Title: State Farm Fire and Cas. Co. v. Paulson

State: wyoming

Issuer: Wyoming Supreme Court

Document:

State Farm Fire and Cas. Co. v. Paulson1988 WY 77756 P.2d 764Case Number: 87-259, 87-260Decided: 06/03/1988Supreme Court of Wyoming
STATE FARM FIRE AND 
CASUALTY COMPANY, APPELLANT (DEFENDANT),

v.

HERB J. PAULSON, APPELLEE 
(PLAINTIFF).

HERB J. PAULSON, 
APPELLANT (PLAINTIFF),

v.

STATE FARM FIRE AND 
CASUALTY COMPANY, APPELLEE (DEFENDANT).

Appeal from the District 
Court, LaramieCounty, Edward L. Grant, 
J.

John A. Sundahl 
of Godfrey, Sundahl & Jorgenson, Cheyenne, for State Farm Fire and Cas. Co.

Stanley K. Hathaway and Blair J. 
Trautwein of Hathaway, Speight & Kunz, Cheyenne, for Herb J. 
Paulson.

Before BROWN, C.J., THOMAS, CARDINE and MACY, JJ., 
and ROONEY, Retired Justice.

ROONEY, Retired 
Justice.

[¶1.]     This appeal in Case No. 
87-259, by State Farm Fire and Casualty company (hereafter referred to as 
"appellant") is from a judgment entered against appellant after a non-jury trial 
declaring that an insurance policy issued to Herb J. Paulson (hereafter referred 
to as "appellee") covered damage resulting from the entrance of water and hail 
into the basement of appellee's house after a severe storm. The basic issue 
presented on appeal is whether or not the trial court erred in declaring the 
existence of such coverage.

[¶2.]     We 
reverse.

[¶3.]     Uncontroverted are the 
facts that hail, followed by hail and rain, fell in Cheyenne on August 1, 1985; 
that the storm was severe; that hail broke sections of three basement windows on 
the east side of appellee's residence in Cheyenne; that water and hail, which 
were generated within a few blocks of the residence (a 62-acre drainage area), 
entered the basement through the windows; that the high water line was several 
inches above the basement and water completely filled the basement; that less 
water would have entered had the windows not been broken; and that the policy in 
question was in force at the time and provided in pertinent 
part:

"SECTION 1 - LOSSES 
INSURED

"COVERAGE A - 
DWELLING

"We insure for accidental 
direct physical loss to the property described in Coverage A except as provided 
in SECTION I-LOSSES NOT INSURED.

"COVERAGE B - PERSONAL 
PROPERTY

"We insure for accidental 
direct physical loss to property described in Coverage B caused by the following 
perils except as provided in SECTION I-LOSSES NOT INSURED:

* * * * * 
*

"2. Windstorm or hail. 
This peril does not include loss to property contained in a building caused by 
rain, snow, sleet, sand or dust. This limitation does not apply when the direct 
force of wind or hail damages the building causing an opening in a roof or wall 
and the rain, snow, sleet, sand or dust enters through this 
opening.

* * * * * 
*

"11. Weight of ice, snow 
or sleet which causes damage to property contained in a 
building.

* * * * * 
*

"SECTION I - LOSSES NOT 
INSURED

* * * * * 
*

"2. We do not insure 
under any coverage for loss (including collapse of an insured building or part 
of a building) which would not have occurred in the absence of one or more of 
the following excluded events. We do not insure for such loss regardless of: a) 
the cause of the excluded event; or b) other causes of the loss; or c) whether 
other causes acted concurrently or in any sequence with the excluded event to 
produce the loss:

* * * * * 
*

"c. Water Damage, 
meaning:

"(1) flood, surface 
water, waves, tidal water, overflow of a body of water, or spray from any of 
these, whether or not driven by wind."

An insurance policy is a 
contract (§ 26-15-101 et seq., W.S. 1977).

