The defendant, Farmland Mutual Insurance Company, issued a
policy insuring plaintiff, Penalosa Cooperative Exchange, against
employee dishonesty. Plaintiff filed two claims based upon
employee embezzlement for two policy periods. Defendant paid the
first claim but denied the second on the grounds that the
embezzlement resulted from a series of similar or related acts
which, under the policy, constituted a single occurrence. The
trial court, on stipulated facts, granted summary judgment to
plaintiff for its second claim of $100,000. The defendant
appeals. We affirm.
Wayne Winter was employed by plaintiff as its general manager
from June 1, 1979, until January 7, 1986. During that time, he
embezzled at least $740,000. Of that sum, $228,900 was embezzled
on 14 different occasions between July 19, 1984, and May 31,
1985, and $511,100 was embezzled on 12 different occasions
between June 7, 1985, and December 17, 1985. On each occasion,
Winter committed the embezzlement by transferring plaintiff's
funds by wire or by check to a commodities broker for speculation
in the commodities market.
Farmland originally issued its policy to plaintiff from June 1,
1984, through June 1, 1985. The policy was renewed from June 1,
1985, through June 1, 1986. The limit of liability for loss
caused by employee dishonesty was $100,000.
Plaintiff filed two claims with Farmland for $100,000 each.
Farmland paid $100,000 under the policy in effect from June 1,
1984, to June 1, 1985, but denied the second claim. Farmland
argues that the unambiguous terms of its policy allow plaintiff
to recover only once for a single occurrence.
Because the facts were submitted by stipulation, and because
the construction of a written instrument is a question of law,
our standard of review is de novo. Lightner v. Centennial Life
Ins. Co., 242 Kan. 29, Syl. ¶ 1, 744 P.2d 840 (1987); American
States Ins. Co. v. Hartford Accident & Indemnity Co.,
218 Kan. 563, Syl. ¶ 4, 545 P.2d 399 (1976).
The question for resolution requires that we interpret the
policy of insurance issued by Farmland. Before dealing with the
applicable policy provisions, it will be helpful to set forth the
rules to be applied in our interpretation of Farmland's policy.
(1) Insurance is a matter of contract. The parties to a
contract of insurance may choose whatever terms they wish, and
courts> will enforce the policy as written so long as the terms do
not conflict with pertinent statutes or with public policy.
Western Casualty & Surety Co. v. Trinity Universal Ins. Co.,
13 Kan. App. 2d 133, Syl. ¶ 1, 764 P.2d 1256 (1988), aff'd
245 Kan. 44, 775 P.2d 176 (1989).
(2) If a dispute arises as to the meaning of the terms chosen
by the parties, courts> will attempt to determine what the parties
intended. To determine this intent, courts> will consider the
policy as a whole and will examine the language used by the
parties, taking into account the situation of the parties, the
nature of the subject matter, and the purpose to be accomplished.
American Media Inc. v. Home Indemnity Co., 232 Kan. 737, Syl. ¶
1, 658 P.2d 1015 (1983); Mah v. United States Fire Ins. Co.,
218 Kan. 583, Syl. ¶ 1, 545 P.2d 366 (1976).
(3) If there is no uncertainty about the meaning of the policy,
it will be enforced as written. American Media, 232 Kan. 737,
Syl. ¶ 5; Nash v. Adkins, 11 Kan. App. 2d 326, 328-29, 720 P.2d 1129
(4) If there is uncertainty about the meaning of the policy,
courts> determine the meaning by applying rules of construction.
These rules do not apply unless the court first determines that
the policy is ambiguous. A policy is not ambiguous unless,
viewing it as a whole, there is genuine uncertainty as to which
one of two or more possible meanings is the proper meaning.
Patrons Mut. Ins. Ass'n v. Harmon, 240 Kan. 707, 713,
732 P.2d 741
(1987). Ambiguity may not be created by viewing the policy in
fragmentary segments. Farm Bureau Mut. Ins. Co. v. Horinek,
233 Kan. 175, 180, 660 P.2d 1374 (1983); Nash v. Adkins, 11 Kan. App. 2d
at 329. And the rules of construction do not "`authorize a
perversion of the language, or the exercise of inventive powers
for the purpose of creating an ambiguity where none exists.'"
Topeka Tent & Awning Co. v. Glen Falls Ins. Co.,
13 Kan. App. 2d 553, ...