Opinion ID: 1148450
Heading Depth: 1
Heading Rank: 4

Heading: construction of the insurance contract

Text: It is well settled in our law that general rules of interpretation apply to insurance policies in the same way that they apply to other contracts. Massachusetts Mutual Life Ins. v. Nails, 549 So.2d 826 (La.1989); Savoie v. Fireman's Fund Insurance Co., 347 So.2d 188, 191 (La.1977). A conventional obligation, such as created by an ordinary contract or insurance policy, is a legal relationship whereby the obligor is bound to render a performance in favor of the obligee. La.C.C. art. 1756. In a conventional obligation, the nature of that relationship is governed by the agreement of the parties. Hence, the interpretation of a contract is the determination of the common intent of the parties. La.C.C. art. 2045; Hurst v. Ricard, 514 So.2d 14, 16 (La.1987). Under civilian methodology, the interpretation of a contract is similar to the interpretation of a statute, and vice versa. Id., at 17; Geny, Methode d'Interpretation et Sources en Droit Prive' Positif, No. 98, p. 182 (2d ed. La.St.L.Inst. trans. 1963); see also La.C.C. art. 2046, Comment (c). Civil Code article 2045 further provides that [w]hen the words of a contract are clear and explicit and lead to no absurd consequences, no further interpretation may be made in search of the parties' intent. Also, in determining the meaning of the words of a contract, they are to be given their generally prevailing meaning. La. C.C. art. 2047; Savoie, supra, at 191; Taylor v. State Farm Mutual Auto Insurance Co., 248 La. 246, 178 So.2d 238, 241 (1965). When the meaning of the words are clear then the courts should look no further in determining the intent of the parties. La. C.C. art. 2046; Soverign Ins. Co. v. Texas Pipe Line Co., 488 So.2d 982, 985 (La. 1986). Where the meaning of a contract is to be determined solely from the words upon its face, without the necessity of extrinsic evidence, the appellate courts are as competent to review the evidence as the trial court, and no special deference is usually accorded the trial court's findings. Investors Associates, Ltd. v. B.F. Trappey's Sons, 500 So.2d 909 (La.App. 3d Cir.), writ denied 502 So.2d 116 (La.1987); W. Freedman, Richards on Insurance. § 11:2(i) at 255 (1990). The issue at hand involves the interpretation of the Continental Policy issued to L.S.U. at the time of the accident. The policy is a standardized national commercial automobile liability policy. It provides that Continental will pay all damages for which anyone is legally liable while he or she was using with L.S.U.'s permission a covered auto owned, hired, or borrowed by L.S.U. The policy provides in pertinent part: A. WE WILL PAY. 1. We will pay all sums the insured legally must pay as damages because of bodily injury or property damage to which this insurance applies, caused by an accident and resulting from the ownership, maintenance or use of a covered auto. D. WHO IS INSURED.       2. Anyone else is an insured while using with your permission a covered auto you own, hire or borrow ... The policy does not define the term borrow. Because of Endorsement 1 to the policy, a covered auto includes any auto, whether it be an owned, hired, or nonowned vehicle. The parties therefore agree that the Schroeder vehicle qualifies as any auto under the provisions of the policy. It is undisputed that LSU did not own or hire the Schroeder vehicle. However, the parties dispute whether the vehicle was borrowed within the terms of the insurance policy; and if the vehicle was borrowed, whether Eric used it with LSU's permission. In our opinion, the words of the insurance policy affording coverage for an auto you own, hire or borrow are clear and explicit, and when given their generally prevailing meaning lead to the conclusion that under the facts established for purposes of summary judgment, the Schoeder vehicle was not borrowed by LSU, and thus not covered under the policy. The idea of borrowing in general, and of borrowing a motor vehicle in particular, simply does not encompass, within the generally prevailing meaning of the term, every instance in which a policy holder may have received a benefit from the use of an auto by another. In common parlance, to borrow means not only that one receives the benefit of the borrowed object's use but also that the borrower receives temporary possession, dominion, or control of the use of the thing. For example, when a person uses his auto to pick up a prescription for a sick friend, he may confer a significant benefit on the invalid, but no one would say that the bedridden friend had borrowed the auto used for the errand. Also, very few persons, if any, would think that LSU had borrowed its employees' vehicles each day during their trips to and from