"A policy of insurance is 
a contract between the insurer and the insured and construed in the same way. 
Worthington v. State, Wyo., 598 P.2d 796 (1979); State Farm Mutual Automobile 
Insurance Co. v. Farmer's Insurance Group, Wyo., 569 P.2d 1260 (1977). When terms of a 
contract are shown without any conflict of evidence, interpretation of a 
contract becomes a question of law for the court. Engle v. First National Bank 
of Chugwater, Wyo., 590 P.2d 826 (1979). Paraphrased, and as 
said approvingly from a quote in Horvath v. Sheridan-Wyoming Coal Co., 58 Wyo. 
211, 131 P.2d 315 (1942), the interpretation of a written contract is a question 
of law for the court; but where the terms of a contract are conflicting or 
doubtful, it is for the jury to ascertain the intention of the parties and 
determine what the contract was under proper instructions. The interpretation 
and construction of a contract are done by the court as a matter of law. Amoco 
Production Co. v. Stauffer Chemical Company of Wyoming, Wyo., 612 P.2d 463 (1980). See also, Goodman 
v. Kelly, Wyo., 390 P.2d 244 (1964)." Hursh Agency, Inc. 
v. Wigwam Homes, Inc., Wyo., 664 P.2d 27, 31 
(1983).

The only 
exception to construing insurance contracts as other contracts are construed is 
the requirement that ambiguous language in an insurance contract is to be 
liberally construed in favor of the insured.

"When there are any 
ambiguities or uncertainties in the meaning of the language used in a policy, 
they must be strictly construed against the insurer who drafted the contract. 
Wilson v. Hawkeye Casualty Co., 67 Wyo. 141, 215 P.2d 867, 
874-875 (1950). However, if the language is clear and unambiguous, there is no 
room for the court to resort to a strict construction against the insurer, and 
the insurance policy must be interpreted according to the ordinary and the usual 
meaning of its terms. McKay v. Equitable Assurance Society of 
U.S., [Wyo., 421 P.2d 166,] 168 [(1966)]; Addison v. Aetna Life 
Insurance Company, Wyo., 358 P.2d 948, 950 
(1961); Coit v. Jefferson Standard Life Ins. Co., 28 Cal. 2d 1, 168 P.2d 163, 
169-170 (1946); Ostendorf v. Arrow Insurance Company, [288 Minn. 491], 182 N.W.2d 
[190,] 192 [(1970)]." Worthington v. State, 
Wyo., 598 P.2d 796, 806 (1979).

[¶4.]     The basic 
considerations for construing a contract are summarized in Amoco Production 
Company v. Stauffer Chemical Company of Wyoming, Wyo., 612 P.2d 463, 465 
(1980):

"Our basic purpose in 
construing or interpreting a contract is to determine the intention and 
understanding of the parties. Fuchs v. Goe, 62 Wyo. 134, 163 P.2d 783 (1945); Shellhart v. Axford, Wyo., 485 P.2d 1031 (1971); Oregon Short Line Railroad Company 
v. Idaho Stockyards Company, 12 Utah 2d 205, 364 P.2d 826 (1961). If the 
contract is in writing and the language is clear and unambiguous, the intention 
is to be secured from the words of the contract. Pilcher v. Hamm, Wyo., 351 P.2d 1041 
(1960); Fuchs v. Goe, supra; Hollabaugh v. Kolbet, Wyo., 604 P.2d 1359 (1980); Wyoming Bank and Trust Company v. Waugh, Wyo., 
606 P.2d 725 (1980). And the contract as a whole should be considered, with each 
part being read in light of all other parts. Shepard v. Top Hat Land & 
Cattle Co., Wyo., 560 P.2d 730 (1977); Rossi v. Percifield, Wyo., 527 P.2d 819 
(1974); Shellhart v. Axford, supra; Quin Blair Enterprises, Inc. v. Julien 
Construction Company, Wyo., 597 P.2d 945 (1979). The interpretation and 
construction is done by the court as a matter of law. Hollabaugh v. Kolbet, 
supra; Bulis v. Wells, Wyo., 565 P.2d 487 (1977); Shepard v. Top Hat 
Land & Cattle Co., supra.

"If the contract is 
ambiguous, resort may be had to extrinsic evidence. J.W. Denio Milling Co. v. 
Malin, 25 Wyo. 143, 165 P. 1113 (1917); 
Kilbourne-Park Corporation v. Buckingham, Wyo., 404 P.2d 244 (1965). An ambiguous 
contract `is an agreement which is obscure in its meaning, because of 
indefiniteness of expression, or because a double meaning is present.' Bulis v. 
Wells, supra, 565 P.2d  at 490. Ambiguity justifying extraneous evidence is not 
generated by the subsequent disagreement of the parties concerning its meaning. 
Homestake-Sapin Partners v. United States, 10th Cir. 1967, 375 F.2d 507."

