Court Opinion

ID: 9448852
Source: CourtListenerOpinion
Date Created: 2023-08-03 23:46:30.055412+00
Date Added: 2024-06-11T17:31:34.527646
License: Public Domain

WEICK, Circuit Judge
(dissenting).
I regret that I cannot agree with the view of the majority, so well expressed by Judge O’Sullivan, that the insurance policy protected McNallys “from all liability arising out of work done in the performance of their contract to inspect and maintain elevators in the Kalamazoo *447Hotel.” McNallys could have purchased this special type of coverage, but they did not do so. McNallys claim that they wanted “to be covered if sued for anything that might happen and that they wanted all the protection they could get for the least money.” The policy which they purchased, however, did not cover everything that might happen. The Court, in my judgment, construed the policy as if it did and gave no effect to the exclusionary provisions of the policy.
The result of the Court’s decision is to add additional coverage to McNallys’ insurance policy for which they paid no premium and which was specifically excluded from the policy.
The policy was a composite one applicable generally to manufacturers and contractors and provided five types of coverage each one of which could be obtained by payment of the applicable premium therefor. The trouble here is that Mc-Nallys purchased only one type of coverage. They want to extend the policy to cover some of the other types.
The first line of the policy reads that the Company “Agrees with the insured, named in the declarations made a part hereof, in consideration of the payment of the premium and in reliance upon the statements in the declarations and subject to the limits of liability, exclusions, conditions and other terms of this policy.”
The "Declarations” contained a description of the five hazards which could be purchased by the insured and provided:
“Item 3. The insurance is only with respect to such and so many of the following coverages and divisions thereunder as are indicated by specific premium charge or charges. The limit of the company’s liability against each such coverage and division shall be as stated herein.”
The limits of liability were $25,000 for bodily injury to one person and $50,000 for each accident and $25,000 for property damage. The premium paid was $63.15.
The specific premium charges were indicated in the Declarations only for Item IV Division 1 of the policy which was entitled “Premises — Operations” and was defined in the policy as “The ownership, maintenance or use of premises and all operations.” The Declaration indicated “Purposes of Use — Classification and Code” and stated “Elevator Inspecting '# 2475 Elevator Erection or repair — including incidental operation of elevators for testing purposes # 5160.”
The following hazards, shown in the Declarations, contained no premium charge or charges and hence were not covered by the policy:
Division 2. Elevators1
Division 3. Independent Contractors
Division 4. Products — Completed Operations 2
*448Coverage D. Contractual Liability of a Specified Type 3
Not only were the above hazards for which no premium was paid not covered, but in the body of the policy they were specifically excluded by language which I think is clear and unambiguous.4
The view of the District Court, approved by the majority, was that the accident came within the purview of the words “all operations” in Item IV “Division 1 — Premises—Operations.” Granting that the words “all operations” are very broad, it is clear to me that this language was expressly limited by the exclusions in the policy, being (a) to (f) inclusive and as so limited provided coverage only for accidents occurring on the hotel premises during the progress of the work.
McNallys were not engaged in doing .any work on the elevator at the time it fell and injured a guest passenger of the hotel nor were they on the hotel premises. They did not own or control the hotel premises or the elevator. At the time of the accident, the elevator was operated by the hotel company in the regular conduct of its business and was in its exclusive possession and control. McNallys claimed that they had intended later to install a rotor in the elevator after they had procured one from Otis Elevator Company, but had not commenced this operation because they had not received the rotor. In my judgment, the record furnishes no support for the view of the Court that the hotel premises and elevator were in the actual or constructive possession and control of Mc-Nallys at the time of the accident.
McNallys’ liability to the hotel company or to strangers, if any, could only be predicated on negligent performance *449of their contract to inspect the elevator. It could only be founded on the proposition that they had, previously to the accident, made an improper inspection. This was the gist of the complaint against them for personal injuries filed in the state court and is controlling here as to the nature of liability sought to be imposed. McNallys did have a continuing duty of inspection under their contract with the hotel company, but I do not construe the coverage provided by the liability policy as insurance for the faithful performance of that contract.
In my opinion, this type of operation by McNallys came within the plain language of Division 4(2) of the policy entitled “Completed Operations” and if it did coverage was expressly excluded under Exclusion (c) (2).
It also seems clear to me that no coverage was provided for contractual liability. Exclusion (f).
McNallys could have claimed with equal propriety that the words “all operations” covered their automobiles when driven upon the public highways, but this was also restricted to operations on the premises by Exclusion (a) (2).
In construing the policy resort must be had to the entire instrument and this included the risks for which no premium was paid which were specifically excluded. Duval v. Aetna Casualty & Surety Co., 304 Mich. 397, 8 N.W.2d 112. It cannot be claimed that McNallys were mislead by any provision in the policy because the proof is that they never read it. Furthermore, this action was not to reform the policy. We are required to construe the policy as it was written.
I think it is wholly immaterial that the entire policy other than the paragraph headings and the Declarations, which were on a separate page, was in fine print. I am sure that McNallys could have read the fine print if they had any inclination to do so. The policy could have been made into a much larger package by the use of bigger type, or it could have been made smaller if only one risk had been provided for, but the size of the policy, it seems to me, is a matter of business judgment for the company and not for us to consider.
