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

BONE, Circuit Judge.

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…