{ "id": 1555210, "name": "OMNI AVIATION MANAGERS, INC., Plaintiff-Appellee, v. William P. BUCKLEY and Doris C. Buckley, Defendants and Third Party Plaintiffs-Appellants", "name_abbreviation": "Omni Aviation Managers, Inc. v. Buckley", "decision_date": "1982-03-02", "docket_number": "No. 13528", "first_page": "477", "last_page": "482", "citations": [ { "type": "official", "cite": "97 N.M. 477" }, { "type": "parallel", "cite": "641 P.2d 508" } ], "court": { "name_abbreviation": "N.M.", "id": 8835, "name": "Supreme Court of New Mexico" }, "jurisdiction": { "id": 52, "name_long": "New Mexico", "name": "N.M." }, "cites_to": [ { "cite": "119 S.W. 249", "category": "reporters:state_regional", "reporter": "S.W.", "year": 1909, "opinion_index": 0 }, { "cite": "90 Ark. 256", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1513865 ], "year": 1909, "opinion_index": 0, "case_paths": [ "/ark/90/0256-01" ] }, { "cite": "295 S.W.2d 894", "category": "reporters:state_regional", "reporter": "S.W.2d", "case_ids": [ 2252376, 10181326 ], "year": 1956, "opinion_index": 0, "case_paths": [ "/tex/156/0456-01", "/sw2d/295/0894-01" ] }, { "cite": "156 Tex. 456", "category": "reporters:state", "reporter": "Tex.", "case_ids": [ 2252376 ], "year": 1956, "opinion_index": 0, "case_paths": [ "/tex/156/0456-01" ] }, { "cite": "470 S.W.2d 296", "category": "reporters:state_regional", "reporter": "S.W.2d", "case_ids": [ 10149980 ], "opinion_index": 0, "case_paths": [ "/sw2d/470/0296-01" ] }, { "cite": "93 N.M. 677", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 1568718 ], "weight": 2, "year": 1979, "pin_cites": [ { "page": "679" }, { "page": "372" } ], "opinion_index": 0, "case_paths": [ "/nm/93/0677-01" ] }, { "cite": "94 N.M. 65", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 1573153 ], "weight": 4, "year": 1980, "pin_cites": [ { "page": "68" }, { "page": "606", "parenthetical": "citation omitted" } ], "opinion_index": 0, "case_paths": [ "/nm/94/0065-01" ] }, { "cite": "83 N.M. 534", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 5334291 ], "weight": 5, "year": 1972, "pin_cites": [ { "page": "536" }, { "page": "614" } ], "opinion_index": 0, "case_paths": [ "/nm/83/0534-01" ] }, { "cite": "8 DePaul L.Rev. 25", "category": "journals:journal", "reporter": "DePaul L. Rev.", "weight": 3, "year": 1958, "pin_cites": [ { "page": "27" }, { "page": "33" } ], "opinion_index": 0 }, { "cite": "99 L.Ed. 911", "category": "reporters:federal", "reporter": "L. Ed.", "year": 1955, "pin_cites": [ { "parenthetical": "footnote omitted" } ], "opinion_index": 0 }, { "cite": "349 U.S. 85", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 11333728 ], "weight": 2, "year": 1955, "pin_cites": [ { "page": "91", "parenthetical": "footnote omitted" }, { "page": "632", "parenthetical": "footnote omitted" } ], "opinion_index": 0, "case_paths": [ "/us/349/0085-01" ] }, { "cite": "48 N.W.2d 534", "category": "reporters:state_regional", "reporter": "N.W.2d", "year": 1951, "opinion_index": 0 }, { "cite": "234 Minn. 379", "category": "reporters:state", "reporter": "Minn.", "case_ids": [ 179616 ], "year": 1951, "opinion_index": 0, "case_paths": [ "/minn/234/0379-01" ] }, { "cite": "214 N.W.2d 63", "category": "reporters:state_regional", "reporter": "N.W.2d", "year": 1973, "pin_cites": [ { "parenthetical": "provision that bailee \"shall not be liable for the loss of, or damage to, the aforesaid equipment, however caused\" held to unequivocally absolve bailee of liability for own negligence" } ], "opinion_index": 0 }, { "cite": "50 Mich.App. 703", "category": "reporters:state", "reporter": "Mich. App.", "case_ids": [ 2102817 ], "year": 1973, "pin_cites": [ { "parenthetical": "provision that bailee \"shall not be liable for the loss of, or damage to, the aforesaid equipment, however caused\" held to unequivocally absolve bailee of liability for own negligence" } ], "opinion_index": 0, "case_paths": [ "/mich-app/50/0703-01" ] }, { "cite": "103 F.Supp. 902", "category": "reporters:federal", "reporter": "F. Supp.", "case_ids": [ 336182 ], "opinion_index": 