The language of 
the contract quoted supra is not ambiguous.1 It is plain and clear. It does not 
have a double meaning, nor is it indefinite or obscure in its meaning. It is 
definite in expression and can be understood in only one way. It has but a 
single meaning, and that meaning is not uncertain. It provides that there is no 
coverage for loss due to "water damage" as "water damage" is defined in the 
contract, i.e., that resulting from "flood, surface water, waves, tidal water, * 
* * or spray from any of these, whether or not driven by the wind." Appellee 
argues that the loss was caused by "rain" - which is not listed under the 
contract definition of "water damage" - and therefore coverage existed. 
Appellant argues that the loss was caused by "surface water" and therefore is 
within the contract exclusion. This resulting issue was accepted by the trial 
court as the crux of the case. It said, in the Declaratory Judgment, Findings of 
Fact and Conclusions of Law:

"The Court views the 
coverage issue in this case as follows: if the water which fell with and after 
the hail and [d]id the damage is considered `rain', then there is coverage. If 
such water is considered `flood' or `surface water', there is no coverage * * 
*."

[¶5.]     The trial court also 
recognized that contract language to be unambiguous - but it inconsistently 
concluded that the words "rain," "flood," and "surface water" were latently 
ambiguous. It said, in its second Conclusions of Law:

"While the policy 
language is not inherently ambiguous, it is ambiguous as applied to the 
extraordinary facts in this case because the terms `rain', `flood', and `surface 
water', are not defined in the insurance policy. An examination of the cases 
referred to in the February 2, 1987 letter decision reveal that the Courts have 
not necessarily agreed upon the `plain' meaning to be given to `flood', `surface 
water' or `rain'. Because the terms are not defined, the Court concludes that 
rain does not become surface water immediately after it hits the ground; rather 
it remains `rain' (a non-excluded peril)."

[¶6.]     We cannot accept this 
conclusion. A policy must be construed according to its plain language, giving 
to the words their common and ordinary meaning.

"[W]ords used will be 
given their common and ordinary meaning. 13 Appleman, Insurance Law and 
Practice, § 7402 (1943). * * * Absent ambiguity, there is no room for 
construction and the policy will be enforced according to its terms. Addison v. 
Aetna Life Insurance Company, Wyo., 358 P.2d 948, 950 [(1961)]. Neither will 
the language be `tortured' in order to create an ambiguity. Malanga v. Royal 
Indemnity Company, 4 Ariz. App. 150, 418 P.2d 396, 399 [(1966)]; 
Appleman, Insurance Law and Practice, § 7384 (1943)." McKay v. Equitable Life 
Assurance Society of the United 
States, Wyo., 421 P.2d 166, 168 
(1966).

[¶7.]     It is true that "rain," 
"flood" and "surface water" are not further defined in the policy. But neither 
does it define "fire," "theft," "freezing" or other perils with common and 
ordinary meanings. "Rain" is ordinarily and commonly thought of as water falling 
from the sky. After it stops falling, one does not say that it is "raining" 
although there may still be wet sidewalks and streets, puddles of water 
resulting from the rain, or water running through gutters and elsewhere as a 
result of the rain. It is not common or usual to say in such instances that it 
is still raining.

[¶8.]     This common and usual 
meaning is the same as that legally determined and used in the science of 
hydrology. In Al Berman, Inc. v. Aetna Casualty & Surety Co., 216 F.2d 626, 
628 (3rd Cir. 1954), the court defined "rain" as:

"`The condensed vapor of 
the atmosphere falling to the earth in drops large enough to attain sensible 
velocity.' New Standard Dictionary." (Emphasis added.)

Expert witness 
Rechard testified at the trial:

"Q. Is there a 
distinction as a hydrologist, sir, and based upon your expertise in hydrology 
between rain and surface water?

"A. Yes, there 
is.

"Q. What is that 
distinction?

"A. Rain is the water 
falling from the atmosphere striking the surface of the earth, and surface water 
is water on the surface of the earth.

"Q. What happens after 
rain falls to the ground? Does it retain its characteristic as rain or does it 
become something else?

"A. It becomes either 
surface water or if it infiltrates it becomes underground 
water.

"Q. Is that a commonly 
accepted definition, as far as you know?

"A. As far as hydrology 
is concerned, yes.

"Q. That's one that is 
used - has been used for how many years? For as long as you can 
remember?

"A. As long as there has 
been the science of hydrology."

If, by 
definition, "rain" remains "rain" after it stops falling, then the water in 
streams and lakes, coming from household faucets, etc. is "rain" since it 
originated, partly at least, from water that fell from the 
sky.

