American Auto. Ins. Co. v. Transport Indem. Co.

• Decision Date: 21 February 1962
• Citation: 19 Cal.Rptr. 558,200 Cal.App.2d 543
• Parties: AMERICAN AUTOMOBILE INSURANCE COMPANY a corporation, Plaintiff, Respondent and Appellant, v. TRANSPORT INDEMNITY COMPANY, a corporation, Security Mutual Casualty Company, a corporation, et al., Defendants, Appellants and Respondents. Civ. 19610.
• Court: California Court of Appeals Court of Appeals

Page 558

19 Cal.Rptr. 558

200 Cal.App.2d 543

AMERICAN AUTOMOBILE INSURANCE COMPANY a corporation, Plaintiff, Respondent and Appellant, v. TRANSPORT INDEMNITY COMPANY, a corporation, Security Mutual Casualty Company, a corporation, et al., Defendants, Appellants and Respondents.

Civ. 19610.

District Court of Appeal, First District, Division 1, California.

Feb. 21, 1962.

Bledsoe, Smith, Cathcart, Johnson & Phelps, San Francisco, R. S. Cathcart, San Francisco, of counsel, for appellant American Auto. Ins. Co.

Clark, Heafey & Martin, Oakland, for Transport Indemnity Co. and Security Mut. Cas. Co.

TOBRINER, Justice.

This is another of the plethora of cases coming to the courts in which insurance carriers engage in an internecine struggle to determine which carrier should discharge a loss under primary and 'excess' coverage provisions. In entering the legalistic labyrinth of the provisions of the policies, we are not favored, like Theseus, with any thread of principle; each case apparently presents a particularistic and unique problem. The obscurities of overlapping coverage have, indeed, led some experts to urge legislative clarification. ¹ In the absence of such statutory definition, our efforts in interpreting the policies in this case have led us, with one exception as to the apportionment of liability, to the same basic conclusion as the trial judge.

American Automobile Insurance Company (hereinafter called American) brought this action for declaratory relief to adjudicate its liability as against that of two other insurance companies: Transport Indemnity Company (hereinafter called Transport) and Security Mutual Casualty Company (hereinafter called Security). The claim arose because of the negligence of a truck driver, employed by Culy Transportation Company (hereinafter called Culy) in delivering four blocks of metal to General Grinding Company (hereinafter called General); in unloading the truck, the driver and Rea negligently pushed a block from it, thereby injuring a small girl who was passing by the truck. The foreman of General, Walter Bardon, directed the driver to unload the truck at a designated point, and Bardon assigned one of the company's employees to participate in the unloading operation.

American insured Bardon and General; the other two insurers covered liability arising from use of the Culy truck. We face these questions on appeal: (1) Did the loss fall under the excess provisions of the American policy? (2) Are two of the other policies excess or primary insurance, under their terms? (3) Ultimately, what is the proper method of apportionment of the liabilities? As we shall explain in more detail infra, we have concluded that the trial court properly rendered affirmative answers to the first two queries; we have differed with it in one respect in its analysis of the third problem.

The parties have agreed that the appeal rests upon the facts set out in an abbreviated reporter's transcript. We incorporate the clear statement of the events as described by Judge Preston Devine of the superior court: 'On May 9, 1955, Culy Transportation, by its driver Guerrero, drove its truck, containing four steel blocks, each weighing between 400 and 600 pounds, to the Grinding Company's yard. That company ordinarily would have removed the blocks from the truck by a crane, but the crane was out of order. Grinding Company's foreman, Bardon, and one of its machinists, Rea, talked with driver Guerrero about unloading the blocks. Bardon told Guerrero to place the truck in position where the blocks could be thrown off into some dirt which was part of 8th Street in Oakland (There was no sidewalk).

'When this conversation took place, the truck was in the yard, and Bardon realized that to have thrown them off would have broken both the cement paving of the yard and the edges of the blocks. Bardon also told Guerrero that Rea would help him, according to Guerrero, and although Bardon's testimony is that he did not 'specifically' assign Rea to the task of helping, he admits that he left Rea in the yard for the purpose of helping Guerrero, and Rea testified that he knew he was there for the purpose of 'assisting the truck.' His ordinary duties were those of a machinist, and there was no other purpose of his being left in the yard than to help to get the truck unloaded.

