Opinion ID: 1934882
Heading Depth: 1
Heading Rank: 2

Heading: The rental exclusion under the Employer's Mutual policy

Text: Marlowe is the named insured under a garage liability policy which was also in effect at the time of the accident. This policy, purchased from Employer's Mutual, provides bodily injury and property damage coverage for accidents arising out of garage operations (i.e., the ownership, maintenance or use of the [insured's] premises for the purposes of an automobile sales agency, repair shop, or service station), including the ownership, maintenance or use of any automobile owned by the named insured while furnished for the use of any person. The policy excludes coverage: (e) to bodily injury or property damage arising out of the ownership, maintenance, operation, use, loading or unloading of any       (2) automobile       (ii) while rented to others by the named insured unless to a salesman for use principally in the business of the named insured   . The trial court concluded that the car driven by Sister Rademacher was definitely rented to others by the Named Insured at the time of the accident, and therefore the Employer's Mutual policy was not applicable. On appeal, American argues that the vehicle was not rented. Employer's Mutual points out, correctly, that this argument was not raised below. It agrees that interpretation of the contract presents an issue of law which this court may independently review, but argues that our review necessarily depends upon the underlying issues of fact and that American may not raise factual issues on appeal which Employer's Mutual had no opportunity to litigate below. Employer's Mutual contends that if the argument had been raised below, it would have introduced evidence to determine whether the arrangement between the church and Marlowe was a profitable one for Marlowe. However, Employer's Mutual does not dispute the trial court's characterization of the transaction as one motivated by charitable intentions. In the memorandum which was made a part of its findings, the trial court stated: It is important first of all to recognize    that the entire transaction of lease of the 1966 Pontiac by Marlowe to the Church was in fact a charitable accommodation by Marlowe in favor of the Church. This fact is established not only by direct testimony but by the terms of the lease itself. Marlowe was allowing the Church to use this vehicle without any charge for overhead or depreciation and in return the Church was only obligated to pay for the cost of servicing and to carry the necessary insurance for the owner Marlowe. From this finding of fact, we conclude as a matter of law that the vehicle was not rented within the meaning of the policy. The arrangement was a charitable accommodation; the $30 monthly charge was intended to approximate the cost of maintenance and not to return a profit to Marlowe. [2] A rental arrangement, in contrast, contemplates a commercial context and a profit motivation. [3] Whether or not the $30 monthly fee in fact exceeded the actual cost of maintenance is immaterial where profit was unintended. Employer's Mutual was not prejudiced by its lack of opportunity to introduce evidence on that issue. We hold that the exclusion for rented automobiles under the Employer's Mutual policy is not applicable. Under our decision in this case, both insurance policies cover the damages caused by Marlowe's negligent repair. American and Employer's Mutual agree that should we hold both policies applicable, they will contribute equally to indemnify Marlowe for his liability based upon such negligence. Affirmed in part; reversed in part.