RAYMOND LOWRY v. H. H. KNEELAND AND ANOTHER. UNIVERSAL UNDERWRITERS INSURANCE COMPANY, THIRD-PARTY DEFENDANT, APPELLANT.
No. 38,579
Supreme Court of Minnesota
September 21, 1962
117 N. W. (2d) 207
Affirmed.
King & MacGregor and Thomas J. Burke, for respondent.
KNUTSON, CHIEF JUSTICE.
This is an appeal from an order of the trial court denying a motion of third-party defendant for summary judgment. The questions involved were certified by the court as important and doubtful, thereby making the order appealable.
The facts are not seriously in dispute. E. W. Boyer is part owner of Mitchell Boyer, Inc., a Lincoln-Mercury dealership. On February 24, 1959, Boyer and his wife were to fly to a meeting of automobile dealers in Las Vegas, Nevada, and, after completion of the meeting, were to continue on to Hawaii for a vacation. H. H. Kneeland is a longtime friend of Boyer, and on occasion Boyer has consulted with him about some business activities. Kneeland is not connected with the Mitchell Boyer corporatiоn as stockholder or director. Customarily, Boyer would have his son-in-law take him to the airport, but on the day in question his son-in-law was to attend a breakfast meeting of automobile dealers so Boyer asked Kneeland if he would drive the Boyers to the airport in a company-owned automobile and then return the automobile to the garage. The automоbile to be used was a demonstrator and was for sale, and it was necessary to return it to the garage after the trip. The exact hour during which it was to be returned to the garage was left up to Kneeland. He was to call the garage and ascertain when someone could return him to his home or wherever he wanted to go after taking the car back.
Pursuant to this arrangement, Kneeland and his wife drove to the Boyer home, where they left their own automobile, and, in the car
An action was commenced by plaintiff against Mitchell Boyer, Inc., and Kneeland. Answer was interposed by appellant as the insurer on the garage liability insurance policy carried by Mitchell Boyer, Inc., in behalf of the corporation, but it declined to represent Kneeland on the ground that he was not within the coverage of the policy as an insured. Thereupon appellant was brought in as a third-party defendant. Depositions were taken of Kneeland and Boyer, and, bаsed on the depositions, pleadings, and an affidavit, a motion was made by appellant for summary judgment on the third-party complaint.
The policy of insurance carried by Mitchell Boyer, Inc., is one of restricted liability. The provision of the policy giving rise to the present dispute is found in an endorsement attached to the policy and enables the company to procure insurance at a reduced rate. It reads as follows:
“The unqualified word ‘insured’ includes the named insured and also includes (1) any partner, employee, director or stockholder thereof while acting within the scope of his duties as such, and any person or organization having a financial interest in the business of the named insured covered by this policy, and (2) any partner or employee or director or stockholder thereof or a member of the household of the named insured or such partner or employee or director or stockholder, while using an automobile covered by this policy or when legally responsible for the use thereof, provided the actual use of the automobile is by the named insured or with his permission, and (3) any other person or organization legally responsible for the use thereof only while such automobile is operated by the named insured or any such partner or employee or director or stockholder or member of the household of the named insured or partner or employеe or director
or stockholder, provided the actual use of the automobile is by the named insured or with his permission.”
It is the position of appellant that Kneeland is not an employee of Mitchell Boyer, Inc., and therefore does not qualify as an insured within the terms of the policy. It is admitted that he does not come under the other provisions as a partner, director, or stockholder of the company. It is likewise admitted that he is not a paid employee. The trial court held that a fact issue at least existed whether Kneeland could be considered an employee within the meaning of this insurance policy. The court also held that, even if he is not an employee, coveragе might still be found within clause (3) of the quoted portion of the policy in that it could be said that Boyer, even though not present in the automobile himself, was the operator thereof.
We have frequently held that words used in contracts of insurance, like any other contract, must be given the meaning they ordinarily convey to the popular mind and that, in the absence of ambiguity, they must be given their plain, ordinary, and popular meaning.1
In the recent case of Simon v. Milwaukee Auto. Mutual Ins. Co. 262 Minn. 378, 385, 115 N. W. (2d) 40, 45, we said with respect to the rule that a contract of insurance must be construed most strongly against the insurance company who chose the language of it:
“* * * This rule is limited, however, by another rule. Where the insurance contract is unambiguous, the language used must be given its оrdinary and usual meaning the same as any other contract, and we have no more right to redraft an insurance contract under the guise of strict construction to reach a result that we would prefer than we have to redraft any other contract.”