[¶9.]     In any event, the 
important determination to be made in this case is whether or not the damage was 
caused in whole or in part by 
"surface water." If the water which accumulated on the ground and entered the 
basement window was still "rain," then there is either no such thing as "surface 
water," or "rain" and "surface water" are synonymous. Obviously, there is such a 
thing as "surface water" - at least in the minds of the parties to the contract 
in which they used the term. And if the two terms are synonymous, then the 
exclusion provision of the policy for "surface water" also applies to "rain," 
and there is no coverage.

[¶10.]  Justice Blume, speaking for this court, 
defined "surface water" in State v. Hiber, 48 Wyo. 172, 44 P.2d 1005, 1008 
(1935):

"`Surface water,' it has 
been said, is that which is diffused over the surface of the ground, derived 
from falling rains and melting snows, and continues to be such, and may be 
impounded by the owner of the land, until it reaches some well-defined channel 
in which it is accustomed to, and does, flow with other waters; or until it 
reaches some permanent lake or pond, and it then ceases to be surface water and 
becomes the water of the water course, or a lake or a pond, as the case may be. 
Kinney on Irrigation, [(2d Ed.)] § 318; Crawford v. Rambo, 44 Ohio St. 279, 7 N.E. 429 [(1886)]; King v. Chamberlin, 20 Idaho[] 504, 118 P. 1099 
[(1911)]."

[¶11.]  At least some of the water which entered 
appellee's basement had diffused over the surface of the ground, was derived 
from falling rains, and had not reached a well-defined channel, lake or pond. It 
fit other plain meanings of surface water as reflected ante. The evidence 
established the fact that this kind of water entered the basement and caused the 
damage. There was no evidence to the contrary. Thus, a contrary finding could 
not be made. M & M Welding, Inc. v. Pavlicek, 
Wyo., 713 P.2d 236 (1986); Alco of Wyoming v. Baker, Wyo., 
651 P.2d 266 (1982); Clausen v. Boland, 
Wyo., 601 P.2d 541 (1979); Douglas Reservoirs 
Water Users Association v. Cross, Wyo., 569 P.2d 1280 
(1977).

[¶12.]  Appellee, himself, 
testified:

"And then later on I had 
a city dump truck pick me up and leave me off a block away from my house over 
there.

And I swam the rest of 
the way.

"Q. You mean swam? That 
you were flat with both your legs and your arms kicking?

"A. Right, 
right.

. . . 
.

"Q. How deep was the 
water at your - in the street right by your house?

"A. By the 
house?

"Q. Yes, right by the 
house?

"A. Oh, I would say maybe 
like oh, two and a half, three feet, something like that. Two and a half 
feet.

"Q. Can you describe it 
for me by reason of how tall you are or where it came up to you on your 
waist?

"A. Oh, up to about the 
beltline.

"Q. Came up to the 
beltline?

"A. A little bit, 
yes.

"Q. That's at the street 
by your house?

"A. At the street by my 
house.

"Q. Let's move up to the 
area around the house.

"A. 
Okay.

"Q. How deep was the 
water level at the house?

"A. Oh, I would say 
approximately maybe like oh, six inches above the, you know, where it went into 
the basement, you know, the side of the basement, that wall, six inches above. 
The whole area in there could have been maybe like 20 inches, something like 
that, 17.

* * * * * 
*

"Q. Okay. And do I 
understand correctly that when you went in the house the water was not only from 
the basement but all the way through the joists and 
ceiling?

"A. 
Right.

"Q. And up onto the first 
floor?

"A. First floor about 
half an inch, maybe three-quarters.

"Q. Now, was that - As 
you came to the house that evening, as you swam to the house that evening, was 
the water moving at all?

"A. 
Yes.

"Q. In which direction 
was it moving?

"A. I'd say it was coming 
in from the north. Coming in from the north.

* * * * * 
*

"Q. Now, Mr. Paulson, I 
would like to now ask you whether or not had it not been for the flood and the 
surface water you would have had the loss to your basement and its 
contents?

"A. Maybe a minimum 
amount maybe.

"Q. Just a minimum? 

"A. 
Minimum."

Mr. Rechard 
testified:

"Q. So if we wouldn't 
have had the flood or surface water there is nominal if any damage to the 
basement and its contents, correct?

"A. That is my 
opinion."

There is 
testimony that some "rain" may have fallen directly into the basement through 
the broken windows without first hitting the ground and becoming "surface 
water." But there was no contradictory evidence to the fact that some of the 
water which entered the basement and contributed to the damage was "surface 
water" as defined in State v. Hiber, supra, and as such is commonly considered 
(see additional definitions ante).

