Apparel Mfrs'. Supply Co. v. National Auto. & Cas. Ins. Co.

• Decision Date: 27 February 1961
• Citation: 11 Cal.Rptr. 380,189 Cal.App.2d 443
• Court: California Court of Appeals Court of Appeals
• Parties: APPAREL MANUFACTURERS' SUPPLY CO., Plaintiff, v. NATIONAL AUTOMOBILE AND CASUALTY INSURANCE COMPANY, et al., Defendants. APPAREL MANUFACTURERS' SUPPLY CO., Appellant, v. NATIONAL AUTOMOBILE AND CASUALTY INSURANCE COMPANY and York-shire Insurance Company of New York, Respondents. APPAREL MANUFACTURERS' SUPPLY CO., Respondent, v. NATIONAL AUTOMOBILE AND CASUALTY INSURANCE COMPANY, Appellant. APPAREL MANUFACTURERS' SUPPLY CO., Respondent, v. YORKSHIRE INSURANCE COMPANY OF NEW YORK, Appellant. Civ. 24394.

Page 380

11 Cal.Rptr. 380

189 Cal.App.2d 443

APPAREL MANUFACTURERS' SUPPLY CO., Plaintiff, v. NATIONAL AUTOMOBILE AND CASUALTY INSURANCE COMPANY, et al., Defendants.

APPAREL MANUFACTURERS' SUPPLY CO., Appellant, v. NATIONAL AUTOMOBILE AND CASUALTY INSURANCE COMPANY and York-shire Insurance Company of New York, Respondents.

APPAREL MANUFACTURERS' SUPPLY CO., Respondent, v. NATIONAL AUTOMOBILE AND CASUALTY INSURANCE COMPANY, Appellant.

APPAREL MANUFACTURERS' SUPPLY CO., Respondent, v. YORKSHIRE INSURANCE COMPANY OF NEW YORK, Appellant.

Civ. 24394.

District Court of Appeal, Second District, Division 3, California.

Feb. 27, 1961.

Rehearing Denied March 27, 1961.

McBain & Morgan, Victor S. Cogen, and Angus C. McBain, Los Angeles, for appellant-respondent Apparel Manufacturers' Supply Co.

William H. Levit, Los Angeles, Bert W. Levit, San Francisco, and Long & Levit, Los Angeles, for appellant-respondent National Authomobile and Cas. Ins. Co.

Hindman & Davis and E. Eugene Davis, Los Angeles, for appellant-respondent Yorkshire Ins. Co. of New York.

FORD, Justice.

This is an action for declaratory relief brought by Apparel Manufacturers' Supply Co. against two insurance companies, National Automobile and Casualty Insurance Company and Yorkshire Insurance Company of New York. Reference will be hereafter made to the parties as, respectively, Apparel, National, and Yorkshire.

The plaintiff, a California corporation, was the owner of merchandise, furniture, fixtures and equipment located at 927 S. Los Angeles Street, in Los Angeles. On December 1, 1955, defendant National issued a 'commercial block' insurance policy in the amount of $100,000 to Apparel covering such property. 'Commercial block' coverage includes the risk of loss through fire together with the risk of loss by other means. By its terms the policy was to be in effect for a period of five years but it could be cancelled by the company or by the insured upon the fulfillment of certain specified conditions.

The insurance with National was procured for Apparel by one Louis Harrow, who handled Apparel's insurance matters. Harrow was also an agent of the defendant National and of other insurance companies, but not of defendant Yorkshire. In January of 1957, between the 10th and 15th of that month, John Rossi, inland marine insurance manager for Kleiner, Fields & Burton, general agent for defendant National, informed Harrow that National wanted to be relieved of the risk on Apparel's policy because of the history of losses related thereto. National did not at that time, or at any time subsequent thereto, give formal notice of cancellation in compliance with the terms of the policy. Upon receiving such information from Rossi, Harrow set about to procure insurance in another company to replace the National policy. After a number of unsuccessful attempts, Harrow, through his employee Claire Murray, contacted Sigmund Geisendorfer, an employee in the office of Deans & Homer, a managing general agent for Yorkshire. There is a conflict in the evidence as to what transpired between Geisendorfer and Miss Murray and between Geisendorfer and Harrow. However, the trial court found that Yorkshire (through Geisendorfer) and Apparel (through Harrow) entered into an oral agreement of insurance.

On February 11, 1957, at 10:15 p. m., Apparel sustained a fire loss with respect to its property. It was stipulated by all the parties, and the court found, that such property in an undamaged state was of the sound value and reasonable cash and market value of $126,817.85. It was further stipulated, and found by the court, that such property was damaged by the fire to the extent of $108,669.93. The parties stipulated, and the court found, that Apparel had either performed all the terms and conditions on its part to be performed under each of the said contracts of insurance or that such compliance had been waived.

