Summary
In Hemel v. State Farm Mutual Automobile Ins. Co., La. App., 25 So.2d 357, the court reviewed the coverage afforded by Comprehensive Insurance, and while the holding did not give effect to a provision excluding mechanical breakdown, the court did indicate that if the accident had been caused by collision or upset, there would have been no coverage.
Summary of this case from Manard Molasses Co. v. Sun Insurance Office, Ltd.Opinion
No. 18368.
March 25, 1946. Rehearing Denied April 15, 1946. Writ of Certiorari Granted May 27, 1946.
Appeal from Civil District Court, Parish of Orleans; Harold A. Moise, Judge.
Action by Louis Hemel against the State Farm Mutual Automobile Insurance Company to recover under a combination automobile policy the cost of a new motor purchased to replace one damaged by fire judgment for defendant and plaintiff appeals.
Reversed.
S. Sanford Levy, of New Orleans, for appellant.
Porteous, Johnson Humphrey, of New Orleans, for appellee.
This is a suit by an insured against an insurer on what is known as a "combination automobile policy". The plaintiff alleges that his automobile was damaged to the extent of $490.78 as the result of a fire in the motor. He sues for the cost of a new motor, $490.78, plus 25% of that amount together with interest from judicial demand and a reasonable attorney's fee.
The defendant insurance company denied liability on the ground that plaintiff's loss was not caused by fire, but by a mechanical breakdown which was not within the coverage of the policy.
There was judgment below in defendant's favor and plaintiff has appealed.
On July 4, 1944, plaintiff together with his wife and two small children, and three guests, left the City of Houston intending to drive to New Orleans. When he reached a point on the Airline Highway about 20 miles from LaPlace, Louisiana, he smelled smoke, stopped his car, turned off the ignition and raised the hood, whereupon he saw flames shooting up from the motor. He attempted to extinguish the fire by throwing water on it, but without success. He then secured some large bath-towels from the rear of the car and smothered the flames. He then tried to start the engine, but could not do so. The car had to be towed to New Orleans, where it was repaired at a cost of $490.78. The defendant in denying liability takes the position that the damage to the motor was caused by a mechanical breakdown. In other words, due to the lack of proper lubrication the connecting rod attached to the engine became loose and knocked a hole through the side of the motor block.
It is conceded that if the damage to plaintiff's automobile was caused by fire as he alleges, there could be no question of defendant's liability. However, the record fails to establish plaintiff's claim to that effect. All of the experts who testified agree that it was due to a mechanical breakdown as claimed by the defendant. Whether the breakdown was due to lack of oil or not seems doubtful, but the fire does not appear to have been a factor. The question for determination, therefore, is whether the policy sued on covers damage due to a mechanical breakdown.
As we have said, the policy is what is known as a "combination automobile policy" and, among the coverages included, is what is known as "comprehensive". To quote from the policy: "Coverage C — Comprehensive. To pay for loss of or damage to the automobile due to any cause except collision or upset. For the purpose of this coverage it is understood that damages caused directly by tornado, cyclone, windstorm, hail, any falling object and damage resulting from theft, breakage of glass, earthquake, explosion, riot, insurrection or civil commotion, shall not be deemed a loss caused by collision or upset."
It will be noted that this coverage is denominated as "comprehensive" and includes any loss or damage to an automobile due to any cause except collision or upset and then proceeds to qualify upset so as to exclude from the exception upsets due to certain causes. There is, however, another clause in the policy under the heading "Exclusions" which declares that this policy does not apply: "(1) Under coverages C, D, E, F to (1) depreciation, mechanical or electrical breakdown, wear and tear, freezing, or loss of tools or repair equipment, unless as a direct result of a theft or wrongful conversion, covered by this policy, of the entire automobile, or * * *".
Counsel for defendant contends that the exclusions are intended to qualify the comprehensive coverage so as to add other exceptions besides collision and upset, among them mechanical breakdown. There is no doubt that the language of the exclusion clause so declares. Opposing counsel concedes this point but invokes the familiar rule of construction to the effect that contracts, when ambiguous, must be construed against those who write them as, for example, the insurer in the present instance.
