                IN THE SUPREME COURT, STATE OF WYOMING

                                   2015 WY 145

                                                    OCTOBER TERM, A.D. 2015

                                                          November 16, 2015

CONTINENTAL WESTERN
INSURANCE COMPANY,

Appellant
(Plaintiff),

v.

JAMES BLACK, JJ BUGS, LTD.,                   S-15-0068
ANDREW GUSTAFSON, individually,
and as Personal Representative of
Stephanie Gustafson, CHARLES ADSIT,
JOE PATTERSON, and MIA
PATTERSON,

Appellees
(Defendants).

                  Appeal from the District Court of Laramie County
                   The Honorable Thomas T.C. Campbell, Judge

Representing Appellant:
      Marianne LaBorde and David C. Fawley of Montgomery Amatuzio Dusbabek
      Chase, LLP, Denver, CO. Argument by Mr. Fawley.

Representing Appellees:
      Cameron S. Walker of Schwartz, Bon, Walker & Studer, LLC, Casper, WY for
      Appellees James Black and JJ Bugs, Ltd.; Thomas G. Tasker of Hillyard
      Wahlberg Kudla Sloane & Woodruff, Denver, CO; and Patrick J. DiBenedetto of
      Metier Law Firm LLC, Fort Collins, CO for Appellee Andrew Gustafson; Richard
      Wolf of Wolf, Tiedeken Woodard, P.C., Cheyenne, WY for Appellee Charles
      Adsit; and Donald J. Sullivan of Sullivan Law Offices, P.C., Cheyenne, WY for
      Appellees Joe and Mia Patterson; and Philip White Jr., Laramie, WY for
      Appellees Gustafson, Adsit, and Pattersons. Argument by Messers. Walker and
      White.
Before BURKE, C.J., HILL, DAVIS, FOX, and KAUTZ, JJ.


NOTICE: This opinion is subject to formal revision before publication in Pacific Reporter Third.
Readers are requested to notify the Clerk of the Supreme Court, Supreme Court Building,
Cheyenne, Wyoming 82002, of any typographical or other formal errors so that correction may be
made before final publication in the permanent volume.
HILL, Justice.

[¶1] Keizer Trailer Sales, Inc. (Keizer), who is insured by Continental Western
Insurance Company (CWIC), sold three refrigerated trailers to James Black. Mr. Black
took immediate possession of the trailers, but the installment purchase agreement
pursuant to which he bought the trailers specified that Keizer would remain the owner of
the trailers until the purchase price was paid in full. Mr. Black was subsequently in an
accident with one of the trailers while traveling on Interstate 80 in Wyoming, and
wrongful death and personal injury actions were filed against him and his business.

[¶2] CWIC was notified of potential claims against the policies it issued Keizer on the
trailer involved in the accident. CWIC thereafter filed a complaint for declaratory
judgment in the district court for the First Judicial District, seeking a declaration that the
policies issued to Keizer do not provide coverage for the claims arising from Mr. Black’s
accident. The district court ruled against CWIC and found that Mr. Black was insured
under the policies’ omnibus clauses because he was driving a vehicle owned by Keizer
with Keizer’s permission. We affirm.

                                          ISSUES

[¶3]   CWIC states the issues on appeal as follows:

              1.     Did the trial court err in finding that Keizer Trailer
                     Sales, Inc. was the owner of the trailer for purposes of
                     liability insurance despite the fact that James Black
                     had purchased it under a conditional sales agreement?

              2.     Did the trial court err in finding that James Black was
                     operating the trailer on the day of the accident pursuant
                     to Keizer Trailer Sales, Inc.'s permission?

                                          FACTS

[¶4] On December 27, 2010, James Black purchased three refrigerated trailers from
Keizer Trailer Sales, Inc. (Keizer). The purchase was made pursuant to an Offer of
Purchase Agreement (Purchase Agreement) prepared by Keizer. On its front side, the
Purchase Agreement set forth the total price of the trailers and specified the following
terms (with our emphasis added):

              These trailers are being purchased through a “Lease to
              Purchase” and [Keizer] will remain the owner of the
              equipment until the loan is paid in full.



                                               1
             Buyer agrees to the payment schedule on the Promissory
             Note-Guaranty dated 12/27/2010.
             Buyer agrees to provide insurance showing [Keizer] as both
             the loss payee and additional insured.
             Buyer agrees that if he becomes more than two payments past
             due the trailers will be returned to one of our locations and all
             monies paid to date will be forfeited.
             Buyer understands the trailers are being sold on this date with
             a current DOT inspection and that the buyer will be
             responsible for getting a new DOT inspection every 12
             months from this day forward.

[¶5] On the Purchase Agreement’s reverse side, under the paragraph entitled “Title-
Risk of Loss,” the Purchase Agreement again specified that: “All products sold to Buyer
hereunder shall remain the property of Seller until fully paid for in cash.” Mr. Black also
signed a separate Promissory Note-Guaranty, promising to pay to Keizer the sum of
$81,946.64, with interest at the rate of 14% per annum, in thirty-six monthly installments
beginning on January 26, 2011.

