Bonfils v. Pacific Auto. Ins. Co.

• Decision Date: 14 November 1958
• Court: California Court of Appeals Court of Appeals
• Parties: C. M. BONFILS and Marie Bonfils, Plaintiffs and Appellants, v. PACIFIC AUTOMOBILE INSURANCE COMPANY, a corporation, Defendant and Respondent. Civ. 5714.

Page 766

331 P.2d 766

165 Cal.App.2d 152

C. M. BONFILS and Marie Bonfils, Plaintiffs and Appellants, v. PACIFIC AUTOMOBILE INSURANCE COMPANY, a corporation, Defendant and Respondent.

Civ. 5714.

District Court of Appeal, Fourth District, California.

Nov. 14, 1958.

King & Mussell, San Bernardino, for appellants.

Wilson & Wilson, San Bernardino, for respondent.

COUGHLIN, Justice pro tem.

Action for damages under policy of indemnity insurance. Judgment for defendant reversed.

The plaintiffs, Mr. and Mrs. Bonfils, recovered a default judgment, in the sum of $8,733.65, against Ygnacio C. Vielma, on account of injuries sustained by them in an automobile accident occurring on July 23, 1950. The judgment was entered June 30, 1953. In their complaint against Vielma, the plaintiffs alleged that he 'so negligently, carelessly and recklessly drove and operated' his Buick automobile as to cause it to collide with a Chevrolet automobile being driven by Mr. Bonfils, in which Mrs. Bonfils was riding, proximately resulting in severe personal injuries to both of them.

Prior to this accident, the defendant, Pacific Automobile Insurance Company, had issued to Vielma a policy of insurance indemnifying him against loss on account of personal injury or property damage arising out of the use of his Buick automobile.

Among other things, this policy stated:

(1) That the defendant agreed to 'pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of injury to' person or property 'caused by accident and arising out of the ownership, maintenance or use of the automobile'; and also agreed to 'defend any suit against the insured alleging such injury * * * and seeking damages on account thereof, even if such suit is groundless, false or fraudulent'.

(2) That, for the purposes in question, the 'word 'insured' includes the named insured and also includes any person while using the automobile * * * provided the actual use of the automobile is by the named insured or with his permission'; and

(3) That, 'Any person * * * who has secured' a judgment against the insured on account of such injury 'shall thereafter be entitled to recover under this policy to the extent of the insurance afforded by this policy.'

An endorsement attached to the policy contained this statement: 'It is understood and agreed that the coverage under this policy, shall be null and void if the within described automobile, shall be operated by any person, outside of the named insured. All other declarations, agreements and conditions remaining unchanged.'

The defendant determined that, at the time of the accident in question, the Buick automobile was being operated by a person named Nykatha Miller, not by Vielma; and on August 23, 1950, which was a month after the accident, notified Vielma that no coverage was afforded under any of the provisions of his policy, because his automobile had been driven by a person other than himself, with his consent.

In the following January, the plaintiffs commenced their action against Vielma; a copy of the complaint was served on him and, in turn, delivered to the defendant with a demand that it appear in and defend the action on his behalf. No appearance was made; Vielma's default was entered; judgment ensued awarding Mrs. Bonfils $5,000 and Mr. Bonfils $3,733.65.

The Bonfils made a demand upon the defendant to pay this judgment. Upon refusal this action was commenced. The trial court found that Vielma was not driving the Buick at the time of the accident, and concluded that the insurance company was not liable under the policy because of the endorsement provision, that coverage should be null and void if the subject automobile was operated by a person outside of the named insured. Judgment in favor of the defendant was entered accordingly, from which the plaintiffs take this appeal.

The plaintiffs contend that the endorsement provision is contrary to public policy and therefore null and void; and, further, that the finding of the court in the accident case, that Vielma was driving the Buick at the time of the accident, is binding upon the defendant in this case.

'An insurance company has the right to limit the coverage of a policy issued by it and when it has done so, the plain language of the limitation must be respected.' Continental Cas. Co. v. Phoenix Const. Co., 46 Cal.2d 423, 432, 296 P.2d 801, 806, 57 A.L.R.2d 914. However, any such limitation must conform to the law; if contrary to public policy it is void.

