Case Title: OHIO CASUALTY INSURANCE COMPANY, an Ohio corporation V. W. N. McMURRY CONSTRUCTION CO., a Wyoming corporation; W. N. McMURRY CONSTRUCTION CO., a Wyoming corporation V. OHIO CASUALTY INSURANCE COMPANY, an Ohio corporation; W. N. McMURRY CONSTRUCTION CO., a Wyoming corporation V. BW INSURANCE AGENCY, INC., and OHIO CASUALTY INSURANCE COMPANY, an Ohio corporation

Citation: 

Docket Number: S-08-0163

State: wyoming

Court: Wyoming Supreme Court

Date: 2010-05-04T00:00:00Z

Document:
OHIO CASUALTY INSURANCE COMPANY, an Ohio corporation V. W. N. McMURRY CONSTRUCTION CO., a Wyoming corporation; W. N. McMURRY CONSTRUCTION CO., a Wyoming corporation V. OHIO CASUALTY INSURANCE COMPANY, an Ohio corporation; W. N. McMURRY CONSTRUCTION CO., a Wyoming corporation V. BW INSURANCE AGENCY, INC., and OHIO CASUALTY INSURANCE COMPANY, an Ohio corporation2010 WY 57230 P.3d 312Case Number: S-08-0163, S-08-0164, S-08-016Decided: 05/04/2010
APRIL 
TERM, A.D. 2010

 
 
OHIO 
CASUALTY INSURANCE COMPANY, an Ohio 
corporation,Appellant(Defendant),v.W. N. McMURRY 
CONSTRUCTION CO., a Wyoming 
corporation,Appellee(Plaintiff).

W. 
N. McMURRY CONSTRUCTION CO., a Wyoming 
corporation,Appellant(Plaintiff),v.OHIO CASUALTY 
INSURANCE COMPANY, an Ohio 
corporation,Appellee(Defendant).

W. 
N. McMURRY CONSTRUCTION CO., a Wyoming 
corporation,Appellant(Plaintiff),v.BW INSURANCE 
AGENCY, INC., and OHIO CASUALTY INSURANCE COMPANY, an Ohio 
corporation,Appellees(Defendants).

 
 
Appeal 
from the District Court of Natrona County

The 
Honorable John C. Brooks, Judge

 
 

Representing 
Ohio Casualty Insurance Company:

Patrick 
J. Murphy and Scott P. Klosterman of Williams, Porter, Day & Neville, P.C., 
Casper, Wyoming.  Argument by Mr. 
Murphy.

 
 

Representing 
W.N. McMurry Construction Co.:

W.W. 
Reeves and Anna Reeves Olson of Park Street Law Office, Casper, Wyoming.  Argument by Mr. 
Reeves.

 
 

Representing 
BW Insurance:

Billie 
L.M. Addleman and Richard A. Mincer of Hirst Applegate PC, Cheyenne, 
Wyoming.  Argument by Mr. 
Mincer.

 
 
Before 
VOIGT, C.J., and GOLDEN, HILL, KITE, BURKE, JJ.

 
 

GOLDEN, 
Justice.

 
 
[¶1]      These three 
consolidated appeals arise out of W.N. McMurry Construction's (McMurry 
Construction) legal action to recover for two separate incidents involving two 
separate insurance policies.  Both 
policies were issued to it by Ohio Casualty Insurance Company (Ohio 
Casualty).  BW Insurance Agency (BW 
Insurance), an independent insurance agency, was the procuring agent for both 
policies.

 
 
[¶2]      The first subject 
insurance policy is a "Builder's Risk" policy.  McMurry Construction suffered a covered 
loss during the construction of a commercial building.  McMurry Construction filed its claim 
with Ohio Casualty, only to discover its policy limits were precipitously lower 
than it had assumed had been procured.  
The underlying legal action proceeded to a bench trial on McMurry 
Construction's claim seeking reformation of the contract of insurance to reflect 
increased policy limits.  The 
district court agreed with McMurry Construction and ordered the requested 
reformation of the builder's risk policy.  

 
 
[¶3]      In appeal number 
S-08-0163, Ohio Casualty appeals the district court's decision requiring 
reformation.  We reverse this 
decision.  In appeal number 
S-08-0164, McMurry Construction appeals the trial court's calculation of 
interest in its award under the builder's risk policy action.  Because McMurry Construction is no 
longer the prevailing party in that underlying litigation, and therefore no 
longer entitled to damages, appeal number S-08-0164 is dismissed as 
moot.

 
 
[¶4]      The second policy 
at issue is a "Business Auto" policy.  
A McMurry Construction employee was involved in a motor vehicle 
accident.  Ohio Casualty denied the 
resulting claim under the business auto policy, stating the particular employee 
involved in the accident was expressly excluded from coverage.  Although a written exclusion existed, 
McMurry Construction claimed BW Insurance, while acting as the agent for Ohio 
Casualty, explicitly stated the employee was a covered driver, thus binding Ohio 
Casualty to coverage.  

 
 
[¶5]      McMurry 
Construction brought certain tort and contract actions against BW 
Insurance.  BW Insurance moved for 
summary judgment on these causes of action, which the district court granted on 
the grounds that they were barred by McMurry Construction's failure to read the 
policy.  

 
 
[¶6]      McMurry 
Construction also sought reformation of the business auto policy as against Ohio 
Casualty.  After a bench trial, the 
district court found BW Insurance did represent to McMurry Construction that the 
driver at issue was covered under the business risk policy.  The district court also, however, found 
that BW Insurance was not acting as Ohio Casualty's agent when it made this 
representation.  The district court 
consequently declined to order reformation of the business auto policy.  

 
 
[¶7]      In appeal number 
S-08-0165, McMurry Construction appeals the district court's decision to not 
require reformation of the business auto policy.  It also appeals the summary judgment 
granted to BW Insurance on contract and tort actions McMurry Construction had 
filed against BW Insurance in regard to BW Insurance's procurement of the 
policy.  We affirm these decisions. 

 
 
APPEAL 
NUMBER S-08-0163

 
 
ISSUES

 
 
[¶8]      Ohio Casualty 
presents the following issues:

 
 
A.        Did 
the district court err in reforming this builder's risk policy to have $5.5M 
policy limits? 

 
 
1. 
        
Did the district court err when it never analyzed the first element of 
reformation established in McMurry Const. v. Community First Ins., 2007 
WY 96, 160 P.3d 71 (Wyo. 2007)? 

 
 
2. 
        
Did the district court err when it confused BW and Ohio Casualty's 
mistake and miscommunication in reaching their antecedent agreement with the 
doctrine of mutual mistake? 

 
 
3. 
        
Did the parties err in reaching their antecedent agreement or in drafting the written instrument? 

 
 
4. 
        
Did the district court err when it found there was an antecedent 
agreement that the buildings be insured "for full value?" 

 
 
5. 
        
Did the district court err when it ruled that the broker was acting on 
behalf of the insurer, not the insured, when the miscommunication and mistakes 
occurred? 

 
 
6. 
        
Did the district court err when it found that the insurer called the 
broker into action and was controlling the broker's function when the 
miscommunication occurred?

 
 
 
 
[¶9]      McMurry 
Construction reframes the issues thusly:

 
 
I. 
         
Whether the district court's finding that the parties reached an 
antecedent agreement is correct.

 
 
II. 
        
Whether Ohio Casualty is bound by the acts of its agent undertaken within 
the scope of its agency.