0, "case_paths": [ "/f-supp/103/0902-01" ] }, { "cite": "389 S.W.2d 135", "category": "reporters:state_regional", "reporter": "S.W.2d", "case_ids": [ 10156442 ], "opinion_index": 0, "case_paths": [ "/sw2d/389/0135-01" ] }, { "cite": "229 S.W.2d 1016", "category": "reporters:state_regional", "reporter": "S.W.2d", "case_ids": [ 10219417, 2330557 ], "year": 1950, "opinion_index": 0, "case_paths": [ "/sw2d/229/1016-01", "/tex/149/0147-01" ] }, { "cite": "149 Tex. 147", "category": "reporters:state", "reporter": "Tex.", "case_ids": [ 2330557 ], "year": 1950, "opinion_index": 0, "case_paths": [ "/tex/149/0147-01" ] }, { "cite": "77 N.W. 977", "category": "reporters:state_regional", "reporter": "N.W.", "year": 1899, "opinion_index": 0 }, { "cite": "75 Minn. 445", "category": "reporters:state", "reporter": "Minn.", "case_ids": [ 1693159 ], "year": 1899, "opinion_index": 0, "case_paths": [ "/minn/75/0445-01" ] }, { "cite": "175 A.L.R. 8", "category": "reporters:specialty", "reporter": "A.L.R.", "year": 1948, "pin_cites": [ { "page": "19" } ], "opinion_index": 0 }, { "cite": "71 S.E.2d 133", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1952, "opinion_index": 0 }, { "cite": "235 N.C. 705", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8626633 ], "year": 1952, "opinion_index": 0, "case_paths": [ "/nc/235/0705-01" ] }, { "cite": "95 N.M. 193", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 1575567 ], "weight": 4, "year": 1980, "opinion_index": 0, "case_paths": [ "/nm/95/0193-01" ] }, { "cite": "298 S.W. 536", "category": "reporters:state_regional", "reporter": "S.W.", "case_ids": [ 2274853, 10297047 ], "weight": 2, "year": 1927, "pin_cites": [ { "page": "537" } ], "opinion_index": 0, "case_paths": [ "/tex/117/0130-01", "/sw/298/0536-01" ] }, { "cite": "117 Tex. 130", "category": "reporters:state", "reporter": "Tex.", "case_ids": [ 2274853 ], "year": 1927, "opinion_index": 0, "case_paths": [ "/tex/117/0130-01" ] }, { "cite": "44 A.L.R.3d 862", "category": "reporters:specialty", "reporter": "A.L.R. 3d", "year": 1972, "opinion_index": 0 }, { "cite": "43 A.L.R.3d 1283", "category": "reporters:specialty", "reporter": "A.L.R. 3d", "year": 1972, "opinion_index": 0 }, { "cite": "95 N.M. 193", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 1575567 ], "weight": 2, "year": 1980, "opinion_index": 1, "case_paths": [ "/nm/95/0193-01" ] } ], "analysis": { "cardinality": 843, "char_count": 16567, "ocr_confidence": 0.815, "pagerank": { "raw": 7.390673775165119e-08, "percentile": 0.44244220415939306 }, "sha256": "f54a96fd68049e4e19467157b3033ae7acb97d2031caf7829e3eb65f45e11bc5", "simhash": "1:9fa1e9e94a1e7237", "word_count": 2672 }, "last_updated": "2023-07-14T20:10:51.585150+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "EASLEY, C. J., and FEDERICI and RIORDAN, JJ., concur.", "SOSA, Senior Justice, respectfully dissenting." ], "parties": [ "OMNI AVIATION MANAGERS, INC., Plaintiff-Appellee, v. William P. BUCKLEY and Doris C. Buckley, Defendants and Third Party Plaintiffs-Appellants." ], "opinions": [ { "text": "OPINION\nPAYNE, Justice.\nPlaintiff-appellee Omni Aviation Managers, Inc. (Omni), as subrogee of the claim of the insured, Avcor Enterprises, Inc. (Av-cor), sued defendants-appellants Mr. and Mrs. Buckley for damages to Avcor\u2019s airplane due to the defendants\u2019 alleged negligence. The district court found that the defendants were negligent and that their rental contract with Avcor did not limit their liability for damage to the airplane. The defendants appeal, claiming three errors: 1) that the rental contract limited the lessee\u2019s liability for damage to the airplane; 2) that the plaintiff failed to join all indispensable parties, so that the trial court lacked jurisdiction to hear the case; and 3) that the trial court improperly applied the negligence law of New Mexico in deciding the case. We reverse on the first issue.