No. 81-206 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1982 

G-AT AMERICAN INSURANCE COMPANY, 

Plaintiff and Respondent, 

ROYAL GLOBE PROPERTY AND CASUALTY 

COMPANY, 

Defendant and Appellant. 

Appeal from: District Court of the Thirteenth Judicial District, 

In and for the County of Yellowstone, The Honorable 

Diane G. Barz, Judge presiding. 

Counsel of Record: 

For Appellant: 

Moulton, Bellingham, Longo & Mather, Billings, 

Montana 

Brent R. Cromley argued, Billings, Montana 

For Respondent: 

Crowley, Haughey, Hanson, Toole & Dietrich, Billings, 

Montana 

Cynthia Ford argued, Billings, Montana 

Filed: 

Submitted; December 2, 1981 

Decided: APR - 6 1982 

APR - 6 1982 
Mr. Justice Daniel J. Shea delivered the Opinion of the 

Court. 

Royal Globe Property and Casualty Co. appeals from an 

order of the Yellowstone County District Court which compelled Royal Globe to indemnify Great American Insurance 

Company for a fire loss sustained by Ramsey Lumber Company. 

Great American paid the insurance claim and then filed suit 

claiming indemnification for its share of all sums expended 

by Great American in defending and settling claims against 

Ramsey Lumber Company. Both parties filed motions for 

summary judgment. The trial court granted Great American's 

motion for summary judgment which had the effect of ordering 

Royal Globe to indemnify Great American. Royal Globe raises 

three issues on appeal. 

Royal Globe contends first that it was entitled to 

summary judgment because its policy had been effectively 

cancelled before the claims against Ramsey Lumber Company 

arose. Royal Globe further argues that Great American was 

not entitled to summary judgment because, as a matter of 

law, Great American was not entitled to subrogation. Last, 

Royal Globe argues that Great American lacks standing to 

sue, and that summary judgment was improper because material 

facts are in dispute. 

We reverse the judgment of the District Court and hold 

that the issuance of the Great American policy cancelled the 

Royal Globe policy. 

Ramsey Lumber Co., a lumber company in Laurel, Montana, 

is a client of Hoiness-LaBar Insurance Agency of Billings, 

Montana. Since 1974 or 1975, Dennis Gambill, an agent of 

Hoiness-LaBar, has handled the insurance needs of Ramsey 

Lumber, exercising broad authority in obtaining, replacing 

and maintaining insurance coverage for Ramsey umber. 
On April 1, 1977, Ramsey Lumber was issued a Royal 

Globe insurance policy through Hoiness-LaBar Insurance 

Agency. The Royal Globe policy was a "general business 

insurance package." Among other things, it included coverage 

for fire loss and liability from automobile collisions. 

This policy was to run until April 1, 1980. 

In June 1977, Ramsey Lumber sustained a fire loss in 

excess of $65,000. After the fire, Royal Globe reviewed the 

policy, and wishing to be taken off the risk, requested 

Hoiness-LaBar to replace the policy with another insurer. 

After attempting unsuccessfully to persuade Royal Globe to 

remain on the risk, Hoiness-LaBar (without notifying Ramsey 

Lumber) applied to other insurance companies on behalf of 

Ramsey Lumber. One of these applications was to Great 

American, and it contained information concerning Ramsey 

Lumber, including the fact that Royal Globe was the present 

insurer. On September 26, 1977, Great American agreed to 

accept the risk, and authorized Hoiness-LaBar to issue an 

insurance binder effective October 1, 1977. That same day 

(September 26), Hoiness-LaBar advised Royal Globe by mail 

that the Royal Globe policy had been "replaced" as of October 

1, 1977. Both the Royal Globe and the Great American policies 

contained an "other insurance" clause stating that, if more 

than one insurer had insured the loss, the loss would be 

shared equally by the insurers. Both policies were substantially the same as to the types and amounts of coverage 

provided. 

On October 12, 1977, an employee of Ramsey Lumber, 

while in the course of company business, was involved in an 

automobile accident which resulted in claims being filed 

against Ramsey Lumber. Great American assumed the defense 
of these claims, and on January 16, 1978, notified Royal 

Globe of the claims and invited their participation in the 

defense. On March 16, 1978, Great American notified Royal 

Globe that it intended to settle the claims and demanded 

that Royal Globe assume liability for "its share" of the 

cost of defending and settling the claims. Royal Globe did 

not respond to this demand, and Great American ultimately 

settled the claims against Ramsey Lumber for $224,128.35, 

plus $2,900 collision loss paid to Ramsey Lumber. 

Great American filed this suit on July 25, 1979, seeking 

indemnification from Royal Globe on the grounds that the 

Royal Globe policy was in effect at the time the claims 

against Ramsey Lumber occurred. Royal Globe defended on the 

grounds that its policy was cancelled effective October 1, 

1977, and that Great American had no standing to bring 

suit. Royal Globe also denied that Great American was 

subrogated to any rights of Ramsey Lumber. Summary judgment 

was entered in favor of Great American and Royal Globe 

appeals. 

Hoiness-LaBar possessed broad authority to act on 

behalf of Ramsey Lumber. The record shows that Ramsey 

Lumber relied exclusively on Hoiness-LaBar to tend to its 

insurance needs. The uncontroverted testimony of Ms. Colleen 

Ramsey reveals that Ramsey Lumber Company had long relied on 

Hoiness-LaBar to place, replace, and maintain adequate 

insurance coverage on behalf of the company. HoinessLaBar had the authority to replace the Royal Globe policy 

without the express assent or knowledge of Ramsey Lumber. 

See Bituminous Casualty Corp. v. Aetna Insurance Co. (8th 

Cir. 1972), 461 F.2d 730. 

The intent of all parties involved here is equally 

clear. Ramsey Lumber did not want two identical insurance 
policies. Royal Globe requested to be taken off the risk, 

and Great American issued a replacement policy with knowledge 

that the previous insurer had asked to be removed. It would 

conflict with the clear intent of all parties involved to 

hold that both policies were in effect after Great American 

had issued the replacement policy. Nelson v. American 

Reliable Insurance Company (Minn. 1970), 174 N.W.2d 126. We 

therefore hold that the issuance of the replacement policy 

effectively cancelled the Royal Globe policy. 

Our holding eliminates the need to discuss the remaining 

two issues. 

The judgment of the District Court is reversed and 

remanded with instructions to enter summary judgment for 

Royal Globe. 

We Concur: 

d Justices 4