 
 
[¶10]   Ohio Casualty filed a reply 
brief:

 
 
I. 
         
New issues and new arguments raised by McMurry in its brief which are 
addressed in this reply brief

 
 
A. 
       Did 
BW make an antecedent agreement with McMurry, binding on Ohio Casualty, to 
insure these two buildings for $5.5M or for full value?

 
 
B. 
       Was 
BW acting as McMurry's agent, or as Ohio Casualty's agent, when it made the 
alleged antecedent agreement?

 
 
C. 
       Even 
if BW made an antecedent agreement for $5.5M, and even if this Court finds that 
BW was acting as Ohio Casualty's agent when it made that agreement, did BW act 
beyond its $1M binding authority when it made this alleged antecedent agreement 
for $5.5M?

 
 
FACTS

 
 
[¶11]   This is the second appearance of 
this dispute before this Court.  In 
the earlier appeal, we summarized the context of the 
dispute:

 
 
Early 
in 2005, McMurry Construction obtained a contract from the State of Wyoming to 
construct two steel buildings at the State Fairgrounds in Douglas. McMurry 
Construction's bid was $5,521,299.00  $,368,761.00 for a livestock pavilion and 
$2,298,759.00 for a multi-purpose show center.  The contract required McMurry 
Construction to obtain builder's risk insurance covering 100% of the contract 
amount. Anticipating this requirement, McMurry Construction had turned to BW 
Insurance, the agency it typically used, to procure premium estimates for the 
builder's risk and other insurance and bonding requirements of the project.  BW Insurance's employees estimated a 
premium of $8,415.00 for the builder's risk insurance on the originally 
estimated contract price of $4,500,000.00. McMurry Construction used that 
premium estimate in calculating its bid.

 
 
Upon 
learning that McMurry Construction would be awarded the contract, BW Insurance 
sent an insurance application to Ohio Casualty, seeking "blanket" builder's risk 
coverage for the two buildings because both buildings were to be insured under 
the same contract number.  The 
contract amount was stated in the application to be $5,524,000.00.  Because Ohio Casualty does not issue 
"blanket" builder's risk policies  meaning one limit covering multiple 
buildings  Ohio Casualty asked BW Insurance to break out the values of the two 
buildings.  In turn, BW Insurance 
contacted McMurry Construction to obtain those figures. Misunderstanding what 
information was being sought, a McMurry Construction employee mistakenly gave BW 
Insurance the invoice amounts for the steel packages  $603,003.00 for the 
livestock pavilion, and $365,147.00 for the multi-purpose show center.  Those figures were then relayed from BW 
Insurance to Ohio Casualty, where they were inserted as the operative coverage 
amounts in the builder's risk policy. The premium charged to McMurry 
Construction was, as a result, reduced from the estimate of $8,415.00 to 
$3,659.00. 

 
 
BW 
Insurance mailed a certificate of insurance to McMurry Construction on March 2, 
2005, showing the amount of builder's risk coverage to be $968,150.00. The 
policy was mailed to McMurry Construction a few days later, once again 
containing the builder's risk coverages of $603,003.00 and $365,147.00 for the 
two buildings.  On March 15, 2005, 
BW Insurance faxed another copy of the certificate of insurance to McMurry 
Construction at the latter's request, and on March 18, 2005, again at McMurry 
Construction's request, BW Insurance faxed to it a copy of the policy's 
declarations page.  The declarations 
page, as the certificate of insurance, showed the builder's risk coverage to be 
$968,150.00. McMurry Construction does not contest the fact that nobody in its 
offices read the certificate, the declarations page, or the policy upon their 
receipt.

 
 
This 
case was engendered when the livestock pavilion collapsed as it neared 
completion on June 11, 2005, due to improper bracing by a subcontractor.  The cost to return the building to its 
condition before it collapsed was $951,715.00.   

 
 

W.N. 
McMurry Constr. Co. v. Cmty. First Ins., Inc., 
2007 WY 96, ¶¶ 3-6, 160 P.3d 71, 73-74 (Wyo. 2007) (McMurry Construction I) (footnotes 
omitted).  Unfortunately, the policy 
limit for the livestock pavilion, being only $603,003.00, was low enough to 
invoke the policy's underinsured coinsurance penalty.  Ohio Casualty calculated the total 
policy benefit to be $176,543.19.  
Id., ¶ 7, 160 P.3d  at 
74.

 
 
[¶12]   In McMurry Construction I, this Court 
upheld the district court's grant of summary judgment to BW Insurance and Ohio 
Casualty on tort and contract causes of action contained in McMurry 
Construction's complaint because those causes of action were barred by McMurry 
Construction's failure to read the insurance policy documents.  Id., ¶ 37, 160 P.3d  at 83.  We also, however, held that McMurry 
Construction's failure to read the policy documents did not preclude an action 
for equitable reformation of the insurance policy and remanded the case for 
consistent proceedings.  Id.

 
 
[¶13]   Upon remand, following a bench 
trial, the district court made the following findings of 
fact:

 
 
1.         That the 
Plaintiff, W.N. McMurry Construction Company (McMurry) is a Wyoming corporation 
with its principal office in Casper, Wyoming.  McMurry Construction was formed and 
incorporated in late 2002.  W.N. 
McMurry and Rich Fairservis are the primary shareholders of McMurry 
Construction.  Mr. Fairservis runs 
the business.  Richard Nelson has 
been employed at McMurry Construction since June of 2003.

 
 
2.         That the 
Defendant, Ohio Casualty Insurance Company (Ohio) is an Ohio corporation doing 
business in Wyoming.  Ohio is an 
insurer which has its home office in Ohio, but which is authorized to sell 
insurance policies in many states, including Wyoming.  Ohio has an agency agreement with BW 
Insurance Agency.  Ohio has a 
regional underwriting office in Denver, Colorado.  Mike McKenna was, and is, the Regional 
Underwriting Manager for Ohio in its Denver, Colorado, office.  Kim Rons is one of eight senior 
underwriters in the Denver, Colorado, office.  Since 2002, Ms. Rons has reported to and 
been supervised by Mr. McKenna.

 
 
3.         B.W. 
Insurance Agency, Inc., (BW) is a successor of Community First Insurance, Inc., 
and is an insurance agency with an office in Casper, Wyoming.  Richard Garrod has managed the Casper BW 
office since 2002.  Leo Ashba and 
Judy Goodwin were sales agents with BW and its predecessor companies.  Mr. Ashba retired from BW in July 2005 
and Ms. Goodwin is still employed at BW.  
Ms. Goodwin began her career with BW's predecessor company in 1988, and 
she has always worked the commercial insurance side of the business.  Mr. Ashba began working for BW's 
predecessor company in 1983, and while he sometimes sold his insured clients 
their various commercial insurance policies, he primarily worked the bond side 
of the business.  Mr. Ashba was 
assisted for over 20 years by Debbie Stoddard.

 
 
4.         Community 
First was purchased by Bank of the West in 2004.  It has operated as BW ever since. 

 
 
5.         As an 
agent, BW would shop from among multiple insurance companies to seek and procure 
the best insurance coverage for its insured clients, such as McMurry, for the 
lowest premium.

 
 
6.         Some of the 
insurers BW used for general liability, property, and business auto policies and 
coverage from 2002 through 2005 are AIG, SAFECO, The Hartford, Ohio, Colorado 
Casualty, and St. Paul-Traveler's.