[¶6] Mr. Black took possession of the three trailers on December 27, 2010, but they
remained titled and registered in Keizer’s name. Keizer paid for and supplied license
plates for the trailers throughout the duration of Mr. Black’s possession. Keizer also
continued to maintain and pay for two insurance policies on the three trailers, a
commercial policy and an umbrella policy, both issued by Continental Western Insurance
Company (CWIC). Keizer’s commercial policy with CWIC lists the three trailers under
the policy's “Schedule of Covered Autos You Own,” and the commercial policy defines
an insured as:

             a.     You [Keizer] for any covered “auto.”
             b.     Anyone else while using with your permission a
                    covered “auto” you own, hire or borrow * * * .

[¶7]   The commercial policy defines “auto” as:

             1.     A land motor vehicle, “trailer” or semitrailer designed
                    for travel on public roads; or
             2.     Any other land vehicle that is subject to a compulsory
                    or financial responsibility law or other motor vehicle
                    insurance law where it is licensed or principally
                    garaged.

[¶8] The commercial policy then defines “trailer” to mean, in relevant part, “a
semitrailer or a dolly used to convert a semitrailer into a trailer.” The umbrella policy


                                             2
uses substantially similar language to define an insured and auto and thereby operates to
increase the liability coverage and provide that increased coverage under the same terms
as the commercial policy.

[¶9] On April 29, 2012, Mr. Black was operating a tractor pulling one of the Keizer
trailers and was involved in an accident on Interstate 80 just east of Cheyenne, Wyoming.
The accident resulted in multiple injuries and one fatality. Following the accident,
wrongful death and negligence claims were filed against Mr. Black and his business, and
CWIC was notified of potential claims against the commercial and umbrella policies it
issued Keizer on the trailer involved in the accident.

[¶10] On September 18, 2013, CWIC filed a complaint for declaratory judgment seeking
a declaration that the commercial and umbrella policies issued to Keizer do not provide
coverage for the claims arising from Mr. Black’s accident. The defendants named in
CWIC’s declaratory judgment complaint included Mr. Black and his business and the
plaintiffs in the underlying wrongful death and negligence actions.

[¶11] CWIC filed a motion for summary judgment, and Defendants filed their
oppositions and requested that the court issue a judgment declaring that the CWIC
policies provide coverage for the claims arising out of Mr. Black’s accident. On
November 25, 2014, the district court issued a decision letter denying CWIC’s motion for
summary judgment and directing entry of an order granting Defendants summary
judgment. The district court noted the parties’ agreement that there were no disputed
issues of fact and then ruled (citations omitted):

                     Under the express terms of the Policy, coverage
             extends to Black if Keizer was the owner of the trailer at the
             time of the accident, and if Keizer gave Black permission to
             use the trailer. Conversely, coverage does not extend to
             Black if either one of these questions is answered in the
             negative. Because no party disputes the facts in this matter,
             the question of ownership is also a question of law.
                     The answer to the question of whether Black had
             possession of and was using the trailer with Keizer’s
             permission flows directly from the answer to the ownership
             question. Keizer and Black entered into a sales agreement
             and there is no indication that Black unlawfully possessed the
             trailer at the time of the accident. Therefore, if Keizer
             retained ownership of the trailer, Black is patently using the
             trailer with Keizer’s permission. If, however, Keizer divested
             its ownership of the trailer, Keizer could not have granted
             Black permission to use the trailer. Thus, the Court need only
             analyze the question of ownership.


                                            3
                    The terms of the Offer of Purchase Agreement, which
            Keizer drafted and entered into with Black, are unambiguous
            and set forth only one meaning—that Keizer was to “remain
            the owner of the equipment until the loan was paid in full.”
            Therefore, the plain language of the contract establishes
            Keizer’s express intent to retain ownership, not just retain
            title for the purpose of maintaining any formal or informal
            security interest in the trailer. If Keizer only intended to
            retain a security interest, it could have drafted its contract
            using different terms or remained silent on the issue of
            ownership if it felt the law supplied the answer to the
            ownership question. It did not. Keizer is bound by the terms
            of its own drafting, and in doing so chose to maintain
            ownership, and was the owner of the trailer at the time of the
            accident.
                                           ****
                    Not only did Keizer maintain the trailer on the Policy
            listing it on the Policy’s Schedule of Covered Autos You
            Own, but in exchange for premium payments, CWIC agreed
            to insure the trailers listed on the Policy. Therefore, the intent
            of the parties to the insurance contracts at issue here was to
            insure the trailer involved in the accident. While the
            insurance contract does not, of and by itself, create an actual
            or legal ownership interest in the trailer in Keizer, it does
            create a contractual insurable interest in Keizer and an
            obligation for CWIC to provide insurance coverage.
                    Furthermore, Black, by virtue of Keizer’s ownership of
            the trailer had Keizer's permission to use the trailer. Because
            Keizer owned the trailer under the express terms of the Offer
            of Purchase Agreement and gave Black permission to use it,
            the coverage of the Policy extends to Black. Also, since
            Keizer contracted for coverage, listing the trailer on the
            CWIC Policy Schedule of Covered Autos You Own, CWIC’s
            coverage extends to Black in regard to the April 29, 2012,
            accident.

