Title: Farm Bureau Mut. Ins. Co. v. Horinek

State: kansas

Issuer: Kansas Supreme Court

Document:

233 Kan. 175 (1983)
660 P.2d 1374
FARM BUREAU MUTUAL INSURANCE COMPANY, INC., Appellee,
v.
ANTON HORINEK and STANLEY SMITH, Appellants.
No. 55,071

Supreme Court of Kansas.
Opinion filed March 26, 1983.
Ronald S. Shalz, of Shalz, Taylor & Schiffner, of Colby, argued the cause, and John D. Gatz, of the same firm, was with him on the brief for Anton Horinek, appellant.
H.E. Jones, of Hershberger, Patterson, Jones & Roth, of Wichita, argued the cause, and Jeff A. Roth, of the same firm, and Whalen & Fairbanks, P.A., of Goodland, were with him on the brief for the appellee.
The opinion of the court was delivered by
LOCKETT, J.:
This is a declaratory judgment action brought by the plaintiff, Farm Bureau Mutual Insurance Company, Inc. (Farm Bureau), versus the defendants, Anton Horinek and Stanley Smith. The case was submitted to the trial court on motions *176 for summary judgment. The trial court sustained the plaintiff Farm Bureau's motion for summary judgment and denied the defendant Anton Horinek's motion for summary judgment. The defendant appeals.
The pertinent facts are: On April 13, 1981, Anton Horinek, defendant, was the owner of a 1952 Ford truck which was properly licensed and registered. Defendant Horinek was insured under two policies of insurance written by the plaintiff, Farm Bureau: an automobile liability insurance policy and a Farm-Master Policy. On April 13, 1981, defendant Horinek was operating the 1952 truck hauling dirt from a grain bin construction site on his farm property to his farmyard. The trips necessitated his use of Kansas Highway K-25. Approximately three miles north of Atwood, Kansas, defendant Horinek's farm access road to the grain bin site intersects K-25. While attempting to execute a right-hand turn onto his farm property, defendant Horinek was involved in a motor vehicle accident with the defendant, Stanley Smith. Defendant Smith instituted an action against the defendant Horinek in the United States District Court for the District of Kansas for personal injuries received in the accident.
Horinek claimed that plaintiff, Farm Bureau, afforded liability coverage under both the automobile liability insurance policy and the Farm-Master Policy. Farm Bureau denied coverage under the Farm-Master Policy. acknowledged coverage under the motor vehicle liability policy and is supplying a defense to defendant Horinek under the terms of the motor vehicle policy. Farm Bureau filed the present declaratory judgment action to determine whether or not the Farm-Master Policy afforded liability coverage to the defendant Horinek.
The Farm-Master Policy is a combination property and liability policy divided into two major sections. "Section I" of this policy consists of seven (7) pages, and covers losses peculiar to farm structures and operations. Covered under Section I are: dwellings, household and personal effects, farm personal property, outbuildings and livestock. "Section II" covers the farmer's comprehensive liability.
Farm-Master policies are designed to provide protection against risks that are peculiar to farming activities. Certain limitations are contained within the policy to decrease risk in order *177 to reduce premium cost. Farm Bureau claims injuries or property damage arising from the maintenance, operation or use of a motor vehicle on the public highway is one of the exclusions of this policy.
The construction and effect of insurance contracts are questions of law to be determined by the court. None of the facts are disputed by the parties. If the facts are admitted, then it is for the court to decide whether they come within the terms of the policy, and the function of the appellate court is the same as the trial court. Scott v. Keever, 212 Kan. 719, 721, 512 P.2d 346 (1973). Each of the questions raised by defendant Horinek in his appeal deal with the exclusions contained in Section II, "Coverage K - Medical Payments - Other Than Named Insured and Family and Employees" Exclusions (5)(b).
"SECTION II
FARMERS COMPREHENSIVE LIABILITY
COVERAGE G - LIABILITY
Bodily Injury or
Property Damage
"2. Elsewhere, if such bodily injury:
"EXCLUSIONS
UNDER COVERAGE G LIABILITY AND COVERAGE K MEDICAL PAYMENTS - OTHER THAN NAMED INSURED AND FAMILY AND EMPLOYEES. THIS POLICY DOES NOT APPLY TO:
"13. Any liability for punitive damage;
"UNDER COVERAGE K MEDICAL PAYMENTS - OTHER THAN NAMED INSURED AND FAMILY AND EMPLOYEES, THIS POLICY SHALL NOT APPLY TO BODILY INJURY TO:
The first contention raised is whether the exclusion heading in Section II excludes defendant Horinek from coverage. The section states:
"EXCLUSIONS
Following are listed fourteen (14) exclusions of coverage under the contract. The heading Exclusions is directed to Coverage G and K. Coverage G and K are set out by completely stating the letter designation and title; therefore it should be read:
EXCLUSIONS
"Coverage G" extends coverage to the insured for all sums the insured might become legally obligated to pay because of bodily injury or property damage. "Coverage K" covers payment of medical expenses of third persons. Both "Coverage G and K" are subject to the fourteen (14) exclusions set forth in the contract.
Exclusion 14 specifically excludes "any Insured as defined under the definition of Insured." The policy defines insured as:
Defendant Horinek could obtain medical coverage under Coverage L, "Optional Coverage - Coverage L - Medical Payments - Named Insured and Family." The policy distinguishes between coverage for the insured and his family and those "other than named insured."
An insurance policy should be construed to give effect to the *180 intention of the parties. The test applied in determining that intention is not what the insured intended the policy to mean, but what a reasonable person in the position of the insured would understand it to mean. Wheeler v. Employer's Mutual Casualty Co., 211 Kan. 100, 104, 505 P.2d 768 (1973). The terms of an insurance contract, as in the case of any written contract, must be considered as a whole. Bramlett v. State Farm Mutual Ins. Co., 205 Kan. 128, 468 P.2d 157 (1970). The exclusions clearly apply to the defendant Horinek under "Coverage G and Coverage K."
The next contention is that the exclusion heading is ambiguous. Language in an insurance contract is ambiguous if the words used to express the meaning and intention of the parties are insufficient in a sense that the contract may be understood to reach two or more possible meanings. Wood v. Hatcher, 199 Kan. 238, 428 P.2d 799 (1967); Mays v. Middle Iowa Realty Corp., 202 Kan. 712, 452 P.2d 279 (1969). In construing a written instrument, reasonable rather than unreasonable interpretations are favored by law. Results which vitiate the purpose or reduce the terms of the contract should be avoided. Weiner v. Wilshire Oil Co., 192 Kan. 490, 496, 389 P.2d 803 (1964). Ambiguity is not to be derived from or created by the fragmentation of an insurance contract. The terms of an insurance contract, as in the case of any written contract, must be considered as a whole. Scott v. Keever, 212 Kan. at 723. The policy provisions which bear upon the issue are concisely and clearly expressed and not ambiguous.
Defendant Horinek's third contention is that if the particular exclusion relied on by Farm Bureau only excludes coverage to the insured's property or property over which he has some right to control, then damage to defendant Smith's property is covered, since Smith's property is not the insured's property and the insured has no right to control. Clearly there is comprehensive liability coverage contained in Section II, Coverage G - Liability. Coverage is stated:
Bodily Injury or
Property Damage
*181 The liability coverage is limited by the exclusion for liability stated in the policy:
....
Defendant Horinek was operating a registered, licensed 1952 Ford truck, which he owned. The accident occurred during Horinek's operation of the truck on Highway K-25. This is the method of operation that is specifically excluded under the Farm-Master Policy. Here Farm Bureau clearly limited the coverage; neither defendants Horinek nor Smith were covered under the contract.
The final contention is the Farm-Master Policy is void for being in violation of the Kansas Automobile Injury Reparations Act, K.S.A. 40-3101 et seq. The material portions of the Act in K.S.A. 40-3107(a) and (b) are:
K.S.A. 40-3103(m) defines motor vehicles:
K.S.A. 40-3105 provides for certain exemptions from the Kansas Automobile Injury Reparations Act:
Exclusion (5)(b) of the Farm-Master Policy excludes coverage of motor vehicles unless the vehicle is not subject to motor vehicle registration, and the vehicle is used exclusively on the insured premises or kept in dead storage on the residence premises. The Farm-Master Policy is not a motor vehicle liability insurance policy within K.S.A. 40-3107 and is not in violation of the Act.
Judgment is affirmed.