 
 
7.         BW sought 
builder's risk quotes from AIG, SAFECO, The Hartford, Colorado Casualty, Zurich 
North America, and Ohio.

 
 
8.         BW is paid 
a commission by insurers when it places its insured clients' coverages with 
those insurers.  Typically, no 
additional payment or consideration is received from the insured 
client.

 
 
9.         Community 
First Insurance signed an agency agreement with Ohio on September 1, 2003, which 
was adopted by BW.

 
 
10.       BW had Ohio's authority 
and permission to bind or commit Ohio to providing builder's risk coverage of up 
to $1,000,000 without Ohio's underwriters' knowledge or 
approval.

 
 
* 
* * *

 
 
34.       Upon learning that 
McMurry intended to bid on the Fairground Project, in accordance with the usual 
service it provided, BW independently obtained from the bid center in Casper, 
Wyoming, where contract documents were on file, the documents from which BW 
could determine the insurance and bond requirements for bidders on the project 
and for successful bidder.

 
 
35.       From the contract documents 
it obtained, BW recorded the bond and insurance requirements on a work paper 
referred to as the "Pink Sheet."  
Those requirements included a bid bond and a payment and performance bond 
in the amount of 100% of the contract amount, owner's protective liability 
insurance (OCP), and builder risk insurance in the amount of 100% of the 
contract sum.

 
 
36.   Debbie Stoddard was Leo Ashba's 
long-time bond assistant.  She was a 
bond specialist.  Infrequently, Ms. 
Stoddard would be involved with clients' commercial insurance products or 
policies.  Judy Goodwin worked 
primarily with clients' commercial insurance policies and needs and rarely with 
bonds.

 
 
37.       Debbie Stoddard knew 
McMurry would be submitting its bid on the Fairground Project to the State of 
Wyoming on or about January 6, 2005.  
Ms. Stoddard knew that McMurry Construction needed to purchase OCP and 
builder's risk coverage and that McMurry needed estimated premiums for the 
proposed insurance policies to add into its bid.

 
 
38.       Debbie Stoddard asked 
BW's Judy Goodwin to obtain and provide Ms. Stoddard with quotes or estimates 
for the OCP and builders risk policies.  
Judy Goodwin then provided Ms. Stoddard with a $3,330 quote for OCP 
coverage and an estimate of $.187/per hundred for the builder's risk 
coverage.

 
 
39.       Judy Goodwin obtained 
her $3,330 OCP estimated premium number from Ohio through rates provided by 
Ohio, but she likely obtained her $.187/per hundred builder's risk rate from 
Zurich.

 
 
40.       Upon being notified 
that the project would be awarded to McMurry, BW proceeded to obtain a payment 
and performance bond, OCP insurance, and builder's risk insurance in accordance 
with the requirement of the contract documents it had obtained from the bid 
center.

 
 
41.       BW employee Debbie 
Stoddard signed the payment and performance bond on behalf of the surety, 
Hartford Casualty Insurance Company, on February 24, 2005.

 
 
42.       BW employee Judy 
Goodwin prepared an application to Ohio for the OCP and builder's risk policy 
for a contract of $5,524,000.  This 
application was faxed to Ohio on or about February 1, 
2005.

 
 
43.       That at all times 
relevant, there was in place an agency agreement between Ohio and BW. Material 
provisions of the agreement include:

 
 

(a)          
"Agent 
is authorized under this agreement to write for the following divisions: 
personal lines, commercial lines, specialty lines."

(b)          
"The 
agent is authorized by the company to solicit and accept proposals for insurance 
covering such classes of risk as the company are licensed to write and which the 
company has authorized the agent to write subject to any restrictions imposed by 
law or by this agreement on the agent." 

(c)          
"The 
company shall have the authority to expand or restrict the agent's authority 
effect upon written notice to the agent."  

 
 
44.       Ohio's authority was 
not limited in the agreement or by any subsequent writing delivered to the 
agent.

 
 
45.       On or about February 
22, 2005, Kim Rons, on behalf of Ohio, for the first time examined the 
application for builder's risk and OCP insurance.  She wanted to know the value of each of 
the two buildings so separate coverage limits could be stated for each.  She called Judy Goodwin of BW and 
requested that information. 

 
 
46.       Judy Goodwin asked 
Debbie Stoddard to call McMurry for the information. Stoddard then spoke to 
Jeremiah Robert, an estimator at McMurry, and asked for a "break-down of 
building costs."

 
 
47. 
      Whatever 
words were used, McMurry understood the request to be for the costs of the steel 
for the two buildings.  Stoddard 
reported to Goodwin, who reported to Rons, that the break-down of building costs 
for Livestock Pavilion were $603,003 and $365,147 for the Multi-Purpose 
building.  Those numbers represent 
the cost of the steel packages for the respective 
buildings.

 
 
48. 
      The 
February 1, 2005, application, through Ohio, requested a blanket             
builder's risk coverage for approximately $5.5 million. 

 
 
49. 
      That as a 
result of miscommunications in the phone calls between Rons, Goodwin, Stoddard, 
and Robert, Rons wrote the policy limits for the two buildings as $603,003 for 
the Livestock Pavilion and $365,247 for the Multi-Purpose Show Center.  That the above figures represented only 
the costs of steel in the respective buildings and not the replacement costs for 
such buildings. As such, both buildings were grossly 
underinsured.

 
 
50. 
      That Ohio 
relied upon BW to do most of the underwriting work for the risk on the 
buildings.

 
 
51. 
      That the 
builder's risk policy written by Ohio was based upon a $.378/hundred on policy 
limits of $603,003 for the Livestock Pavilion and $365,247 on the Multi-Purpose 
Show Center.  Ohio charged a total 
builder's risk premium of $3,659.  
The premium for a builder's risk policy of $5.5 million would have been 
$20,790.

 
 
[No. 
52 was omitted in district court's decision.]

 
 
53. 
      That the 
Livestock Pavilion building collapsed on June 11, 2005.  Improper bracing by the sub-contractor, 
Montana Steel, was believed to be the reason for the collapse. That BW sent an 
insured copy of the Ohio policy to McMurry on March 7, 2005. BW sent the 
declaration page of the builder's risk policy to McMurry Construction on March 
18, 2005. The Certificate of Insurance showed a builder's risk policy limit of 
$908,150 for the policy period of February 7, 2005, through February 7, 
2006.

 
 
54. 
      That the 
builder's risk insurance requested by McMurry was a type of insurance provided 
by Ohio.  No one from Ohio testified 
that they would not have issued the policy for the two buildings. The Ohio 
representative testified that a combined total limit of $5.5 million would have 
resulted in additional inquires about the risk.  However, they did not testify that those 
inquires would have resulted in rejecting the risk. The Court finds that if 
there had not been miscommunications, Ohio would have written a policy fully 
insuring both the livestock and multipurpose buildings.

 
 
The 
district court then made the following conclusions of law:

 
 
10. 
      With respect to 
the builder's risk policy, the Court concludes that it was the intent of all 
parties (Ohio, BW, and McMurry) that the buildings in question would be insured 
for full value. That when the insurance contract was formed, it was the belief 
of all the parties that the buildings were fully 
insured.

 
 
11. 
      That the 
livestock building and multipurpose building were not insured to full value due 
to a series of miscommunications and misunderstandings between Stoddard, 
Goodwin, Rons, and Robert. It should have been readily apparent to BW, Ohio and 
McMurry that coverages of $365,000 and $603,000 for the buildings in question 
were insufficient to insure the buildings.

