Continental Western Insurance Co. v. Black
361 P.3d 841
| Wyo. | 2015Background
- Keizer Trailer Sales sold three refrigerated trailers to James Black on a written "Lease to Purchase"/Purchase Agreement stating Keizer would "remain the owner of the equipment until the loan was paid in full."
- Black took immediate possession; trailers remained titled/registered to Keizer, Keizer supplied plates, and Keizer listed the trailers on its commercial and umbrella policies issued by Continental Western Insurance Company (CWIC).
- Black was involved in a fatal accident while operating one trailer; plaintiffs sued Black and his business, and CWIC was notified of potential claims under Keizer's policies.
- CWIC sought a declaratory judgment that its policies provided no coverage for the accident, arguing (1) the transaction was a conditional sale making Black the owner and (2) the Iowa owner-consent statute definitions should control the policy term "owner."
- The district court granted summary judgment to defendants, holding the Purchase Agreement left ownership in Keizer and Black used the trailer with Keizer's permission; this Court affirmed.
Issues
| Issue | Plaintiff's Argument (CWIC) | Defendant's Argument (Keizer/Black) | Held |
|---|---|---|---|
| Whether Keizer was the "owner" of the trailer for purposes of omnibus coverage | The sale was a conditional sale; under Iowa law the buyer (Black) is the vehicle's owner despite retained title | The written Purchase Agreement explicitly states Keizer remains owner until paid in full; parties intended Keizer to retain ownership | Keizer retained ownership under the Purchase Agreement; not a conditional sale |
| Whether Black was using the trailer "with [Keizer's] permission" | If Black was the owner (per CWIC), his use was not "with permission" and omnibus coverage does not apply | Black possessed and used the trailer pursuant to Keizer's agreement and permission | Black's use was with Keizer's permission; omnibus clause covers him |
| Whether the omnibus term "own" should incorporate Iowa's owner-consent statutory definition | The policy term "own" should be read in light of the Iowa owner-consent statute, which may treat the buyer as owner | Insurance-policy terms are given their ordinary meaning unless a statute that governs insurance requires incorporation; the owner-consent statute does not apply to trailers and does not govern policy coverage | Court gave "own" its ordinary meaning and declined to import the owner-consent statute; no statutory conflict required incorporation |
| Whether the promissory note transforms the transaction into a conditional sale | The promissory note evidences an agreement to pay full purchase price and a right to declare the balance due on default, supporting characterization as a conditional sale | The Purchase Agreement, as the controlling integrated document, expressly created a "lease-to-purchase"/bailment-for-purchase allowing return of trailers on default; the note appears to merely memorialize payment terms | The Purchase Agreement controls; the transaction was not a conditional sale and did not impose an unconditional obligation to pay full price such that ownership passed to Black |
Key Cases Cited
- Industrial Credit Co. v. Hargadon Equipment Co., 119 N.W.2d 238 (Iowa 1963) (articulates tests distinguishing conditional sale from bailment-for-purchase)
- Pillsbury Co., Inc. v. Wells Dairy, Inc., 752 N.W.2d 430 (Iowa 2008) (rules on contract interpretation and primacy of parties' intent and integrated agreement)
- Lee v. Grinnell Mut. Reinsurance Co., 646 N.W.2d 403 (Iowa 2002) (statutory definitions are read into policies only where statute governs the contract or conflicts with policy)
- Boelman v. Grinnell Mut. Reinsurance Co., 826 N.W.2d 494 (Iowa 2013) (insurance policy terms given ordinary meaning; ambiguities construed for insured)