Title: Kinnon v. Universal Underwriters Ins. Co.

State: alabama

Issuer: Alabama Supreme Court

Document:

418 So. 2d 887 (1982)
Larry KINNON
v.
UNIVERSAL UNDERWRITERS INSURANCE COMPANY.
81-185.

Supreme Court of Alabama.
August 27, 1982.
*888 Steven F. Schmitt of Hornsby & Schmitt, Tallassee, for appellant.
Bibb Allen of London, Yancey, Clark & Allen, Birmingham, for appellee.
BEATTY, Justice.
This is an appeal from a declaratory judgment rendered by the Circuit Court of Tallapoosa County in a proceeding to determine insurance coverage.
On or around September 7, 1979, Thrash-Walters Ford-Mercury, Inc. (Thrash-Walters) sold an automobile to Carrie Smith. After a few days Ms. Smith returned the car to the garage of Thrash-Walters for repairs. The garage allowed Ms. Smith to use a 1978 Ford Fairmont owned by Thrash-Walters as a substitute automobile while her car was being repaired. Ms. Smith used this car for several weeks up through October 21, 1979. On that date Willie James Terrell, who lived in Ms. Smith's household, was involved in a collision while driving this same Fairmont. The respondent, Larry Kinnon, was injured in the accident and later filed a claim for personal injuries in the Circuit Court of Tallapoosa County against James Terrell.
On February 6, 1981, petitioner Universal Underwriters Insurance Company (Universal) filed its bill for declaratory judgment against respondents James Terrell and Larry Kinnon. Based on the stipulation of facts, exhibits and arguments of counsel, the trial court found that Terrell was not an "INSURED" under the garage liability policy issued to Thrash-Walters by Universal. We affirm.
The only issue presented is whether James Terrell was insured under the dealership's insurance policy. The identity of the insured and liability of the insurer are determined from the terms of the contract, Armstrong v. Security Insurance Group, 292 Ala. 27, 30, 288 So. 2d 134, 136 (1973), and this court must resolve any ambiguities contained in the policy in favor of the insured. Employers Ins. Co. of Alabama v. Jeff Gin Company, 378 So. 2d 693, 695 (Ala.1979). But if a contract in its terms is plain and free from ambiguity, however, there is no room for construction, and it is the duty of the court to enforce it as written. E.g., Utica Mutual Insurance Company v. Tuscaloosa Motor Company, Inc., 295 Ala. 309, 313, 329 So. 2d 82, 85 (1976); Southern Guaranty Insurance Company v. Wales, 283 Ala. 493, 496, 218 So. 2d 822, 825 (1969); Chemstrand Corporation v. Maryland Casualty Company, 266 Ala. 626, 632, 98 So. 2d 1, 6 (1957). Likewise, the court cannot refine away the terms of the contract that are expressed with sufficient clarity to convey the intent and meaning of the parties. Green v. Merrill, 293 Ala. 628, 631, 308 So. 2d 702, 704 (1975).
The parties agree on which sections of the insurance policy are relevant. The following policy provision outlines the coverage provided. Capitalized words are defined in the policy.
Page 2 of Garage Insurance Coverage Part No. 400.
It is clear from "Section II. GARAGE LIABILITY" that coverage extends only to an "INSURED." The applicable definitions are set out below.
Page 1 of Part A.
Page 4, Garage Insurance Coverage Policy Part No. 400.
The dispute is centered on the interpretation of "IV. PERSONS INSURED (3)(b)." Under Section (3)(b) Terrell would be covered under the policy only if the vehicle which he was driving were found to be "physically operated by the NAMED INSURED or any such partner or paid employee or director or stockholder," etc. The parties agree that Terrell is not a partner or paid employee or director or stockholder, etc. Therefore, for coverage to exist, Thrash-Walters, the named insured, must have been "physically operating" the automobile at the time of the accident.
The respondent, Kinnon, argues that the phrase "physically operated" is ambiguous and requires construction by the court. If there is an ambiguity, the policy must be construed against the insurance company, as we have shown.
