Title: ALPHA REAL ESTATE v AETNA LIFE
Citation: N/A
Docket Number: 13776
State: Montana
Issuer: Montana Supreme Court
Date: October 24, 1977

No. 13776 I N THE S U P R E M E COURT O F THE STATE O F MONTANA 1977 A L P H A REAL ESTATE DEVELOPMENT, I N C . , P l a i n t i f f and Appellant, -vs- AETNA LIFE & C A S U A L T Y C O M P A P T Y , Defendant and Respondent. Appeal from: D i s t r i c t Court of t h e Fourth J u d i c i a l D i s t r i c t , Honorable Edward T. Dussault, Judge presiding. Counsel of Record: For Appellant: Jordan, Sullivan and Baldassin, Missoula, Kontana Lee Jordan argued, Missoula, Montana For Respondent : Garlington, Lohn and Robinson, Missoula, Montana Gary Graham argued, Missoula, Montana Submitted: September 2 2 , 1977 Decided: o c i 1371 r l - G * V J q Filed: b L i 6 % I , , M r . Justice John Conway Harrison delivered the Opinion of the Court: This i s an appeal from an order of the d i s t r i c t court, Missoula County, granting summary judgment t o defendant. Plaintiff Alpha Real Estate Development, Inc . (Alpha) brought an action against i t s insurance c a r r i e r , Aetna Life and Casualty Company (Aetna) t o recover on a certain insurance policy for the t h e f t of a commercial carpet cleaner. Aetna moved for summary judgment on the ground the policy expressly excluded coverage for theft of such equipment. B y its order of February 3, 1977, the d i s t r i c t court granted Aetna's motion. Alpha appeals. A commercial carpet cleaner valued a t $1400 t o $1500, owned and utilized by Alpha i n the maintenance of i t s apartment building, was stolen on or about June 7, 1975. The carpet cleaner was used exclusively t o clean and maintain the hallway carpet i n the apartment building. A t that time, Alpha was covered by a property insurance policy issued by Aetna. Following the loss, Alpha submitted a claim t o Aetna for reimbursement due t o the loss of the carpet cleaner. The claim was denied on the ground the cleaner was not an "integral part of a building or structure" covered by the policy, and a s such, was expressly excluded from t h e f t coverage by the terms of the policy. The pertinent portion of the policy, Form MLB-101, provided : "I. INSURING AGREEMENT "This policy insures against a l l risks of direct physical loss to Coverage A - Building(s) , subject t o the provisions and stipulations herein and in the policy of which this,- form i s made a part. "11. P R O P E R T Y COVERED "When the insurance under t h i s policy covers buildings, such insurance shall also cover a l l additions and extensions attached thereto; a l l fixtures, machinery and equipment constituting a permanent part of and pertaining t o the service of the building; materials and supplies intended for use i n construction, alteration o r repair of the buildings, yard fixtures; personal property of the insured a s landlord used for the maintenance or service of the described buildings * * *. "VI . EXCLUSIONS ''This policy does not insure under t h i s form against : "D. Loss caused by: 5 theft (including but not limited t o burglary and robbery) of any property which a t the time of loss is not an integral part of a building or structure * * *." A t the hearing on the motion for summary judgment, Aetna argued the carpet cleaner was not an "integral part of a building or structure1' such that its t h e f t was expressly excluded by Clause V I , D. , 5 of Aetna' s Form MLB-101. The d i s t r i c t court granted summary judgment for defendant Aetna. Thus, the determinative inquiry is whether the d i s t r i c t court was correct in granting summary judgment t o defendant on the basis of the language of the insuring agreement. Alpha's position is that the carpet cleaning machine was an "integral part" of the structure of the insured apartment building, and i s expressly covered under the general provision, Clause 11. P R O P E R T Y C O V E R E D as "personal property of the insured as landlord used for the maintenance o r service of the des- cribed buildings':. The policy, it is contended, i s ambiguous i n i t s terms a s , on the one hand, it provides for wide coverage, including fixtures and nonf ixture maintenance equipment, but on the other hand negates such coverage in the case of the loss of such items due t o theft. When a contract i s thus ambiguous, the ambiguity should be resolved i n the insured's favor. Aetna' s argument refutes the positions taken by Alpha and asserts, i n essence, that the contract is plain and clear upon its face in excluding nonintegral items of personal property, such as a commercial carpet cleaner, from t h e f t coverage. A n "integral part" it is maintained, is something akin t o a fixture, such a s a heating device, a door, a water pump, etc. There being nothing for the court t o construe, the d i s t r i c t court was correct in granting summary judgment. W e do not c i t e , nor have we been able t o find, any case authority which precisely defines the term "integral part" i n the context of the dilemma presented by t h i s case. The insurance contract i t s e l