Opinion
No. 71-480
Decided February 6, 1973.
Action to recover on insurance policy for loss of amphibious vehicle which sank while being demonstrated for possible sale. Insurer defended on basis that demonstrator was not a "qualified employee." From dismissal of action, plaintiff appealed.
Affirmed
1. INSURANCE — Demonstrator — Amphibious Vehicle — Not — Employee of Insured — Required by Policy — Dismissal of Action — Affirmed. In action to recover upon insurance policy for loss of amphibious vehicle, the arrangements made between vehicle owner and insurance salesman to demonstrate the vehicle to prospective buyer were such that salesman was not an employee of vehicle's owner as required by policy, and thus, the loss of the vehicle during that demonstration was not covered by the policy.
Appeal from the District Court of the City and County of Denver, Honorable James C. Flanigan, Judge.
Jacob H. Chisen, Walberg and Pryor, John Walberg, for plaintiff-appellant.
Zarlengo, Mott and Carlin, Reed L. Winbourn, David Cheibach, for defendant-appellee. Division II.
Appellant Grace Clinger was issued an insurance policy by appellee United States Fire Insurance Company, insuring against certain losses with respect to automobiles held by her for resale. Following a loss to one of the cars, Clinger sought recovery under the policy. The insurance company denied coverage and Clinger instituted this action. After a trial to the court, judgment was entered dismissing the action. Clinger appeals from that judgment. We affirm.
The facts are undisputed. Clinger is a school teacher in Loveland, Colorado. As a sideline she sells Amphicars, vehicles which are equipped to travel on land and water, selling three or four cars a year. Her inventory consists of three to five cars. Clinger does not employ any salesmen or mechanics, and handles the business of buying and selling the cars by herself. When she started selling Amphicars, in 1963, Clinger purchased an insurance policy from defendant insurance company which insured against direct loss to the Amphicars caused by,
(B) Windstorm [and] Launching operations, including Marine perils while on the water for demonstrations, trial, or sinking,. . . or overturn."
The policy also stated,
"7. It is further warranted that the assured or a qualified employee of the assured shall accompany the insured property during demonstration and/or trial. Failure to comply with this warranty shall render the policy null and void during the period this warranty is breached."
While one of Clinger's cars was being demonstrated on a reservoir in Pueblo, Colorado, a sudden squall came up and the Amphicar was swamped and sank. The insurance company admits that the car and loss were both covered under the policy but allege that the man conducting the demonstration, Mr. Schneider, was not a "qualified employee" of the assured, and therefore, under paragraph 7 quoted above, the policy was void as to this loss.
The facts pertinent to this issue, again undisputed, are that Schneider was an insurance salesman who travelled extensively around the state. About five years prior to the loss he became acquainted with Clinger when he was given a demonstration of an Amphicar. During the succeeding years, Schneider and his boss received several demonstration rides, during which Schneider, at times, drove the car. Following one of the early demonstrations Clinger gave them pictures of the Amphicar and told them that if they found a prospect for the purchase of a car and she sold one to the prospect she would "give them what was fair, some kind of a commission — what was fair."
In August 1968, Schneider advised Clinger that he was going to be in Pueblo for about a week selling insurance, and would like to have an Amphicar to demonstrate to a prospect there. Clinger agreed, had a car put in shape, took Schneider on a refresher trip, reviewed the procedures for preparing the car for water use, gave him twenty-five dollars for costs, and turned the car over to him to use for the trip and demonstration. Clinger testified that Schneider was definitely not a salesman, was only authorized to demonstrate the car and had no authority to negotiate a sale. She further testified that if the prospect had wanted to buy she would have gone to Pueblo to effect the sale. There was no agreement as to the amount of the commission, but it was understood that a commission would be paid Schneider if a sale were made. There were no restrictions on Schneider's use of the car during the week when he was not demonstrating it.
[1] The sole issue before the trial court and here is whether, under the above facts, Schneider was a qualified employee as required by the policy. The facts being undisputed, this is a question of law. The trial court determined Schneider was not a qualified employee. We agree.
The word "employee" is not defined in the policy. Therefore, the word retains its ordinary and customary meaning. Dumont v. Teets, 128 Colo. 395, 262 P.2d 734. In the cited case the issue was whether certain sales agents were employees or independent contractors. The salesmen travelled the state selling items for various manufacturers and were paid commissions for goods sold. In determining the issue our Supreme Court said that the test is: "Does the employer retain or have the right of control over the person as to all details of the work, or whether that rests solely with the person engaged? In the instant case there are no particular services required and no time limit fixed, but whatever work these agents did was performed at their convenience." The court held that under these circumstances the agents were independent contractors.
Here Clinger retained no right of control over Schneider. No particular services were required. Schneider could make the demonstration when and how he chose, at his own convenience.
In Brush Hay Milling Co. v. Small, 154 Colo. 11, 388 P.2d 84, where a similar issue was involved, the court set forth certain criteria which are significant in determining whether a person is acting as an employee. There the agent was held not to be an employee because he was called in to perform a given task and not for general employment. This task took only a small part of his total worktime, and his regular work did not have any close relationship with the regular business of the person for whom he was performing the particular services. All of these factors are present here.
Schneider was not an employee of Clinger. Therefore it becomes unnecessary for us to consider whether he was "qualified" to conduct the demonstration.
Judgment affirmed.
JUDGE PIERCE and JUDGE SMITH concur.