\nOn September 2, 1976, defendant William Buckley signed a standard form rental agreement provided by Avcor which authorized him to rent airplanes from Avcor on a continuing basis. The contract contained the following provisions:\n17. I agree to pay for any loss or damage to the aircraft or to other persons or property caused in whole or in part by my failure to comply with the above, or by my negligence or pilot error, not covered by insurance. [Emphasis added.]\n18. I expressly agree to and hereby indemnify and hold lessor harmless of, from and against any and all loss, costs, damages, attorney\u2019s fees and/or liability in connection with the foregoing contract.\nThe contract also provided two statements: \u201cI agree to pay $1.00 per flight hour in lieu of the deductible physical damage liability [,]-Date-[;] I do not wish to pay the $1.00 per flight hour and agree to remain liable for the specified physical damage deductible liability [,] -Date--\u201d Neither of the statements was completed. Buckley rented an airplane from Avcor and piloted it from Albuquerque to Puerto Vallarta, Mexico. While attempting to land in Puerto Vallarta, the Buckleys negligently caused $10,371 in damage to the plane.\nThe Buckleys paid Avcor $2,913.72, which represented in part the costs of returning the damaged plane to Albuquerque and the deductible amount of $500 specified in Av-cor\u2019s insurance contract with Omni. Subsequently Omni paid Avcor $9,871.75 in damages pursuant to the insurance contract and brought suit against the Buckleys as subrogee of Avcor\u2019s claim.\nThe trial court found that \u201cthe terms of the rental agreement . .. did not limit the defendants\u2019 liability for damage to the aircraft\u201d and that the payment the Buckleys made to Avcor did not constitute a complete settlement and release relieving them from further liability. Therefore, the court concluded, Omni was entitled to judgment against the Buckleys.\nThe lease of personalty, such as an automobile or an airplane, is a bailment, and the lease agreement is governed by the law of contracts as well as the law of bailments. 8 Am.Jur.2d Bailments \u00a7 4 (1980); Annot., 43 A.L.R.3d 1283 (1972); Annot., 44 A.L.R.3d 862 (1972).\nAlthough an ordinary bailee is normally held liable for his negligence toward a bailed item, he may limit or disclaim his liability for his own negligence by so providing in the contract of bailment. Langford v. Nevin, 117 Tex. 130, 298 S.W. 536 (1927); 8 Am.Jur.2d Bailments \u00a7\u00a7 154-55 (1980). We have examined exculpatory clauses in contracts in the context of leases of real property, see Acquisto v. Joe R. Hahn Enterprises, Inc., 95 N.M. 193, 619 P.2d 1237 (1980), but not in the context of bailment contracts. In Acquisto, we held that the parties to a lease of real property may vary the rule that each bears the risk of loss caused by his own negligence, but to do so they must either agree to a specific allocation of the risk or must expressly provide in the lease that one party is relieved from liability for his negligence. We noted that one method by which the parties to the lease may agree to allocate the risk is by specifying which of them will carry fire insurance for the benefit of both. We also held that in determining whether the parties intended to vary the ordinary rules of liability, a court must construe the lease as a whole.\nThose courts of other jurisdictions which have dealt with contract clauses disclaiming or limiting a bailee\u2019s liability for his negligence have generally held that the exculpatory clause must be expressed in clear and unambiguous language. See, e.g., Hill v. Carolina Freight Carriers Corp., 235 N.C. 705, 71 S.E.2d 133 (1952). Most of them have also held that the clause will be strictly construed and \u201cwill not be interpreted as effecting the exemption if any other meaning may reasonably be ascribed to the language employed.