Bankers & Shippers Insurance v. Urie

Gilbert, C. J., delivered the opinion of the Court. Stripped bare of rhetoric, legal niceties, and the like, this appeal boils down to what is meant by the conjunction “and” 1 as used in a policy of aircraft liability insurance. ²³⁴ The particular clause of the policy upon which our attention is focused reads: “PILOTS: The coverage afforded by this policy shall not apply while the [insured] aircraft is operated in flight by other than the following pilots: PAUL ERICKSON AND WILFORD GOLDMAN” (Emphasis supplied.) The appellant-insurer, Bankers and Shippers Insurance Company of New York (Bankers), quotes from three out-of-state opinions 2 which rely upon Black's Law Dictionary 112 (4th ed. 1968); 3A C.J.S. And450-51 (1973); and Century Dictionary (1911). All three authorities share common definitions of “and” as “along with,” “also,” “besides,” “moreover,” “in addition to,” and “together with.” The various appellees 3 assign a different meaning to “and” and support it by similarly impressive authority including Kennedy v. Haskel, 67 Kan. 612, 617 , 73 P. 913, 914 (1903); Fidelity & Deposit Co. v. Mattingly Lumber Co., 176 Md. 217, 226 , 4 A. 2d 447, 452 (1939); and Webster’s Third New International Dictionary 80 (1976). There are, to be sure, other issues involved in this matter,. but the overriding one is the meaning of the conjunction “and” as used in the above quoted portion of the aviation ²³⁵ insurance policy. 4 “Words,” Rudyard Kipling observed, “are ... the most powerful drug used by mankind.” Speech, February 14, 1923.

Accepting Kipling’s pronouncement as true arguendo, the question becomes who received the “fatal overdose,” Bankers or the appellees? For the reasons stated infra, we conclude that Bankers’ appeal must fail, and, accordingly, we affirm the judgment of the Circuit Court for Washington County. THE FACTS Effective April 30,1973, Bankers issued an aircraft liability policy to Electro Enterprises, Inc. (Electro) of Hagerstown, Maryland. The policy provided for bodily injury coverage limits in the amount of $1,000,000 for each occurrence and $100,000 for each person.

Item No. 7 of the policy contained the pilot limitation set out above ipsissimis verbis. On March 29,1974, Electro owned a Cessna Model 421 dual control aircraft. The plane left Hagerstown on that date for Scottsdale, Arizona 5 where a business meeting was to take place. There were five persons aboard including Paul Erickson, president of Electro, who was a pilot with a private plane license, Earl G. Bittle, a pilot who held a commercial license, Joseph Urie, Caswell Nuger and Irvin G. Turner. 6 A transcript of a recorded conversation between the pilot of the Cessna and the Air Route Traffic Control Center, Olathe, Kansas revealed that on the evening of March 29, 1974, at 7:19 p.m., the pilot reported: “[Wje’re picking up very heavy icing we’d like to start a route around this please.” ²³⁶ The route around the icing conditions was granted by the Control Center.

Three minutes later a “May day may day” transmission was heard by Control and other aircraft in the area. The distress call was followed by — “Three one 7 (unintelligible) spinning.” No more was heard by the Control Center from the Cessna, but an Ozark Airlines flight radioed that he heard an aircraft report “out of control and spinning in heavy icing....” A ground search was initiated, and shortly thereafter the wreckage of the Cessna was found where it had crashed, in Clark National Forest, near Bunker, Missouri. There were no survivors. All the appellees, except Electro, brought suit against the corporate owner of the aircraft.

Demand was made by Electro that Bankers defend the actions. Bankers disclaimed coverage on the ground that “at the time of the alleged fatal accident [the plane] was being piloted by Earl G. Bittle, and second pilot, Paul C. Erickson, in direct violation of the .policy contract.” Bankers, on December 13, 1974, filed, in the circuit court, a declaration for declaratory judgment and petition for injunction as ancillary relief. The declaration was subsequently amended. The matter went to trial before Judge Irvine H. Rutledge and a jury on July 28,1976.

A single issue, videlicet, “Do you find that Earl Bittle was actually manipulating the controls of the airplane at the time of the' crash?”, was submitted to the jury on the third day of the trial. The jury answered the issue by the single word, “No.” Thus, the jury implicitly found that Paul Erickson was the pilot of the ill-fated aircraft at the time of the crash. Following the jury’s factual finding, Judge Rutledge ruled: “(1) The words “Goldman and Erickson mean “Goldman or Erickson”, so as to afford coverage if either was the pilot at the time of the ... accident. (2)... [Bankers] is not relieved from defending [the] cases filed against it in related proceedings arising ²³⁷ out of the ... accident.