 
 
12. 
      That based 
on the application for builder's risk insurance, all parties knew that the two 
buildings, comprising 80,000 square feet and 50,000 square feet, were to be 
insured. Construction costs of $603,000 and $365,000 for the two buildings based 
on 130,000 square feet were clearly incorrect.

 
 
13. 
      That it is 
clear from the exhibits that construction costs of $5.5 million were 
correct.

 
 
14. 
      That once a 
claim was made after the loss for approximately $1 million, Ohio only agreed to 
pay $175,000 since the building was underinsured.  Thus, Ohio penalized McMurry for 
underinsuring the building, clearly demonstrating that Ohio expected that the 
building would be fully insured.

15. 
      That the 
June 27, 2005, letter from BW to Ohio, designated Plaintiff's Exhibit 22 in the 
builder's risk case, clearly indicates that a mistake had been made in that a 
$5.5 million insurable interest was proper.

 
 
16. 
      That BW was 
acting on behalf of Ohio when the miscommunication and mistakes occurred. BW was 
in fact performing underwriting functions at the request of Ohio when BW and 
Ohio sought to have the building costs divided between the two construction 
projects. BW clearly knew and agreed that the buildings needed to be insured for 
full value and that the livestock building needed some $3.25 million in 
coverage.

 
 
17. 
      That Ohio 
specifically directed BW to determine the separate values of the buildings.  McMurry responded with steel costs, 
which Ohio and BW should have known were incorrect. That the miscommunications 
were primarily the fault of BW, who was working in an underwriting capacity for 
Ohio at that moment. It was Ohio who called BW in the action and was controlling 
BW's function at that time.

 
 
18. 
      That it was 
the intent of all parties that the buildings be fully insured and that only 
through a mutual mistake and miscommunication of all parties, did the buildings 
become underinsured. Thus, there was an antecedent agreement that the buildings 
be insured for full value.

 
 
Based 
on these findings and conclusions, the district court ordered reformation of the 
builder's risk policy.

 
 
DISCUSSION

 
 
Standard 
of Review

            

[¶14]   We quote the district court's 
factual findings at length because the findings, coming after a bench trial, are 
reviewed with deference by this Court.  
The district court's factual findings are presumptively correct.  The district court's findings of fact 
will only be overturned if, upon review of the entire evidence, we determine 
such findings to be clearly erroneous.  
The district court's conclusions of law are, as always, reviewed by this 
Court de novo.  Aviat Aircraft, Inc. v. Saurenman, 2009 
WY 98, ¶ 16, 213 P.3d 956, 964 (Wyo. 2009); Addison v. Dallarosa-Handrich, 2007 WY 
110, ¶ 8, 161 P.3d 1089, 1091 (Wyo. 2007); Mullinnix LLC v. HKB Royalty Trust, 2006 
WY 14, ¶ 12, 126 P.3d 909, 916 (Wyo. 2006).

 
 
Law 
of Reformation

 
 

[¶15]   An insurance policy is a contract 
and as such is subject to the same rules of construction as any contract.  State ex rel. Arnold v. Ommen, 2009 WY 
24, ¶ 37, 201 P.3d 1127, 1137 (Wyo. 2009); Colorado Cas. Ins. Co. v. Sammons, 2007 
WY 74, ¶ 12, 157 P.3d 460, 465 (Wyo. 2007); Cathcart v. State Farm Mut. Auto. Ins. 
Co., 2005 WY 154, ¶ 18, 123 P.3d 579, 587 (Wyo. 2005).  Reformation is an equitable remedy 
available in cases where a 
mistake in the drafting 
of the written 
contract makes the writing 
convey the intent or meaning of neither party to the contract.  This Court has previously explained: 

 
 
Reformation 
is an equitable remedy which emanates from the maxim that "equity treats that as 
done which ought to have been done."  
66 Am.Jur.2d Reformation of 
Instruments § 2 at 528 (1973).  
At its most fundamental level, the remedy acknowledges the fact that for 
one reason or another written instruments do not always accurately memorialize 
the antecedent agreement of the parties.  
See 3 Arthur L. Corbin, Corbin on Contracts § 540 (1960).  Accordingly, a court acting in equity 
may reform a written instrument upon clear and convincing evidence of the 
following elements:  (1) a meeting 
of the minds -- a mutual understanding between the parties -- prior to the time 
a writing is entered into, (2) a written contract, or agreement, or deed (3) 
which does not conform to the understanding, by reason of mutual mistake.  Clear and convincing evidence is defined 
as "that kind of proof which would persuade a trier of fact that the truth of 
the contention is highly probable."    

 
 

Hutchins 
v. Payless Auto Sales, Inc., 
2002 WY 8, ¶ 19, 38 P.3d 1057, 1063 (Wyo. 2002), (some citations omitted).  

 
 
[¶16]   In McMurry Construction I, we 
stated:

 
 
The 
availability of the remedy of reformation is entirely dependent upon two 
particulars:  (1) that the mistake 
occurred in the drafting of the instrument, rather than in reaching the 
antecedent agreement, Hutchings v. 
Krachun, 2002 WY 98, ¶ 20, 49 P.3d 176, 183 (Wyo. 2002), overruled in part on other grounds by White 
v. Allen, 2003 WY 39, 65 P.3d 395 (Wyo. 2003); and (2) that the mistake was 
"reciprocal and common to both parties with each party being under the same 
misconception as to the terms of the written instrument," Mathis v. Wendling, 962 P.2d 160, 164 
(Wyo. 1998).  In other words, an 
agreement was reached, but that agreement was not correctly recited in the 
subsequently written instrument.  
Whether or not that initial agreement was reached is a question of 
fact.  Raymond v. Steen, 882 P.2d 852, 856 
(Wyo. 1994).

 
 

McMurry 
Construction I, 
¶ 19, 160 P.3d  at 77-78 (footnote omitted). 

 
 
Analysis

 
 
[¶17]   McMurry Construction is seeking, 
through reformation, to enforce a contract other than that into which it 
entered.  In order to do so it must 
prove, by clear and convincing evidence, it mutually agreed with Ohio Casualty 
that Ohio Casualty would provide $5.5 million in builder's risk coverage.  

 
 
[¶18]   The facts are relatively 
clear.  BW Insurance submitted an 
application to Ohio Casualty for a builder's risk policy containing $5.5 million 
in blanket coverage.  Ohio Casualty 
responded that they did not offer blanket coverage, effectively rejecting the 
application.  There certainly was no 
meeting of the minds at this point. 

 
 
[¶19]   The process continued with Ohio 
Casualty requesting a breakdown of the replacement cost of each building so it 
could determine the individual coverage limits being sought.  As stated in the facts, the numbers 
ultimately reported to Ohio Casualty, supplied by McMurry Construction, were 
$603,003 for the livestock pavilion and 
$365,247 on the multi-purpose show center.  Ohio Casualty accepted the risk for the 
amounts reported for the respective buildings, calculated the premium therefore, 
and wrote the policy accordingly.  

