Summary
In Merchants Mutual Casualty Co. v. Melcher, 94 N.H. 174, 49 A.2d 504 (Sup. Ct. 1946), the court said that the test to be applied is not what the insurance company intended the clause to mean, but what a reasonable person would have understood it to mean.
Summary of this case from Gunther v. Metropolitan Cas. Ins. Co.Opinion
No. 3589.
Decided November 6, 1946.
A clause in a motor vehicle liability policy issued to a city, excluding coverage for actions against its employees because of injury to other employees thereof, does not thereby exclude from its coverage as an "employee" a recipient of county relief who by governmental arrangement renders services to the insured which are not a prerequisite to the aid received but are merely incidental thereto. In construing an insurance contract the test is not what the insurance company intended the words of the policy to mean but what a reasonable person in the position of the insured would have understood them to mean.
PETITION for a declaratory judgment, to determine the rights of the parties under a motor-vehicle liability policy. The policy was issued by the plaintiff September 4, 1940, for one year with the defendant city of Franklin as the named insured. It was approved by the Insurance Commissioner. March 4, 1941, the defendant Melcher received personal injuries while working for the city as a helper on a truck used in the collection of garbage, which truck was covered by said policy. He stood in the truck and received and emptied barrels of garbage handed up by other workmen. The vehicle was driven by the defendant Bruno McDonald, who was operating it in the capacity of a regular employee of the city in its highway department and who gave the instructions that were carried out by Melcher. The latter brought an action on the case for negligence against McDonald. At the time of the accident Ned Melcher was a recipient of relief from the county of Belknap, which was granted by the overseer of the poor of the city of Franklin as agent for the county. The Court found: "There was no hourly pay basis or any other kind of pay basis agreed upon or contemplated between Melcher and the city, Melcher and the county, or the city and the county. There was no relation between the amount of relief he received and the amount of work he did." The city of Franklin had not accepted the provisions of the Workmen's Compensation Act for its highway department employees.
The Court (Lorimer, C. J.) reserved and transferred without ruling the questions whether Melcher was an employee of the highway department of the city at the time of the accident and, if so, whether the policy covered McDonald for liability to him.
Murchie Murchie (Mr. Alexander Murchie orally), for the plaintiff.
Robert W. Upton and Richard F. Upton (Mr. Richard F. Upton orally), for the defendant Melcher.
One of the questions transferred by the Court is whether Mr. Melcher at the time of the accident was an employee of the city of Franklin. If he was not, he does not come within the provisions of the policy excluding coverage to persons of the class of employees and the plaintiff is obligated to pay any judgment recovered by him in the suit against the regular employee McDonald. The material parts of the policy that contain the word to be construed are two. First, there is an express exclusion of liability to any employee of the insured as follows: "EXCLUSIONS . . . (e) under Coverage A, to bodily injury to or death of any employee of the insured while engaged in the business, other than domestic employment, of the insured, or while engaged in the operation, maintenance or repair of the automobile; or to any obligation for which the insured may be held liable under any workmen's compensation law; . . ." Then in the statement of the coverage of the policy under "Definitions of `Insured,'" there is the following: "The provisions of this paragraph do not apply: . . . (d) to any employee of an insured with respect to any action brought against said employee because of bodily injury to or death of another employee of the same insured injured in the course of such employment in an accident arising out of the maintenance or use of the automobile in the business of such insured." Concerning the purpose of this last quoted provision, it has been said: "Thus, regardless of whether the suit is brought against the named insured or the additional insured, the same result should logically follow, and the insurer will be relieved of liability." 7 Appleman, Insurance Law and Practice 240. The meaning of the term "employee" in the question of the Court is limited to the sense in which it was used in the above quoted provisions of the policy. If Melcher was not excluded from coverage under the policy, then the plaintiff must defend and pay any judgment awarded him against McDonald.
If one considers the number of cases that have been decided either way with respect to whether a recipient of welfare relief who performs work is an employee or not, one cannot doubt that the word employee is ambiguous. 14 Words and Phrases, Employee, Relief work, 499. Cases discussing whether or not one on relief who works is an employee under workmen's compensation acts and deciding either way are found in 127 A.L.R. 1483. Similarly in 30 C. J. S. 227-231 under the title "Employee," instances of relief workers are given who have been held to be employees and of others who have not been so classified.
The test to be applied in the interpretation of the insurance policy has been definitely stated in Hoyt v. Insurance Co., 92 N.H. 242, 243. "In construing an insurance contract the test is not what the insurance company intended the words of the policy to mean but what a reasonable person in the position of the insured would have understood them to mean." Numerous cases are cited in support. The city of Franklin in fact did not classify those on relief together with the regular employees. The highway commissioner testified: "There were two classes of men, the unemployed or O.P.'s and the employees of the city of Franklin; one received pay and the other received no money, so that was kept separate from the regular employees . . . in a separate book." Evidence of a former overseer of the poor also brought out the difference between the two groups so far as the city was concerned. "Q. What were they [relief recipients] sent to work for, why were they sent down to work? A. Principally to keep them off the street. Q. What account was made of the money they earned working for the city? A. I don't know as there was any account kept of any money they earned for the city. Q. You didn't keep any account then as overseer of the poor? A. No."
There are distinctions between a recipient of relief who as a consequence works for his county or city and a workman that may be termed a regular employee. The work rendered by those who were charges on the municipality or the county was performed primarily to remove the possible stigma of their positions and to gain the goodwill of the overseers of the poor, while that of the regular employees was done because of its utility and desirability. In the governmental arrangement with the former, work was incidental to aid received; in that with the latter, pay was dependent upon the work. Relief was generally given in advance of the work and not in money; the usual employees were paid in money after the work was done. The time of those on relief was measured to the amount of aid given; regular employees worked during customary business hours.
It is a reasonable conclusion that the defendant Melcher was not an employee of the city of Franklin within the meaning of the exclusionary clauses of the policy under consideration. Accordingly he is entitled to its benefits.
Judgment for the defendants.
All concurred.