Northern Assur. Co. of America v. Truck Ins. Exchange

• Decision Date: 15 April 1968
• Docket Number: No. 11280,11280
• Citation: 151 Mont. 132,439 P.2d 760
• Parties: NORTHERN ASSURANCE COMPANY OF AMERICA, a Massachusetts Corporation, and Wallace D. Flodberg, d/b/a Zip Auto Service, Plaintiff and Respondents, v. TRUCK INSURANCE EXCHANGE, a California Corporation, Defendant and Appellant.
• Court: Montana Supreme Court

Page 760

439 P.2d 760

151 Mont. 132

NORTHERN ASSURANCE COMPANY OF AMERICA, a Massachusetts

Corporation, and Wallace D. Flodberg, d/b/a Zip

Auto Service, Plaintiff and Respondents, v. TRUCK INSURANCE EXCHANGE, a California Corporation,

Defendant and Appellant.

No. 11280.

Supreme Court of Montana.

April 15, 1968.

Worden, Worden, Thane & Robb, Norman C. Robb (argued), Missoula, for appellant.

Garlington, Lohn & Robinson, H. L. Holt (argued), for respondents.

JAMES T. HARRISON, Chief Justice.

This is an appeal from a judgment for the plaintiff in a declaratory judgment action. The action was brought by Northern Assurance Company of America (hereinafter called Northern Assurance) and Wallace Flodberg to determine whether Truck Insurance Exchange (hereinafter called Truck Insurance) is liable on a policy of insurance issued by it.

Truck Insurance insured Zip Auto Service in which Wallace Flodberg was a partner. Northern Assurance insured Goldie Flodberg, Wallace Flodberg's mother. Goldie Flodberg requested her son to do some work on her car. On the morning of June 19, 1964, Wallace Flodberg walked across the street from his house to his mother's house and obtained her car which he drove to work that morning. A serviceman in the garage did the work for which $2.00 was charged. At the end of the day Wallace Flodberg was driving his mother's car home to return it to her and he was involved in an accident. A suit was filed against Wallace Flodberg as a result of that accident. Truck Insurance refused to defend and to prevent default Northern Assurance undertook the defense. The suit was subsequently compromised.

This action was brought to declare Truck Insurance liable on its policy and to recover the damages paid and costs of Northern Assurance including attorney's fees. The lower court found for the plaintiff.

The sole issue, as stated by the appellant, is whether Wallace Flodberg was excluded from coverage under the Northern Assurance policy issued to Goldie Flodberg by reason of the garage business exclusion clause contained within that policy.

Northern Assurance's garage business exclusion clause reads: 'This policy does not apply under Part 1: * * * (g) to an owned automobile while used by any person while such person is employed or otherwise engaged in the automobile business, but this exclusion does not apply to * * * any * * * agent of the named insured * * *.' Automobile business under the terms of the policy 'means the business or occupation of selling repairing, servicing, storing or parking automobiles.'

If Wallace Flodberg was excluded under the foregoing then Truck Insurance would be liable. If he was not excluded then Northern Assurance would be liable and Truck Insurance would only be liable for any excess over the Northern Assurance policy limits.

There appears to be a number of types of garage business exclusions. One form which we shall call the first type says: 'This policy does not apply to an owned automobile while used in the automobile business.' This type is generally construed to mean that driving the automobile to and from the garage for the customer is not within the exclusion. Cherot v. United States Fidelity & Guaranty Co., 10 Cir., 264 F.2d 767, 71 A.L.R.2d 959 (1959); Northwestern Mutual Inc. Co. v. Great American Insurance Co., 66 Wash.2d 762, 404 P.2d 995 (1965); LeFelt v. Nasarow, 71 N.J.Super. 538, 177 A.2d 315 (1962), aff. 76 N.J.Super. 576, 85 A.2d 217.

The second type reads: 'The insurance * * * does not apply * * * to any person * * * operating an automobile * * * repair shop * * * with respect to any accident arising out of the operation thereof * * *.' This court has construed that clause in a recent case. National Farmers Union Property & Casualty Co. v. General Guaranty Insurance Co. (Mont.1967), 434 P.2d 708 (1967). In that case we found that the clause excluded coverage when the automobile was being driven to and from the garage for the customer.

The clause involved in the case at bar is different from the two preceding types. Appellant cites one case construing the clause involved here, Dumas v. Hartford Accident & Indemnity Co., 181 So.2d 841 (La.App.1965). In that case the court found driving the automobile to the customer was not within the exclusion. The court in that case relied on the fact that the act of servicing the automobile had been completed and thus found the exclusion did not apply.

The exclusion here says it applies while the automobile is used by a person while that person is employed or engaged in the business or occupation of selling, repairing, servicing, storing or parking automobiles. We find that the words 'business or occupation' mean more than the actual act of servicing the automobile....