[¶12] On January 21, 2015, the district court entered its Order Granting Summary
Judgment. CWIC thereafter filed its timely notice of appeal to this Court.

                             STANDARD OF REVIEW

[¶13] In a declaratory judgment action, we review an entry of summary judgment as
follows:


                                             4
                    The district court decided the matter by grant of
             summary judgment, which we have held “may be an
             appropriate resolution of a declaratory judgment action.”
             Cheyenne Newspapers, Inc. v. Bldg. Code Bd. of Appeals of
             City of Cheyenne, 2010 WY 2, ¶ 8, 222 P.3d 158, 161
             (Wyo.2010); see also State ex rel. Arnold v. Ommen, 2009
             WY 24, ¶ 23, 201 P.3d 1127, 1134 (Wyo.2009) (“Summary
             judgment is appropriate in a declaratory judgment action so
             long as there are no genuine issues of material fact.”).

                     We review a grant of summary judgment entered in
             response to a declaratory judgment action through our usual
             standard for review of summary judgments. Arnold, ¶ 13, 201
             P.3d at 1132; Voss, ¶ 9, 203 P.3d at 419. Our review of a
             district court’s summary judgment ruling is de novo, using
             the same materials and following the same standards as the
             district court. Arnold, ¶ 13, 201 P.3d at 1132; W.R.C.P. 56(c).
             No deference is accorded to the district court on issues of law,
             and we may affirm the summary judgment on any legal
             grounds appearing in the record. Voss, ¶ 9, 203 P.3d at 419.
             “The summary judgment can be sustained only when no
             genuine issues of material fact are present and the moving
             party is entitled to judgment as a matter of law.” Id. (quoting
             Wyo. Cmty. Coll. Comm’n, ¶ 11, 31 P.3d at 1247).

City of Casper v. Holloway, 2015 WY 93, ¶¶ 27-28, 354 P.3d 65, 73 (Wyo. 2015).

[¶14] Regarding our review of summary judgment in the interpretation of a contract, we
have said:

             The initial question of whether the contract is capable of
             being understood in only one way is a question of law for the
             court. If the court determines that the contract is capable of
             being understood in only one way, then the language used in
             the contract expresses and controls the intent of the parties. In
             such case, the next question, what is that understanding or
             meaning, is also a question of law. When we review the
             district court’s summary judgment decisions that a contract is
             capable of being understood in only one way and what that
             understanding is, we accord no deference to those decisions.




                                             5
Leeks Canyon Ranch, LLC v. Callahan River Ranch, LLC, 2014 WY 62, ¶ 12, 327 P.3d
732, 737 (Wyo. 2014) (quoting Claman v. Popp, 2012 WY 92, ¶ 23, 279 P.3d 1003, 1012
(Wyo. 2012)).

[¶15] The parties have confirmed the district court’s observation that there are no
questions of material fact in this case. Our review is therefore confined to questions of
law: the district court’s interpretation of the Purchase Agreement between Keizer and Mr.
Black and the CWIC policies issued to Keizer.

                                          DISCUSSION

[¶16] An omnibus clause is “a provision in an insurance policy that extends liability
coverage to persons who use the named insured’s vehicle with his or her permission.” 8
Steven Plitt, et al., Couch on Insurance 3d § 111:1 (2014). The commercial and umbrella
policies CWIC issued to Keizer each contained an omnibus clause, which provides that
an insured under the policy includes both the named insured, Keizer, and “[a]nyone else
while using with your permission a covered ‘auto’ you [Keizer] own.” Resolution of the
insurance coverage question presented here depends upon our interpretation of this
omnibus clause. In particular, we must determine the meaning of the terms own and
permission, and whether Keizer, under the terms of its Purchase Agreement with Mr.
Black, continued to own the trailer involved in the accident, and whether Mr. Black’s
possession and use of the trailer was with Keizer's permission, as that term is used in the
omnibus clause.

A.     Governing Iowa Law

[¶17] The parties agree that the Purchase Agreement and the CWIC insurance policies
are to be interpreted applying Iowa law. 1 The Iowa Supreme Court has outlined its
governing principles for interpreting a contract:

                      The cardinal rule of contract interpretation is to
               determine what the intent of the parties was at the time they
               entered into the contract. Walsh v. Nelson, 622 N.W.2d 499,
               503 (Iowa 2001). “Words and other conduct are interpreted
               in the light of all the circumstances, and if the principal

1
  Although Mr. Black’s accident occurred in Wyoming, the Purchase Agreement entered into between
Keizer and Mr. Black specifies that the agreement will be interpreted according to the laws of
Iowa/Nebraska. Additionally, Mr. Black is a resident of Iowa and his business is organized under the
laws of Iowa, with its principal place of business located in Iowa, and CWIC is a corporation organized
under the laws of Iowa, with its principal place of business located in Iowa. Keizer is a corporation
organized under the laws of South Dakota, with its principal place of business located in South Dakota,
but based on its address as shown on its CWIC policies, Keizer also appears to have some presence in
Iowa.