The Automobile Financial Responsibility Law of California is set forth in Sections 410 through 423.1 of the Vehicle Code, the provisions of which are 'directly intended for the benefit of drivers and owners of motor vehicles as a means of forestalling suspension of the license of the driver and of the registration of the vehicle or vehicles, and, more fundamentally, designed to give monetary protection to that ever changing and tragically large group of persons who while lawfully using the highways themselves suffer grave injury through the negligent use of those highways by others.' (Latter italics ours.) Continental Cas. Co. v. Phoenix Const. Co., 46 Cal.2d 423, 434, 296 P.2d 801, 807. This law declared the public policy of this state in the premises; it is 'remedial in nature and in the public interest is to be liberally construed to the end of fostering its objectives.' Continental Cas. Co. v. Phoenix Const. Co., 46 Cal.2d 423, 434, 296 P.2d 801, 808. Section 415 of the Vehicle Code, a part of the Financial Responsibility Law, requires that every policy of insurance issued pursuant to that law 'shall insure the person named therein and any other person using or responsible for the use of said motor vehicle or motor vehicles with the express or implied permission of said assured.'

In Wildman v. Government Employees' Ins. Co., 48 Cal.2d 31, 39, 307 P.2d 359, 364, the Supreme Court of this state expressed the rule applicable to the case at bar, as follows: 'It appears that section 415 must be made a part of every policy of insurance issued by an insurer since the public policy of this state is to make owners of motor vehicles financially responsible to those injured by them in the operation of such vehicles. Section 402 of the Vehicle Code provides that 'Every owner of a motor vehicle is liable and responsible for the death of or injury to person or property resulting from negligence in the operation of such motor vehicle, in the business of such owner or otherwise, by any person using or operating the same with the permission, express or implied, of such owner, and the negligence of such person shall be imputed to the owner for all purposes of civil damages.' We are of the opinion that for an insurer to issue a policy of insurance which does not cover an accident which occurs when a person, other than the insured, is driving with the permission and consent of the insured, is a violation of the public policy of this state as set forth in sections 402 and 415 of the Vehicle Code.' (Italics ours.)

Defendant urges that the mandate of section 415 of the Vehicle Code applies only to policies of insurance issued after suspension proceedings have been instituted in connection with a judgment against a non-responsible automobile owner or driver. The cited language from the opinion in the Wildman case is directed to 'every policy of insurance issued by an insurer'; this declaration was reiterated therein where the court said: 'Inasmuch as sections 402 and 415 of the Vehicle Code set forth the public policy of this state such laws must be considered a part of every policy of liability insurance even though the policy itself does not specifically make such laws a part thereof'; and again where it is stated: '* * * said sections were intended by the Legislature to be, and are, a part of every policy of motor vehicle liability insurance issued by an insurance carrier authorized to do business in this state.' (Italics ours.) Wildman v. Government Employees' Ins. Co., 48 Cal.2d 31, 40, 307 P.2d 359, 365.

Every motor vehicle liability policy of insurance issued in this state, by virtue of law, covers both the owner of the subject automobile and every person using the same with the owner's consent; any omission of an express provision in such a policy resulting in a failure to effect this dual coverage is supplied by implication of law; by the same standard, any provision therein which expressly excludes such coverage, being contrary to public policy, is rendered ineffectual by law. The insurance provisions of the Automobile Financial Responsibility Law were intended for the benefit not only of the drivers and owners of motor vehicles, but also for persons injured as a result of their negligence (Continental Cas. Co. v. Phoenix Const. Co., 46 Cal.2d 423, 296 P.2d 801; Bachman v. Independence Indemnity Co., 112 Cal.App. 465, 483, 297 P. 110, 298 P. 57). 'The substantive law of this state cannot be enlarged, circumvented, defeated, or modified by any provision which the insurer may have elected to place in its contract in derogation of or in conflict therewith. The statute is founded upon principles of public policy, and an anomalous situation would be created if the rights of third parties, for whose protection the law was adopted, could be hindered, delayed, or defeated by the private agreements of two of the parties to a triparty contract.' Malmgren v. Southwestern A. Ins. Co., 201 Cal. 29, 33, 255 P. 512, 513. In issuing the policy in question the defendant insurance company impliedly agreed that such policy should conform to the law. This is a mandate of law.

Moreover, the policy in question, by its express provisions, amended itself to conform to the statutes of this state (Cassin v. Financial Indemnity Co., 160 Cal.App.2d 631, 325 P.2d 228).

The endorsement which provides that 'the coverage under this policy, shall be null and void if the within...