Opinion ID: 672855
Heading Depth: 3
Heading Rank: 2

Heading: Capital Mutual's Policy with Blank in His Individual Capacity

Text: 27 Capital Mutual argues that its policy with Blank insures him in his individual capacity, rather than his corporate capacity. This position is based on the first page, the declarations page, of Capital Mutual's policy with Blank. That page includes a section marked Item 3 consisting of the text, The Named Insured is: and a series of boxes marked Individual, Partnership, Corporation, Joint Venture, and Other. The box marked Individual is checked. Capital Mutual also asserts that this first page indicates that the policy insures Blank in his individual, rather than corporate, capacity because Item No. 1 of the declarations page of Capital Mutual's policy of insurance issued to Blank lists the named insured as 'Walter T. and Jane Blank.'  Capital Mutual's Brief at 14. 28 Capital Mutual argues that because the State sued Blank in his corporate capacity, Capital Mutual is not obliged to defend Blank. Capital Mutual points to language in Section II of the policy in an effort to demonstrate that the policy does not cover property owned or operated by Abalene. In a subsection entitled, Persons Insured, the policy provides: 29 Each of the following is an insured under this insurance to the extent set forth below: 30 (a) if the named insured is designated in the Declarations as an individual, the person so designated but only with respect to the conduct of a business of which he is the sole proprietor, and the spouse of the named insured with respect to the conduct of such a business. 31 Capital Mutual argues that under this language Blank would only be insured in a corporate capacity if Abalene had been a sole proprietorship. This argument raises the question whether, under the terms of the policy, it is possible to be the sole proprietor of a business even if the business is not legally organized as a sole proprietorship. That is, we must determine whether we are to afford sole proprietor a narrow, technical legal definition or whether we are to afford the term a definition that, while consistent with the legal definition, also comports with the plain and ordinary meaning of the term. 32 Under the law of New York, the latter course is preferred. In interpreting insurance policies, [n]arrow and technical legal definitions are to be avoided. General Accident Ins. Co. of America v. Hyatt Legal Servs., 130 A.D.2d 970, 516 N.Y.S.2d 560 (4th Dept.1987). Instead, unambiguous terms are to be given their plain and ordinary meaning. Lavanant v. General Accident Ins. Co. of America, 79 N.Y.2d 623, 629, 584 N.Y.S.2d 744, 747, 595 N.E.2d 819, 822 (1992); Ace Wire & Cable Co., Inc. v. Aetna Casualty & Sur. Co., 60 N.Y.2d 390, 398, 469 N.Y.S.2d 655, 658, 457 N.E.2d 761, 764 (1983) (The tests to be applied in construing an insurance policy are common speech ... and the reasonable expectation and purpose of the ordinary business [person]) (citation omitted). Further, any ambiguity in an insurance policy is to be resolved against the insurer. Id.; see also Kimmins, 19 F.3d at 81; United States Fidelity & Guar. Co. v. Annunziata, 501 N.Y.S.2d 790, 791, 67 N.Y.2d 229, 232, 492 N.E.2d 1206, 1207 (1986). 33 As the term is commonly understood, sole proprietorship is a form of business in which a single person owns all of the assets of a business. Here, it is undisputed that Blank was the sole shareholder of Abalene. The term sole proprietor often connotes something more than ownership, however. In particular, the term often connotes a large degree of control over the affairs of the business. Thus, it might be incorrect to characterize the sole shareholder of a corporation as a sole proprietor when that person has delegated operation of the corporation to corporate officers. Where, however, the sole shareholder maintains close control over the operation of the corporation--by, for example, assuming the position of corporation president--the term sole proprietor may be an appropriate characterization. In this case, in addition to being the sole shareholder, Blank was the President and Treasurer of Abalene. In those capacities, Blank exercised close control over the operation of Abalene. Therefore, Blank may be characterized as a sole proprietor as the term is ordinarily understood, even though Abalene was organized as a corporation and was not in the technical sense a sole proprietorship. 7 Cf. People v. Schwebel, 44 Misc.2d 1035, 1039-40, 255 N.Y.S.2d 760, 766 (defining appellant as proprietor although appellant's business was organized as a corporation where appellant conducted the business and exercised supervision, management, direction, and control over employees), aff'd, 16 N.Y.2d 724, 262 N.Y.S.2d 107, 209 N.E.2d 724 (1965). 34 We find that the district court properly determined that Capital Mutual was obliged to defend Blank in the underlying action.