No. 81-206 INTHE 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: DistrictCourt 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: 

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# -61982Mr. 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 sustainedby 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 indefending and settling claims against Ramsey Lumber Company. Both parties filedmotions for summary judgment. The trial court granted GreatAmerican's motion for summary judgmentwhich had the effect of ordering Royal Globe to indemnify GreatAmerican. Royal Globe raises three issues on appeal. Royal Globe contends first that itwas entitled to summary judgmentbecause itspolicy had been effectively cancelled before the claims againstRamsey Lumber Company
arose. Royal Globe further argues that GreatAmericanwas not entitled to summary judgment because, as a matter of law, Great Americanwas 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 GreatAmerican policy cancelled the Royal Globepolicy. 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 insuranceneeds of Ramsey Lumber, exercising broad authority in obtaining, replacing and maintaining insurance coverage for Ramsey umber.OnApril 1, 1977,Ramsey Lumber was issued a Royal Globe insurancepolicy through Hoiness-LaBar Insurance Agency. The Royal Globepolicy was a "generalbusiness insurancepackage." Among other things, it included coverage for fire loss and liability from automobile collisions. This policy was to run untilApril 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 (withoutnotifying Ramsey Lumber) applied to other insurance companies on behalf of Ramsey Lumber. One of these applicationswas to Great American, and it contained information concerning Ramsey Lumber, including the fact that Royal Globewas the present insurer. On September 26, 1977, Great American agreed to accept the risk, and authorized Hoiness-LaBar to issue an insurancebinder effectiveOctober 1, 1977. That same day (September26), Hoiness-LaBar advised Royal Globe by mail that the Royal Globepolicy 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 equallyby the insurers. Both policieswere 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 claimsbeing filed against Ramsey Lumber. Great American assumed the defenseof these claims, and on January 16, 1978, notified Royal Globe of the claims and invited their participation in the defense. On March 16, 1978,GreatAmerican 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 losspaid to Ramsey Lumber. Great American filed this suit on July 25, 1979, seeking indemnification from Royal Globe on the grounds that the Royal Globepolicy was in effect at the time the claims against Ramsey Lumber occurred. Royal Globe defended on the grounds that itspolicy was cancelled effective October 1, 1977,and that GreatAmerican 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 insuranceneeds. 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 onbehalf 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 InsuranceCo. (8th Cir. 1972), 461 F.2d 730. The intent of allparties involved here is equally clear. Ramsey Lumber did not want two identical insurancepolicies. Royal Globe requested to be taken off the risk, and Great American issued a replacement policy with knowledge that theprevious insurer had asked to be removed. Itwould conflictwith the clear intentof all parties involved to hold that both policies were in effect after Great American had issued the replacementpolicy. Nelson v. American Reliable InsuranceCompany (Minn. 1970), 174N.W.2d 126. We thereforehold that the issuance of the replacementpolicy effectively cancelled the Royal Globepolicy. Our holding eliminates the need to discuss the remaining two issues. The judgment of the District Court is reversed and remandedwith instructions to enter summary judgment for Royal Globe.

We Concur:



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