(3) No stay in [the related] proceedings is granted____” (Emphasis supplied.) 8 THE LAW The application for Electro’s aircraft insurance policy was signed on behalf of the company by Paul C. Erickson, its president. Immediately preceding Mr. Erickson’s signature appeared the legend: “All particulars herein are warranted true and complete to the best of my/our knowledge and no information has been withheld or suppressed and I/we agree that this Application and the terms and conditions of the policy in use by the insurer shall be the basis of any contract between me/us and the Insurer. I hereby authorize this Company to investigate all or any qualifications or statements contained herein.” The application contained a statement that the aircraft was for “Corporate — Executive” purposes and would be “flown by professional pilots employed for this purpose.” Additionally, “[o]ther [u]ses not indicated above” were explained by the wording, “Paul Erickson, Pres. — Student Pilot,” thus clearly showing that Mr. Erickson would also pilot the plane. The application made manifest that “INA declined to write policy with Paul Erickson as a student pilot.” During the course of the three-day trial involving this matter, Bankers sought to introduce the application into evidence.

Following a bench conference, which is not recorded in the transcript, an objection to the admission of the application was sustained. 9 It is the declination by Judge Rutledge to admit the application into evidence that Bankers perceives to be reversible error, but, as we have previously indicated, we do not share that point of view. ²³⁸ Maryland has unflinchingly adhered to the theory of the objective law of contracts at least since McKeever v. Washington Heights Realty Corp., 183 Md. 216, 220 , 37 A. 2d 305, 308 (1944). See also, e.g., Orkin v. Jacobson, 274 Md. 124, 128 , 332 A. 2d 901, 903-04 (1975); Little v. First Federated Life Ins. Co., 267 Md. 1, 5 , 296 A. 2d 372, 375 (1972); Slice v. Carozza Properties, Inc., 215 Md. 357, 368 , 137 A. 2d 687, 693 (1958); Ray v. Eurice, 201 Md. 115, 126-27 , 93 A. 2d 272, 279 (1952). By “objective law of contracts,” wé mean that the written language of the contract will be determinative of the liabilities and rights of the parties thereto, regardless of the contemplation of the parties, exclusive of fraud, duress or mutual mistake, at the time they entered into the agreement, unless the written language is not open to an unqualified understanding.

Orkin v. Jacobson, supra, 274 Md. at 128 , 332 A. 2d at 903-04 ; Slice v. Carozza Properties, Inc., supra, 215 Md. at 368 ; 137 A. 2d at 693 ; Ray v. Eurice, supra, 201 Md. at 127 , 93 A. 2d at 279 . The objective law rule was trenchantly explicated by Judge Levine in Fasten Constr. Co. v. Rod Enterprises, Inc., 268 Md. 318 , 301 A. 2d 12 (1973), when he penned for the Court: “The cardinal rule in the construction and interpretation of contracts is that effect must be given to the intention of the parties, unless it is inconsistent with some established principle of law, Hardy v. Brookhart, 259 Md. 317 , 270 A. 2d 119 (1970); Cadem v. Nanna, 243 Md. 536 , 221 A. 2d 703 (1966); Schapiro v. Jefferson, 203 Md. 372 , 100 A. 2d 794 (1953). But, where a contract is plain and ²³⁹ unambiguous, there is no room for construction, and it must be presumed that the parties meant what they expressed, Little v. First Federated Life, 267 Md. 1 , 296 A. 2d 372 (1972); Kermisch v. Savings Bank, 266 Md. 557 , 295 A. 2d 776 (1972); Devereux v. Berger, 253 Md. 264 , 252 A. 2d 469 (1969).

And, when the language of a contract is clear, the true test of what is meant is not what the parties to the contract intended it to mean, but what a reasonable person in the position of the parties would have thought it meant. U.S.I.F. Triangle v. Rockwood Dev. Co., ... [ 261 Md. 379 , 275 A. 2d 487 (1971)]; Seldeen v. Canby, 259 Md. 526 , 270 A. 2d 485 (1970); Katz v. Pratt Street Realty, 257 Md. 103 , 262 A. 2d 540 (1970).” 268 Md. at 328-29 , 301 A. 2d at 18 . The contract in the case sub judice was integrated in the form of the aircraft liability policy issued by Bankers to Electro.

Of course, by integrated we mean that the parties adopted the written policy “as the final and complete expression of the agreement. An integration is the writing or writings so adopted.” 1 Restatement of Contracts § 228 (1932). Ray v. Eurice, supra, 201 Md. at 127 , 93 A. 2d at 279 , states: “... [W]here there has been an integration of an agreement, those who executed it will not be allowed to place their own interpretation on what it means or was intended to mean. The test in such case is objective and not subjective.” Thus, “[i]t follows that the test of the true interpretation of an offer or acceptance is not what the party making it thought it meant or intended it to mean, but what a reasonable person in the position of the parties would have thought it meant.” (Footnote omitted.) 1 Williston on Contracts § 94 (3rd ed. 1957).

The insurance