Opinion ID: 1270504
Heading Depth: 1
Heading Rank: 2

Heading: Was Jones a fellow employee of Roberts and Mead within the meaning of the fellow-employee exclusion of Hawkeye's policy?

Text: Hawkeye's policy designated the named insured as Spencer Municipal Utilities, 712 N. Grand Avenue, Spencer, Iowa 51301. Premium notices were billed to Utilities. An exclusion under the comprehensive general liability section provides the insurance shall not apply    to bodily injury to an employee of the insured arising out of and in the course of his employment by the insured   . For an additional premium a separate endorsement entitled ADDITIONAL INSURED (Employees) amended the Persons Insured provision of the policy to include any employee of the named insured.  However the endorsement carried a similar exclusion with respect to bodily injury to    another employee of the named insured arising out of or in the course of his employment   . (Emphasis appears in the policy.) Almost identical exclusions are found in the comprehensive automobile liability provisions of the policy. Under the issues drawn in this litigation, and our applicable rules, we must first determine whether Jones was another employee of the named insured.  If he was, then clearly Hawkeye had no obligation to pay any amount because of his injury. We first turn to an interpretation of the contract to discover what the parties intended by the above-quoted language. We are permitted to consider evidence of the surrounding circumstances, the situation of the parties, and the objects they were striving to attain. Hamilton v. Wosepka, 261 Iowa 299, 305-314, 154 N.W.2d 164, 167-172 (1967). Where insurance contracts require interpretation, the courts will adopt the construction most favorable to the insured. Rich v. Dyna Technology, Inc., 204 N.W.2d 867, 872 (Iowa 1973). Such contracts should be interpreted from the viewpoint of an ordinary person, not a specialist or expert. Qualls v. Farm Bureau Mutual Insurance Company, 184 N.W.2d 710, 712 (Iowa 1971); Bates v. United Security Insurance Company, 163 N.W.2d 390, 397 (Iowa 1968). It is conceded the management and control of public utilities in Spencer were placed in the hands of a board of trustees by a 1942 election. See §§ 6144 through 6149, The Code, 1939 (now §§ 397.29 through 397.34, The Code, 1973). By statute this board is given all the power and authority conferred on waterworks trustees. Section 6149, The Code, 1939 (§ 397.34, The Code, 1973). Thus the trustees had the power to employ a superintendent and such other employees as may be necessary and proper for the    conduct of the business   . Section 6158, The Code, 1939 (§ 398.9, The Code, 1973). At all times pertinent to this litigation the board was empowered to grant its employees civil service rights. Section 398.13, The Code. While Utilities' revenues are deposited with the city treasurer, these funds are separate and distinct and may be paid out only on the written order of the board    who shall have full and absolute control of the application and disbursement thereof for the purposes prescribed by law   . Section 6158, The Code, 1939 (§ 398.9, The Code, 1973). The record discloses without controversy Mead and Roberts were hired as linemen by Utilities' manager, who directed their work. They were paid by warrants drawn on Utilities' funds. Utilities had its own employer's identification number and filed its own separate quarterly employer's tax returns and separate quarterly returns to the Iowa Public Employees' Retirement System. It had its own insurance program. On November 20, 1968 Utilities' workmen's compensation insurance was carried by Employers Mutual Casualty Company. Jones was hired by the City, worked in the street department, and was paid by a warrant drawn on City funds. The City of Spencer had its own separate employer's identification number and filed its own returns for income tax, social security and Iowa public employees' retirement purposes. The City had a separate insurance program and on November 20, 1968 it was insured for both liability and workmen's compensation under a combination policy issued by Continental Western Mutual Insurance Company. That company paid Jones' workmen's compensation claim. These facts are uncontested. The relationship of Mead and Roberts to Utilities satisfies all those tests utilized to determine whether an employer-employee situation exists. See McClure v. Union et al., Counties, 188 N.W.2d 283, 285 (Iowa 1971). The relationship of Jones to Utilities satisfies none of those factors. Had Jones negligently injured a passer-by on the day of this accident, Hawkeye undoubtedly would have denied his liability was covered as an employee-insured under its policy, and rightly so. The statutes cited above clearly show a legislative intent to create a separate employer in Utilities. See State v. Downing, 261 Iowa 965, 971, 155 N.W.2d 517, 521 (1968). It is plain Utilities and the City of Spencer comprised two separate, distinct employing units. Hawkeye sold insurance coverage to one such unit (Utilities) as its named insured. This was amended to cover the employees of the named insured. In each critical instance Hawkeye's policy printed the words named insured in darker print, as though to limit its coverage to Utilities, its employees, and none other. Interpreting the policy under these circumstances, we hold the parties to the insuring contract intended to insure the liability of Utilities and its employees, and not the employees of the City of Spencer, a separate employing unit. It follows Jones was not another employee of Utilities, nor a co-employee of Mead and Roberts. Hawkeye's defense based upon its policy exclusion is without merit.