Argonaut Ins. Co. v. Transport Indem. Co.

• Decision Date: 25 January 1972
• Citation: 492 P.2d 673,6 Cal.3d 496,99 Cal.Rptr. 617
• Court: California Supreme Court
• Parties: , 492 P.2d 673 ARGONAUT INSURANCE COMPANY, Plaintiff and Appellant, v. TRANSPORT INDEMNITY COMPANY et al., Defendants and Respondents. L.A. 29884. In Bank

Page 617

99 Cal.Rptr. 617

6 Cal.3d 496, 492 P.2d 673

ARGONAUT INSURANCE COMPANY, Plaintiff and Appellant, v. TRANSPORT INDEMNITY COMPANY et al., Defendants and Respondents.

L.A. 29884.

Supreme Court of California,

In Bank.

Jan. 25, 1972.

Garibaldi & Lane, Los Angeles, Walter M. Sharman, Glendale, and Abe Mutchnik, Los Angeles, for plaintiff and appellant.

Hagenbaugh, Murphy & Davies, Sigurd E. Murphy, Ellis J. Horvitz, Schell & Delamer and Eugene D. Hillman, Los Angeles, for defendants and respondents.

McCOMB, Justice.

In this case, involving the liability of three insurers whose policies provided concurrent coverage for a certain accident, a hearing was granted by this court, after decision by the Court of Appeal, Second Appellate District, Division Two, for the purpose of giving further study to the problems presented. After such study, we have concluded that the opinion of the Court of Appeal, prepared by Mr. Justice Compton, in most respects correctly treats and disposes of the issues involved; and, with certain changes, it is adopted as and for the opinion of this court. Such opinion (with appropriate deletions and additions as indicated) is as follows: ¹

Argonaut Insurance Company sought declaratory relief delineating the respective rights and obligations of three insurance companies whose policies provided concurrent coverage for an accident which occurred during the unloading of a truck and which resulted in injuries to the driver. The trial court prorated liability between plaintiff Argonaut and defendant Transport Indemnity Company. Defendant Balboa Insurance Company was held liable for excess coverage only in the event that Argonaut's and Transport's coverage be deemed invalid and noncollectible. Argonaut has appealed.

The case was submitted below upon an agreed statement of facts with attached exhibits which included copies of the pertinent insurance policies.

Said agreed statement is as follows:

'On December 21, 1964, RICHARD NANCE was an employee of WILLIG FREIGHT LINES and acting in the scope of his employment as a truck driver when he sustained an injury giving rise to the litigation referred to herein.

'STEELFORM CONTRACTING COMPANY was engaged in a construction project for a shopping center in the vicinity of Firestone Boulevard and Woodruff Avenue, in Los Angeles County. STEELFORM engaged WILLIG FREIGHT LINES to transport a quantity of steel pan shaped forms from Steelform's plant in San Leandro, California, to the jobsite in Downey. Sometime prior to December 21, 1964, Willig's tractor and semi-trailer unit was brought to Steelform's plant in San Leandro and there loaded with pan shaped forms. Subsequently, an employee of Willig brought the tractor and loaded semi-trailer to Willig's Los Angeles yard. There, on the day of the accident Nance, in response to his employer's instructions hooked another of his employer's tractor units to the semi-trailer and took it to the jobsite.

'At the jobsite the tractor and semitrailer were located on the premises of Steelform, and KENNETH B. CURRIER, an employee of Steelform, was directed to unload the semi-trailer. In the process of unloading the semi-trailer Currier was furnished by his employer with a forklift which Steelform had rented from, and which was owned by, ASSOCIATED TRUCK RENTALS, INC. Nance was assisting in the process of unloading when a portion of the load fell from the semitrailer onto Nance and injured him.

'WILLIG FREIGHT LINES was on the date of the accident a highway common carrier and a petroleum irregular route carrier, operating under permits issued by the Public Utilities Commission of the State of California and the United States Interstate Commerce Commission.

'As a result of the accident and his injuries Nance has brought an action for damages in the Superior Court in Los Angeles County. The action bears #SE C 3171--C and is entitled RICHARD NANCE, plaintiff v. STEELFORM CONTRACTING COMPANY (and various fictitiously named defendants.) In plaintiff's complaint, . . . plaintiff Nance refers to the tractor and semi-trailer as a 'flat bed truck,' and alleges he sustained damages as a result of negligence of defendants in (1) loading the truck; (2) inspecting, testing, and fastening the load on the truck; and (3) operating the forklift while unloading the truck.

'INSURANCE POLICIES

'At the time of the injury in question there were in effect four liability insurance policies:

'1. A policy issued by ARGONAUT INSURANCE COMPANY to STEELFORM as named insured.

'2. Two policies issued by TRANSPORT INDEMNITY COMPANY to WILLIG as named insured.

