HOUSTON FIRE & CAS. INS. CO. V. C & H CONSTR. &
PAVING CO., 1971-NMSC-080, 82 N.M. 799, 487 P.2d 908 (S. Ct. 1971)
HOUSTON FIRE AND CASUALTY INSURANCE
COMPANY,
Plaintiff-Appellant,
vs.
C AND H CONSTRUCTION AND PAVING COMPANY, INC.,
Defendant-Appellee
SUPREME COURT OF NEW MEXICO
1971-NMSC-080, 82 N.M. 799, 487 P.2d 908
Appeal from the District Court of
Bernalillo County, MacPherson, Judge
LOUIS J. VENER, Albuquerque, N.M.,
Attorney for Appellant.
TOULOUSE, MOORE & WALTERS,
Albuquerque, N.M., Attorneys for Appellee.
J. C. Compton, C.J., LaFel
E. Oman, J.
{1} Plaintiff sued in the
District Court of Bernalillo County to recover premiums alleged due upon a
liability policy issued by it to defendant. After trial without a jury,
judgment was entered for only part of the sums claimed, and plaintiff appeals.
{2} Plaintiff issued a
liability policy to defendant, the premium for which was to be based on
defendant's expenditures for wages and rental of equipment from others, and
also on receipts from rental of its own equipment to others. These items were
estimated in advance by defendant. At the end of the policy period plaintiff
audited defendant's records and determined that the actual earned premium was
$6,725.00 greater than that estimated and paid in advance by plaintiff.
Defendant denied any additional indebtedness and alleged that it was entitled
to a reduced premium on the vehicles it leased from others because of a clause
in the policy which provided for a premium of only 5% of the normal premium
under certain conditions.
{3} The problem revolves
around the meaning and application of a provision of the policy which reads, as
follows:
"The rates for each $100.00 of 'cost of hire' shall be
5% of the applicable hired automobile rates, provided the owner of such hired
automobile has purchased automobile Bodily Injury Liability and Property Damage
Liability covering the interest of the named insured on a direct primary basis
as respects such automobile and submits evidence of such insurance to the named
insured."
{4} Defendant had obtained
"Certificates of Insurance" from the owners of vehicles it had
leased. A certificate of insurance is merely a statement from an insurer that a
particular vehicle leased to lessee is covered by a policy of insurance.
Defendant was not shown as an insured in any of these certificates. Defendant
contends that the policies of insurance referred to in the certificates were
adequate to qualify it for the reduced premium. Plaintiff insists that the
defendant could qualify for the reduced rate only by producing either policies
or certificates of insurance in which the defendant is specifically named as an
insured and with maximum limits of liability which are as great as those in the
policy issued by plaintiff to defendant. It was shown that some of the policies
referred to by the certificates were lower than the limits issued by the
plaintiff.
{5} After a careful reading
of the transcript, it is obvious that the trial judge decided that the
interpretation of the above-quoted policy provision was ambiguous. An ambiguity
arises in the provision under consideration since it is fairly susceptible of
two different constructions by reasonably intelligent men on reading it.
Reasonably intelligent men could honestly differ as to the meaning thereof. See
East and West Ins.Co. of New Haven, Conn. v. Fidel, 49 F.2d 35 (10th Cir.
1931).
{*801} Thus, the trial court was
correct in resolving it against appellant. Foundation Reserve Ins.Co. v.
McCarthy,
77 N.M. 118,
419 P.2d 963 (1966). In arriving at his decision the
court considered the "omnibus clause" in the insurance contracts
involved. All the policies had equivalent provisions, as follows:
"Each of the following is an insured under this
insurance to the extent set forth below:
(c) Any other person while using an owned automobile or a
hired automobile with the permission of the named insured, provided his actual
operation or (if he is not operating) his other actual use thereof is within
the scope of such permission, but with respect to bodily injury or property
damage arising out of the loading or unloading thereof, such other person shall
be insured only if he is: (1) a lessee or borrower of the automobile; (2) an
employee of the named insured or such lessee or borrower."
{6} The trial court found
that the certificate of insurance met the requirement of the policy that the
owner of the leased truck purchased automobile insurance covering the interest
of the defendant on a direct primary basis, and we think this is correct. See
Continental Cas.Co. v. American Fidelity and Casualty Co., 275 F.2d 381 (7th
Cir. 1960).
{7} Appellant contends that
the words "covering the interest" of plaintiff meant a coverage to
the extent of $100,000 for each person and $300,000 for each accident, which
was the coverage provided in the policy issued by plaintiff to defendant. These
words, too, were considered ambiguous by the trial court. The language of the
plaintiff's policy did not help in this regard. Again, when a provision is
susceptible of two different constructions an ambiguity does arise. Therefore,
the trial court must resolve the problem and we will not challenge his
decision. See East and West Ins.Co. of New Haven, Conn. v. Fidel, supra, and
Foundation Reserve Ins.Co. v. McCarthy, supra.
{8} It is further a general
rule that the "coverage of a liability policy will extend not only to the
named insured, but to all persons or classes of persons specifically listed in
the policy's omnibus clause," Lazarus v. Manufacturers Casualty Ins.Co.,
105 App.D.C. 357, 267 F.2d 634 (1959).
{9} Our disposition of the
above point makes it unnecessary to consider the second point concerning the
trial court's finding that plaintiff was estopped to refuse defendant a reduced
rate.
{10} We affirm. IT IS SO
ORDERED.
J. C. Compton, C.J., LaFel E. Oman, J.