\u201d Langford v. Nevin, supra, 298 S.W. at 537. The result of the application of this strict construction rule has often been that a contract provision that would seem to relieve the bailee of liability for his negligence is ruled not to do so because the parties failed to use the word negligence in the provision. See, e.g., Hill v. Carolina Freight Carriers Corp., supra (provision that plaintiff \u201cwill bear ... all losses thru [sic] ... collision to said motor vehicle\u201d held not to relieve defendant of liability for employee\u2019s negligence). Thus, the parties\u2019 ostensible freedom of contract has been circumvented through strict construction by the courts. Annot., 175 A.L.R. 8, 19 (1948). However, examination of those cases employing the strict construction rule reveals that in most of them the bailee either prepared the bailment contract, see, e.g., Minnesota Butter & Cheese Co. v. St. Paul Cold-Storage Warehouse Co., 75 Minn. 445, 77 N.W. 977 (1899); Hill v. Carolina Freight Carriers Corp., supra; McAshan v. Cavitt, 149 Tex. 147, 229 S.W.2d 1016 (1950); Langford v. Nevin, supra, or entered into a series of negotiations over the contract with the bailor, see, e.g., Anchor Casualty Co. v. Robertson Transport Co., 389 S.W.2d 135 (Tex.Civ.App.1965). Other courts have relaxed the strict construction rule, even when the bailee prepared the contract. See, e.g., Blinder v. United States Fire Ins. Co. of New York, 103 F.Supp. 902 (N.D.Ill.1952) (phrase \u201cany loss of or damage to said article\u201d held to refer to losses due to bailee\u2019s own negligence); Klann v. Hess Cartage Company, 50 Mich.App. 703, 214 N.W.2d 63 (1973) (provision that bailee \u201cshall not be liable for the loss of, or damage to, the aforesaid equipment, however caused\u201d held to unequivocally absolve bailee of liability for own negligence). See also Buckey v. Indianhead Truck Line, 234 Minn. 379, 48 N.W.2d 534 (1951).\nThe application of the strict construction rule has tended to weaken contract provisions that disclaim or limit the bailee\u2019s liability for his own negligence, and thus perpetuate the former rule that the bailee cannot exculpate himself from such liability. The two major purposes behind that rule have been \u201c(1) to discourage negligence by making wrongdoers pay damages, and (2) to protect those in need of goods or services from being overreached by others who have the power to drive hard bargains.\u201d Bisso v. Inland Waterways Corp., 349 U.S. 85, 91, 75 S.Ct. 629, 632, 99 L.Ed. 911 (1955) (footnote omitted).\nThe application of the rule of strict construction in the case at bar would do little to achieve those purposes. Avcor, the bailor, provided the contract without any participation from Buckley, the bailee, who obviously did not have the power to drive a hard bargain. If anything, it was Buckley and not Avcor who needed protection here. Also, to suggest that failure to apply the strict construction rule here \u201cwould, without more, tend to encourage bailees to be careless is unrealistic and ... highly conjectural and remote.\u201d Brodkey, Contractual Limitation of Bailee\u2019s Liability in Illinois, 8 DePaul L.Rev. 25, 27 (1958). Instead, a relaxation of the strict construction rule here would advance the goals of freedom of contract and security of transactions. We therefore hold that when the bailor prepares the contract of bailment without the participation of the bailee the rule that exculpatory clauses are to be strictly construed against exonerating the bailee from liability for his own negligence will not be rigorously applied. The parties to a bailment contract need not use any particular magic words to disclaim or limit the bailee\u2019s liability; their intent, clearly expressed or necessarily implied from the contract as a whole, will determine whether the bailee is liable. Thus, we adopt the rule of Acquisto v. Joe R. Hahn Enterprises, Inc., supra, as applicable to the case at bar.