[2, 3] In Paragraph "C" there is no exception to the coverage of the policy except collision and upset. No reference is made to any other part of the policy to which an insured might look for further exclusions or qualifications of the coverage, so that if this paragraph stood alone, the policy could not be the subject of but one interpretation. It would cover every damage to an automobile except such as is caused by collision or upset. Moreover, it is called "comprehensive", which means extensive or embracing much. In the exclusion clause we find that there are several other exceptions to the coverage not mentioned in paragraph "C", so that the effect is ambiguous, contradictory and misleading. In Coverage "C" the insurer assumes the risk of all damage to the insured's automobile from "any cause" except collision and upset and in the exclusion clause there is contained a denial of this comprehensive coverage because of other exceptions which render the coverage much less comprehensive.
In Corporation of Roman Catholic Church of Eunice v. Royal Insurance Company, 158 La. 601, 104 So. 383, it was said all provisions tending to work a forfeiture should be construed most strongly against the insurer, and a contract of insurance prepared by an insurance company will be construed liberally as against the insured and strictly as against the company.
In Mutual Life Insurance Company of New York v. Hurni Packing Company, 263 U.S. W, 174, 44 S.Ct. 90, 91, 68 L.Ed. 235, 31 A.L.R. 102, the United States Supreme Court said: "The rule is settled that in case of ambiguity that construction of the policy will be adopted which is most favorable to the insured. The language employed is that of the company and it is consistent with both reason and justice that any fair doubt as to the meaning of its own words should be resolved against it." See, also, Parker v. Provident Life Accident Insurance Co., 178 La. 977, 152 So. 583; Ellis v. Modern Mosaic Templars of Louisiana, La. App., 149 So. 308; Perrodin v. Thibodeaux, La. App., 191 So. 148.
In a supplemental brief counsel for the defendant insurance company call our attention to the fact that in the policy sued on there is the following statement in the first paragraph of the insurance contract: "* * * (the insurer) does hereby agree with the insured named in the declarations made a part hereof, in consideration of the payment of premiums, and of the statements contained in the declarations, subject to the limits of liability, exclusions, conditions and other terms of this policy".
They argue that this language must be read in connection with every clause in the policy. It must be conceded that the paragraph referred to is clear enough and it contains a statement to the effect that the liability of the insurer is limited by the exclusions contained in the policy. Nevertheless, there is no such intimation in paragraph "C", which contains no reference to any other exclusions than those mentioned in that paragraph — collision and upset. The result, therefore, is, in our opinion, ambiguous.
Reliance is placed upon the case of American Manufacturing Company v. National Union Fire Insurance Company, 203 La. 515, 14 So.2d 430, 434, where a contract of sprinkler leakage insurance was considered by the Supreme Court. In the coverage clause of the policy under consideration there, there was contained the following, "except as herein provided" and the Court held that that exception related to the only other appropriate provision in the policy, which was the "hazards not covered" clause. For example, the court said: "First, we note the phrase 'except as herein provided', immediately following the coverage clause. The coverage clause relates to but one hazard, sprinkler leakage, and the phrase 'except as herein provided' shows that there was some provision in the policy relating to, and qualifying, that clause — some provision setting out conditions or circumstances under which the insurer would not be liable for loss and damage caused by sprinkler leakage."
There is in the insurance policy in the instant case no such qualifying clause and nothing to indicate to one who reads the coverage clause alone that there is any other exception to the coverage other than collision or upset. We are of the opinion that the case relied on is not authority for the position taken by counsel.
Counsel for plaintiff invokes Act 59 of the Extra Session of 1921 as authorizing the collection of 25% damages plus a reasonable attorney's fee, which they have sued for here. The Act relied on covers only fire and theft insurance and the loss sustained by plaintiff in this case is not due to fire or theft.
For the reasons assigned the judgment appealed from is annulled, avoided and reversed and it is now ordered that there be judgment herein in favor of Louis Hemel, plaintiff, and against the State Farm Mutual Automobile Insurance Company, defendant, in the sum of $490.78, with legal interest from judicial demand, and for all costs.
Reversed.
[1-4] While I hesitate to strike out and render ineffective any condition or exclusion contained in an insurance policy which is clearly stated and expresses the intention of the parties (as the contract should be interpreted as a whole and considered as the law between the parties), I am unable to disagree with the reasoning upon which the main opinion is pitched, in view of the peculiar wording of the comprehensive coverage clause "C" contained in this particular insurance policy. But, since my individual thoughts differ slightly from the view of my associate, I feel that it is appropriate for me to set them forth.
