Read v. Western Farm Bureau Mut. Ins. Co.

• Decision Date: 12 April 1977
• Docket Number: No. 2785,2785
• Citation: 563 P.2d 1162,1977 NMCA 39,90 N.M. 369
• Parties: John Dee READ, Plaintiff-Appellant, v. WESTERN FARM BUREAU MUTUAL INSURANCE COMPANY and Dwight M. Mazzone, individually and as agent for Western Farm Bureau Mutual Insurance Company, Defendants-Appellees.
• Court: Court of Appeals of New Mexico

Page 1162

563 P.2d 1162

90 N.M. 369

John Dee READ, Plaintiff-Appellant, v. WESTERN FARM BUREAU MUTUAL INSURANCE COMPANY and Dwight M Mazzone, individually and as agent for Western Farm Bureau Mutual Insurance Company Defendants-Appellees.

No. 2785.

Court of Appeals of New Mexico.

April 12, 1977.

Phil Krehbiel, Toulouse, Krehbiel & DeLayo, P.A., Albuquerque, for plaintiff-appellant.

Frank H. Allen, Jr., Modrall, Sperling, Roehl, Harris & Sisk, Albuquerque, for defendant-appellee Western Farm Bureau Mut. Ins. Co.

OPINION

SUTIN, Judge.

Plaintiff sought reformation of a general farm liability insurance policy issued by Western Farm Bureau Mutual Insurance Company (Western Farm) to include therein family medical insurance coverage. In addition, plaintiff sought damages based on negligence, breach of contract and fraudulent misrepresentation. Summary judgment was granted Western Farm and plaintiff appeals. We reverse.

A. On the claim for reformation, a genuine issue of material fact exists.

Plaintiff contends, on his claim for reformation of the Western Farm insurance policy that the doctrine of reasonable expectation applies as stated in Pribble v. Aetna Life Insurance Company, 84 N.M. 211, 501 P.2d 255 (1972). Western Farm contends that plaintiff had no reasonable expectation because a check of the face sheet would alert any layman that he did not have medical coverage. It is Western Farm's position that the policy in question, particularly the face sheet, is clear, plain and without ambiguity; and, therefore, plaintiff is chargeable with knowledge of its terms.

The question for decision is:

Is there a genuine issue of material fact on whether the insurance policy issued by Western Farm was clear, plain and without ambiguity?

On April 24, 1974, Dwight M. Mazzone (Mazzone), a sales agent for Western Farm, discussed various insurance coverages with plaintiff. Plaintiff asked for a liability insurance policy that included family medical coverage, and specifically told Mazzone that plaintiff wanted coverage that would pay medical expenses for accidental injury to himself and members of his family.

Mazzone assured plaintiff that the policy purchased would contain family medical coverage without limitation as to the amounts of benefits payable thereunder. Plaintiff relied on Mazzone, purchased the insurance and paid the premium.

Plaintiff received the insurance policy by mail. Plaintiff examine the policy and noted paragraph III of section one, which was 'COVERAGE D--MEDICAL PAYMENTS (Premises and Employees)'. This paragraph provided for medical payments 'to or for each person who sustains bodily injury caused by accident; while such person is: 1. on the insured premises with your permission'. Plaintiff believed that this described the type of insurance requested, and plaintiff assumed that the policy had been issued in accordance with Mazzone's assurance.

Paragraph IV of section one was 'COVERAGE E--Medical Payments (Named Insured and Family)'. From the affidavit and depositions of plaintiff and his wife, we have no knowledge whether plaintiff read this paragraph.

On the face sheet of the policy, plaintiff noticed the word 'NIL' typed several times under all coverages specified, except 'general Farm Liability.' The premium for this coverage was $37.20. Under '5. FAMILY MEDICAL PAYMENTS--E. LIMITS E--PREM.' appeared the word 'NIL'.

Plaintiff was 19 years of age with a high school education. He swore that he could not find a definition of 'NIL' in the policy. He had no idea what it meant and no one had explained it to him.

After plaintiff suffered an accidental injury, Western Farm denied liability.

The word 'nil' is a contracting of 'nihil', and 'nihil' means 'nothing'.

We have discovered only two cases that discuss the use of the word 'nil' in an insurance policy. Treadwell v. Pacific Indemnity Company, 154 C.A.2d 853, 317 P.2d 123 (1957); Alamo Cas. Co. v. Richardson, 235 S.W.2d 726 (Tex.Civ.App.1950).