                                                   6
purpose of the parties is ascertainable it is given great
weight.” Fausel v. JRJ Enters., Inc., 603 N.W.2d 612, 618
(Iowa 1999) (quoting Restatement (Second) of Contracts §
202(1) (1979)). Another relevant rule of contract
interpretation requires that “[w]herever reasonable, the
manifestations of intention of the parties to a promise or
agreement are interpreted as consistent with each other and
with any relevant course of performance, course of dealing, or
usage of trade.” Restatement (Second) of Contracts § 202(5)
(1979).

       These rules of interpretation are general in character
and only serve as guides in the process of interpretation.
Restatement (Second) of Contracts § 202 cmt. a (1979). The
rules do not depend on a determination that there is an
ambiguity, but we use them to determine “what meanings are
reasonably possible as well as in choosing among possible
meanings.” Fausel, 603 N.W.2d at 618 (quoting Restatement
(Second) of Contracts § 202 cmt. a (1979)).

     Long ago we abandoned the rule that extrinsic evidence
cannot change the plain meaning of a contract. Hamilton v.
Wosepka, 261 Iowa 299, 313, 154 N.W.2d 164, 171–72
(1967). We now recognize the rule in the Restatement
(Second) of Contracts that states the meaning of a contract
“can almost never be plain except in a context.” Id.;
Restatement (Second) of Contracts § 212 cmt. b (1979).
Accordingly,

     “[a]ny determination of meaning or ambiguity
     should only be made in the light of relevant
     evidence of the situation and relations of the
     parties, the subject matter of the transaction,
     preliminary negotiations and statements made
     therein, usages of trade, and the course of dealing
     between the parties. But after the transaction has
     been shown in all its length and breadth, the words
     of an integrated agreement remain the most
     important evidence of intention.”
Fausel, 603 N.W.2d at 618 (quoting Restatement (Second) of
Contracts § 212 cmt. b (1979)) (emphasis in original).




                               7
                    In other words, although we allow extrinsic evidence
             to aid in the process of interpretation, the words of the
             agreement are still the most important evidence of the
             party’s intentions at the time they entered into the contract.

Pillsbury Co., Inc. v. Wells Dairy, Inc., 752 N.W.2d 430, 436 (Iowa 2008) (emphasis
added).

[¶18] Regarding the interpretation of insurance policies in particular, the Iowa Supreme
Court has explained:

                      Our rules governing the construction and interpretation
             of insurance policies are well-settled. “The cardinal principle
             ... is that the intent of the parties at the time the policy was
             sold must control.” LeMars Mut. Ins. Co. v. Joffer, 574
             N.W.2d 303, 307 (Iowa 1998). Except in cases of ambiguity,
             we determine “the intent of the parties by looking at what the
             policy itself says.” Boelman, 826 N.W.2d at 501. If a term is
             not defined in the policy, we give the words their ordinary
             meaning. Id. “We will not strain the words or phrases of the
             policy in order to find liability that the policy did not intend
             and the insured did not purchase.” Id.

                    “[A] policy is ambiguous if the language is susceptible
             to two reasonable interpretations” when the contract is read as
             a whole. Id. “If the policy is ambiguous, we adopt the
             construction most favorable to the insured.” Id. at 502. “An
             insurance policy is not ambiguous, however, just because the
             parties disagree as to the meaning of its terms.” Id. Moreover,
             “‘[a]mbiguity is not present merely because the provision
             “could have been worded more clearly or precisely than it in
             fact was.”’” Am. Family Mut. Ins. Co. v. Corrigan, 697
             N.W.2d 108, 114 (Iowa 2005) (quoting Cairns v. Grinnell
             Mut. Reins. Co., 398 N.W.2d 821, 824 (Iowa 1987)). “If an
             insurance policy and its exclusions are clear, the court ‘will
             not “write a new contract of insurance”’ for the parties.”
             Boelman, 826 N.W.2d at 502 (quoting Thomas v. Progressive
             Cas. Ins. Co., 749 N.W.2d 678, 682 (Iowa 2008)). We
             construe exclusions strictly against the insurer. Id.
             Nevertheless, “we must enforce unambiguous exclusions as
             written.” Bituminous Cas. Corp. v. Sand Livestock Sys., Inc.,
             728 N.W.2d 216, 222 (Iowa 2007).



                                             8
Amish Connection Co.. v. State Farm Fire & Cas. Co., 861 N.W.2d 230, 236 (Iowa
2015); see also State Farm Auto. Ins. Co. v. Malcolm, 259 N.W.2d 833, 836 (Iowa 1977)
(“An insurance policy is a contract of adhesion and therefore its provisions will be
construed in a light most favorable to the insured.”).

