Shields v. Hiram C. Gardner, Inc.
| Decision Date | 26 July 1968 |
| Docket Number | No. 9956,9956 |
| Citation | 444 P.2d 38,92 Idaho 423 |
| Parties | James T. SHIELDS, Maude Shields, James H. Shields and Jane Shields Redman, a Partnership dba 'Shields', Third-Party Plaintiffs and Respondents, v. HIRAM C. GARDNER, INC., a Corporation, as Attorney-in-Fact for Manufacturers and Wholesalers Indemnity Exchange, Third-Party Defendants, and Appellant. |
| Court | Idaho Supreme Court |
Benoit, Benoit & Alexander, Twin Falls, for appellant.
Hepworth, Nungester & Felton, Buhl, for appellee.
Plaintiffs-respondents, the insureds, will be referred to as Shields, and defendant-appellant, the insurer, as Manufacturers.
Shields, a partnership, was sued by certain residents of Mexico and a Mexican corporation seeking judgment for damages occasioned by failure to germinate of certain seed beans purchased from Shields. Shields brought this third party action against Manufacturers to force it to defend and to pay any judgments within the policy limits of its insurance policy issued to Shields. Summary judgment was entered in favor of Shields, and Manufacturers has appealed.
The undisputed facts show that one Coughran, with other Mexican residents, placed by telephone from Mexico, an order with Shields at Buhl, Idaho, for a quantity of seed beans, of which Shields is a processor and dealer. The seed beans, ordered on January 5, 1965, were shipped by Shields to Nogales, Arizona, where payment was made by a bank on behalf of the Mexican residents and delivery of the beans made to them in Arizona. The seed beans were taken into Mexico and planted, but failed to germinate properly, with resulting loss. The loss suffered resulted from the loss of a crop, or the use of the land. The damages were aggravated by the fact that the plaintiffs could not reseed for a period of three to four weeks because of a Mexican governmental regulation concerning permits. The Mexican residents instituted suit against Shields and others for their damages. The seed beans had been treated by Shields at their Buhl plant with a chemical that had destroyed their viability because of an error in mechanical mixture.
Shields had an insurance policy issued by Manufacturers for the period of September 1, 1964, to September 1, 1965, denominated as a 'Blanket Liability Policy.' Shields contends this policy required Manufacturers to defend the action brought by the Mexican residents, and to pay, within the policy limits, any judgment obtained. Manufacturers, on the other hand, asserts that this transaction was not within the terms of the policy and hence it is not liable thereunder.
Shields, on this appeal, asserts the trial court correctly granted the summary judgment primarily on two theories: first, because the provisions of the policy protect Shields from the liability claimed in the action by the purchasers of seed beans; and secondly, that the record discloses Manufacturers had waived certain policy provisions or was estopped to deny coverage. Manufacturers contends, however, that the only basis under which the summary judgment could be upheld is on the theory that construction of the policy does not involve resolutions of factual issues; Manufacturers claims, however, that there are genuine issues of material fact which are unresolved as to he estoppel or waiver theory advanced by Shields and therefore the judgment was improperly entered.
The trial court in its summary judgment held that Manufacturers is obligated under the terms of the insurance policy to defend Shields in the main action; that Shields have the protection of the policy limits and that Manufacturers was liable for attorney fees and costs Shields incurred in defending the main action and also in prosecuting this third party action.
Pertinent provisions of the printed portion of Manufacturers' 'Blanket Liability Policy' include the following:
'PART I LIABILITY INSURING AGREEMENTS
'1. Coverage A-Bodily Injury Liability * * *
To pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of injury to or destruction of property, including the loss of use thereof. * * *
This policy does not apply:
(a) to liability assumed by the insured under any contract or agreement except (1) a contract as defined herein or (2) as respects the insurance which is afforded for the Products Hazard as defined, a warranty of goods or products;
(f) as respects the insurance which is afforded for other than automobile under coverage B, to injury to or destruction of * * * (4) any goods, products or containers thereof manufactured, sold, handled or distributed or premises alienated by the named insured, or work completed by or for the named insured, out of which the occurrence arises.