The term or word “employee,” like many others frequently encountered in attempting to construe аn insurance contract, or other contracts, apparently defies exact definition. On the face of it, it would
It is elementary that if therе is doubt as to its meaning it must be construed most strongly against the one who chose the language in drafting the instrument.2
While appellant contends that neither Kneeland nor Boyer considered Kneeland was an employee of Mitchell Boyer, Inc., their concept of the meaning of the word may not be conclusive. Kneeland did testify that he never considered himself an employee of Mitchell Boyer, Inc., or of E. W. Boyer individually.
The relationship between Kneeland and Mitchell Boyer, Inc., must have been that of bailor-bailee, master and servant, principal and agent, employer and employee, or an independent contractor. It seems quite clear that the term “employer and employеe” is an outgrowth of and synonymous with master and servant, at least in the context used here. In 35 Am. Jur., Master and Servant, § 2, we find the following:
“* * * The words ‘employer’ and ‘employee’ are the outgrowth of the old terms ‘master’ and ‘servant;’ they have been adopted by reason of the shift of the relation in general from a personal to an impersonal one, and arе the terms now commonly used to describe the relation-
ship. The relationship of employer and employee is the same as that of master and servant. * * * The term [servants] is synonymous with ‘employees.’ The latter may sound more euphonious than ‘servants,’ but there is no necessary distinction or any substantial difference between the two.”
In Frankle v. Twedt, 234 Minn. 42, 47 N. W. (2d) 482, we had occasiоn to consider the question whether the negligence of a driver of a car was imputed to the owner of the car so as to bar his right of recovery under circumstances not too unlike those found in the instant case. With respect to the relationship of master and servant we said (234 Minn. 47, 47 N. W. [2d] 487):
“* * * A servant is a person employed by a master to perform service in his affairs whose physical conduct in the performance of such service is controlled or is subject to the right of control by the master. Restatement, Agency, § 2. As applied to automobiles, the difference between a mere bailment relation and that of master and servant is the distinction between a mere permissive use and a use which is subject tо the control of the master and connected with his affairs.”
We equated the relationship of the two parties in that case to that of a chauffeur for the owner of a car. Even though a person might be driving the car for the owner‘s business when the owner was not present, he still would be a servant of the master, or an employee. That is true here if the оther requirements for establishing a relationship of employer and employee are present.
If Kneeland had been paid by Mitchell Boyer, Inc., for performing the services he did, we assume that no one would quarrel with the fact that he was an employee within the meaning of this insurance policy. While compensation is a factor to be considered in determining whether the employer-employee relationship exists, it is not conclusive. The relationship may be found to exist even though the employee neither expects nor may demand compensation.3
“One who volunteers services without an agreement for or expectation of reward may be a servant of the one accepting such services.”
As an illustration we find the following (illustration 1):
“A, a social guest at P‘s house, not skilled in repairing, volunteers to assist P in the repair of P‘s house. During the execution of such repair, A negligently drops a board upon a person passing upon the street. A may be found to be a servant of P.”
In Frankle v. Twedt, supra, we also recognized the fact that a master-servant relationship might exist even if the servant was performing services for the master gratuitously.
Here, there is no question but that the car was being driven for the benefit of Boyer, an officer of Mitchell Boyer, Inc., and, as such, the services were for the benefit of the corporation.
Cases from other jurisdictions dealing with this subject are of little help. It seems that, where it has been for the benefit of the insurеd to construe the word so as to permit recovery, the term “employee” has been held to exclude the existence of that relationship and at other times, when it was to the benefit of the insured to hold the opposite, that has been done. Consequently, two lines of cases have emerged. In the following it has been held that “employee” did not include one who occupied a position analogous to that of Kneeland in the instant case: Bean v. Gibbens, 175 Kan. 639, 265 P. (2d) 1023; Braley Motor Co. v. Northwest Cas. Co. 184 Wash. 47, 49 P. (2d) 911; Stephanelli v. Yuhas, 135 Pa. Super. 573, 7 A. (2d) 124.