[¶13.]  Accordingly, the specific policy 
exclusions prevent coverage in this instance. That quoted supra from "SECTION 
I-LOSSES NOT INSURED" of the policy specifies that there is no coverage for loss 
caused by "surface water" or "flood," and (1) "We do not insure for such loss 
regardless of: a) the cause of the excluded event"; e.g., hail breaking a window 
and allowing the "surface water" or "flood" to enter; (2) "We do not insure for 
such loss regardless of: * * * b) other causes of the loss"; e.g., if the loss 
was also caused by "rain" falling 
into the basement through the broken window, or if it was also caused by "hail"; 
and (3) "We do not insure for such loss regardless of: * * * c) whether other 
causes acted concurrently or in any sequence with the excluded event to produce 
the loss"; e.g., the loss was a result of the window being broken, "hail" and 
"rain" entering, together with "surface water" or "flood" entering - either at 
the same time or in sequence.2

[¶14.]  Although the foregoing may be sufficient 
for a reversal of this matter, the second Conclusion of Law, supra, of the 
learned trial judge deserves additional comment.

[¶15.]  Contrary to his statement therein that 
the cases referred to in his letter opinion "reveal that the Courts have not necessarily agreed upon the `plain' 
meaning to be given to `flood', `surface water' or `rain'," (emphasis added) a 
review of such cases reflects that they are in substantial agreement as to the 
meaning of these words. Of the sixteen cases there considered, three do not 
address those meanings;3 five define "flood";4 three of those defining flood also 
define "surface water,"5 as do an additional seven;6 and one considers the meaning of 
"rain."7 Of course, the fact situation is 
not the same in all of these cases. 

[¶16.]  The policy exclusion prevented coverage 
if the damage resulted from a "flood." With reference to the five cases 
considered by the trial court which defined "flood," Bartlett v. Continental 
Divide Insurance Company, Colo. App., 697 P.2d 412 (1984); Ferndale Development 
Co., Inc. v. Great American Insurance Company, 34 Colo. App. 258, 527 P.2d 939 
(1974); Mateer v. Reliance Insurance Co., 247 Md. 643, 233 A.2d 797 (1967); 
Everett v. Davis, 18 Cal. 2d 389, 115 P.2d 821 (1941); Poole v. Sun Underwriters 
Ins. Co. of New York, 65 S.D. 422, 274 N.W. 658 (1937), only Mateer v. Reliance 
Ins. Co. has language which could make "flood" a consideration in this case. It 
states:

"Today we commonly speak 
of a cellar or basement being `flooded' without regard to whether the water 
comes from the overflow of a stream, from 
a hard downpour, or from the bursting of pipes." (Emphasis added.) 
Id. at 
799.

In each of the 
other four cases, "flood" is defined in a similar fashion: Bartlett v. Continental 
Divide Insurance Company, 697 P.2d  at 413 states:

"Ordinarily, `flood' 
means `a body of water (including moving water) . . . overflowing or inundating 
land not usually covered.' 36A C.J.S. Flood * * *."

And it notes 
that no distinction is made between natural and artificial 
causes.

Everett v. Davis, 115 P.2d  at 823, and Poole v. Sun Underwriters Ins. Co. of New York, 274 N.W. 
at 600, define flood waters as

"those which escape from 
a stream or other body of water and overflow the adjacent 
territory."

Ferndale Development Co., 
Inc. v. Great American Insurance Company, 527 P.2d  at 940, adopts the definition 
from 5 Appleman, Insurance Law and Practice § 3145 at 462 
(1970):

"`"Flood waters" are 
those waters above the highest line of the ordinary flow of a stream, and 
generally speaking they have overflowed a river, stream, or natural water course 
and have formed a continuous body with the water flowing in the ordinary channel 
* * *.'"

These cases do 
not indicate material disagreement as to the plain meaning of the word 
"flood."

[¶17.]  The meaning of "surface water" is of much 
more importance to this case since, as noted, if it caused the damage - even in 
part - there was no coverage under the policy. A review of the cases defining 
"surface water" and referred to or quoted from in the trial judge's opinion 
letter (see notes 5 and 6, supra) attribute the meaning to "surface water" 
substantially as it is defined by this court in State v. Hiber, 
supra.

[¶18.]  Transamerica Insurance Company v. 
Raffkind, Tex.Civ.App., 521 S.W.2d 935, 939 (1975), defines "surface water" 
as

"natural precipitation 
coming on and passing over the surface of the ground until it either evaporates, 
or is absorbed by the land, or reaches channels where water naturally 
flows."