In Treadwell, the insured argued that the typewritten word 'nil' should apply to limits of liability, rather than to coverage. The Court said:

In more technical approach, the word 'nil,' a contraction of nihil, means 'nothing' (Webster's New International Dictionary, 2d ed.). To state that 'The liability of this Company shall not exceed nothing' is by no means to say that the liability is unlimited. We are aware that it is hardly realistic to apply standards of good English usage to the language of an insurance policy. Policy jargon is at least as painful to the purist as the language of judicial opinions. Nonetheless, we are convinced that the word 'nil' in its context here cannot be given the meaning urged by appellant. (Emphasis added.) (317 P.2d at 124)

In Alamo Cas. Co., cited in Treadwell, the Court held that the word 'nil' as used in a clause of the policy which read '$ Nil On automobiles being driven over road to point of destination selected by the insured as the place of storage of such automobiles' would be construed to mean that the policy did not insure against such loss, and not as meaning that no limitation as to amount was imposed on liability for such loss. The Court said:

(A) The test of the constructions proposed by the parties is the intention expressed in the policy, and the only evidence of this intention now before us is the language of the policy. The parties did not pray for equitable relief, and they did not attempt to prove that language in the policy had a meaning different from the meaning which would ordinarily be attributed to it. (Emphasis added.) (235 S.W.2d at 729)

We gather from the above cases that in an equitable action, if the insured attempts to prove that the word 'nil' is of doubtful meaning, an ambiguity may exist in the insurance policy.

In the instant case, the claim for reformation of the insurance policy was an equitable proceeding. Buck v. Mountain States Investment Corporation, 76 N.M. 261, 414 P.2d 491 (1966).

The question that presents itself is whether the use by Western Farm of 'NIL', the meaning of which plaintiff did not understand, renders the policy vague and ambiguous.

'Language is ambiguous when its meaning is doubtful or when it has a double meaning.' Foundation Reserve Insurance Co. v. McCarthy, 77 N.M. 118, 120, 419 P.2d 963 (1966). In an insurance policy, language used is a means of communication, and a word used in an insurance policy is often a 'bone of contention'. This is a metaphor taken from two dogs fighting for a bone. Decade after decade, with regularity, the insured and the insurer fight for a bone, which includes the meaning of a word, a phrase or a provision of the insurance policy.

In each case where a 'bone of contention' exists over a word in an insurance policy, that word has different meanings to the insured and insurer, because "A word is not a crystal, transparent and unchanged, it is the skin of a living thought and may vary greatly in color and content according to the circumstances and the time in which it is used." Quoted in Jernigan v. New Amsterdam Casualty Company, 69 N.M. 336, 343, 367 P.2d 519, 524 (1961); Harp v. Gourley, 68 N.M. 162, 171--72, 359 P.2d 942 (1961). In each case, we take the word or phrase and construe it liberally to protect the insured. Mountain St. M.C. Co. v. Northeastern N.M. Fair Ass'n, 84 N.M. 779, 508 P.2d 588 (1973) (practicing); King v. Travelers Insurance Company, 84 N.M. 550, 505 P.2d 1226 (1973) (accidental); Foundation Reserve Insurance Co., supra (struck; by); Ivy Nelson Grain Co. v. Commercial U. Ins. Co. of N.Y., 80 N.M. 224, 453 P.2d 587 (1969) (all only while contained in or attached to such buildings or structures); Fowler v. First National Life Insurance Co. of America, 71 N.M. 364, 378 P.2d 605 (1963) (driving or riding).

The reason is that the insurer prepares the policy. Its sales agent, generally, is schooled in the art of salesmanship. The insured most often is a layman, the average man or woman on the street, who is not a college graduate or a student of insurance law. These insureds are persons who do not seek legal advice to determine whether insurance coverage has been afforded when the coverage and the premium paid are modest. They cannot, ordinarily, read and understand the complex, complicated and intricate provisions of an insurance policy in words of fine print that ambles along the way. They rely on the representations of the sales agent.

These facts are also the reasons why a word, a phrase, or a provision in a contract of insurance is not what the insurer intended the language to mean, but what a reasonable person in the position of the insured would have understood them to mean, and any ambiguity will be construed liberally in favor of the insured. Ivy Nelson Grain Co. v. Commercial U. Ins. Co. of N.Y., supra. The trial court below and this Court understand the meaning of the odd contracted Latin word 'NIL' as used in the policy, and we know that coverage of medical payments, limited to premises and employees, does not cover medical payments for the named insured and family, but we must not impose this knowledge on the public. When we say that a word will be given its ordinary meaning, we do not include 'odd' words, peculiar words, contracted words, Latin words, or words that are not a part of speech or writing. We mean words ordinarily used in the common speech of men and women. Black's Law Dictionary 1195 (Rev.4th ed. 1968) defines NIHIL:

Lat. Nothing. Often contracted to 'nil.' The word standing alone is the name of an abbreviated form of return to a writ made by a sheriff or constable, the fuller form of which would be 'nihil est' or 'nihil habet,' according to circumstances.

We must recognize the admonition of Justice Moise sixteen years age when he said that '. . . the better rule is to not require of an insured something we know as a practical matter is not ordinarily done, namely, that he read and understand the terms of his...