The trial court found that 'there has been and still is an actual controversy between plaintiff and defendants National and Yorkshire and between said defendants in that with respect to plaintiff's aforesaid loss National contends that at the time of the aforesaid fire its policy of insurance had been cancelled and replaced by insurance in Yorkshire and Yorkshire had sole liability for the loss, and Yorkshire contends that at the time of the aforesaid fire, first, that it did not have any insurance in effect but National's said policy was in effect and National had sole liability for the loss, and second, that if Yorkshire had insurance in effect National's policy was also in effect and the amount of plaintiff's loss and damage should be divided between said defendants, subject to the application of policy coinsurance clauses, if any.' With regard to this controversy the trial court made findings that 'defendant National's policy was in full force and effect at the time of said fire and loss and damage and further finds that Yorkshire also had insurance in effect during all said times * * *' Apparel's insurance with Yorkshire was found to be 'under a so-called 'commercial block' form in substantially the same form as defendant National's aforesaid policy against all risks of loss and damage to said property, including the risk of fire, in the sum of $100,000.00 for a term commencing February 6, 1957, and contnuing until receipt of a written agreement of insurance.' The trial court made a further finding that: 'The premium to be charged was the usual premium for such insurance in Los Angeles, California * * *.' Finally, the court determined that 'the defendants' respective insurance contracts being of equal amount, plaintiff's loss of $108,669.93 is to be borne equally by said defendants and National's share of liability therefor is $54,334.96 and Yorkshire's share of liability therefor is $54,334.97.' The court gave judgment accordingly. All parties have appealed from the judgment. The position of each insurer on this appeal will be discussed.

Yorkshire's first contention is that the trial court's finding that an oral contract was entered into between Apparel and Yorkshire is not supported by the evidence. The evidence bearing upon the existence of an oral contract, considered in the light most favorable to Apparel, will be stated.

M. Claire Murray, an employee in the Harrow office, testified that after that office received notice of National's desire to be relieved of the Apparel risk, she called Mr. Geisendorfer in an attempt to get coverage for Apparel. The date of this call was February 5, 1957. She had contacted him on many occasions previously in his underwriting capacity when she was employed in another insurance office. Miss Murray informed Geisendorfer of the nature of the risk, and asked him 'if he could bind the coverage' until such time as he could come out and see Mr. Harrow and talk to him regarding writing insurance for their office. She testified that at this time she asked for coverage for Apparel for fire, extended coverage, vandalism, and malicious mischief on the stock and equipment located at the insured's address. She informed Geisendorfer that another company or other companies wanted to be relieved of the risk. Geisendorfer agreed to bind the risk, and she made an appointment for him ot come out to see Mr. Harrow and discuss the particular insurance coverage with him.

Both Mr. Harrow and Miss Murray testified as to the conversation which took place the next day, February 6, 1957, when Geisendorfer arrived at the Harrow office. Harrow testified that Mr. Geisendorfer came to his office around noon on that day. Miss Murray introduced Mr. Geisendorfer to him, and he explained the situation to Geisendorfer, including the fact that the firms had suffered two recent losses. Geisendorfer complimented him on his frankness and said, 'Well I am binding the risks now, and I am going to stop by tomorrow morning and look at those risks.' He stated that he had been in the building where Apparel was located on a previous occasion. Harrow testified, 'Just then, after he made that statement, I says to him, 'Mr. Geisendorfer, do I understand that I am bound for $100,000 of all-risk commercial block for Apparel Manufacturing Supply Co.?' He smiled and he said, 'Yes.' I said, 'I am a very technical person, and I would like you to answer me in the presence of Miss Murray.' I didn't say in the presence of Miss Murray. I meant that while Miss Murray was there I wanted him to answer me.' He then testified that he asked a similar question with respect to Cal-button and Amsco Shoulder Pad, ¹ and in each case Geisendorfer answered, 'Yes.' He had informed Mr. Geisendorfer of the nature of the property to be covered prior to eliciting these answers. He had discussed with Geisendorfer the type of property to be insured, the fact that he wanted $100,000 coverage for Apparel on equipment, stock and fixtures, the specific address, and the type of operation conducted. Geisendorfer left 'commercial block' application forms with him, which were to be completed so that the company could issue the policies and determine the premium.

Miss Murray's testimony concerning the February 6 meeting at the Harrow office was substantially similar. She introduced Mr. Geisendorfer to Mr. Harrow. They discussed the possibility of an agency agreement between Deans & Homer and Harrow. Mr. Harrow then discussed with Geisendorfer the matter of the Apparel insurance. He said he would like to have 'commercial blocks' for the three firms, $100,000 coverage for Apparel, the same amount of coverage for Cal-Button and $35,000 coverage for Amsco Shoulder Pad for stock and equipment. Mr. Geisendorfer said he would accept these risks for commercial block policies for the above amounts. He had brought with him commercial block applications which he gave to Mr. Harrow; he asked Harrow to have such applications completed. She could not give the exact words he used to bind the insurance. Mr. Harrow...