'The truck was placed where Bardon had directed it should be, though Bardon had returned to the shop before the movement was made. Rea gave the signal to Guerrero as to the exact point to stop. Both men then got onto the rear of the trailer and pushed one block off onto the dirt. Then the two men maneuvered the second block on the trailer to a place near the middle, where it would not strike either the cement or the first block; Guerrero said everything was clear, and the two men pushed the block off. Just as it left the trailer, Guerrero saw a leg coming around the back of the trailer. This was the leg of the little girl, and it was struck by the block.

'As to knowledge of the possible presence of children, there are these facts: 1. Bardon knew that children walked down the street on their way to school, but usually in the center of the street, because there was no real sidewalk. 2. At this time, the truck blocked two-thirds of the street. 3. He had never seen children walk along the side of the street where the accident happened. Rea knew there were children walking around there (on other occasions), but never paid much attention. His back was turned towards the direction from which the girl came. Guerrero had 'heard kids talking' on the Hayward, or south, side (the girl came from the other, or north, side), but he did not hear them while he was resting for about 20 seconds before pushing the second block off. He had looked to see if there was anyone coming before the first block was pushed off, and looked again, while resting, before the second block was dropped; all he could see was about five feet of the roadway. The men did not have any conversation 'about whether anybody would be walking by there.'

'That there was negligence in the operation is hardly to be denied, and the settlement of the tort case, if not an outright admission of that fact, is at least a strong indication that negligence cannot be gainsaid.'

American, insurer of General, and Transport, one of the two insurers of the Culy truck, settled the claim for $75,000, each contributing one-half, but by agreement the two companies reserved the right to bring an action for declaratory relief to obtain contribution. American brought this action against Transport and Security to recover the $37,500 which it paid in settlement of the claim. The court entered a judgment assessing the liability of American at $5,555.55, of Security at $4,444.45 and of Transport at $65,000. Although all parties are appealing from this judgment American will be designated as respondent and Transport and Security as appellants.

The relevant insurance policies are the following:

1. American policy: The policy is a comprehensive liability policy which covers several named partners of General, including Walter Bardon. The bodily injury provisions read: 'A--Bodily Injury Liability--Automobile. To pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of bodily injury * * * sustained by any person, and arising out of the ownership, maintenance or use of any automobile, including the loading and unloading thereof. B--Bodily Injury Liability--Except Automobile. To pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of bodily injury * * * sustained by any person.'

As to injury to one person, the coverage is $50,000. The policy specifically provides that it is excess coverage as to injuries arising out of the use of a non-owned automobile; Clause 13 states in part 'the insurance under this policy shall be excess insurance with respect (1) to loss arising out of the maintenance or use of any hired automobile or non-owned automobile. * * *'

2. Transport policy (#52-001): The policy insures Culy as a motor carrier for hire for $10,000 (bodily injury); however, an endorsement pursuant to a regulation of the Public Utilities Commission establishes a limit of liability of $15,000 for injury or death of one person. The policy contains a provision covering permissive users of automobiles of the private passenger type only.

3. Security policy: The policy is entitled 'Excess Insurance Contract' and provides the same coverage for Culy as the underlying policy, Transport #52-001, except that it is excess over $10,000. In another provision the policy states that it is excess as to all primary or underlying insurance. The policy limits are $40,000.

4. Transport policy (#52-002): This is an excess policy identical with the Security policy, except that it has a limit of $450,000 liability and is excess over $50,000.

As we have stated, we agree with the trial court's ruling that the first Transport policy (#52-001) is primary and the remaining policies are excess. We treat infra the apportionment of the excess liabilities among the carriers. The crucial conclusion of the trial court that the excess provision and not the general comprehensive liability of the American policy applies finds support in two alternative theories. The first, stemming from the specific language of the policy, holds that the American excess clause takes effect because the loss arose out of the use of a non-owned automobile; the second, set out by the trial court, rests upon the proposition that the primary and excess policies of Transport and Security issued on the truck cover Bardon as a permissive user and that American's coverage was excess.

Turning to the first proposition, we note that the language of the American policy provides for the application of the excess provision for any loss arising out of the use of...