Beeson v. State Auto. and Cas. Underwriters

• Court: Colorado Court of Appeals
• Writing for the Court: PIERCE; SMITH; DWYER; DWYER
• Citation: Beeson v. State Auto. and Cas. Underwriters, 508 P.2d 402, 32 Colo.App. 62 (Colo. App. 1973)
• Decision Date: 06 February 1973
• Docket Number: No. 71--407,71--407
• Parties: Holly F. BEESON, a Minor, by her father, next friend and guardian, Ernest A. Beeson, Plaintiff-Appellant and Appellee, v. STATE AUTOMOBILE AND CASUALTY UNDERWRITERS, a corporation, Defendants- Appellant, and Insurance Company of North America, a corporation, et al., Defendants- Appellees. . I

Page 402

508 P.2d 402

32 Colo.App. 62

Holly F. BEESON, a Minor, by her father, next friend and guardian, Ernest A. Beeson, Plaintiff-Appellant and Appellee, v. STATE AUTOMOBILE AND CASUALTY UNDERWRITERS, a corporation Defendants- Appellant and Insurance Company of North America, a corporation, et al Defendants- Appellees.

No. 71--407.

Colorado Court of Appeals, Div. I.

Feb. 6, 1973.

Rehearing Denied Feb. 27, 1973.

Certiorari Granted April 23, 1973.

John H. Williamson, Montgomery, Little & Young, J. Bayard Young, Denver, for plaintiff-appellant and appellee.

Wood, Ris & Hames, F. Michael Ludwig, Denver, for defendant-appellant State Automobile and Casualty Underwriters.

Yegge, Hall & Evans, Don R. Evans, Denver, for defendant-appellee Ins. Co. of North America.

Wolvington, Dosh, DeMoulin, Anderson & Campbell, William P. DeMoulin, Denver, for defendant-appellee State Farm Mutual Automobile Ins. Co.

Burnett, Watson, Horan & Hilgers, William P. Horan, Denver, for defendant-appellee Allstate Ins. Co.

PIERCE, Judge.

This case arises out of an injury sustained by Holly Beeson when she was struck in the eye by a key thrown or dropped by her uncle, David Olson, from a third floor window of an apartment house owned by her grandparents. Holly's grandparents own, among others, apartment houses at the following addresses in Denver: 1275 Washington Street, which they manage and where they reside; and 1430 Race Street, where Holly's uncle, David Olson, resides and which he manages. It was at the Race Street location that the injury occurred.

On the date of the injury, Holly accompanied her grandmother and mother, in Holly's parents' station wagon, to a freight salvage establishment in Denver to purchase rugs for the Washington Street apartment. After purchasing the rugs they drove to the Race Street apartment, where a pickup truck used in the family apartment business was stored. It was their intention to use the truck to transport to the Washington Street apartments the rugs they had purchased. Holly's uncle, David, who performed general maintenance functions at all of the family apartments, had the keys in his third floor apartment, where they were regularly stored. Holly's mother drove into the driveway of the Race Street apartments, got out of the station wagon, leaving the door open and the engine running and requested that David throw her the keys from his third-floor window. This he did. The keys went over her shoulder and through a partially open window in the station wagon and struck Holly, causing the loss of her eye.

Holly brought this action seeking declaratory relief against the following insurance companies: Insurance Company of North America (INA), which provided liability coverage for the Washington Street apartment; State Automobile and Casualty Underwriters (State Auto), which provided liability coverage for the Race Street apartment; State Farm Mutual Automobile Insurance Company (State Farm), which insured the pickup truck; and Allstate Insurance Company (Allstate), which insured the station wagon. Holly sought a determination as to whether any or all of the policies issued by these companies provided coverage for the accident in which she had been involved.

A motion was filed contesting the rights of the plaintiff to raise these issues in a declaratory judgment action on the ground that the named insureds under the various policies, whose rights would also be determined by this action, were not joined. Thereafter, a stipulation signed by all of the original parties or their legal representatives and Holly's mother, her grandparents and her uncle, was placed of record. The signators agreed to the following:

1. That they were all proper parties to this determination and that the issue to be decided was what, if any, insurance coverage was afforded by the insurance policies.

2. That all of the parties desired to have their status and rights adjudicated in this particular action.

3. That all the signators, of their own free will, agreed to be found by the decision as finally determined after exhaustion of appellate procedures through the courts of the State of Colorado.

4. That the defenses of Gloria Beeson, David Olson, Lester D. Olson, and Emma Olson, as to liability, were preserved for subsequent litigation.