 
 

[¶20]   We fail to see any mutual mistake 
engendered by the above facts.  
The 
required mutuality of a mistake can only be found if the parties had identical 
intentions as to the material terms of the policy.  The essential terms of a contract for 
insurance include: the subject matter of insurance; risk insured against; 
duration of the risk; amount of insurance; and premium rate. 1A Lee R. Russ 
& Thomas F. Segalla, Couch on 
Insurance, § 17:1, at 2-3 (3d ed. 2005) (footnotes omitted).  "[T]he maximum amount for which the 
insurer may become liable in case of loss or destruction of the subject matter 
of the insurance is essential to the validity of the contract."  Id. at § 17:8, at 14-15.  In this case, the maximum amount of 
liability was never mutually agreed upon.  
Certainly McMurry Construction 
expected a business risk insurance policy providing $5.5 million of 
coverage.  This expectation, 
however, amounts to a unilateral mistake on its part.  Ohio Casualty held no such belief.  Ohio Casualty wrote exactly the policy 
it intended to write  separate limits for each building, totaling slightly less 
than $1 million.  There was 
no mistake on the part of Ohio Casualty as to the policy limits it was 
issuing.  There was no mistake on 
the part of Ohio Casualty as to the premium price being charged for the policy 
as issued.  There was no 
juxtaposition of numbers or other scrivener's error in the policy.  The written policy said exactly what 
Ohio Casualty intended it to say.  
There was no mistake "reciprocal 
and common to both parties with each party being under the same misconception as 
to the terms of the written instrument."  

 
 
[¶21]   The district court based its 
decision ordering reformation on its finding that there existed an antecedent 
agreement between the parties to the effect that the buildings be insured to 
full value, and since everyone involved should have known that the full value of 
both buildings equaled $5.5 million, the failure of the policy to reflect that 
amount was a mutual mistake, correctable through reformation of the 
policy.

 
 
[¶22]   In this reasoning, the district 
court takes the law of reformation too far.  Reformation is not available "[i]f the 
parties made a mistake about the premises of their agreement, about some fact in 
the world outside their word-processing machines."  Black's Law Dictionary 1394 (9th ed. 
2009) (quoting Douglas Laycock, Modern 
American Remedies 39 (3d ed. 2002)).  
One example of such a word-processing mistake is when an insured and the 
insurer agree that a certain property is to be covered, but the address of the 
property is written incorrectly in the insurance policy.  Since both parties are agreed as to the 
property to be insured, the insurance policy can be reformed to correct the 
mistaken address.  The mistake at 
issue, however, is not a mistake caused by mistyping numbers already agreed 
to.   Instead, it is a mistake 
in reaching the antecedent agreement.  
This type of mistake cannot be corrected by means of reformation.  

 
 
[¶23]   Ohio Casualty takes issue with the 
district court's determination that BW Insurance was acting as Ohio Casualty's 
agent in procuring the business risk policy.  Although we question this decision, we 
need not delve into the issue because, under the specific facts of this case, it 
makes no difference to the outcome.  
The consequence of finding that BW Insurance was acting as the agent for 
Ohio Casualty is to impute the knowledge of BW Insurance to Ohio Casualty.  Cargill, Inc. v. Mtn. Cement Co., 891 P.2d 57, 62-63 (Wyo. 1995).   BW Insurance cannot be said to have 
known that McMurry Construction needed $5.5 million in business risk 
coverage.  Certainly, BW Insurance 
knew the total contract price was $5.5 million, but a business risk policy does 
not necessarily cover the full contract price.  Rather, business risk insurance covers 
the value of buildings under construction.  
The BW Insurance agent involved in the transaction testified that she did 
not question the numbers supplied by McMurry Construction as to the cost of the 
buildings because she assumed the difference between the contract price and the 
building costs was made up by other construction work (for example, earth 
moving).  She fully intended the 
policy to cover only the amounts reported to her by McMurrry Construction.  Whether or not she should have known 
better, while potentially important in other legal settings, is not pertinent to 
determining if a mutual mistake occurred in reducing the terms of the policy to 
writing.

 
 

[¶24]   Further, even if one were to accept 
that BW Insurance, and thereby Ohio Casualty, had actual knowledge that McMurry 
Construction needed $5.5 million in coverage, such knowledge on the part of Ohio 
Casualty still does not support reformation of the policy.  The bottom line is that Ohio Casualty, 
for whatever reason, never agreed to provide $5.5 million dollars of 
coverage.  McMurry 
Construction and Ohio Casualty never came to a complete meeting of the minds 
respecting this essential term of the insurance contract.  There was never any antecedent agreement 
to mistype.

 
 
CONCLUSION

 
 
[¶25]   The remedy of reformation is not available for the purpose of making a 
new and different contract for the parties.  Instead, it is confined to 
establishment of the actual agreement reached between the parties as to the 
material terms of the contract.  
McMurry Construction and Ohio Casualty never reached a mutual agreement 
on material terms of the insurance policy  specifically the coverage 
limits.  The decision of the 
district court is reversed.

 
 
APPEAL 
NUMBER S-08-0164

 
 
[¶26]   In this appeal, McMurry 
Construction challenges the interest calculations of the district court in its 
award of damages after reformation of the builder's risk policy.  Since we have reversed the district 
court order requiring reformation of the builder's risk policy, this appeal is 
moot, and therefore dismissed.

 
 
APPEAL 
NUMBER S-08-0165

 
 
[¶27]   This appeal is based on the 
district court's grant of summary judgment in favor of BW Insurance on contract 
and tort claims made against it by McMurry Construction, as well as the district 
court's denial of McMurry Construction's attempt to reform its business auto 
insurance policy to gain coverage for a driver Ohio Casualty had expressly 
excluded from the policy.  

 
 
ISSUES

 
 
[¶ 
28]  McMurry Construction presents 
the following issues:

 
 
With 
respect to Appellee BW Insurance, the issue presented for review is: 

 
 
I.          
Whether the insured was given a reasonable opportunity to read the final 
version of the policy and was mislead by the agent's assurances that the policy 
would be amended to include specific coverage.  

 
 
With 
respect to Appellee Ohio Casualty, the issue presented for review is: 

II.         
Whether the district court erred in finding that the insurance agent was 
acting for the insured and not the insurance company so that the agent's 
knowledge and intent was not imputed to the insurance company. 

In 
its reply brief, McMurry Construction addresses the issue of "[w]hether Cordero Mining Company v. U.S. Fidelity 
& Guarantee Co., 67 P.3d 616, 2003 WY 48 (Wyo. 2003) was wrongly 
decided."

 
 
 
 
FACTS

 
 
[¶29]   Along with the same basic factual 
findings in paragraphs 1-10, as listed in appeal number S-08-0163, the district 
court made the following findings of fact specifically related to the business 
auto policy:

 
 
11.       On October 
28, 2003, title was issued to McMurry for a 2004 GMC Pickup.  The last four dig[et]s of the VIN on the 
pickup are 1703.  The pickup is 
referred to hereafter as 1703.

 
 
12.       In change 
endorsement #3, effective August 18, 2003, pickup 1703 was included as a covered 
auto on McMurry's business auto policy.

 
 
13.       On 
September 18, 2003, Ohio checked the driving record of McMurry employee Richard 
Nelson.  The report showed that 
Nelson had four speeding tickets between February 6, 2002 and April 2, 
2003.  At that time Ohio added to 
the policy an exclusion-of-named-persons.  
The exclusion provided in part that, "it is agreed that the company shall 
not be liable for loss, damage, and/or liability due to the operation of a 
covered auto by the following persons:  
Richard David Nelson."  The 
endorsement was accepted and signed by Zam Mathisen, who was authorized by 
McMurry to accept and sign it.