[¶19.]  In Richman v. Home Ins. Co. of N.Y., 172 
Pa. Super. 
383, 94 A.2d 164, 166 (1953), quoting Fenmode v. Aetna Casualty & Surety Co. 
of Hartford, Conn., 303 Mich. 188, 6 N.W.2d 479, 481 (1942), it 
states:

"[S]urface waters are 
commonly understood to be waters on the surface of the ground, usually created 
by rain or snow, which are of a casual or vagrant character, following no 
definite course and having no substantial or permanent 
existence."

Urse v. Maryland 
Casualty Co., 58 F. Supp. 897, 899 (D.C.N.D. 1945) accepted two definitions of 
surface water, one from the Supreme Court of Appeals of West 
Virginia:

"`Surface water is water 
of casual, vagrant character, oozing through the soil, or diffusing and 
squandering over or under the surface, which, though usually and naturally 
flowing in known direction, has no banks or channel cut in the soil; coming from 
rain and snow, and occasional outbursts in time of freshet, descending from 
mountains and hills, and inundating the country; and the moisture of wet, 
spongy, springy, or boggy land. For obstructing or diverting surface water, 
though damaging another, the party is not liable.' Neal v. Ohio River R. Co., 47 
W. Va. 316, 34 S.E. 914, Pt. 2 Syl."

The other 
definition was from Kinney on Irrigation and Water Rights, § 318 at 516 
(1912):

"`"Surface" water may be 
defined as water on the surface of the ground, the source of which is so 
temporary or limited as not to be able to maintain for any considerable time a 
stream or body of water having a well-defined and substantial existence.'" 58 F. Supp.  at 899.

Poole v. Sun Underwriters 
Ins. Co. of New York, 274 N.W.  at 660 also used this definition from Kinney, 
together with that set forth supra by Richman v. Home Ins. Co. of N.Y., 94 A.2d  
at 164, and Fenmode v. Aetna Casualty & Surety Co. of Hartford, Conn., 6 N.W.  at 
479.

Sherwood Real Estate 
& Investment Company v. Old Colony Insurance Company, La. App., 234 So. 2d 445, 447 (1970) states:

"In 56 Am.Jur., verbo 
water, Sec. 65, it is stated:

"`The term "surface 
water" is used in the law of waters in reference to a distinct form or class of 
water which is generally defined as that which is derived from falling rain or 
melting snow, or which rises to the surface in springs, and is defused over the 
surface of the ground, while it remains in such defused state or condition * * 
*.'"

Everett v. Davis, 115 P.2d  at 823 
states:

"Surface waters are those 
falling upon, arising from, and naturally spreading over lands produced by 
rainfall, melting snow, or springs. They continued to be surface waters until, 
in obedience to the laws of gravity, they percolate through the ground or flow 
vagrantly over the surface of the land into well defined watercourses or 
streams."

[¶20.]  Ferndale Development Co., Inc. v. Great 
American Insurance Company, 527 P.2d  at 940, again adopts the definition of 
"surface water" from 5 Appleman, Insurance Law and Practice, supra at 463, 
as:

"`water which is derived 
from falling rain or melting snow, or which rises to the surface in springs, and 
is diffused over the surface of the ground, while it remains in such a diffused 
state, and which follows no defined course or channel, which does not gather 
into or form a natural body of water, and which is lost by evaporation, 
percolation, or natural drainage.'"

Aetna Fire 
Underwriters Insurance Company v. Crawley, 132 Ga. App. 181, 207 S.E.2d 666, 668 (1974) 
states that "surface water"

"is used as a part of a 
series of contingencies all of which have in common the property that they 
comprise water flowing on the surface of the ground at the time they enter the 
home of the insured."

[¶21.]  And finally, in Hatley v. Truck Insurance 
Exchange, 261 Or. 606, 495 P.2d 1196, 1197 (1972), the court 
said:

"The term `surface 
water,' particularly when used in conjunction with flood, waves, and tidal 
water, was intended to mean water `diffused over the surface of the ground, 
derived from falling rains or melting snows.' Price v. Oregon Railroad Co., 47 
Or. 350, 358, 83 P. 843, 846 (1906)."