\nIn determining the intent of Avcor and Buckley regarding the limits of Buckley\u2019s liability, we must examine paragraphs 17 and 18 and the insurance options quoted above. Meaning and significance must be given to each provision in its proper context with all other parts of the agreement. Schultz & Lindsay Construction Co. v. State, 83 N.M. 534, 494 P.2d 612 (1972). Paragraphs 1 through 16 establish the standard of care Buckley had to exercise toward the airplane. Omni argues that paragraph 18 is an unlimited assumption of all liability by Buckley, and that paragraph 17 merely sets out his liability for damages not covered by insurance. Such a reading of the two paragraphs, however, makes paragraph 17 superfluous since it would merely be restating a part of what Buckley agreed to assume under paragraph 18. We reject this interpretation, since \u201c[t]he court will if possible give effect to all parts of the instrument and an interpretation which gives a reasonable meaning to all its provisions will be preferred to one which leaves a portion of the writing useless or inexplicable.\u201d 4 Williston on Contracts \u00a7 619, at 731 (3d ed. 1961) (footnote omitted). Instead, we read paragraph 17 as allocating the risk of personal injury or property damage caused by Buckley\u2019s departure from the standard of care established by paragraphs 1 through 16, or his negligence or pilot error. Paragraph 18 allocates all other risk under the contract.\nThe rental contract, however, is ambiguous. Paragraph 17 implies that the pilot\u2019s negligence is covered by insurance. The insurance options refer to \u201cdeductible physical damage liability\u201d and \u201cspecified physical damage deductible liability.\u201d A pilot could read the options as providing insurance to cover the deductible amount of the insurance already compensating for the damages dealt with by paragraph 17. From this he could reasonably conclude that he is liable under paragraph 17 for only the amount Avcor would itself be liable for under its insurance policy. This interpretation differs from Omni\u2019s interpretation, that paragraph 17 merely implicitly reserves a claim against the pilot for the specified damages, whether or not they are covered by insurance.\nBecause the contract is reasonably and fairly susceptible of different constructions, it is ambiguous. Vickers v. North Am. Land Developments, 94 N.M. 65, 607 P.2d 603 (1980). Although \u201c[t]he mere fact that the parties are in disagreement on the construction to be given does not necessarily establish ambiguity,\u201d id. at 68, 607 P.2d at 606 (citation omitted), we are unable to determine the parties\u2019 intent from the contract as a whole. \u201cThe mere fact that we have to speculate demonstrates the ambiguity of the agreement.\u201d Young v. Thomas, 93 N.M. 677, 679, 604 P.2d 370, 372 (1979).\nThere is no substantial extrinsic evidence in the record to support Omni\u2019s interpretation. Instead, there is evidence to support Buckley\u2019s interpretation. The construction of a contract adopted by the parties, as evidenced by their conduct, is entitled to some weight in ascertaining their intention and understanding of the contract. \u201cThis is particularly true as to the resolution of ambiguities and uncertainties of meaning in the contract [citations omitted], and especially so if the conduct of the parties manifesting their construction of the contract occurred prior to the development of a controversy between them.\u201d Schultz & Lindsay Construction Co. v. State, supra, 83 N.M. at 536, 494 P.2d at 614. After the accident but almost a year before this suit was filed, Avcor, at Omni\u2019s instruction, deleted paragraph 17 from all its contracts so that they would not contradict Avcor\u2019s insurance policy with Omni. This constitutes some evidence that Avcor and Omni realized that paragraph 17 was at least ambiguous.\nWe must construe the ambiguities in the contract most strongly against the party who drafted it. Id. Although Avcor did not draft the contract, it adopted it, so the contract will be construed against Omni, Avcor\u2019s subrogee. Since there is no substantial extrinsic evidence to support Omni\u2019s interpretation, we hold that the terms of the contract limit Buckley\u2019s liability to the amount of damages not covered by Avcor\u2019s insurance. Under these circumstances, this reasonable interpretation of the contract satisfies the rule of Acquisto v. Joe R. Hahn Enterprises, Inc., supra.