 (Ariz.App.1978); State Farm Mutual Auto. Ins. Co. v. Partridge, 10 Cal.3d 94, 109 Cal.Rptr. 811, 514 P.2d 123 (1973); Northwestern Nat. Ins. Co. v. Phalen, 597 P.2d 720 (Mont.1979); Conner v. Transamerica Ins. Co., 496 P.2d 770 (Okl.1972); McDonald Industries, Inc. v. Rollins Leasing Corp., 26 Wash.App. 376, 613 P.2d 800 (1980). See also Bonner County v. Panhandle Rodeo Ass'n Inc., 101 Idaho 772, 620 P.2d 1102 (1980); Farmers Ins. Group v. Sessions, 100 Idaho 914, 607 P.2d 422 (1980). Hence, the courts have held that the burden is on the insurer to use clear and precise language if it wishes to restrict the scope of its coverage. Goforth v. Franklin Life Ins. Co., 202 Kan. 413, 449 P.2d 477 (1969); Anderson v. Nationwide Life Ins. Co., 6 Kan.App.2d 163, 627 P.2d 344 (1981); Harvey's Wagon Wheel, Inc. v. MacSween, 96 Nev. 215, 606 P.2d 1095 (1980). Here, Mid-America has not met its above-noted burdens of clarity and precision in its utilization of the terms "regular" or "frequent".

This Court has held that when a contractual provision is reasonably subject to differing interpretations, it is ambiguous and its meaning is a question of fact. E.g., Rutter v. McLaughlin, 101 Idaho 292, 612 P.2d 135 (1980); Bergkamp v. Carrico, 101 Idaho 365, 613 P.2d 376 (1980). See Farmers Ins. Group v. Sessions, 100 Idaho 914, 607 P.2d 422 (1980) (holding that an exclusionary clause in an insurance contract that lends itself to different interpretations is ambiguous and must be construed in a manner most favorably to the insured). The application of that rule to the instant case requires a holding that the terms "regular" or "frequent" are ambiguous. Indeed, the terms "regularly or frequently used" were held to be ambiguous in Shadbolt v. Farmers Ins. Exchange, 275 Or. 407, 551 P.2d 478 (1976). The Oregon court explained its reasoning in a later case:

"(W)hen words or terms of a general nature are used in an insurance policy such words or terms may be ambiguous, in a legal sense, when they can reasonably be given a broader or narrower meaning, depending on the intent of the parties in the context in which such words are used by them."

Allen v. Continental Ins. Co., 280 Or. 631, 572 P.2d 617, 617-18 (1977). See also State Farm Mutual Auto Ins. Co. v. Gudmunson, 495 F.Supp. 794 (D.Mont.1980). That Oregon rule is closely allied with the:

"long established precedent of this Court to view insurance contracts in favor of their general objectives rather than on a basis of strict technical interpretation of the language found therein. Where language may be given two meanings, one of which permits recovery and the other does not, it is to be given the construction most favorable to the insured. Stated somewhat differently, an insurance contract is to be construed most favorably to the insured and in such a manner as to provide full coverage for the indicated risks rather than to narrow protection. This Court will not sanction a construction of the insurer's language that will defeat the very purpose or object of the insurance."

Bonner County v. Panhandle Rodeo Ass'n Inc., 101 Idaho 772, 776, 620 P.2d 1102, 1106 (1980), quoting Erikson v. Nationwide Mutual Ins. Co., 97 Idaho 288, 292, 543 P.2d 841, 845 (1975). Accord Stoddard v. "Aid" Ins. Co. (Mutual), 97 Idaho 508, 509, 547 P.2d 1113, 1114 (1976); Shields v. Hiram C. Gardner, Inc., 92 Idaho 423, 444 P.2d 38 (1968); Watkins v. Federal Life Ins. Co., 54 Idaho 174, 29 P.2d 1007 (1934). Indeed, this Court has observed that a policy's coverage ambiguity is perhaps demonstrated by the fact that this Court is almost equally divided upon the proper interpretation of the provision. Shields v. Hiram C. Gardner, Inc., supra.

Additional indication of vagueness and ambiguity of the two terms is found when the contract is examined as a whole. More than forty terms are defined in the contract. If the question was what constituted an "automobile" or a "bodily injury" for example, an insured could have looked to the definitions contained in the contract. However, if an insured desired to know what constituted "regular" or "frequent" trips, he would be required to guess. The policy did not set a percentage of hauling time as deemed "frequent", nor did it state that a certain number of trips per month constituted "regular" use, nor in fact was there any attempt to give the insured advance notice and guidance regarding the meaning of those terms. By examining the policy Moss could not know that the thirteenth trip put him beyond the limit supposedly imposed by those terms.

It is true that other courts have held that the terms regular or frequent are not ambiguous. E.g. Commercial Standard Insurance Co. v. Haley, 282 F.Supp. 16, 20 (S.D.Iowa 1968). Nevertheless, even those courts treat the issue as a question of fact to be decided by the trier of fact. In Boedigheimer v. Taylor, 287 Minn. 323, 178 N.W.2d 610 (1970), the court required such a case to go to the jury with the instruction that the terms are to be given their common and ordinary meaning in order to determine the factual issue of whether there had been compliance with those terms. Likewise, the Iowa court held that the term "regular use" involved a determination of a question of fact. General Casualty Co. of Wisconsin v. Hines, 261 Iowa 738, 156 N.W.2d 118 (1968). In Pennsylvania Casualty Co. v. McCoy, 167 F.2d 132 (5th Cir. 1948), a trial court sat as the trier of fact. On appeal, the trial court's decision was characterized as having "found" that the use of the vehicle was not "regular" or "frequent" so as to exclude it from coverage under the policy. In State Farm Mutual Auto. Ins. Co. v. Gudmunson, 495 F.Supp. 794 (D.Mont.1980), the question was presented as to whether a jeep was available for "frequent use". The court held it was not, as a matter of fact, and in language pertinent to this case, stated:

"I think that the variants in the meaning of common words should be considered by the finder of fact-normally a jury. Words used in an insurance policy should be given the meaning which the community would generally give them. A jury chosen from the community is probably better equipped to apply community meanings than is a judge. Any effort to apply meanings as a matter of law simply results in the creation of endless distinctions or in a uniformity that is achieved by squeezing sets of facts into molds carefully tailored for other, but slightly different, sets of facts."

Id. at 797 n.4. In Emmco Ins. Co. v. Waters, 413 S.W.2d 484 (Tex.Civ.App.1967), a jury verdict for the insured was upheld in the face of assertions by the insurer that eight trips outside the mileage limit in the nine-month policy period were "regular" and "frequent" as a matter of law. See also Bandy v. East & West Ins. Co., 163 S.W.2d 350 (Mo.App.1942); Bruins v. Anderson, 73 S.D. 620, 47 N.W.2d 493 (1951). We have been cited to no case holding that the issue is one of law for the court to determine at the...