State Capital Ins. Co. v. Nationwide Mut. Ins. Co.

• Decision Date: 18 November 1986
• Docket Number: No. 89PA86,89PA86
• Parties: STATE CAPITAL INSURANCE COMPANY v. NATIONWIDE MUTUAL INSURANCE COMPANY, and Howard E. Anderson and Paula C. Anderson, and Milton Louis McKinnon.
• Court: North Carolina Supreme Court

Page 66

350 S.E.2d 66

318 N.C. 534

STATE CAPITAL INSURANCE COMPANY v. NATIONWIDE MUTUAL INSURANCE COMPANY, and Howard E. Anderson and Paula C. Anderson, and Milton Louis McKinnon.

No. 89PA86.

Supreme Court of North Carolina.

Nov. 18, 1986.

Young, Moore, Henderson & Alvis, P.A. by R. Michael Strickland and A. Bradley Shingleton, Raleigh, for plaintiff-appellant State Capital Ins. Co.

Moore, Ragsdale, Liggett, Ray & Foley, P.A. by Peter M. Foley and Kurt E. Lindquist II, Raleigh, for defendant-appellant Nationwide Mut. Ins. Co.

Manning, Fulton & Skinner by John B. McMillan and Charles E. Nichols, Jr., Raleigh, for defendant-appellees Howard E. Anderson and Paula C. Anderson.

FRYE, Justice.

The issue in this case is whether liability for personal injuries suffered by a third party when a rifle accidently discharged while being removed by insured from a motor vehicle is covered by insured's automobile liability insurance policy or his homeowners liability insurance policy, or both. Under the facts presented in the instant case, we hold that coverage is provided by both policies. ¹ We thus affirm the decision of the Court of Appeals.

On 13 November 1982, defendant Howard E. Anderson and defendant Milton Louis McKinnon traveled in Anderson's pickup truck to a tract of land in Warren County. The two had planned to survey and determine whether the property was fit for hunting by the M & K Hunting Club of which Anderson was a member. Anderson was driving while McKinnon was riding in the passenger seat. The truck was equipped with a gun rack in which were placed two guns, a shotgun and a rifle. In the storage space behind the seat Anderson had placed on a quilt a .30-30 rifle belonging to him. It was Anderson's custom to carry firearms in the storage space when the gun rack was full. Anderson brought the truck to a stop on the left side of a logging road near a ravine. Both he and McKinnon left the truck, presumably to talk with some other hunting companions whom they had followed in order to survey the property. At some point McKinnon returned to the truck. After several minutes, Anderson spotted a deer and returned to the truck in order to retrieve his rifle. Anderson Nationwide's automobile liability insurance policy provided in pertinent part as follows:

opened the driver's door, moved the back of the seat forward and reached in the area where the rifle lay. At the same time McKinnon began to exit the truck. When Anderson's hand came in contact with the rifle it discharged, causing a bullet to strike McKinnon in the leg. At the time of this accident, defendants Howard E. Anderson and Paula C. Anderson were covered under both an automobile liability insurance policy issued by defendant Nationwide Mutual Insurance Company ("Nationwide") and a policy of homeowners liability insurance issued by plaintiff State Capital Insurance Company ("State Capital").

Part B

LIABILITY COVERAGE

INSURING AGREEMENT

We will pay damages for bodily injury or property damage for which any covered person becomes legally responsible because of an auto accident.

....

FINANCIAL RESPONSIBILITY REQUIRED

When this policy is certified as future proof of financial responsibility, this policy shall comply with the law to the extent required.

State Capital's homeowners liability insurance policy contained the following provision:

SECTION II--EXCLUSIONS

1. Coverage E--Personal Liability and Coverage F--Medical Payments to Others do not apply to bodily injury or property damage:

....

e. arising out of the ownership, maintenance, use, loading or unloading of:

....

(2) a motor vehicle owned or operated by, or rented or loaned to any insured....

Plaintiff State Capital brought a declaratory judgment action seeking a determination of its rights and liabilities and those of defendant Nationwide with respect to the injuries suffered by defendant McKinnon. All parties waived jury trial; the trial judge instead made findings of fact, the essence of which are recounted above, and concluded that neither policy provided coverage for damages in this case. Defendants Anderson appealed. A unanimous panel of the Court of Appeals reversed the judgment of the trial court and held that both Nationwide's automobile liability policy and State Capital's homeowners liability policy provided coverage. We affirm this decision for the reasons stated below.