'3. A policy issued by BALBOA INSURANCE COMPANY to ASSOCIATED TRUCK RENTALS as named insured.'

The following additional pertinent facts are disclosed by the record and exhibits.

Both Transport's policy No. 4100551 and Argonaut's policy contained 'excess coverage' or 'other insurance' clauses, which if given full application would result in no coverage whatsoever. Transport's policy No. 4100551--X also contained such an excess coverage clause, the operative effect of which was to limit its coverage to any excess liability owed after payment on all other applicable policies.

Balboa's policy contained an 'escape clause' which if valid, as the trial court found, served to insulate Balboa from any liability so long as Transport's and Argonaut's policies were valid and collectible.

The conclusion of the trial court was that 'Transport has coverage for Willig, Currier and Steelform to the extent of $100,000.00; Argonaut has coverage for Steelform, Currier and Willig to the sum of $500,000.00; said companies shall prorate liability in the proportion their coverage bears, to wit, 1/6 Transport, 5/6 Argonaut, to the total sum of $600,000.00. Liability of said insureds in excess of $600,000.00 is supplied by Transport under its specific excess policy No. 4100551--X.'

Plaintiff seeks reversal of the judgment on three grounds: First, plaintiff asserts that the coverage of defendant Transport should be declared to be primary for the reason that its policies contained 'P.U.C.' endorsements. Secondly, plaintiff urges that the 'other insurance' clause in Balboa's policy did not represent a valid 'escape clause.' Thirdly, plaintiff complains of the trial court's failure to specify in the judgment the specific obligations of the three insurers in respect to the duty to defend.

It is well settled that where no extrinsic evidence is introduced at trial to aid in the construction of a contract, such construction presents a question of law. (United States Leasing Corp. v. duPont, 69 Cal.2d 275, 284, 70 Cal.Rptr. 393, 444 P.2d 65; Continental Cas. Co. v. Hartford Acc. & Indem. Co., 213 Cal.App.2d 78, 28 Cal.Rptr. 606.) Accordingly, on review of the judgment we are free to make independent determination of the policies' meanings as deduced from the pertinent provisions of the policies. (Continental Cas. Co. v. Phoenix Constr. Co., 46 Cal.2d 423, 430, 296 P.2d 801, 57 A.L.R.2d 914.)

As a highway common carrier and petroleum irregular route carrier, Willig was required by state law to obtain minimum liability insurance as a precondition to doing business in California.

Section 3631 of the Public Utilities Code instructs the Public Utilities Commission 'in granting permits pursuant to this chapter, (to) require the highway carrier to procure, and continue in effect during the life of the permit, adequate protection . . . against liability imposed by law upon the highway carrier for the payment of damages for personal bodily injuries, including death resulting therefrom . . ..' The P.U.C. retains the authority to deny its certificate of convenience and necessity to any highway carrier who fails to abide by its rules and regulations concerning the procurement of liability insurance. (See Stats. 1935, ch. 223, p. 879; Stats. 1951, ch. 764, p. 2116; C. W. Carlstrom, 40 C.R.C. 175; §§ 1061, 1062, 1063 of the Public Utilities Code.)

In exercising its jurisdiction the P.U.C. 'by general order or otherwise, may prescribe rules applicable to any and all highway common carriers, cement carriers and petroleum irregular route carriers.' (Section 1062 of the Public Utilities Code.)

The P.U.C. regulations concerning liability insurance are contained in P.U.C. General Order No. 100B, effective July 1, 1961, and supplemental modifications of that order.

P.U.C. Endorsement No. 111, which was attached to Transport's policy, brought said policy into compliance with General Order No. 100B. Endorsement No. 111 extended Transport's coverage of Willig to the required $100,000 minimum for bodily injury to one person.

Endorsement No. 111 reads in pertinent part: '. . . (Transport) hereby agrees to pay, within the limits of liability hereinafter provided, ($100,000.00 per person) any final judgment rendered against the insured for bodily injury to or death of any person, or loss of or damage to property of others (excluding injury to or death of the insured's employees while engaged in the course of their employment, . . .) resulting from the operation, maintenance, or use of motor vehicles for which a certificate of public convenience and necessity or permit is required or has been issued to the insured by the Public Utilities Commission of the State of California, regardless of whether such motor vehicles are specifically described in the policy or not.

'Within the limits of liability hereinafter provided it is further understood and agreed that no condition, provision, stipulation, or limitation contained in the policy, or any other endorsement thereon or violation thereof, or of this endorsement, by the insured, shall relieve (Transport) from liability hereunder or from the payment of any such final judgment, irrespective of the financial responsibility or lack thereof or insolvency or bankruptcy of the insured. However, all terms, conditions, and limitations in the policy to which this endorsement is...