I am unable to follow the reasoning of the Court relative to Division 4 Products —Completed Operations. True, the paragraph heading Products and Completed Operations is separated by a hyphen, but I do not attach any significance to this. Division 4(1) provides for Products and 4(2) Completed Operations. Each paragraph is separate and complete. The fact that a semicolon instead of a period appears at the end of Paragraph 1 does not make the separately numbered paragraphs any the less separate. If there was any conflict between the paragraph headings and the language in the paragraphs, the latter would control.
The District Court in Paragraph 6 of his Conclusions of Law said:
“The exclusionary provision (c) (2) of the policy cannot be interpreted as having any application to the hazards against which plaintiffs are insured for the reason that it makes specific reference to ‘the Products — Completed Operations Hazard’; and the plaintiffs were not engaged in a business involving products. Their business was service.”
I submit that even if plaintiffs handled no products (and the uncontroverted proof shows that they did handle products) Paragraph 2 of Division 4 relating to Completed Operations would nevertheless apply to their operations. As I view it Paragraph (1) of Division 4 insured against liability occasioned by defective products while Paragraph (2) covered work which was improperly or defectively performed. Even if McNallys had no product, the purchase of Products — Completed Operations coverage would have protected them against liability occasioned by their improper workmanship.
But the undisputed evidence showed that McNallys did handle products as part of their service arrangement. The written contract between McNallys and Burdick Hotel provided not only for in-*450speeting and servicing the hotel elevators, but also that. McNallys would supply the following parts when necessary: “machine, motor, generator and controller parts including worms, gears, thrusts, bearings, brake magnet, coils or brake motors, brake shoes, brushes, windings, commutators, rotating elements, contacts, coils, resistance for operating and motor circuits, magnet frames and other mechanical parts.!’ In addition, Mc-Nallys agreed to renew guide shoes gibs or guide rollers, wire ropes and repair or replace conductor cables. They agreed to furnish “lubricants compounded to our rigorous specifications.” McNallys kept some of these parts in inventory. Division 4(1) of the policy was not limited to products manufactured by McNallys, but covered any that were “sold, handled or distributed” by them. The contract with the hotel was not the only elevator maintenance contract which McNallys had with their customers.
Paragraph 7 of the Conclusions of Law adopted by the District Court provides:
“7. Division 4 (Products — Completed Operations) hazard is meaningless when an attempt is made to apply it to plaintiffs’ operations which remained incomplete for the life of the service contract they had with the Burdick Hotel.”
I think the District Court has misinterpreted the policy. Operations were completed whenever McNallys finished their work on the elevators and left the premises. The uncontroverted fact is that McNallys were not performing any work on the elevators at the time of the accident. The duties of inspection required by the contract, however, remained until the contract expired or was terminated.
The majority has construed the policy as protecting McNallys for breach of warranty of good workmanship or inspection and as insuring the faithful performance of their contract with the Hotel Company.
Protection as against liability for warranty was afforded only by Division 4 Products — Completed Operations. This appears from the language of Division 4 (2) “improperly or defectively performed” and the provisions of Exclusion (f).
McNallys could also have procured specific coverage for liability assumed under their service contracts by purchasing Coverage D “Contractual Liability of a Specified Type.” One of the types which could have been specified was “(3) An elevator or escalator maintenance agreement.”
The entire policy and not just part of it was before the District Court for construction. Even though part may not have been stressed, this affords no basis for imposing liability where none exists.
• I agree with the reasoning of the New York Court of Appeals in Berger Brothers Electric Motors, Inc. v. New Amsterdam Casualty Co., 293 N.Y. 523, 58 N.E.2d 717 which explained the purpose of the exclusion clauses in a similar policy. The court said:
“By these clauses the parties intended to limit the casualty company’s liability to accidents occurring during the progress of the work and to exclude liability for accidents occurring, after the work was completed, as the result of defective workmanship. If that be not the meaning of the plain language used, the insurer would remain liable indefinitely for defective workmanship upon the theory that defective work is never complete until the defect is discovered and corrected. But this is a risk which the parties intended to exclude from the coverage of the policy, and we cannot read these policies as intended to cover such risks, for the language is plain and unambiguous.”
See also: Butler v. United States Fidelity & Guaranty Co., 197 Tenn. 614, 277 S.W.2d 348; Baker v. Maryland Casualty Co., 73 R.I. 411, 56 A.2d 920.
So-called experts gave conflicting opinions at the trial as to their interpretation of provisions of the insurance policy. Opinion evidence was not admissible to *451interpret a contract unless it contained technical terms of art, science or trade. 20 Am.Jur. § 829, p. 696. The policy contained no such technical terms. In 9 Wigmore on Evidence, 3rd ed. § 2556, p. 522, the author states that “The construction of all written instruments belongs to the courts.” See: Cordovan Associates, Inc. v. Dayton Rubber Co., 290 F.2d 858 (C.A. 6); Home Insurance Co. v. Continental Insurance Co., 180 N.Y. 389, 396, 73 N.E. 65. The fact that the experts disagreed does not in my judgment, make the contract ambiguous. Their testimony was not admissible.
It was not competent to vary or change the written contract by parol evidence as to the type of coverage which the Mc-Nallys claim they wanted, but did not purchase.
I would reverse the judgment of the District Court and dismiss the complaint.