[¶19] The Iowa Supreme Court has further held that “[w]hen an insurer has
‘affirmatively expressed coverage through broad promises, [it] assumes a duty to define
any limitations or exclusionary clause in clear and explicit terms.’” Farm Bureau Life
Ins. Co. v. Chubb Custom Ins. Co., 780 N.W.2d 735, 742 (Iowa 2010) (quoting Malcolm,
259 N.W.2d at 835). When such definitions are not provided, Iowa courts find the
ordinary meaning of the controlling terms using the following approach:

                    When words are left undefined in a policy, we give
             them their ordinary meanings—meanings which a reasonable
             person would give them. A.Y. McDonald, 475 N.W.2d at 619.
             We do not typically give them meanings only specialists or
             experts would understand. City of Spencer v. Hawkeye Sec.
             Ins. Co., 216 N.W.2d 406, 408–09 (Iowa 1974). In searching
             for the ordinary meanings of undefined terms in insurance
             policies we commonly refer to dictionaries. See, e.g., Witcraft
             v. Sundstrand Health & Disability Grp. Benefit Plan, 420
             N.W.2d 785, 788 (Iowa 1988) (meaning of “illness”); N. Star
             Mut. Ins. Co. v. Holty, 402 N.W.2d 452, 455 (Iowa 1987)
             (meaning of “apparatus”). If a word is susceptible to two
             interpretations, typically we adopt an interpretation favoring
             the insured. A.Y. McDonald, 475 N.W.2d at 619.

Farm Bureau Life Ins. Co. v. Holmes Murphy & Assoc., 831 N.W.2d 129, 134 (Iowa
2013); see also Boelman v. Grinnell Mut. Reinsurance Co., 826 N.W.2d 494, 502 (Iowa
2013) (citing Steel Prods. Co. v. Millers Nat’l Ins. Co., 209 N.W.2d 32, 36 (Iowa 1973))
(“[W]e interpret the policy language from a reasonable rather than a hypertechnical
viewpoint.”).

B.    Application of Iowa Law

1.    Ordinary Meaning of the Policy Terms

[¶20] We begin our analysis by looking to the terms of the omnibus clause contained in
Keizer’s commercial and umbrella policies, which provides that an insured includes
“[a]nyone else while using with your permission a covered ‘auto’ you [Keizer] own.”
Both the commercial and umbrella policies specify that words and phrases that appear in
the policy in quotation marks have special meaning and are defined in the policy’s
definitions section. The words own and permission, as used in the omnibus clause, do not


                                            9
appear in quotation marks in either policy and the policies do not otherwise define the
terms. We, therefore, in keeping with the Iowa rules of policy interpretation, give those
terms their ordinary meaning.

[¶21] The term own means “[t]o rightfully have or possess as property; to have legal title
to.” Black’s Law Dictionary 1214 (9th ed. 2009). The term permission means “1. The
act of permitting. 2. A license or liberty to do something; authorization.” Black’s Law
Dictionary 1255 (9th ed. 2009). Based on the ordinary meaning of the terms own and
permission, we agree with the district court’s conclusions that Keizer owned the trailer
involved in Mr. Black’s accident and Mr. Black was using the trailer with Keizer’s
permission.

[¶22] With regard to Keizer’s ownership of the trailer, the Purchase Agreement states in
clear terms, in two separate provisions, that Keizer was to remain the owner of all three
trailers until the trailers were paid for in full. There is no dispute that the trailer had not
been fully paid for when the accident occurred, and in fact all three trailers have since the
accident been returned to Keizer’s possession.2 Because the trailers were not fully paid
for when the accident occurred, the trailers were, under the Purchase Agreement’s plain
terms, owned by Keizer.

[¶23] CWIC acknowledges the ordinary meaning of the omnibus clause terms and the
Purchase Agreement’s language concerning Keizer’s ownership of the trailer, but it offers
two reasons this Court should nonetheless find Mr. Black to be the trailer's owner. First,
CWIC argues the transaction between Keizer and Mr. Black was a conditional sales
agreement, and under this type of transaction, the law dictates that the buyer is the
vehicle's owner. Second, CWIC argues that the Iowa owner consent statute applies and
requires a finding that Mr. Black was the owner of the trailer involved in the accident.
2
  It is not clear from the record precisely when the three trailers were returned to Keizer or what the
circumstances were of their return to Keizer. Mr. Black testified:

                       Q.      Okay. And the trailers also under the separate contracts,
               those have been returned?
                       A.      Everything’s returned.
                       Q.      And you’re being sued on those?
                       A.      No.
                       Q.      Okay.
                       A.      As far as I know to this point, Utility is not going to sue
               us. From what I understood from John, they pretty much sold them and
               broke even.
                       Q.      Are we talking about [Keizer] now?
                       A.      [Keizer], yes.
               ***
                       Q.      And [Keizer] has not sued you?
                       A.      [Keizer] hasn’t sued us. As of right now, I haven't –
               everything’s pretty much evened out.