[¶22.]  The case of Goldfarb v. Maryland Casualty 
Co., 311 Ill. App. 568, 37 N.E.2d 376, 377 (1941) referred to in the opinion 
letter of the trial court did not define "rain," but did comment that "[i]t is 
difficult to say where the line of demarcation lies between rain and surface 
water." In finding that there was coverage under a policy providing coverage for 
the peril of rain, the court said that "[t]here is no evidence that there was 
any water lying on the ground, in the area * * * of the defective door," and 
that the plaintiffs' theory "is that the rain coming between the two buildings, 
and through the fire escape, fell directly before and through the defective door 
of plaintiffs' premises."

[¶23.]  These cases do not indicate a 
disagreement among the courts as to the meaning of the word "flood," "surface 
water" and "rain" sufficient to cloud the plain and ordinary meaning of them. 
Particularly with reference to "surface water," it is difficult to understand 
how an item can be more plainly labeled. It is water on the surface, other than 
in streams, lakes and ponds. The parties, as reasonable people, must have 
attached this plain meaning to the words in the policy. The words "surface 
water" have the common meaning attributed to them by this court in State v. 
Hiber, supra.

[¶24.]  Accordingly, and mindful of the following 
admonishment in Worthington v. State, 598 P.2d  at 807, we hold 
that appellee's damages were not covered by his policy with 
appellant:

"[A] court [is 
restrained] from liberally and unreasonably construing an insurance contract to 
permit a strained or unnatural interpretation in order to find coverage for 
innocent victims who are subjects of enormous sympathy. Otherwise, the effect 
would be to bind an insurer to a risk that was not contemplated and for which it 
was not paid. D'Angelo v. Cornell Paperboard Products, Co., 59 Wis.2d 46, 207 N.W.2d 846, 848 (1973)."

[¶25.]  Case No. 87-259 is reversed. Since such 
reversal makes moot the issue in the cross-appeal of Herb J. Paulson in Case No. 
87-260,8 the trial court's holding in that 
case is affirmed.

CARDINE, J., filed a dissenting 
opinion.

FOOTNOTES

1 See definition of 
ambiguous contract in quotation from Amoco Production Company v. Stauffer 
Chemical Company of Wyoming, 612 P.2d 465, and in McArtor v. State, Wyo., 699 P.2d 288 (1985); Attletweedt v. State, Wyo., 684 P.2d 812 (1984); Matter of 
Estate of Reed, Wyo., 672 P.2d 829 (1983); Busch Development, Inc. v. City of 
Cheyenne, Wyo., 645 P.2d 65 (1982); State ex rel. Albany County Weed and Pest 
District v. Board of County Commissioners of County of Albany, Wyo., 592 P.2d 1154 (1979); DeHerrera v. Herrera, Wyo., 565 P.2d 479 (1977); County of Natrona 
v. Casper Air Service, Wyo., 536 P.2d 142 (1975).

2 If a policy did not 
contain a sequential exclusion, as did this one, coverage would exist if an 
otherwise excluded peril resulted in the occurrence of a covered peril, such as 
non-covered peril of vandalism resulting in breakage of water pipes which caused 
covered peril of water damage.

3 Franklin Packaging Company 
v. California Union Insurance Company, 171 N.J. Super. 188, 408 A.2d 448 (1979), 
cert. denied 84 N.J. 434, 420 A.2d 340 (1980); Fawcett House, Inc. v. Great 
Central Insurance Company, 280 Minn. 325, 159 N.W.2d 268 (1968); Unobskey v. Continental Ins. Co., 147 Me. 249, 86 A.2d 160 
(1952).

4 Bartlett v. Continental Divide Insurance Company, 
Colo. App., 
697 P.2d 412 (1984); Ferndale Development Co., Inc. v. Great American Insurance 
Company, 34 Colo. App. 258, 527 P.2d 939 
(1974); Mateer v. Reliance Insurance Co., 247 Md. 643, 233 A.2d 797 (1967); Everett v. Davis, 18 Cal. 2d 389, 115 P.2d 821 (1941); Poole v. Sun Underwriters Ins. Co. of New York, 65 S.D. 422, 
274 N.W. 658 (1937).

5 Ferndale Development 
Co., Inc. v. Great American Ins. Co., supra; Everett v. Davis, supra; 
Poole v. Sun Underwriters Ins. Co. of New York, 
supra.

