Corgatelli v. Globe Life & Accident Insurance Co. , 96 Idaho 616 ( 1975 )

DONALDSON, Justice

(dissenting).

It appears to me that the majority opinion in its haste to adopt a new doctrine in interpretation of insurance contracts has forgotten or overlooked certain basic principles involved in construing contracts and it is therefore necessary to make a quick review of the principles.

The purpose of interpretation or construction of a contract is to determine the intent of the parties, as expressed in writing, so that it may be given effect. To ascertain the intent of the parties to an insurance agreement, the Court must first look to the contract itself, construing the document as a whole. Parma Seed, Inc. v. General Ins. Co. of America, 94 Idaho 658, 662, 496 P.2d 281 (1972); Watkins v. Federal Life Ins. Co., 54 Idaho 174, 178, 29 P.2d 1007 (1934). If the language is dis-positive of intent, the Court need not revert to extrinsic evidence. Parma Seed, Inc. v. General Ins. Co. of America, supra. Indeed, in the absence of ambiguity, contracts for insurance must be construed as any other and understood in their plain, ordinary and proper sense, according to meaning derived from the plain wording of the contract. Continental National Am. Group v. Allied Mutual Ins. Co., 95 Idaho 251, 253, 506 P.2d 478 (1973); Lively v. City of Blackfoot, 91 Idaho 80, 83, 416 P.2d 27 (1966); Smith v. Idaho Hospital Service, Inc., 89 Idaho 499, 506, 406 P.2d 696 (1965); Evans v. Continental Life & Acc. Co., 88 Idaho 254, 257, 398 P.2d 646 (1965); Thomas v. Farm Bureau Mutual Ins. Co. of Idaho, Inc., 82 Idaho 314, 318, 353 P.2d 776 (1960).

If the language is susceptible to but one meaning, it must be given effect, for a court cannot by construction create liability or make a new contract for the parties. Occidental Fire & Cas. Co. v. Cook, 92 Idaho 7, 9, 435 P.2d 364 (1967); Lively v. City of Blackfoot, supra 91 Idaho at 85, 416 P.2d 27; Coburn v. Fireman’s Fund Ins. Co., 86 Idaho 415, 420, 387 P.2d 598 (1963); Thomas v. Farm Bureau Mut. Ins. Co. of Idaho, Inc., supra 82 Idaho at 319, 353 P.2d 776; Rosenau v. Idaho Mutual Benefit Assn., 65 Idaho 408, 415, 145 P.2d 227 (1944).

In the event of ambiguity, intent of the parties must be resolved in favor of the insured, Abbie Uriguen Oldsmobile Buick, Inc. v. United States Fire Ins. Co., 95 Idaho 501, 507, 511 P.2d 783 (1973); Dunford v. United of Omaha, 95 Idaho 282, 284, 506 P.2d 1355 (1973); Stephens v. New Hampshire Ins. Co., 92 Idaho 537, 540, 447 P.2d 14 (1968); Shields v. Hiram C. Gardner, Inc., 92 Idaho 423, 427, 444 P.2d 38 (1968); Medical-Dental Service, Inc. v. Boroo, 92 Idaho 328, 331, 442 P.2d 738 (1968). If the meaning of the contract is in doubt, it must be construed in the sense in which the insurer believed, at the time of making, the insured understood the terms. Shields v. Hiram C. Gardner, Inc., supra. As such, the doctrine of probability or reasonableness has long been a rule of construction geared toward ascertaining intent in situations of ambiguity. The standard to be applied is what a reasonable person in the position of the insured would have understood the language to mean.

The majority, in recognizing reasonable expectation, has applied the doctrine to situations where ambiguity is not involved. They justify such action on a public policy argument of adhesion contract. As set forth earlier in the dissent, I contend that application of the doctrine to an unambiguous situation circumvents its purpose. The Court is faced with determining intent of the parties, and absent ambiguity, intent must be derived from the contract itself.

In the majority’s determination of Part 2 benefits, I suggest they precisely applied the correct rules of construction as set forth above. They deny this stating:

“While ambiguities may be highly relevant in determining the reasonable expectations of an insured, nevertheless we deem it clear that the invocation and application of the doctrine of reasonable expectations does not depend for its existence upon the presence of ambiguities.”

Notwithstanding the above, the majority fully discusses the patent ambiguity in the contract as found at the magistrate and district court levels and then finally reverts to the maxim that ambuguities in insurance policies are to be resolved in favor of the insured, and holds that Corgatelli may recover at least $300 pursuant to the “shoulder joint” benefits of Part 2.

Thus far they had properly ruled. An ambiguity was found — medical impossibility of dislocation of the collar bone — and intent of the parties was resolved in favor of the insured construing the contract as he understood its terms at the time of making.

Unfortunately, the majority further applied the doctrine of reasonable expectation to double payment provisions concerning open reduction and metallic fixation. Though they stated an ambiguity existed, they failed to argue the point and based application of the doctrine on the before mentioned public policy argument. I contend that no ambiguity existed, and as such the doctrine should not have been applied. Intent clearly was ascertainable from the contract itself,

“For an Open Operation with Bone Grafting or Metallic Fixation at Point of Fracture the Amount Payable will be Twice the Amount Payable for Simple Fracture.”

The above phrase, construed in its plain, ordinary sense, is susceptible to but one meaning — double benefits are payable only where outlined procedures are applied to a point of fracture. Testimony is uncontradicted that no fracture was involved. Therefore, benefits under this provision cannot be allowed.

Again, the Court construes an insurance policy for the purpose of determining the intent of the parties. If the contract is unambiguous, intent must be derived from the plain meaning of its language. To revert to the doctrine of reasonable expectation in such an instance controverts its purpose.

The decision of the district court should be affirmed.

McFADDEN, J., joined in dissent.