1. Definitions
(g) Products Hazard. The term 'products hazard' means
(1) goods or products manufacturered, sold, handled or distributed by the named insured or by others trading under his name, if the occurrence arises after possession of such goods or products has been relinquished to others by the named insured or by others trading under his name and if such occurrence arises away from the premises owned, rented or controlled by the named insured; provided such goods or products shall be deemed to include any container thereof, other than a vehicle, but shall not include any vending machine or any property, other than such containter, rented or located for use of others but not sold;
(2) operations, if the occurrence arises after such operations have been completed or abandoned and occurs away from premises owned, rented or controlled by the named insured; provided, operations shall not be deemed incomplete because improperly or defectively performed or because further operations may be required pursuant to an agreement; provided further, the following shall not be deemed to be 'operations' within the meaning of this paragraph: (a) pickup or delivery, except from or onto a railroad car, (b) the maintenance of vehicles owned or used by or in behalf of the insured and (c) the existence of tools, uninstalled equipment and abandoned or unused materials.
16. Policy Period, Territory
This policy applies only to occurrences which arise during the policy period within the United States of America, its territories or possessions, or Canada. * * *.'
General Change Endorsement No. 1, which is a typewritten endorsement later added to the printed portion of the policy, provides in pertinent part:
'PROVISION NUMBER II
Insofar as Seeds are concerned, it is further understood and agreed that the word, 'accident' shall be substituted for the word 'occurrence' wherever used with respect to coverages afforded for 'Property Damage Liability-Losses resulting from Products as afforded hereunder. 'It is further understood and agreed that the definition of Products insofar as Seeds are concerned is amended to include the following: 'To Protect the Insured against liability imposed by the erroneous delivery of seeds, errors in mechanical mixtures, cross-pollination, germination failure, or the presence of noxious weed seed."
In summary the policy is a standard liability policy. It is broken down into two parts. Part I contains the liability insuring agreements, to which there are certain exclusions applicable solely to Part I, as well as special conditions applicable only to Part I. Part II insures against automobile physical damage, and to which there are certain exclusions and special conditions. Part II of the policy is not in issue here.
Part I, the liability insuring agreement, is divided into two coverages. Coverage A insures against bodily injury liability, which is not before the court. Coverage B, of which we are primarily concerned, insures against property damage liability. The exclusionary provision applicable to Part I () states: 'This policy does not apply: (a) to liability assumed by the insured under any contract * * * except (1) a contract as defined herein or (2) as respects the insurance which is afforded for the Products Hazards as defined, a warranty of goods, or products.' Other exclusionary provisions hereunder are not applicable herein. Exclusion (f)(4) excludes coverages for injury to or destruction of goods or products sold, handled or distributed by the insured.
Certain special conditions are made applicable to Part I of the policy, including a definition of terms. Under these special conditons applicable to Part I is the definition of the 'Products Hazard' quoted above, (g) (1) and (2), supra. It is to be noted that this term is defined to include damages caused by goods handled by the insured if the 'occurrence arises after possession * * * has been relinquished and if such occurrence arises away from premises * * *' of the insured.
Both Part, I (Liability Insuring Agreement) and Part II (Automobile Physical Damage Insuring Agreements) are by the printed terms of the policy made subject to the various General Conditions of the policy which include conditions as to other insurance, premium, inspection and audit, assistance and cooperation of the insured, subrogation, etc., and also paragraph 16, which is set out verbatim hereinbefore, and makes the policy applicable only to 'occurrences which arise during the policy period within the United States * * *.'
On rehearing, this court is called upon to consider whether General Change Endorsement No. 1 constitutes an additional insuring agreement, which, by its terms, is intended to provide coverage for specified named perils irrespective of the place of 'occurrence' which appellant contends must be construed to be the place of loss (Mexico), that is, the place where damages arose.
It must be emphasized that General Change Endorsement No. 1 is a typewritten endorsement attached to the main body of the printed policy and provides in...
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