5. That the defendants withdrew from the present action any objection to failure to join an indispensable party or that the action was not brought by the real party in interest and any defenses attacking the capacity of the plaintiff to bring the action.

Upon trial, the trial court denied recovery under each of the policies, except for the State Auto policy covering the Race Street apartments.

Holly appeals that portion of the judgment denying coverage under the other three policies and State Auto appeals the determination that it must provide coverage. We affirm the determination that the State Auto policy provides coverage, and that the State Farm and Allstate policies do not. We reverse the determination that the INA policy does not extend coverage to this loss.

I.

While the parties did not raise the issue, it is necessary that we discuss initially the procedure followed by the original parties and other interested persons, in order to bring themselves within the purview of C.R.C.P. 57 and C.R.S.1963, 77--11--1 to 15, which delineate the requirements for seeking declaratory relief.

Our Supreme Court has held that an action for declaratory judgment may be properly maintained by an insurance company to determine if it will be liable to its insured for a defense and for payment of a possible judgment arising from a specified occurrence. O'Herron v. State Farm Mutual, 156 Colo. 164, 397 P.2d 227. Although the procedure used in this particular case is unorthodox, it has achieved the same end as if the insureds or the insurance companies had initiated the action. In the present action, by their stipulation, all persons having any interest whatsoever regarding the interpretation of these insurance policies have placed themselves before the court. All the possible tort feasors, in essence, challenge the respective insurance companies to defend the various named insureds pursuant to the terms of their contracts, and the insurance companies have denied any liability. By doing so, they have raised a controversy of sufficient immediacy and reality to warrant the issue of a declaratory judgment. Maryland Casualty Co. v. Pacific Coal & Oil Co., 312 U.S. 270, 85 L.Ed. 826, 61 S.Ct. 510. Furthermore, hereafter the insureds and the companies are estopped to further contest the stipulated matters. Both the essential requirements and the spirit of C.R.C.P. 57 and C.R.S.1963, 73--11--1 to 15 have been complied with. Furthermore, it would be an exercise in futility now to require all concerned to return to the trial court to technically change the caption of this action or to commence a new action before placing their problems before the trial court or this court. We rule that the parties did properly bring themselves within the purview of the rule and statute, and the district court had jurisdiction to decide the issue.

II.

The insurance policies covering the two vehicles contain similar provisions with regard to coverage. Under both, the insured is covered for sums which he becomes legally obligated to pay as a result of personal injuries arising out of the ownership, maintenance, or use, including loading or unloading of the covered vehicle.

The insurance companies have found it necessary to adopt such broad language for liability policies since it would be impossible to anticipate all the occurrences that can lead to injury. Consequently, as a guide to interpreting such policies, our Supreme Court has ruled that to be within the coverage afforded by an automobile insurance clause, the accident must arise under circumstances which could be reasonably contemplated by the parties when they entered the agreement. Mason v. Celina Mutual Insurance Co., 161 Colo. 442, 423 P.2d 24. The applicable rule for interpreting this clause in an automobile insurance contract is found in Azar v. Employer's Casualty Co., Colo., 495 P.2d 554. There, our Supreme Court stated:

'. . . it is generally held that there must be a causal relation or connection between the injury and the use of the vehicle in order for the injury to come within the meaning of the phrase 'arising out of the use' of a vehicle. . . . Use, as contemplated by the automobile liability policy, means Use of a vehicle as such, not a use foreign to its inherent purpose, to which the vehicle might conceivably be put.'

This accident was not sufficiently connected with these vehicles to satisfy this rule, and thus, neither of these policies is applicable. Certainly, the throwing of the keys to the truck was not within the contemplation of the parties when they entered into their insurance agreement. It is in no way connected with the inherent nature of the vehicle, and thus, damages resulting therefrom are not insured under the basic insurance agreement. Therefore, the State Farm policy does not provide coverage.

Similarly, the fact that Holly happened to be sitting in the station wagon when she was struck is inadequate to satisfy the requirements set forth in Azar, supra. There, the victim also just happened to be in the car. However, again, there is nothing inherent in Holly's use of the vehicle that would bring such an event within the contemplation of the parties to the Allstate contract. See Brenner v. Aetna Insurance Co., 8 Ariz.App. 272, 445 P.2d 474.

Furthermore, this is not a case of loading or unloading within the terms of the Allstate policy. Had it been David's intention to throw the keys directly into the car, we might have to reach this issue. However, they were not intended cargo, and thus, this is not a case concerned with loading.

III.

The policies covering the two apartment buildings contain similar provisions,...