                                                    10
We will consider each of these arguments below, addressing first the contention that the
transaction between Keizer and Mr. Black was a conditional sale and then turning to
application of the Iowa owner consent statute.

2.    Conditional Sales Agreement

[¶24] CWIC argues that if the Purchase Agreement is read as a whole, this Court must
reach the conclusion that what the parties intended was to enter into a conditional sales
agreement, whereby Keizer retained title to the trailers, not as an owner with the right to
control Mr. Black’s use of the trailers, but solely as a holder of a security interest.
Because the Purchase Agreement is a conditional sales agreement, CWIC argues, the law
recognizes that Mr. Black, the purchaser, was, at the time of the accident, the trailer’s
owner and was not a permissive user under the omnibus clause. In support of this
argument CWIC directs us to Couch on Insurance, which instructs:

                     The rule pertaining to absolute sales is also applicable
             to conditional sales—the vendor is not regarded as giving
             permission to the vendee to operate the automobile, with the
             result that the vendor’s insurer is not liable by virtue of the
             omnibus clause, because as long as the conditional vendee
             has the right to possession, he or she does not operate the car
             by the permission of the vendor.

8 Steven Plitt, et al., Couch on Insurance 3d § 112:15 (2014) (footnotes omitted); see
also § 112:14 (footnote omitted) (“In essence, when the alleged permittee uses a vehicle
not as the insured’s vehicle covered by the insured’s policy but as his or her own
automobile, he or she is not using the covered automobile with the consent of the insured
and is not an omnibus insured.”).

[¶25] While we recognize the effect of a conditional sales agreement on the applicability
of an omnibus clause, we disagree that the Purchase Agreement entered into between
Keizer and Mr. Black is a conditional sales agreement under Iowa law. The Iowa
Supreme Court has outlined the attributes of a conditional sales agreement:

                   A conditional sale contract is actually a form of
             bailment and it is often difficult to distinguish it from a
             bailment for the purpose of sale. * * *

                                         ****

                   ‘The main distinction, or the most approved test, has
             been said to be that in a conditional sale there is a promise or
             agreement to pay, while in a bailment there is no such


                                             11
              promise or agreement, but the bailee may relieve himself of
              further liability by surrending the property.’ 8 C.J.S.
              Bailments, § 3(2) p. 328; Bentley & Olmstead v. Snyder &
              Son, 101 Iowa 1, 69 N.W. 1023, 1025; Hansen v. Kuhn, 226
              Iowa 794, 285 N.W. 249; Hull-Dobbs Motor Co. v.
              Associates Discount Corp., 241 Iowa 1365, 1369, 44 N.W.2d
              403.

                     The Court has also said: ‘To constitute a conditional
              sale, within the terms of the statute, there must be a delivery
              of possession to the purchaser, with the intention of passing
              immediate ownership, subject only to the reservation of title
              to the seller, as security for the purchase money.’ Firestone
              Tire & Rubber Co. v. Anderson, 190 Iowa 439, 442, 180
              N.W. 273, 274; Greenlease-Lied Motors v. Sadler, 216 Iowa
              302, 249 N.W. 383; Hansen v. Kuhn, ibid; Hull-Dobbs Motor
              Co. v. Associates Discount Corp., ibid.

Industrial Credit Co. v. Hargadon Equipment Co., 119 N.W.2d 238, 241-42 (Iowa 1963)
(emphasis added).

[¶26] On our review, we find that Keizer’s arrangement with Mr. Black has attributes of
both a bailment for purchase and a conditional sale. Consistent with the bailment for
purchase, the Purchase Agreement’s front page refers to the transaction as a “Lease to
Purchase,” with Keizer remaining the owner of the trailers “until the loan is paid in full.”
The reverse side of the Purchase Agreement reiterates that Keizer shall retain ownership
of the trailers until paid for in full. Additionally, the Purchase Agreement contains no
provision entitling Keizer to recover the entire purchase price upon a buyer default and
sets forth only one remedy upon the buyer’s default: “Buyer agrees that if he becomes
more than two payments past due the trailers will be returned to one of our locations and
all monies paid to date will be forfeited.” The Purchase Agreement is thus consistent
with a bailment in that Mr. Black could relieve himself from further liability under the
agreement by simply returning the trailers to Keizer.

[¶27] On the other hand, Mr. Black also signed a separate promissory note, the terms of
which required him to pay Keizer $81,946.64, with interest at a rate of 14% per annum,
in thirty-six monthly installments. Unlike the Purchase Agreement, the promissory note
does seem to embody an agreement to pay the entire purchase price, which if that is the
case, would make the transaction look more like a conditional sale. The promissory note
provides (our emphasis added):




                                              12
                      * * * In the event any payment due hereunder is not
                made when due, the entire balance shall be immediately due
                and payable at the option of the holder.
                      In the event of default, the undersigned agree to pay all
                reasonable attorney fees and costs of collection.