To the contrary, see Fidelity & Deposit Co. of Maryland v. Friedlander (6 Cir.) 101 F. (2d) 106; Sherman v. O‘Sullivan (La. App.) 164 So. 343.
White v. Gifis (D. Minn.) 172 F. Supp. 296, involved a situation where two parties were driving an automobile to California for one who was purchasing cars in Minnesota and selling them in California. En route, one of the оccupants of the car was injured as a result of the alleged negligence of the driver of the car, and the question arose whether he was an employee of the one for whom the cars
In Orth v. Universal Underwriters Ins. Co. (9 Cir.) 284 F. (2d) 857, provisions of an insurance policy identical with those now before us were before the court, but the question there was whether a prospective buyer who had an accident while taking a test drive of a car was covered under clause (3) rather than whether he was an employee. Similar questions arose in Robbins v. Greene, 43 Wash. (2d) 315, 261 P. (2d) 83, and State Farm Mutual Auto. Ins. Co. v. Smith (W. D. Mo.) 48 F. Supp. 570. In view of our construction of the word “employee,” it is not necessary to consider that question.
We are convinced that, applying the usual rules that the terms of an ambiguous contract should be construed against the insurer, we must give to the word “employee” a broad enough meaning within this policy tо encompass one engaged, as was Kneeland, in performing a service for the insured even though such service was of a temporary duration and uncompensated.
Affirmed.
OTIS, JUSTICE (dissenting).
I agree with the Chief Justice that the words of an insurance policy must be given the plain meaning they ordinarily convey to the popular mind, but I have difficulty in finding that his interpretation of the word “employee” gives effect to the intention of the parties to the contract.1 I think it is significant that the word “employee” is here included among four classes of persons who may be connected with the insured corporation, namely, “any partner, employee, director or stockholder.” Partners, directors, and stockholders have definitе and
In Frankle v. Twedt, supra, there was quid pro quo for the driver‘s use of the car, and the problem to be resоlved did not involve the construction of a written contract. That decision simply drew the line beyond which the court refused to immunize a bailor from the contributory negligence of his bailee.
I feel the meaning of the word “employee” should not be distorted to effect a purpose which the laymen who entered the contract quite obviously did not intend. Therе is nothing in the word “employee” which in itself creates an ambiguity. What was said in State ex rel. Gorczyca v. City of Minneapolis, 174 Minn. 594, 219 N. W. 924, is more persuasive to me than the reasoning of cases which merely reach for a construction that will hold the insurance company liable. In that case we stated (174 Minn. 596, 219 N. W. 925):
“The term ‘employe’ is defined in the dictionaries as one employed by another; a clerk or workman in the service of an employer. The term has been defined as one who works for a salary or wages. * * * The word implies continuity of service, regular and continual service.”
However, in finding there was coverage under a clause which excluded “employees” from a liability insurance policy, the Kansаs court has held that a decedent, who had consented to tow defendant‘s truck when he was killed, was performing an occasional, incidental, casual, and neighborly act, and was not an employee in so doing. Bean v. Gibbens, 175 Kan. 639, 265 P. (2d) 1023. In my opinion, this precisely describes Mr. Kneeland‘s situation at the time of his accident. See, also, Braley Motor Co. v. Northwest Cas. Co. 184
“* * * It is true that the Minnesota Supreme Court has found in various instances that the master and servant relationship was present where control or the right to control as a practical matter was slight. Frankle v. Twedt, 1951, 234 Minn. 42, 47 N. W. 2d 482; Tschida v. Dorle, 1952, 235 Minn. 461, 51 N. W. 2d 561. However, we are dealing with the term ‘employeе’ as used in an insurance contract and the words of an insurance contract must generally be given the meaning that they ordinarily convey to the popular mind.”
The court then held that under an insurance policy which excluded employees, a person who drove a car from Minnesota to California was not an employee of the owner under an arrangement which simply permitted the owner to have his vehicle transported without cost and the driver to secure an economical ride to the west coast.
In the absence of any clear-cut authority to the contrary, I am of the opinion the word “employee” should be construed in the sense in which it is usually understood in the business world, and that the decision of the lower court should therefore be reversed.
NELSON, JUSTICE (dissenting).
I concur in the dissent of Mr. Justice Otis.
ROGOSHESKE, JUSTICE (dissenting).
I concur in the dissent of Mr. Justice Otis.