Robert D. Maland and Bonnie J. Maland v. Houston Fire and Casualty Insurance Company of Fort Worth, Texas, a Corporation, and Patricia Royston

Appellant Robert Maland is a partner in a business firm known as City Motors, which buys and sells used cars in Spokane, Washington. In ordering automobile liability insurance for City Motors, Maland and J. Tom Clinton, an agent for appellee insurance company, came to a mutual understanding that the policy would cover all cars owned by the partnership and held for purposes of resale — insurance providing “Division I” coverage. Inadvertently, Clinton ordered a policy which protected only against liability incurred through the use of automobiles not owned or hired by the insured, and accordingly, on November 1, 1956, appellee issued to City Motors a standard automobile garage liability policy, affording what is called “Division II” coverage. This policy clearly stated that the hazards guarded against were only those arising through the operation of “automobiles not owned or hired” by the insured. Four months later, while driving a car owned and held for resale by City Motors, Mrs. Ma-land ran into and injured Patricia Royston. Appellants subsequently instituted this action to reform the contract so as to reflect the mutual intent of the parties, thereby insuring Mrs. Maland against…