[¶28] We thus have two instruments that seem to be in conflict with each other. The
Purchase Agreement specifies that it is a lease to purchase with a default by Mr. Black
resulting only in return of the trailers and forfeiture of monies paid. The promissory note,
on the other hand, allows Keizer to collect the entire amount promised should Mr. Black
fail to make a payment when due. To the extent this Court must determine which of
these documents should control in determining the character of the parties’ transaction,
we are inclined to look to the terms of the Purchase Agreement.

[¶29] First, it is entirely unclear what purpose is served by the promissory note. Keizer
neither loaned Mr. Black the face amount of the promissory note nor transferred
ownership of the trailers in exchange for the note. Moreover, there appears to be little
relationship between the note and the Purchase Agreement. The note requires payment of
an amount that is equal to the total purchase price of the trailers, but it does not reference
either the Purchase Agreement or the trailers. The Purchase Agreement likewise does not
incorporate the promissory note, and its only reference to the note is a provision
specifying: “Buyer agrees to the payment schedule on the Promissory Note-Guaranty
dated 12/27/2010.” When the Purchase Agreement and the Promissory Note are read
together, the Promissory Note would appear to do no more than memorialize the parties’
agreed upon payment schedule. 3

[¶30] When we look to the Purchase Agreement to define the character of the
transaction between Keizer and Mr. Black, it is clear that the transaction was not a
conditional sales agreement. As we noted above, two findings must be made to conclude
that a transaction is a conditional sale: 1) the buyer must be obligated to pay the entire
purchase price—as opposed to being able return the property and walk away from the
deal without incurring further liability; and 2) there must be a delivery of possession
coupled with an intention of passing immediate ownership. Indus. Credit Co., 119
N.W.2d at 241-42. With respect to the first requirement, the Purchase Agreement
imposes no obligation on Mr. Black to pay the entire purchase price of the trailers and
allows him to relieve himself from further liability under that agreement by simply
returning the trailers to Keizer. With respect to the second requirement, the Purchase
Agreement reflects no intention to pass immediate ownership of the trailers to Mr. Black

3
  While we find the Purchase Agreement to be the controlling document for purposes of defining the
character of the parties’ transaction, the question of Keizer’s rights under the promissory note is not a
question before this Court. Our opinion should therefore not be construed to resolve the parties’
obligations and rights under that document.


                                                    13
and in fact clearly expresses an opposite intention that Keizer shall retain ownership of
the trailers.4

[¶31] Keizer’s transaction with Mr. Black was neither a completed sale nor a conditional
sale. Keizer therefore retained ownership of the trailers, and it follows that Mr. Black’s
use of the trailers was with Keizer’s permission, making coverage available under the
omnibus clauses of the CWIC policies:

                        When the transaction is not a completed sale as
                 between the parties themselves, the use of the vehicle by the
                 prospective purchaser is not based on any right as an owner
                 but solely on the permission granted by the insured owner,
                 and the omnibus clause is operative.
                        If the parties to the sales contract specifically agree
                 that the title shall not be transferred until a later date, the
                 seller may still grant permission during the time prior to the
                 transferring of title.

8 Steven Plitt, et al., Couch on Insurance 3d § 112:16 (2014) (footnotes omitted); see
also State Farm Mut. Auto. Ins. Co. v. Liverett, 475 F.2d 188, 189 (5th Cir. 1973)
(holding ownership remained in seller where buyer had possession of vehicle but there
had been no transfer of title and vehicle remained registered in seller’s name); Benton v.
State Farm Mut. Auto. Ins. Co., 306 F.2d 179, 181 (6th Cir. 1962) (finding no completed
sale and holding ownership remained in seller where buyer took possession of vehicle
with understanding that seller retained ownership and title until full payment and seller
had right to repossess vehicle at any time.).

3.      Application of Iowa Owner Consent Statute

[¶32] CWIC next argues that the term own, as used in the omnibus clause, should be
defined in keeping with the requirements of Iowa's owner consent statute, which defines
an owner of a vehicle to mean a person to whom the certificate of title has been assigned
as well as the following:

4
  The Purchase Agreement states, in two separate provisions, that Keizer shall remain the owner of the
trailer, and the agreement contains no language limiting that ownership to only a security interest.
Additionally, Keizer did not file a security statement, and it continued to behave as if it owned the trailers.
It retained title to the trailers, registered the trailers in its name, and paid for the plating of the trailers. It
also listed the trailers on its CWIC policies under the “Schedule of Covered Autos You Own,” which
counsel for CWIC confirmed during oral argument was an intentional listing to provide coverage for
losses such as damage to the trailers themselves or claims relating to damages caused by defects in a
trailer. As the district court observed, the listing of the trailers in the CWIC policies does not in itself
establish Keizer’s ownership of the trailers, but it does provide further confirmation of Keizer’s intention
to retain ownership of the trailers.


                                                         14
             (1) the lessee under a written lease for a period of twelve
             months or more with a lessor to whom the certificate of title
             has been issued, (2) a debtor in possession of a vehicle
             pursuant to a security agreement, and (3) a purchaser or a
             transferee of a vehicle who has received delivery of the
             vehicle under a bona fide sale or transfer. Iowa Code §§
             321.493(1)(a), 321.1(49), 321.493(2).

