Great American Insurance v. Royal Globe Property & Casualty Co.

No. 81-206
I N THE SUPREME COURT O THE STATE O M N A A
F F OTN
1982
GA
-T AMERICAN INSURANCE COMPANY,
P l a i n t i f f and Respondent,
R Y L GLOBE PROPERTY AND CASUALTY
O A
COMPANY,
D e f e n d a n t and A p p e l l a n t .
Appeal from: D i s t r i c t Court of t h e T h i r t e e n t h J u d i c i a l D i s t r i c t ,
I n and f o r t h e County o f Y e l l o w s t o n e , The H o n o r a b l e
Diane G. B a r z , J u d g e p r e s i d i n g .
Counsel o f Record:
For A p p e l l a n t :
Moulton, B e l l i n g h a m , Longo & M a t h e r , B i l l i n g s ,
Montana
B r e n t R. Cromley a r g u e d , B i l l i n g s , Montana
F o r Respondent:
Crowley, Haughey, Hanson, T o o l e & D i e t r i c h , B i l l i n g s ,
Montana
C y n t h i a Ford a r g u e d , B i l l i n g s , Montana
Submitted; December 2 , 1981
Decided: -
APR 6 1982
Filed: -
APR 6 1982
Mr. Justice Daniel J. Shea delivered the Opinion of the
Court.
Royal Globe Property and Casualty Co. appeals from an
order of the Yellowstone County District Court which com-
pelled Royal Globe to indemnify Great American Insurance
Company for a fire loss sustained by Ramsey Lumber Company.
Great American paid the insurance claim and then filed suit
claiming indemnification for its share of all sums expended
by Great American in defending and settling claims against
Ramsey Lumber Company. Both parties filed motions for
summary judgment. The trial court granted Great American's
motion for summary judgment which had the effect of ordering
Royal Globe to indemnify Great American. Royal Globe raises
three issues on appeal.
Royal Globe contends first that it was entitled to
summary judgment because its policy had been effectively
cancelled before the claims against Ramsey Lumber Company
arose. Royal Globe further argues that Great American was
not entitled to summary judgment because, as a matter of
law, Great American was not entitled to subrogation. Last,
Royal Globe argues that Great American lacks standing to
sue, and that summary judgment was improper because material
facts are in dispute.
We reverse the judgment of the District Court and hold
that the issuance of the Great American policy cancelled the
Royal Globe policy.
Ramsey Lumber Co., a lumber company in Laurel, Montana,
is a client of Hoiness-LaBar Insurance Agency of Billings,
Montana. Since 1974 or 1975, Dennis Gambill, an agent of
Hoiness-LaBar, has handled the insurance needs of Ramsey
Lumber, exercising broad authority in obtaining, replacing
and maintaining insurance coverage for Ramsey umber.
On April 1, 1977, Ramsey Lumber was issued a Royal
Globe insurance policy through Hoiness-LaBar Insurance
Agency. The Royal Globe policy was a "general business
insurance package." Among other things, it included coverage
for fire loss and liability from automobile collisions.
This policy was to run until April 1, 1980.
In June 1977, Ramsey Lumber sustained a fire loss in
excess of $65,000. After the fire, Royal Globe reviewed the
policy, and wishing to be taken off the risk, requested
Hoiness-LaBar to replace the policy with another insurer.
After attempting unsuccessfully to persuade Royal Globe to
remain on the risk, Hoiness-LaBar (without notifying Ramsey
Lumber) applied to other insurance companies on behalf of
Ramsey Lumber. One of these applications was to Great
American, and it contained information concerning Ramsey
Lumber, including the fact that Royal Globe was the present
insurer. On September 26, 1977, Great American agreed to
accept the risk, and authorized Hoiness-LaBar to issue an
insurance binder effective October 1, 1977. That same day
(September 26), Hoiness-LaBar advised Royal Globe by mail
that the Royal Globe policy had been "replaced" as of October
1, 1977. Both the Royal Globe and the Great American policies
contained an "other insurance" clause stating that, if more
than one insurer had insured the loss, the loss would be
shared equally by the insurers. Both policies were sub-
stantially the same as to the types and amounts of coverage
provided.
On October 12, 1977, an employee of Ramsey Lumber,
while in the course of company business, was involved in an
automobile accident which resulted in claims being filed
against Ramsey Lumber. Great American assumed the defense
of these claims, and on January 16, 1978, notified Royal
Globe of the claims and invited their participation in the
defense. On March 16, 1978, Great American notified Royal
Globe that it intended to settle the claims and demanded
that Royal Globe assume liability for "its share" of the
cost of defending and settling the claims. Royal Globe did
not respond to this demand, and Great American ultimately
settled the claims against Ramsey Lumber for $224,128.35,
plus $2,900 collision loss paid to Ramsey Lumber.
Great American filed this suit on July 25, 1979, seeking
indemnification from Royal Globe on the grounds that the
Royal Globe policy was in effect at the time the claims
against Ramsey Lumber occurred. Royal Globe defended on the
grounds that its policy was cancelled effective October 1,
1977, and that Great American had no standing to bring
suit. Royal Globe also denied that Great American was
subrogated to any rights of Ramsey Lumber. Summary judgment
was entered in favor of Great American and Royal Globe
appeals.
Hoiness-LaBar possessed broad authority to act on
behalf of Ramsey Lumber. The record shows that Ramsey
Lumber relied exclusively on Hoiness-LaBar to tend to its
insurance needs. The uncontroverted testimony of Ms. Colleen
Ramsey reveals that Ramsey Lumber Company had long relied on
Hoiness-LaBar to place, replace, and maintain adequate
insurance coverage on behalf of the company. Hoiness-
LaBar had the authority to replace the Royal Globe policy
without the express assent or knowledge of Ramsey Lumber.
See Bituminous Casualty Corp. v. Aetna Insurance Co. (8th
Cir. 1972), 461 F.2d 730.
The intent of all parties involved here is equally
clear. Ramsey Lumber did not want two identical insurance
policies. Royal Globe requested to be taken off the risk,
and Great American issued a replacement policy with knowledge
that the previous insurer had asked to be removed. It would
conflict with the clear intent of all parties involved to
hold that both policies were in effect after Great American
had issued the replacement policy. Nelson v. American
Reliable Insurance Company (Minn. 1970), 174 N.W.2d 126. We
therefore hold that the issuance of the replacement policy
effectively cancelled the Royal Globe policy.
Our holding eliminates the need to discuss the remaining
two issues.
The judgment of the District Court is reversed and
remanded with instructions to enter summary judgment for
Royal Globe.
We Concur:
d Justices
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