f nowhere defines the term. The situation is further clouded by the fact the clause of general coverage refers to "fixtures" and various items of personalty, such as construction, service, and maintenance equipment. The sole reference t o the phrase "integral part" appears i n the exclu- sionary clause. The general and exclusionary clauses, read together, 9ield a contractual ambiguity necessitating judicial construction. Indeed, the d i s t r i c t court appears t o have recognized the ambiguity engendered by the contractual language i n its mder granting summary judgment. - 4 - Therefore our discussion s t a r t s with the proposition the contract in question contains a patent ambiguity. W e focus on the language of the exclusionary clause in the light of the general provisions. In Terry v. National Farmers Union Life Ins. Co., 138 Mont. 333, 356 P.2d 975 (1960), the Court stated: " W e keep in mind that in construing an exclusion policy, in case of uncertainty, every doubt should be resolved i n favor of the insured, and the policy should be construed s t r i c t l y against the insurer company. * * * Otherwise stated a contract of insur- ance w i l l be cons trued s t r i c t l y against the insurer and liberally in favor of the insured. * * *I1 138 Mont. 339. See also: Johnson v. Equitable Insurance Co., 142 Mont. 128, 381 P.2d 778 (1963) ; Holmstrom v. Mutual Benefit Health & Accident Ass'n., 139 Mont. 426, 364 P.2d 1065 (1961). Further, it is uncontroverted that in construction of a contract a particular clause of a contract is subordinate to the general intent of the contract. Section 13-716, R.C.M. 1947. For a general discussion of this rule see: 17A C.J.S. Contracts, 5 9 294(b), 295 (f) . Both of the rules find applicability here. The conclusion to be drawn from a reading of the general provision i s that service and maintenance equipment, including an item such as a commercial carpet cleaner, i s to be grouped together with fixtures and the buildings themselves for purposes of coverage. W e find such language governs the interpretation and defines the parameters of the term "integral part" in the exclusionary clause. Hence, the carpet cleaner was covered as an "integral part1' of the apartment building. To ratify defendant Aetna's position would be to l i m i t theft coverage t o items virtually incapable of being stolen. This Court i n the case of St. Paul Fire & Marine Ins. Co. v. Thompson, 150 Mont. 182, 187, 433 P.2d 795, adopted the t e s t for interpreting t h i s contract: "* * * Again, looking t o the Kansas rule which we have adopted, we find that, 'the t e s t is not what the insurer intended the words of the policy t o mean but what a reasonable person in the position of an insured would understand them t o mean. ' " I f an insurer desires t o l i m i t its coverage i n certain areas, it should employ language clearly and precisely out- lining such restrictions . Johnson v. Equitable Insurance C o . , supra. The order granting summary judgment is reversed and the cause is remanded for proceedings in accordance with t h i s opinion. W e Concur: M r . Justice Frank I. Haswell, dissenting: I would affirm the d i s t r i c t court judgment. The theme of the majority opinion is that the insurance policy is ambiguous and doubts concerning i t s meaning must be resolved i n favor of the insured. I n m y view the policy coverage is unambiguous, clear and certain leaving no room for judicial construction of i t s terms. The policy contains a specific exclusion for theft. The operative language of t h i s exclusion reads: "EXCLUSIONS. This policy does not insure * * * against * * * loss caused by * * *theft * * * of any property which * * * is not an integral part of a building or structure * * *.It A s I see it, a carpet cleaner simply cannot be considered a part of a building or structure without doing violence t o the plain meaning of the English language. The descriptive adjective "integral" further expands the exclusion, but in no sense transforms a carpet cleaner into an "integral part of a building or structure". I n common usage, the language cannot be tortured t o a c h k such meaning in m y opinion. Nor can an ambiguity be created by reading together the general coverage clause and the specific exclusion i n my judgment. A s i n a l l insurance policies excluding certain perils, the general coverage clause is stated in broad terms and the exclusionary clause specifically excludes those p e r i l s for which insurance is not purchased. Thus the insurance policy here is neither internally inconsistent nor ambiguous i n its terms, and there is no basis in law for interpreting the contract against the insurer. This Court cannot rewrite a new policy under the guise of judicial construction contrary to that expressed in the policy agreed upon and purchased by the insured. Johnson v. Metropolitan Life Insurance Co., 107 Mont. 133, 83 P.2d 922 For these reasons, I respectfully dissent. Justice. Mr. Justice Daniel J. Shea dissenting: I agree with the foregoing dissent of Mr. Justice Frank I . Haswell.