The crucial issue in this case turns on a determination of the meaning given to the "arising out of" language in the compulsory motor vehicle liability statute, N.C.G.S. § 20-279.21(b)(2), and the State Capital homeowners policy exclusion. It is particularly important in the instant case to recognize that different rules of construction govern the interpretation of policy provisions which extend coverage as opposed to policy provisions which exclude coverage. In construing the coverage provision of the Nationwide automobile policy, we follow the rule that provisions of insurance policies and compulsory insurance statutes which extend coverage must be construed liberally so as to provide coverage, whenever possible by reasonable construction. See Moore v. Hartford Fire Insurance Co., 270 N.C. 532, 155 S.E.2d 128 (1967); Jamestown Mutual Insurance Co. v. Nationwide Mutual Insurance Co., 266 N.C. 430, 146 S.E.2d 410 (1966). On the other hand, when construing the exclusion provision of the State Capital homeowners policy we are guided by the rule that provisions which exclude liability of insurance companies are not favored and therefore all ambiguous provisions will be construed against the insurer and in favor of the insured. Wachovia Bank & Trust Co. v. Westchester Fire Insurance Co., 276 N.C. 348, 172 S.E.2d 518 (1970).

I.

We first consider whether the Nationwide automobile liability policy provides coverage for injuries resulting from the accidental shooting of McKinnon. The policy language states that Nationwide will insure Anderson against liability for which he "becomes legally responsible because of an auto accident." The compulsory motor vehicle liability statute provides that any motor vehicle policy certified as proof of financial responsibility ² shall insure the named insured against loss from the liability imposed by law "for damages arising out of the ownership, maintenance or use of such motor vehicle...." N.C.G.S. § 20-279.21(b)(2) (1985). It is well established in North Carolina that as a matter of law the provisions of the Financial Responsibility Act are written into every automobile liability policy. Nationwide Mutual Insurance Co. v. Chantos, 293 N.C. 431, 238 S.E.2d 597 (1977). Thus, the Nationwide automobile liability policy, when properly construed, provides coverage for damages "arising out of the ownership, maintenance or use" of the automobile. In this case liability under the Nationwide policy depends on whether the damages resulting from the injuries to McKinnon arose out of the use of the automobile. In determining the meaning of the words "arising out of the use of an automobile" we are mindful that "[a] compulsory motor vehicle insurance act is a remedial statute and will be liberally construed so that the beneficial purpose intended by its enactment by the General Assembly may be accomplished." Moore v. Hartford Fire Insurance Co. Group, 270 N.C. 532, 535, 155 S.E.2d 128.

The words 'arising out of' are not words of narrow and specific limitation but are broad, general, and comprehensive terms affecting broad coverage. They are intended to, and do, afford protection to the insured against liability imposed upon him for all damages caused by acts done in connection with or arising out of such use. They are words of much broader significance than 'caused by.' They are ordinarily understood to mean ... 'incident to,' or 'having connection with' the use of the automobile.... (Citations omitted.)

The parties do not, however, contemplate a general liability insurance contract. There must be a causal connection between the use and the injury. This causal connection may be shown to be an injury which is the natural and reasonable incident or consequence of the use, though not foreseen or expected, but the injury cannot be said to arise out of the use of an automobile if it was directly caused by some independent act or intervening cause wholly disassociated from, independent of, and remote from the use of the automobile. (Citation omitted.)

Fidelity & Casualty Co. of N.Y. v. N.C. Farm Bureau Mutual Insurance Co., 16 N.C.App. 194, 198-99, 192 S.E.2d 113, 118, cert. denied, 282 N.C. 425, 192 S.E.2d 840 (1972).

In short, the test for determining whether an automobile liability policy provides coverage for an accident is not whether the automobile was a proximate cause of the accident. Instead, the test is whether there is a causal connection between the use of the automobile and the accident.

We find that such causal connection exists between the use of the automobile in this case, a pickup truck, and injuries to McKinnon. The transportation of firearms is an ordinary and customary use of a motor vehicle, especially pickup trucks. In addition, use of an automobile includes its loading and unloading. Fidelity and Casualty Co. of N.Y. v. N.C. Farm Bureau Mutual Insurance Co., 16 N.C.App. 194, 192 S.E.2d 113, cert. denied, 282 N.C. 425, 192 S.E.2d 840; see also Fireman's Fund Insurance Co. v. Canal Insurance Co., 411 F.2d 265 (5th Cir.1969). In the case sub judice, Anderson transported his .30-30 rifle in his pickup truck; as he attempted to unload the rifle from the truck, it discharged, causing injury to McKinnon. Since the transportation and unloading of firearms are ordinary and customary uses of a motor vehicle, and the injury-causing accident here resulted from the unloading of the transported rifle, such injuries were a natural and reasonable incident or consequence of the use of the motor vehicle.

We distinguish this case from the cases found in the Court of Appeals'...