Beganovic v. Muxfeldt, 775 N.W.2d 313, 320 (Iowa 2009). We reject this argument for a
number of reasons.

[¶33] As we noted above, the terms of an insurance policy generally are to be given their
ordinary meaning. Farm Bureau Life Ins. Co., 831 N.W.2d at 134; see also LeMars Mut.
Ins. Co. v. Joffer, 574 N.W.2d 303, 307 (Iowa 1998) (“When words or phrases are
undefined in a policy we do not give them a technical or legal meaning. Rather,
undefined words are given their ordinary meaning.”). The Iowa Supreme Court has
recognized, however, that there are circumstances where an insurance policy should be
read in conjunction with governing statutes:

                  Notwithstanding the principle that the meaning of an
             insurance contract is generally determined from the language
             of the policy, statutory law may also affect our interpretation
             of policy provisions. In discussing the application and effect
             of Iowa’s uninsured/underinsured motorist statute, chapter
             516A, this court has stated:
                  A statute that authorizes a contract of insurance has
                  application beyond merely permitting or requiring
                  such a policy. The statute itself forms a basic part
                  of the policy and is treated as if it had actually been
                  written into the policy. The terms of the policy are
                  to be construed in light of the purposes and intent
                  of the applicable statute.
             Tri-State Ins. Co. v. De Gooyer, 379 N.W.2d 16, 17 (Iowa
             1985) (citations omitted). Consequently, when a policy
             provision conflicts with a statutory requirement, the policy
             provision is ineffective and the statute controls. Matthess v.
             State Farm Mut. Auto. Ins. Co., 548 N.W.2d 562, 564 (Iowa
             1996).

Lee v. Grinnell Mut. Reinsurance Co., 646 N.W.2d 403, 406 (Iowa 2002).

[¶34] Lee defines the circumstances under which a statutory definition or requirement
should be considered in interpreting an insurance contract, and those circumstances do


                                            15
not exist in this case. First, the statutory definition that CWIC has asked this Court to
read into the policies it issued Keizer is drawn from the Iowa owner consent statute, not a
statute authorizing insurance contracts or governing the coverage that an insurance
contract must provide.5 Because the owner consent statute does not govern insurance
contracts and the scope of their coverage, the statute does not reflect the same legislative
intent to have the statutory terms read into an insurance policy that was present in the Lee
case.

[¶35] Second, the rule of interpretation announced in Lee gives a statutory requirement
or definition primacy only where there is a conflict between the statute and the insurance
policy in question. There is no such conflict between the CWIC policies and the owner
consent statute on which CWIC relies because the owner consent statute does not apply
to trailers. See Zimmer v. Vander Waal, 780 N.W.2d 730, 734-35 (Iowa 2010) (holding
that trailer is not a motor vehicle as defined by owner consent statute and is therefore not
governed by statute). Because no conflict exists between the owner consent statute and
the CWIC policies, there is no requirement that the CWIC policies be supplemented with
that statute's definitions.

[¶36] The circumstances in this case do not warrant application of the statutory
definitions urged by CWIC, and the policies themselves do not incorporate those
statutory definitions. We shall therefore give the omnibus clause terms their ordinary
meaning.

[¶37] Keizer retained ownership of the trailers through its Purchase Agreement with Mr.
Black, and through that same agreement, it gave Mr. Black permission to take possession
of and use the trailers. If this transaction reflects ownership and permission that is not of
the type CWIC intended to have covered by the omnibus clause of the policies it sold to
Keizer, a company that sells trailers as its business, it was incumbent upon CWIC to have
made that clear in the terms of the policies. See Farm Bureau Life Ins. Co., 780 N.W.2d
at 742 (quoting Malcolm, 259 N.W.2d at 835) (“When an insurer has ‘affirmatively
expressed coverage through broad promises, [it] assumes a duty to define any limitations
or exclusionary clause in clear and explicit terms.’”); see also Stahly Cartage Co. v.
Universal Mut. Cas. Co., 138 N.E.2d 243, 244 (Ill. App. 1956) (noting policy provision
that excluded coverage for any vehicle “subject to any bailment lease, conditional sale,
mortgage or other encumbrance not specifically declared and described in this policy”).
Applying the ordinary meaning of the terms own and permission, coverage is available
under the omnibus clause of the policies CWIC issued to Keizer.




5
  The Iowa owner consent statute, governs an owner’s vicarious liability for damages caused by a person
who uses the owner’s vehicle with the owner’s consent. Beganovic v. Muxfeldt, 775 N.W.2d 313, 318
(Iowa 2009).


                                                   16
                                    CONCLUSION

[¶38] The transaction between Keizer and Mr. Black was neither a completed sale nor a
conditional sale. Keizer therefore retained ownership of the trailers, and Mr. Black’s use
of the trailers was with Keizer’s permission, making coverage available under the
omnibus clauses of Keizer’s CWIC policies. Affirmed.




                                             17