The insurance policy in question provides for what is called "comprehensive" coverage, meaning "extensive or embracing much" as expressed in the main opinion. But, in the preamble of the policy, the insured is put on notice that the comprehensive coverage granted is "subject to the limits of liability, exclusions, conditions and other terms of this policy". Hence, any insured reading the comprehensive clause of the policy is put on notice that there are certain exclusions which might affect the broad coverage granted. However, when the policy is so worded that the insurer agrees "to pay for loss of or damage to the automobile due to any cause, except collision or upset" (italics mine) it naturally would lead the insured to believe that the only exclusions from coverage are collision and upset and he is lulled into a sense of security that the exclusions do not contain other retractions from the stipulated insurance. In other words, while he might contemplate the insertion of exclusions respecting the inapplicability of the insurance while the vehicle is used as a public conveyance or in an illegal enterprise or while being driven by persons under fourteen years of age or for the loss of robes, wearing apparel and other personal effects, he would not, in my view, expect to find an exclusion of coverage for loss of or damage to the automobile due to other causes except collision or upset.
If clause "C" merely provided "to pay for loss of or damage to the automobile, except collision and upset", I think that the court could have well concluded that the exclusion of coverage for mechanical breakdown was enforceable. The exception concerning collision and upset was obviously inserted as an exclusion to coverage "C" because insurance for collision and upset are treated separately under other coverage provisions and are the subject of an additional premium. Therefore, one reading the coverage "C" clause with the elimination of the words "due to any cause" would immediately realize that there may be certain causes of the damage to the automobile which were excluded from coverage other than collision and upset.
How, then, does the use of the words in coverage "C" that the insurer agrees to pay for damage to the automobile "due to any cause" affect the enforceability of the exclusion clause relied on by defendant? I cannot agree that the exclusion that the policy shall not apply to mechanical breakdowns, produces an ambiguity in the contract. In my opinion, it is repugnant to, contradictory of, and inconsistent with, the comprehensive coverage clause "C" but it cannot be said to make the policy so uncertain and indefinite as to be incapable of judicial interpretation. Therefore, the question is not whether it can be interpreted and enforced but whether the court should give effect to it in view of its utter repugnancy. On this question, I am willing to yield to the conclusions reached in the main opinion for — giving to the policy an interpretation most favorable to the insured, I can see that this particular contract produces a most confusing situation in its inconsistencies of statement and that these contradictory clauses operate as a trap to catch the unwary.
But, apart from this, I believe that there is a stronger reason which prompts a decision in plaintiff's favor. The exclusion relied on by defendant, under which it seeks to escape liability and as pertains to this discussion, reads as follows: "This policy does not apply; * * * (i) Under coverages 'C' * * * to mechanical or electrical breakdown * * *".
What is meant by mechanical breakdown? Does it mean that, if the generator of the car should cease to function properly and subsequently a fire started as a reresult of the defect, the insurer would not be liable? Or, suppose a spark from an outside source caused a breakdown of the motor, would liability ensue? If the clause read that no liability would result for loss or damage due and confined to mechanical breakdown, it would be easy to solve these questions. But to say that the policy does not apply to mechanical breakdowns leaves the door open to all sorts of interpretations where a mechanical breakdown causes a fire or vice versa. Hence, I regard the exclusion to be ambiguous and, therefore, unenforceable.
For the foregoing reasons, I respectfully concur in the decree.
I cannot agree with either of my associates that we should strike out of the policy an exclusion which is plainly printed into it and to which attention is called by the opening paragraph on the page which sets forth the protection which is afforded by the policy.
The policy sets forth that it affords protection against nine different possible losses. Among them is to be found as Coverage C "Comprehensive". Nothing in that part of the policy interprets the word "Comprehensive" but on the next page the policy undertakes to interpret each of the coverages including that designated as "Comprehensive" and it puts the policyholder on notice that the coverage afforded is subject to "the limits of liability, exclusions, conditions and other terms of this policy." Among the exclusions is found the following: "This policy does not apply * * * to depreciation, mechanical or electrical breakdown, * * *."
If the loss sustained by the plaintiff had been shown to have been caused by either electrical or mechanical breakdown, there could have been no recovery because I see no reason why such a condition could not be written into a policy of insurance.
I see nothing ambiguous in the exclusion because while the word "Comprehensive" may ordinarily be said to mean all-inclusive, in this particular policy loss caused by mechanical or electrical breakdown is expressly excluded.
However, if the defendant intended to rely on this exclusion it was its duty to show either that all of the damage was caused by mechanical or electrical breakdown or to show what part of the damage was so caused.
For these reasons I concur in the decree.