Catawba Valley MacHinery Co. v. Aetna Insurance Co.

185 S.E.2d 308 (1971)

13 N.C. App. 85

CATAWBA VALLEY MACHINERY CO., Inc. v. AETNA INSURANCE COMPANY.

No. 7125SC516.

Court of Appeals of North Carolina.

December 15, 1971.

Certiorari Denied January 28, 1972.

*310 Kenneth D. Thomas, Hickory, for plaintiff appellant.

Patrick, Harper & Dixon, by Bailey Patrick and F. Gwyn Harper, Jr., Hickory, for defendant appellee.

Certiorari Denied by Supreme Court January 28, 1972.

GRAHAM, Judge.

The first question presented by this appeal is whether, at the time the machines were damaged, they were being held in trust by the insured within the meaning of paragraph 2 of the policy which includes among the property covered, "property of the Insured, or held by them in trust..."

We think this question must necessarily be answered in the affirmative. It is universally held that the words "held in trust," when used in a policy of insurance, are not to be taken in their technical sense so as to limit coverage to cases where title to property is vested in a trustee, but are to be considered as inclusive of all property which has been entrusted to the insured. See Annotation, 67 A.L.R.2d 1241, 1245, and cases there cited. "The words `in trust' may, with entire propriety, be applied to any case of bailment, where goods belonging to one person are entrusted to the custody or care of another, and for which the bailee is responsible to the owner." Exton & Co. v. Home Fire & Marine Ins. Co., 249 N.Y. 258, 164 N.E. 43.

This holding is consistent with general principles prevailing in North Carolina to the effect that "[t]he terms of an insurance contract must be given their plain, ordinary, and accepted meaning unless they have acquired a technical meaning in the field of insurance, or unless it is apparent that another meaning was intended." 4 Strong, N.C. Index 2d, Insurance, § 6 at 462.

Defendant does not seriously question this interpretation, stating in its brief:

"For the purpose of argument we assumed that the words `in trust' as used in the policy in question are not to be interpreted as meaning only a technical trust in which title to the property is held by the trustee, but are to be interpreted in the commercial or mercantile sense as embracing property of others, possession of which has been entrusted to the insured for which the insured may be called to account. The words `in trust,' when thus interpreted are equivalent to stating that a general bailment exists between the owner and the insurance carrier."

The next question becomes: Were the machines which were "held in trust" by the insured excluded from coverage by the language of paragraph 7(d), which specifically provides that the policy does not insure goods carried by the insured under a contract or agreement of hauling or as a bailee for hire? These words were selected by the insurance company and therefore any ambiguity or uncertainty as to their meaning must be resolved in favor of plaintiff and against the company. Wachovia Bank & Trust Co. v. Westchester Fire Insurance Co., 276 N.C. 348, 172 S.E.2d 518. However, an insurance contract, like any other contract, is to be construed according to the sense and meaning of its terms, and if the terms used are clear *311 and unambiguous, they are to be taken and understood in their plain, ordinary and popular sense. Powers v. Travelers' Insurance Co., 186 N.C. 336, 119 S.E. 481.

We find no ambiguity or uncertainty in the language of paragraph 7(d). The language used is simple and all the terms have well understood meanings. The clause simply excludes from coverage goods which, although held by the insured "in trust" for another, are being transported by the insured under a contract or an agreement of hauling or as bailee for hire.

"The heart of a contract is the intention of the parties, which is to be ascertained from the expressions used, the subject matter, the end in view, the purpose sought, and the situation of the parties at the time." Gould Morris Electric Co. v. Atlantic Fire Insurance Co., 229 N.C. 518, 520, 50 S.E.2d 295, 297. Through the exclusion contained in paragraph 7(d), the parties obviously intended to preclude coverage to cargo transported under a "contract of hauling," as contrasted with cargo transported by plaintiff in the course of its customary business of purchasing and selling hosiery machinery. Without such a provision, plaintiff would have received protection under the policy even if it had entered the business of "contract hauling," a business which involves a broader risk than the risks which the policy in question was intended to cover.

Plaintiff contends that there is an irreconcilable conflict between paragraph 2 and paragraph 7(d) in that the coverage purportedly provided in the former paragraph is totally eliminated by the latter paragraph. If provisions in an insurance contract are conflicting, the provision favorable to the insured should be held controlling. Felts v. Shenandoah Life Insurance Co., 221 N.C. 148, 19 S.E.2d 259. However, we do not find an irreconcilable conflict in the provisions of the two paragraphs. Comprehensive coverage provisions of an insurance contract must be read together with other provisions, which through exclusions, more definitely define the scope of the coverage provided. We note that many insurance contracts have exclusion clauses which limit coverage. This is a well accepted and effective manner of specifically defining the actual coverage intended. Of course an exclusion purporting to totally eliminate the coverage defined in a comprehensive statement of coverage would present an irreconcilable conflict. Here, however, paragraph 7(d) does nothing more than limit the protection afforded to that which would ordinarily be needed by a hosiery machinery dealer who is not in the business of hauling for hire. Had plaintiff desired more comprehensive coverage, it was available, although undoubtedly at a higher premium.

The final question is whether plaintiff's evidence conclusively shows that plaintiff was transporting the machines under a contract or an agreement of hauling or as a bailee for hire at the time they were damaged.

Plaintiff offered evidence tending to show that it agreed to transport the machines in question as a favor for its customer, the owner, and not for the purpose of realizing a profit. It contends that the $8.50 an hour was charged simply to help defray expenses. Plaintiff further argues that the court should have permitted evidence of its total volume of business for the year 1968 for the purpose of showing that transporting the machines in question was only a small part of that total. We do not agree.

The question is whether there was a valid and enforceable contractnot whether it was profitable, or whether it was motivated by a desire on plaintiff's part to incur the favor of a customer. The law does not require the consideration to be in exact proportion to the thing to be done. "`The slightest consideration is sufficient to support the most onerous obligation; the inadequacy, as has been well said, is for the parties to consider at the time of making the agreement, and not for the court when *312 it is sought to be enforced.'" Young v. Board of Com'rs of Johnston County, 190 N.C. 52, 57, 128 S.E. 401, 403.

In our opinion, plaintiff's evidence shows that the machines were being transported under a contract of hauling. "When the plaintiff fails to show coverage under the insuring clause or establishes an exclusion while making out his prima facie case, nonsuit is proper." Williams v. Pyramid Life Insurance Co., 2 N.C.App. 520, 523, 163 S.E.2d 400, 402. Since plaintiff's evidence here conclusively establishes an exclusion, the directed verdict entered for defendant was proper.

Affirmed.

MALLARD, C. J., and HEDRICK, J., concur.