6 Transamerica Insurance 
Company v. Raffkind, Tex.Civ.App., 521 S.W.2d 935 (1975); Aetna Fire 
Underwriters Insurance Company v. Crawley, 132 Ga. App. 181, 207 S.E.2d 666 (1974); Hatley v. 
Truck Insurance Exchange, 261 Or. 606, 495 P.2d 1196 on reh. from 261 Or. 606, 
494 P.2d 426 (1972); Sherwood Real Estate & Investment Company v. Old Colony 
Insurance Company, La. App., 234 So. 2d 445 
(1970); Richman v. Home Ins. Co. of N.Y., 172 Pa. Super. 383, 94 A.2d 164 (1953); Urse v. 
Maryland Casualty Co., 58 F. Supp. 897 (D.C.N.D. 1945); Fenmode v. Aetna 
Casualty & Surety Co. of Hartford, Conn., 303 Mich. 188, 6 N.W.2d 479 
(1942).

7 Goldfarb v. Maryland 
Casualty Co., 311 Ill. App. 568, 37 N.E.2d 376 
(1941).

8 The issue argued by Mr. 
Paulson in Case No. 87-260 is: "Under the circumstances of this case, State 
Farm's denial of coverage was unreasonable or without cause, thus entitling Mr. 
Paulson to interest and attorney fees pursuant to W.S. § 
26-15-124."

CARDINE, Justice, 
dissenting.

[¶26.]  I dissent.

[¶27.]  I would find appellant's insurance policy 
ambiguous. In Coverage B, it affords insurance against loss or damage caused by 
hail and rain that enter through an opening caused by the direct force of hail. 
Then § 1 of the policy voids that coverage completely by providing that a loss 
is not covered if caused partly by rain entering directly and partly by rain 
which has become surface water. It would be a rare occurrence in which some rain 
did not, as appellant claims, become surface water and enter the opening. It 
would seem that the parties must have intended to provide insurance coverage for 
something, otherwise why write into the policy all of the provisions concerning 
loss from windstorm, hail, rain, snow, sleet, sand or 
dust.

[¶28.]  Coverage B provides as 
follows:

"We insure for accidental 
direct physical loss * * *.

* * * * * 
*

"2. * * * when the direct 
force of wind or hail damages the building causing an opening in a roof or wall 
and the rain, snow, sleet, sand or dust enters through this 
opening."

The policy then 
provides, under SECTION 1 - LOSSES NOT INSURED:

"We do not insure under 
any coverage for loss * * * which would not have occurred in the absence of one 
or more of the following excluded events. * * * (1) flood, surface water * * 
*."

"We do not insure for 
such loss regardless of: * * * (c) whether other causes acted concurrently or in 
any sequence with the excluded * * * loss."

The undisputed 
evidence in this case was that hail broke out basement windows and that hail and 
rain entered directly through the window opening causing some damage to the 
property. At this point in the occurrence, the damage was clearly covered by the 
policy, for it was hail damage that caused "an opening in a * * * wall" of the 
building and the rain and hail entered through the opening. Appellant even 
concedes that the broken windows are covered damage under the insurance policy, 
although at the time of argument such damage was unpaid.

[¶29.]  The insurance coverage seemingly provided 
by Coverage B of the insurance policy then is claimed excluded by SECTION 1 - 
LOSSES NOT INSURED. The effect of a literal interpretation of the exclusionary 
clause in § 1 is that the policy provides no coverage at all for damage caused 
by rain, for appellant contends that as soon as the rain settles upon some 
surface, it becomes surface water. And if any of that surface water enters 
through an opening caused by hail or wind and it, in combination with rain or 
hail entering directly, causes damage, it is not covered. For example, assume 
that hail damage caused an opening in a roof, rain entered directly through the 
opening causing damage, but some of the rain which fell on the roof collected, 
ran down the roof and into the opening causing additional damage. Under the 
literal language of the policy, there would be no coverage for the loss and 
damage that occurred, for the rain that had collected on the roof would be 
surface water, and it, in combination with rain entering directly and causing 
the total damage, is excluded under § 1. I cannot accept that as the intent of 
the parties in writing this policy.

[¶30.]  Appellant argued that rain did not become 
surface water until it fell to the ground. I do not find that interpretation in 
the policy. At least we must agree that what is surface water and when it 
becomes surface water was ambiguous insofar as such term was used in this 
insurance policy. I would hold it was the intent of the parties to provide some 
kind of coverage for damage caused by hail and rain. An ambiguous contract must 
be most strongly construed against the drafter of the instrument, in this case 
appellant. For this reason I would affirm the decision of the district judge. 
And, in any event, I would hold that the insurance policy at least covered the 
damage caused by the hail and by the rain that entered, not as surface water, 
but directly through the opening itself. Appellant contends that the major 
damage was caused by surface water. That at least is a concession that lesser 
damage was caused by rain and by hail entering directly. Without doubt, this 
damage was covered under the policy.