Michigan Mutual Liability Co. v. Ferguson ( 1968 )

15 Mich. App. 298 (1968) 166 N.W.2d 525

MICHIGAN MUTUAL LIABILITY COMPANY
v.
FERGUSON

Docket No. 4,801.

Michigan Court of Appeals.

Decided December 24, 1968. Leave to appeal denied April 9, 1969.

Schmidt, Smith & Howlett, for plaintiff.

Hathaway, Latimer, Clink & Robb (Charles H. Rawlings, of counsel), for defendant-appellant.

Leave to appeal denied April 9, 1969. See 381 Mich 813.

LESINSKI, C.J.

Plaintiffs-appellees, Michigan Mutual Liability Company and Detroit Automobile Inter-Insurance Exchange, sued as subrogees of Leslie F. Catlow and A. & A. Service Company, respectively. In their original action the plaintiffs obtained a judgment against the principal defendant, Ray Ferguson, after proving that his negligence caused extensive damage to their subrogors. The negligent act allegedly occurred when Ferguson attempted to remove snow from the roof of his business place with a broken shovel, the handle of which had been repaired with aluminum wire. While Ferguson was shoveling, the shovel handle broke for the second time and Ferguson attempted to discard the handle by throwing it over the rear of his building. However, the handle, with the aluminum wire attached, struck high tension power lines, allegedly sending high voltage into and damaging the Catlow building and two automobiles of A. & A. Service Company. In the action below which is the subject of this appeal, plaintiffs sought to garnish defendant's liability insurer to obtain payment of the original judgment.

The only question before this Court is whether or not defendant's insurer, American States, is liable as garnishee under defendant's homeowner's policy.

Two policy exclusions are controlling in determining liability and essentially provide as follows:

(1) The policy does not apply to any business property of an insured or any business pursuits in connection with a business solely owned by an insured, other than in activities therein which are ordinarily incident to nonbusiness pursuits, and

(2) The policy does not apply to any act or omission in connection with premises, other than as defined in the policy, which are owned, rented or controlled by an insured.

The garnishee-insurer contends that since Ferguson was removing snow from his business premises, Ferguson was engaged in a business activity on business property within the meaning of the first exclusion. We disagree. The fact that the activity involved occurred on business property of the insured does not so causally connect that activity with the negligent act as to bring it within the ambiguous exclusion. Richland Knox Mutual Insurance Co. v. Kallen (CA 6, 1967), 376 F2d 360; Francis v. Scheper (1949), 326 Mich 441. The exception providing coverage for activities which are "ordinarily incident to nonbusiness pursuits" strongly suggests applicability of the policy to nonbusiness activities even when occurring on business property. Also, the exclusion is inapplicable because the immediate activity involved, throwing a shovel handle off the roof in order to discard it, was not proved incident to a business pursuit. See Morrill v. Gallagher (1963), 370 Mich 578; Edwards v. Trahan (La App, 1964), 168 So 2d 365; State Farm Fire & Casualty Co. v. MacDonald (1967), 87 Ill App 2d 15 (230 NE2d 513); Gulf Insurance Co. v. Tilley (ND Ind, 1967), 280 F Supp 60.

In Morrill, the insured negligently caused a firecracker to explode in a business place where plaintiff and insured were employed. Under an exclusion practically identical to that involved in the instant case, the Court found the insurer liable, stating (p 588):

"May it be said that in the perpetration of the act here in question Gallagher was engaged in any business pursuit? We think not. Clearly the act in question was not done in connection with any of Gallagher's regular duties on behalf of either of the corporations of which he was the general manager and sole stockholder. The attempted prank was not done in the course of business or for the purpose of expediting it."

Similarly, in the instant case, the trial court properly found that the insured's rash act of throwing the shovel handle was not done in furtherance of his business activities.

Under the second exclusion, the garnishee-insurer contends the policy is inapplicable because the activity occurred on premises not defined in the policy but owned or controlled by the insured. While we agree that the negligent act of throwing the broken handle took place on the roof of nondefined premises controlled by the insured, we find that the act was not proved to be "in connection with" the premises as required under the exclusion. The burden of proof of the applicability of an exclusionary clause rests with the insurer. Roddis Lumber & Veneer Company v. American Alliance Insurance Company (1951), 330 Mich 81. Yet the garnishee-insurer in the instant case has cited no authority in support of its position. Indeed, in Morrill, supra, the same exclusion was present, the negligent act occurred on nondefined premises controlled by the insured, and the Court affirmed recovery under the policy. The words "in connection with" in the instant policy are sufficiently ambiguous to conceivably require some causal connection between the property and the negligent act. Richland Knox Mutual Insurance Co., supra. In any event, these words, being ambiguous, must be strictly construed against the insurer. Morrill, supra; Francis, supra; Leski v. State Farm Mutual Insurance Company (1962), 367 Mich 560. So construing this exclusion, we think the trial judge correct in granting recovery under the policy.

Affirmed. Costs to plaintiff.

FITZGERALD and TEMPLIN, JJ., concurred.