 
 
14.       While 
Nelson was excluded from coverage in the Ohio policy, McMurry obtained liability 
insurance coverage for Richard Nelson and pickup 1703, which Nelson was driving, 
from Progressive Insurance Company.  
The named insured of the Progressive policy was 
McMurry.

 
 
15.       At the 
renewal of the business auto policy for the policy period January 1, 2004, to 
January 1, 2005, pickup 1703 was included as a covered vehicle.  However, it was deleted effective 
January of 2004.  The apparent 
reason for dropping pickup 1703 from the 2004 policy was that Nelson and the 
pickup were covered by Progressive.

 
 
16.       Ohio issued 
its first renewed business auto policy to McMurry for the policy term of January 
1, 2004 through January 1, 2005.  
That policy included an exclusion of named person endorsement for Richard 
David Nelson.

 
 
17.       In 
preparation for renewal of the business auto policy of 2005, McMurry sent a note 
to Leo Ashba of BW which said, "I am sending you copies of info re: our current 
insurance needs.  Rich would like to 
meet with you on Thursday or Friday to discuss costs.  Is that possible?  If you need anything else, call me.  Nancy."  Transmitted with the note was a page 
entitled, "W.N. McMurry Construction list of vehicles."  The third vehicle listed was pickup 
1703.  The information indicated 
that it was insured by Progressive Insurance and driven by Rick 
Nelson.

 
 
18.       M[r]. Ashba 
did not respond to the note, but on November 11th, one of Mr. Ashba's 
assistants in the office signed Leo Ashba's name to an application for renewal 
of the business auto policy to be submitted to Ohio.  Pickup 1703 was not listed on the 
vehicle schedule on the application.

 
 
19.       BW sent 
McMurry's application for renewal of the auto policy to Ohio in November 2004 
for the January 1, 2005, through January 1, 2006, policy.  As he had in previous applications, 
Richard Nelson was listed as a company driver on the application.  This was required information even 
though Mr. Nelson had been excluded as a covered driver.

 
 
20.       BW sent the 
same renewal application to multiple other insurers. BW did this in an effort to 
shop for the policies with the best possible coverage for the lowest premiums 
for McMurry.

 
 
21.       Kim Rons 
processed the business auto application on November 17, 2004, and Ohio renewed 
this business auto policy.  Ms. Rons 
issued this second renewal policy with another exclusion-of-named-driver 
endorsement for Richard Nelson.

 
 
22.       BW office 
assistants prepared a proposal of insurance for McMurry on or about December 31, 
2004.  Leo Ashba took that proposal 
to McMurry in McMurry's office on Friday afternoon December 31, 2004.  Richard Nelson was listed as one of four 
business auto drivers for McMurry Construction in that 
document.

 
 
23.       Rich 
Fairservis testified that at the presentation of the insurance proposal by 
Ashba, Mr. Ashba stated that Richard Nelson was a covered driver under the 
business auto policy.  Ashba denied 
making that statement.

 
 
24,       The Court 
finds by clear and convincing evidence that while Mr. Ashba may not recall 
having done so, he did in fact advise Mr. Fairservis that Mr. Nelson was a 
covered driver under the business auto policy.  This is based on the 
following:

 
 
A.        That 
McMurry cancelled the Progressive Insurance Policy insuring Richard Nelson and 
pickup 1703.

 
 
B.        That 
in 2004 while Nelson was excluded from the Ohio policy, the vehicle that he 
drove, pickup 1703, was not in the schedule of covered 
vehicles.

 
 
C.        That 
in November 2004, McMurry reported to BW that Nelson drove pickup 
1703.

 
 
D.        That 
Ashba put in a cover letter with the 2005 policy a statement that provided, 
"Please note that there are changes pending in your policy as there were changes 
made prior to and following the issue of the renewal that are not included in 
this renewal policy. Ohio Casualty will send you an endorsement soon that states 
the changes that have been made."

 
 
E.        A 
change request for policy was faxed to Ohio on December 31, 2004, requesting 
that pickup 1703 be added to the policy and that Richard Fairservis be added as 
a driver.  These changes could only 
have been requested after the meeting between Ashba and 
Fairservis.

 
 
F.         
Pickup 1703 was added to the policy on February 1, 
2005.

 
 
G.        There 
was no reason to cancel the Progressive Insurance to include the vehicle 
assigned to Nelson in the schedule of covered vehicles in the Ohio policy unless 
the exclusion of Nelson was deleted.

 
 
H.        
Nelson testified that he was present during the Ashba-Fairservis meeting 
and heard Ashba inform Fairservis that Nelson would now be insured under the 
Ohio policy.

 
 
25.       That BW 
sent McMurry an insured copy of the January 1, 2005, through the January 1, 
2006, second renewal of business auto policy.  This policy included an exclusion of 
named person endorsement for Richard Nelson.  No one with McMurry ever read this 
second renewal business policy or the exclusion of Richard 
Nelson.

 
 
26.       No one with 
McMurry ever submitted any oral or written request to Ohio that the exclusion 
endorsement for Richard Nelson be deleted.

 
 
27.       That from 
and after October 2, 2003, Ohio never intended, offered, or agreed to provide 
business auto coverage for Richard Nelson.

 
 
28.       That 
Richard Nelson was driving an uninsured water truck on September 7, 2005.  The water truck was owned by Granit Peak 
Development, a company affiliated with McMurry.  While driving the uninsured water truck, 
Mr. Nelson ran into a passenger car being driven by Richard Borron on East 2nd Street in Casper, Wyoming.  Faye Borron was the front-seat 
passenger.  

 
 
29.       Richard 
Nelson received two traffic citations arising out of his September 7, 2005, 
accident with the Borron vehicle.  
One ticket was for no proof of insurance and the other was for following 
too close.  Both tickets were paid 
by Mr. Nelson or McMurry.

 
 
30.       Faye Borron 
came to Casper, Wyoming, attorney Tom Sedar to pursue her bodily injury claim 
against Richard Nelson and McMurry.  
Mr. Sedar submitted a settlement demand letter to 
McMurry.

 
 
31.       On February 
20, 2006, Ohio notified McMurry that there was no coverage in that Mr. Nelson 
was an excluded driver under the business auto policy.

 
 
32.       That Mr. 
Sedar filed a complaint against Mr. Nelson and McMurry on December 7, 2006.  Mr. Reeves is defending Mr. Nelson and 
McMurry in that lawsuit.

 
 
The 
district court then came to the following conclusions of law: 

 
 
6.         
That with respect to the auto policy, the Court concludes that it was the 
intent of Ohio that Nelson not be insured.

 
 
7.         
That at the December 31, 2004, meeting, Fairservis asked Ashba whether 
Nelson was insured.  At that meeting 
Ashba was being criticized and pressed for an opinion by Fairservis, who was the 
owner of one of Ashba's principal clients.  
Ashba incorrectly stated that Nelson was insured.  The policy clearly indicated that Nelson 
was not insured from and after 2003.

 
 
8.         
I conclude that at the meeting, Ashba was acting on behalf of McMurry and 
not Ohio.  Ashba's opinion was being 
sought and called into action by McMurry.  
Clearly at that moment, Ashba was seeking to please one of his most 
profitable and important clients.  
Ashba was simply wrong and certainly was not representing the interests 
of Ohio at that moment.