. Division 2 — Elevators
The ownership, maintenance or use of any elevator designated in the declarations.

. Division 4 — Products—Completed Operations
(1) Goods or products manufactured, sold, handled or distributed by the named insured or by others trading under his name, if the accident occurs after possession of such goods or products has been relinquished to others by the named insured or by others trading under his name and if such accident occurs away from prem- . ises owned, rented or controlled by the named insured or on premises for which the classification stated in division 1 of Item 4 of the declarations excludes any part of tbe foregoing; provided, such goods or products shall be deemed to include any container thereof, other than a vehicle, but shall not include any vending machine or any property, other than such container, rented to or located for use of others but not sold;
(2) operations, if the accident occurs after such operations have been completed or abandoned and occurs away from premises owned, rented or controlled by the named insured ; provided, operations shall not be deemed incomplete because improperly or defectively performed or because further operations may be required pursuant to an agreement; provided further, the following shall not be deemed to be “operations” within the meaning of this *448paragraph: (a) pick-up or delivery, except from or onto a railroad car, (b) the maintenance of vehicles owned or used by or in behalf of the insured, (c) the existence of tools, uninstalled equipment and abandoned or unused materials and (d) operations for which the classification stated in division 1 of Item 4 of the declarations specifically includes completed operations.

. Coverage D — Contractual Liability of a Specified Type: To pay on behalf of the insured all sums which the insured, by reason of the liability assumed by him under any of the following types of agreements, if in writing and if described in Item 4 of the declarations, shall become legally obligated to pay as damages because of:
Division 1: Bodily Injury Liability— bodily injury, sickness or disease, including death at any time resulting therefrom, sustained by any person and caused by accident.
Division 2. Property Damage Liability — injury to or destruction of property, including the loss of use thereof, caused by accident.
Types of Agreements:
(1) a lease of premises;
(2) a sidetrack agreement;
(3) an elevator or escalator mainte- ■ nance agreement;
(4) an easement agreement in connection with a railroad grade crossing;
(5) an agreement required by municipal ordinance in connection with work for the municipality.

. EXCLUSIONS
This policy does not apply:
(a) under division 1 of the Definition of Hazards, and under coverage C, to the ownership, maintenance, operation, use, loading or unloading of (1) watercraft if the accident occurs away from premises owned by, rented to or controlled by the named insured, except insofar as this part of this exclusion is stated in the declarations to be inapplicable, (2) automobiles if the accident occurs away from such premises or the ways immediately adjoining, or (8) aircraft;
(b) under division 1 of the Definition of Hazards, to elevators;
(e) under division 1 of the Definition of Hazax-ds, to (1) the Independent Contractors Hazard or (2) the Products — Completed Operations Hazard;
(d) under division 1, 2 and 3 of the Definition of Hazards, to liability assumed by the insured under any contract or agreement;
(e) under division 3 of the Definition of Hazards, to any act or omission of the named insured or any of his employees, other than general supervision of work performed for the named insured by independent contractors;
(f) under division 4 of the Definition of Hazards, to liability assumed by the insured under any contract or agreement except a warranty of goods or products;