\nOmni is also bound by the limitation of liability and cannot sue Buckley for reimbursement of its payments to Avcor under the insurance contract. See 16 Couch on Insurance 2d \u00a7\u00a7 61:111, :113 (1966). We therefore reverse the judgment of the trial court and remand the case with directions to dismiss Omni\u2019s claim against the Buckleys.\nIT IS SO ORDERED.\nEASLEY, C. J., and FEDERICI and RIORDAN, JJ., concur.\nSOSA, Senior Justice, respectfully dissenting.\n. Whether the first option was still available at the time Buckley signed the contract was disputed at trial. Buckley testified that it was not pencilled out at the time he signed the agreement. Gelder, the president of Avcor, testified that, although he was not present when Buckley signed the contract, it was Avcor\u2019s policy for their representative to cross out the first option at the time of signing. However, at oral argument, Omni\u2019s counsel conceded that both options must be considered as part of the whole contract in order to determine the parties\u2019 intent.\n. We use the term \u201cordinary bailee\u201d here to refer to a bailee in an arrangement that is \u201cessentially private in nature, so that no other than the bailor and bailee are directly and materially affected\u201d by the limitation of liability. Brodkey, Contractual Limitation of Bailee's Liability in Illinois, 8 DePaul L.Rev. 25, 33 (1958). We do so because those bailees involved in arrangements which directly affect third parties, such as common carriers, are not permitted, absent special legislation, to limit their liability for their own negligence as a matter of public policy. Id.\n. The application of the rules governing leases of realty to cases involving bailment contracts, and vice versa, is not unheard of. See, for example, Bleakley v. Fixture Exchange Corporation, 470 S.W.2d 296 (Tex.Civ.App.1971), and Wichita City Lines v. Puckett, 156 Tex. 456, 295 S.W.2d 894 (1956), applying Langford v. Nevin, supra, to leases of realty, and Anchor Casualty Co. v. Robertson Transport Co., supra, applying Puckett to bailment contracts. See also Gulf Compress Co. v. Harrington, 90 Ark. 256, 119 S.W. 249 (1909).", "type": "majority", "author": "PAYNE, Justice." }, { "text": "SOSA, Senior Justice,\ndissenting.\nI respectfully dissent. The majority opinion incorrectly expands the holding of Acquisto v. Joe R. Hahn Enterprises, Inc., 95 N.M. 193, 619 P.2d 1237 (1980), to allow courts to construe lease agreements to find an implied agreement as to which party will bear the risk of loss due to negligence. This is clearly contrary to the ruling in Acquisto which requires an express exculpatory provision before a negligent party will be allowed to escape liability.\nAs in Acquisto, the parties in the case at bar failed to expressly agree that the pilot would purchase flight insurance; therefore, the pilot must bear the loss for his own negligent conduct. This result falls squarely within paragraph 17 of the lease agreement which states that the pilot agrees to pay for any damage \u201cnot covered by insurance,\u201d and with paragraph 18 in which the pilot agrees to indemnify the lessor against \u201cany and all loss ... and/or liability.\u201d Under the majority\u2019s ruling, the negligent lessee is allowed to escape liability for his negligence.\nFor the foregoing reason, I respectfully dissent.", "type": "dissent", "author": "SOSA, Senior Justice," } ], "attorneys": [ "Wycliffe V. Butler, Albuquerque, for appellants.", "Sheehan & Sheehan, Mary Vermillion, Albuquerque, for appellee." ], "corrections": "", "head_matter": "641 P.2d 508\nOMNI AVIATION MANAGERS, INC., Plaintiff-Appellee, v. William P. BUCKLEY and Doris C. Buckley, Defendants and Third Party Plaintiffs-Appellants.\nNo. 13528.\nSupreme Court of New Mexico.\nMarch 2, 1982.\nWycliffe V. Butler, Albuquerque, for appellants.\nSheehan & Sheehan, Mary Vermillion, Albuquerque, for appellee." }, "file_name": "0477-01", "first_page_order": 507, "last_page_order": 512 }