 
 
9.         
That while this Court believes there is clear and convincing evidence 
that Ashba erroneously advised McMurry, it is the conclusion of this Court that 
he was doing so as an agent for McMurry rather than Ohio.  Therefore, the Plaintiff's claim for 
reformation of the auto policy is dismissed and the Defendant should have 
judgment in that regard.  Thus, 
there is no antecedent agreement between Ohio and McMurry regarding the auto 
policy.

 
 
DISCUSSION

 
 
Contract 
and Tort Claims against BW

 
 
[¶30]   In the lower court proceedings, 
McMurry Construction filed a complaint against BW Insurance alleging several 
causes of action sounding in tort and contract.  BW Insurance filed a motion for summary 
judgment based on McMurry Construction's failure to read the policy and failure 
to mitigate damages.  The district 
court granted BW Insurance's motion.  
On appeal, McMurry Construction argues the grant of summary judgment was 
erroneous because, although it did not read the policy, it should be excused 
because it did not have an adequate opportunity to read the policy. 

 
 
[¶31]   Our review of the grant of summary 
judgment is de novo.  We have the 
same materials before us as the district court and use the same criteria.  Summary judgment is appropriate if there 
are no genuine issues of material fact, leaving the prevailing party entitled to 
judgment as a matter of law.  McMurry Construction I, ¶ 12-13, 160 P.3d  at 75-76.

 
 
[¶32]   As an initial matter, BW Insurance 
argues that McMurry Construction did not raise this defense in front of the 
district court.  BW Insurance is 
correct in that McMurry Construction certainly did not raise the issue below as 
a legal defense.  It did, however, 
argue the general point.  We find 
the argument was sufficiently presented below to allow for appellate 
review.

 
 
[¶33]   Turning, then, to the issue raised, 
McMurry Construction recognizes this Court's consistent holding, as stated in McMurry Construction I, that failure to 
read an insurance policy will bar claims against an agent for breach of contract 
and negligence.  It also admits that 
it never read the business auto policy.  
It argues, however, the duty to read a policy is mitigated if the insured 
does not have a reasonable opportunity to read the policy.  Without ruling on the legal merits of 
this argument, we find that, under the facts of this case, the argument is 
specious.  The policy was delivered 
to McMurry Construction in January 2005.  
The policy as issued contained the exclusion-of-named-person endorsement 
excluding Richard Nelson from coverage.  
The accident happened in September 2005, eight months later.  There was ample opportunity to read the 
policy.  

 
 
[¶34]   McMurry Construction argues that 
the reason we should find it did not have a reasonable opportunity to read the 
policy was that it never received the complete policy.  It supports this argument by referencing 
the cover letter sent by BW Insurance when it received its copy of the policy in 
January 2005, which stated in part:

 
 
Please 
note that there are changes pending for you [sic] policy as there were changes 
made prior and following the issue of the renewal that are not included in this 
renewal policy.  Ohio Casualty will 
send you an endorsement soon that states the changes that have been made.  

 
 
The 
endorsement from Ohio Casualty stating policy changes was quick in coming.  On February 1, 2005, a policy change 
endorsement was issued.  The change 
to the policy was the addition of one more vehicle to the coverage.  Significantly, included in the policy 
change endorsement was a list of other endorsements applicable to the policy in 
general.  The named-person-exclusion 
was among the endorsements listed.  

 
 
[¶35]   McMurry Construction suggests that, 
even after this February 1 endorsement, it did not have the final version of the 
policy.  There are two problems with 
this argument.  First, the cover 
letter specifically referred to one endorsement that would be arriving 
soon.  The February endorsement fits 
this description.   There was 
no longer any reason to believe the policy was not complete at that time.  Second, reliance on potential changes to 
be made in the future turns the requirement of reading the policy on its 
head.  An insured is required to 
read the policy at hand.  It cannot 
abdicate this responsibility under the guise of waiting for anticipated 
changes.  McMurry Construction may 
have expected a change, but there was, at the time the policy was issued and at 
the time of the first endorsement, no change to the exclusion of Richard Nelson 
from coverage.  

 
 
[¶36]   The cover letter on which McMurry 
Construction places so much importance also said "[p]lease check the policy and 
let us know if any coverage needs to be added or amended."  McMurry Construction never bothered to 
take this step.  Under the 
circumstances, we agree with the district court that summary judgment in favor 
of BW Insurance was appropriate.

 
 
Reformation 
of the Business Auto Policy

 
 
[¶37]   The district court denied McMurry 
Construction's claim seeking reformation of the business auto policy after a 
bench trial.  As stated in appeal 
number S-08-0163 above, we review the district court's factual findings after a 
bench trial under a clearly erroneous standard and its legal conclusions de 
novo.  Aviat Aircraft, ¶ 16, 213 P.3d  at 964; Addison, ¶ 8, 161 P.3d  at 1091; Mullinnix LLC, ¶ 12, 126 P.3d  at 
916.

 
 
[¶38]   We begin with the district court's 
factual finding that Leo Ashba, of BW Insurance, informed McMurry Construction 
that Richard Nelson was covered under the business auto policy.  On appeal, Ohio Casualty does not 
dispute this finding.  The question 
before us, therefore, is whether Ashba, and thus BW Insurance, was acting as an 
agent for Ohio Casualty when he made that statement, effectively binding it to 
provide coverage for Nelson.  We 
agree with the district court that Ashba was not.

 
 
[¶39]   When it comes to the law of agency, 
there are typically two forms of agency relationship  actual and apparent.  As between an insurance company and an 
agent, the limit of the agent's authority to bind the insurance company is 
governed by the agent's actual authority.  
As between the insurance company and third persons, the limit of an 
agent's authority to bind the principal is governed by his apparent authority.  

 
 
Actual 
authority may be express or implied.  
An agent has express actual authority to bind the principal when the 
principal, orally or in writing, specifically grants the agent the power to bind 
the principal.  Implied actual 
authority is established by the course of dealings between the parties and the 
circumstances surrounding the case.  

 
 
Apparent 
authority is created when the principal holds the agent out as possessing the 
authority to bind the principal or when the principal allows the agent to claim 
such authority.  To bind the 
principal under a theory of apparent authority, a third party must establish 
personal knowledge of, and reliance on, the apparent authority of the 
agent.  In Herbert Const. Co. v. Continental Ins. 
Co., 931 F.2d 989, 993-94 (2nd Cir. 1991), the Second Circuit Court of 
Appeals articulated that test:

 
 
To 
recover on this theory [apparent authority] the third party must establish two 
facts:  (1) the principal "was 
responsible for the appearance of authority in the agent to conduct the 
transaction in question," Ford [v. Unity Hospital], 32 N.Y.2d [464,] at 
473, 346 N.Y.S.2d [238] at 244, 299 N.E.2d [659] at 664 [(1973)] (citation 
omitted), and (2) the third party reasonably relied on the representations of 
the agent, Hallock, [v. State,] 64 N.Y.2d [224,] at 231, 485 
N.Y.S.2d [510,] at 513, 474 N.E.2d [1178,] at 1181 [(1984)]. 

 

This 
statement essentially modernizes our holding in Ulen [v. Knecttle, 50 Wyo. 94, 103-04, 58 P.2d 446, 449 (1936)].  Apparent 
authority in agency cases will be determined according to this two-prong 
test.  