Kinnon states that a patent ambiguity exists if "physically operate" means to "drive," because a corporation cannot "drive" an automobile. Thrash-Walters is a corporation. Actually, the policy language *890 "physically operated by the NAMED INSURED or any such partner or paid employee or director or stockholder ... of the NAMED INSURED," provides for a situation in which the named insured is a corporation. (Emphasis added.) Therefore, the named insured can be a corporation without causing the term "physically operated" to be ambiguous.
Additionally, the respondent, Kinnon, cites two cases to further his position that "physically operated" is ambiguous. In Trans-Continental Mutual Insurance Company, Inc. v. Harrison, 262 Ala. 373, 78 So. 2d 917 (1955), this court upheld a finding that the word "operate," as used in an insurance policy, was ambiguous and subject to construction by the court. The restrictive endorsement of that policy contained the phrase "being operated by the named insured." This court limited the decision to the particular set of facts before it.
Id. at 379, 78 So. 2d  at 922.
The other case cited by Mr. Kinnon is Truck Insurance Exchange v. Marks Rentals, Inc., 288 Md. 428, 418 A.2d 1187 (1980). The Marks opinion, written by the Court of Appeals of Maryland, is not persuasive because the policy at issue did not use "operate" in the same context as the policy in the present case. There are cases from other courts which we do find persuasive because of the similarity of facts and insurance policies to those in the case at bar.
The court in Leegaard v. Universal Underwriters Insurance Company, 255 N.W.2d 819 (Minn.1977), considered Section (3)(b) of a substantially similar policy. Leegaard was driving an automobile furnished to him by a garage while his car was being repaired. He was involved in an accident and later brought a declaratory judgment action to determine insurance coverage under the garage's liability policy. The court found the policy to be unambiguous; consequently, Leegaard was not covered.
Id. at 822.
The same result was reached in Universal Underwriters Insurance Company v. State Farm Automobile Insurance Company, 166 Mont. 128, 531 P.2d 668 (1975). The driver, D'Orazi, because of complications in the transfer of title, was driving a car belonging to a dealer and insured by Universal. The Montana Supreme Court found no ambiguity in the policy, stating:
Id. at 137, 531 P.2d  at 673.
Mr. Kinnon also asserts that if the phrase "physically operated" is read in light of the *891 "AUTOMOBILE HAZARD 1" provision concerning "GARAGE OPERATIONS," an ambiguity exists.
Page 2 of Garage Insurance Coverage Part No. 400.
Mr. Kinnon then argues that, because of the ambiguity created by the use of the phrase "GARAGE OPERATIONS," the court should construe the policy to mean that the garage was "operating" the car by furnishing it to Smith.
Although arguendo the car might have been used for "GARAGE OPERATIONS," it does not follow that the car was "physically operated" by Thrash-Walters. This same argument was made in Orth v. Universal Underwriters Insurance Company, 284 F.2d 857, 859 (9th Cir. 1960):
The terms used in one provision are not necessarily limited by their connotation in another. The same word may have a different meaning in one part of a contract than in another, depending on the context. Id. at 860. The root word "operate," when used in the context of garage operations, refers to business operations, but "physically operated" means "driven" or "manipulated."
The language of the policy in the case before us is plain and unambiguous. There is no omnibus clause which would cover all permissive users of the automobile. The parties to the insurance contract bargained for the limited coverage which was set out clearly in the policy. Terrell was not the "NAMED INSURED," and the car was not "physically operated" by the named insured. The policy is not fairly susceptible to a construction which would provide coverage for Willie James Terrell. The trial court was correct in granting the declaratory judgment for the plaintiff. Accordingly, that judgment must be, and is, affirmed.
AFFIRMED.
TORBERT, C. J., and MADDOX, JONES and SHORES, JJ., concur.