work and lunch, merely because LSU knowingly received a benefit from each employee's private means of transportation. LSU does not borrow thousands of autos during drive time each day simply because LSU benefits from and could not operate without this private informal transportation system. Cf., Trinity Universal Ins. Co. v. Cincinnati Ins. Co., 513 F.2d 915 (6th Cir.1975); Martin v. American Express, Inc., 361 So.2d 597 (Ala.Civ.App.1978). In each of these examples, the person or entity that received the benefit of the use of the vehicle did not have the possession, dominion, control, or the right to control the use of the auto. Therefore because some element of substantial control is generally understood to be included within the prevailing meaning of the act of borrowing, none of the benefitted persons was a borrower under the generally prevailing meaning of that term. Under the facts established in this case for purposes of summary judgment, it logically follows that a reasonable person, a person in the street or an average citizen, would not say that LSU had borrowed the Schroeder vehicle. Additionally, the prevailing meaning of borrowing is essentially the same as that conceived of by the drafters of the Civil Code. The loan for use, or commodatum, is a gratuitous contract by which one person delivers a thing for anothers temporary use. La.C.C. arts. 2891-2909; A. Ezkovich, Beware! The Commodatum Lurks, 58 Tul. L.Rev. 342 (1983). The parties to a loan for use, or commodatum, are referred to as the borrower and the lender. La.C.C. arts. 2898, 2906. The lender retains the ownership of the object, La.C.C. art. 2895, but gratuitously delivers to the borrower the possession and use of the object, subject to the borrower returning the property after he is finished with it. By definition, the commodatum involves the use of nonconsumable things, and historically contemplated the use of instruments of transportation borrowed by others. In the early years of the Civil Code, horses, oxen and donkeys were the most common means of land transportation, and often the subjects of the commodatum, i.e., borrowing and lending. See Lislet and Carleton, The Laws of Las Siete Partidas which Are Still in Force in the State of Louisiana, 623 (1820). The gratuitous loan principles of the Civil Code conform with the prevailing meaning of borrowing today, and have equal application to loans for use of our modern vehicles of transportation. See, e.g., Lyle v. Guillot, 143 So. 511, 513 (La.App. 1st Cir.1932) (A gratuitous loan for use [of an automobile] makes the borrower, after delivery, the master of the thing borrowed, for the purpose of its use and while using it under the loan). The evidence adduced in support of the summary judgment does not establish beyond genuine dispute that LSU acquired or exercised possession, dominion, control or even the right to direct the use of the vehicle in question while the students were using it to purchase ice for the school activities. In fact, on the present record, a reasonable inference in favor of the non-moving party must be drawn that LSU never had any control over the automobile, even though it may have benefitted from its use by the students. Consequently, the movers failed to demonstrate that they were entitled to a judgment as a matter of law, and the motion for summary judgment was erroneously granted. The majority of other courts that have interpreted similar borrowed automobile provisions have also concluded that the term borrow connotes much more than merely receiving some benefit from another's use of a third person's vehicle. They have determined that borrowing a car requires possession reflecting dominion and control over the vehicle. See, e.g., Liberty Mutual Insurance Co. v. American Employers Insurance Co., 556 S.W.2d 242 (Tx.1977); Sturgeon v. Strachan Shipping Co., 731 F.2d 255, 258 (5th Cir.1984), en banc. The minority view to the contrary, reflected in Travelers Indemnity Company v. Swearinger, 169 Cal.App.3d 779, 214 Cal.Rptr. 383 (1985), is not persuasive. The California intermediate appellate court concluded that the borrowed vehicle provision in an insurance policy was ambiguous and could be reasonably interpreted to mean that borrowing a vehicle would include receiving benefit of its use without the necessity of having possession, dominion or control. We are convinced, on the other hand, that the insurance provision in question in the present case is clear and explicit, and that the prevailing meaning of the term borrow in the context of automobile lending requires that the borrower acquire substantial possession, dominion, control, or the right to direct the use of the vehicle, and not merely that the use of the vehicle by another person redound by chance to the benefit of a purported borrower.