 
 

Cargill, 
891 P.2d  at 62-63 (some citations omitted).  An agent possessing either actual or 
apparent authority may bind the principal.  
Ulen v. Knecttle, 50 Wyo. 94, 
103-04, 58 P.2d 446, 449 (1936).  
Whether an agency relationship exists and the scope of the agent's 
authority are questions of fact.  Id.  See also Velasquez v. Chamberlain, 2009 
WY 80, ¶ 19, 209 P.3d 888, 893 (Wyo. 2009); Carroll v. Bergen, 2002 WY 166, ¶ 11, 57 P.3d 1209, 1214 (Wyo. 2002).   

 
 
[¶40]   McMurry Construction grounds it 
entire appellate argument in favor of finding that BW Insurance was acting as 
Ohio Casualty's agent on Cordero Mining 
Co. v. United States Fid. & Guar. Ins. Co., 2003 WY 48, 67 P.3d 616 
(Wyo. 2003).  In Cordero, Cordero Mining Company was to 
be listed as an additional named insured in a policy procured by a subcontractor 
doing business at one of its mines.  
As it turned out, Cordero Mining Company was not so listed.  The evidence supported a finding that 
both the subcontractor and its insurance agent, The Barlow Agency, an 
independent agency, knew that Cordero Mining Company was to be listed as an 
additional named insured.  The 
question, then, was whether the insurance company, USF & G, should be bound 
by the insurance agent's knowledge.  
In Cordero, we presented the 
following analysis:

 
 
The 
authority of an insurance agent to make a contract of insurance binding upon the 
insurer is determined by the law of agency.  8 Eric Mills Holmes, Holmes' Appleman on 
Insurance 2d, Law of Insurance Agents § 52.1 at 391 (1998).  The underlying agency principle is that 
the insurer will be bound by the acts of its agent undertaken within the scope 
of that agency.  Id. at 392.   The courts lean toward a broad 
rather than a strict construction of an insurance agent's powers, an agent's 
written authority is to be broadly and fairly construed, and a narrow meaning is 
not to be given to it unless the language employed clearly indicates that such 
was the intention of the parties.  
Id. at 394.   An "insurance agent" so far as the 
insurer is concerned, is a person with actual (including express or implied) 
authority to represent the insurer in dealing with third parties in matters 
relating to insurance.  Id. at 395.   In preparing and executing a 
policy, an insurance agent acts as the agent of the insurer.  Id. at 397.   Even where the person's functions 
consist merely of soliciting insurance, receiving applications, forwarding them, 
receiving in return the policy and delivering it, and collecting the premium, 
that person is an agent in the ordinary sense of that term.  Id.

 
 
On 
the basis of similar principles, this court held in Wyatt v. State Farm Fire and Casualty 
Company, 78 Wyo. 228, 322 P.2d 137 (1958), that the knowledge of an agent is 
imputed to the insurer even when such knowledge is not in fact communicated to 
the insurer.  In Wyatt, the insurer denied coverage after 
the insured's garage was destroyed by fire, claiming the policy covered the 
garage only if used for domestic purposes and the insured was using it for 
commercial purposes.  The court 
concluded the policy did not clearly exclude coverage for commercial purposes 
and imputed to the insurer the agent's knowledge at the time the policy was 
negotiated that the garage was being used commercially.  Although Wyatt involved a claim for estoppel 
against the insurer, we find the general principle enunciated there applicable 
to the claim presented here.

 
 
The 
USF & G agency agreement executed with Barlow provided in relevant 
part:

 
 
1. 
[USF & G] hereby grants authority to [Barlow] in the designated territory, 
to solicit and submit applications for insurance . . . ; to issue and deliver 
policies, . . . certificates, endorsements and binders which [USF & G] may, 
from time to time, authorize to be issued and delivered; to collect and receipt 
for premiums thereon; to cancel such policies . . . at the discretion 
of [Barlow] where cancellation is legally possible; and to retain out of 
premiums collected and paid over to [USF & G] commissions at the rates set 
forth in the Commission Schedules.

 
 
Giving 
this provision a broad, fair construction, we conclude Barlow's knowledge that 
Cordero was to be named as an intended additional insured on L & T's policy 
may be imputed to USF & G. 

 
 

Cordoro, 
¶¶ 22-24, 67 P.3d  at 624-25. McMurry Construction, alleging that BW Insurance's 
agency agreement with Ohio Casualty is substantially identical to that between 
USF&G and The Barlow Agency in Cordero, summarily concludes the outcome 
must be the same.  We 
disagree.

 
 
[¶41]   In essence, McMurry Construction is 
putting forward an argument that BW Insurance had actual authority to bind Ohio 
Casualty.1  The problem is that McMurry 
Construction's argument is presented in a factual vacuum.  Even assuming the general provisions of 
the agency agreement between BW Insurance and Ohio Casualty are similar to the 
general provisions quoted in the agency agreement between The Barlow Agency and 
USF&G in Cordero, this is only 
part of the story.

 
 
[¶42]   Although BW Insurance and Ohio 
Casualty had a general agency agreement, the agreement was limited.  Both the representative of Ohio Casualty 
and Ashba testified at trial that the decision on which drivers to insure 
belonged solely to Ohio Casualty.  
Further, Ohio Casualty made it very clear in the terms of the business 
auto policy that BW Insurance had no authority to alter the terms of the 
policy.  There is a common policy 
provision stating:

 
 
This 
policy contains all the agreements between you and us concerning the insurance 
afforded.  The first Named Insured 
shown in the Declarations is authorized to make changes in the terms of this 
policy with our consent.  This 
policy's terms can be amended or waived only by endorsement issued by us and 
made a part of this policy.  

 
 
The 
exclusion-of-named-person endorsement contained the following provision: 

 
 
This 
endorsement is in effect and shall apply to all renewals of this policy.  This endorsement can be canceled or 
deleted by written request of the Named Insured, with approval of the 
Company.  

 
 
Ohio 
Casualty could not have made it more clear that BW Insurance did not have the 
authority to change policy provisions, expressly including the exclusion of 
Nelson from coverage.  "A condition 
in a policy prescribing that the insurer shall not be bound unless the execution 
of the agent's power shall be evidenced by written endorsement on the policy, is 
of the essence of the agent's authority, and a consent or act of the agent not 
so endorsed has been deemed void."  
8 Eric Mills Holmes, Holmes' 
Appleman on Insurance § 50.3 (2d ed. 1998).  Under the facts of this case, BW 
Insurance did not have actual authority from Ohio Casualty to remove the 
exclusion-of-named-person endorsement.  

 
 
CONCLUSION

 
 
[¶43]   McMurry Construction had plenty of 
time to read the business auto policy.  
The grant of summary judgment to BW Insurance on contract and tort claims 
was appropriate.  Further, although 
Ashba told Fairservis that Nelson was covered, Ashba did not have the actual 
authority to effect such a change.  
Ohio Casualty never agreed to cover Nelson and never removed the 
exclusion-of-named-person endorsement from the policy.  There was no basis for the reformation 
of the policy.  The district court's 
decision on both of these issues is affirmed.

 
 
FOOTNOTES

 
 

1McMurry Construction cannot rely on apparent authority because it never, 
in fact, believed BW Insurance was serving as the agent of Ohio Casualty.  Rich Fairservis, who runs McMurry 
Construction, testified that he believed BW Insurance to be McMurry 
Construction's agent, representing its best interest in all matters.  He understood that BW Insurance would 
represent its interests over and above any insurance company's 
interests.