Boulter v. Commercial Standard Ins. Co.

• Decision Date: 17 August 1949
• Docket Number: No. 12056.,12056.
• Citation: 175 F.2d 763
• Parties: BOULTER et al. v. COMMERCIAL STANDARD INS. CO.
• Court: U.S. Court of Appeals — Ninth Circuit

175 F.2d 763 (1949)

BOULTER et al. v. COMMERCIAL STANDARD INS. CO.

No. 12056.

United States Court of Appeals Ninth Circuit.

June 27, 1949.

Rehearing Denied August 17, 1949.

Nathan G. Gray, Berkeley, Cal., for appellant.

Paul C. Dana, Leighton M. Bledsoe, Rogers P. Smith, R. S. Cathcart, Dana, Bledsoe & Smith, San Francisco, Cal. (R. S. Cathcart, San Francisco, Cal., of counsel), for appellee.

Before MATHEWS, HEALY and POPE, Circuit Judges.

POPE, Circuit Judge.

The Boulters, husband and wife, who are appellants here, received personal injuries in a collision between their automobile and a tractor-type truck driven by one Warner. Warner and his partner, who owned the truck and were engaged in the transportation of property for hire pursuant to a permit issued by the California Public Utilities Commission, had procured a policy of liability insurance covering the truck from the appellee, a Texas corporation. Appellants sued Warner in the State court and each recovered a judgment on account of injuries received in consequence of the collision. The appellee Insurance Company defended the suit under a non-waiver agreement from Warner. Appellants, unable to collect their judgment from Warner, then brought this action against the Insurance Company to recover the amount of their respective judgments. In the action, which was removed to the district court by reason of the diversity of citizenship of the parties, the appellee defended on the ground that at the time and place of the accident the truck was being used in such manner as not to be covered by the provisions of the policy. While the first action was pending the Insurance Company procured a declaratory judgment by default in an action which it had filed in the United States District Court against its insured. This judgment held the truck was not covered by the policy at the time of the accident. The Boulters, although named defendants in that action, were never served.

The principal question which arises upon this appeal is whether the policy here involved did in fact cover the truck. The policy, which insured against public liability and property damage, contained the following provision: "The automobiles described are and will be used only for transportation of merchandise purposes, and will be operated as follows, and this insurance covers for no other use or operation."

The Insurance Company asserts that at the time of the accident the truck was not being used for "transportation of merchandise purposes" and hence that neither the insured nor the Boulters could acquire any rights thereunder.

The California Highway Carriers' Act¹ provided the Public Utilities Commission should require highway carriers to procure policies of public liability and property damage insurance, and the Commission was granted power to establish rules and regulations to make this requirement effective. The Commission required such policy to carry an endorsement or rider (which was on the policy in question) which provided that the Company "will pay any final judgment rendered against the insured for bodily injuries to or death of any person or persons other than the named insured, or damage to or destruction of property, or both, arising out of the ownership, maintenance or use of any vehicle operated under authority of the aforesaid statutes * * * that the judgment creditor may maintain an action in any court of competent jurisdiction to compel such payment * * *. Provided, however, that this endorsement shall not be construed to impose any obligation on the Company for which it would not be liable independently hereof with respect to * * * (4) any loss arising out of any operations of the insured except operations authorized or for which authorization is required under the aforesaid statutes."

Upon demand of the plaintiffs, this action was tried to a jury which returned a verdict for plaintiffs. A motion for a directed verdict was made by the defendant Insurance Company at the close of the evidence. The court reserved ruling on the motion until after the verdict. After the verdict was returned the Insurance Company moved for judgment notwithstanding the verdict and for a new trial in the alternative. The lower court thereupon granted the motion for a directed verdict, set aside the verdict and directed judgment to be entered for the defendant. The motion for a new trial was denied.

The evidence, viewed in the light most favorable to the Boulters, disclosed that a week prior to the accident Warner had driven the truck, which is generally referred to in the record as a Dodge tractor, with trailer attached, from San Francisco to Willow Creek which is near Eureka, California. His trailer was loaded with a quantity of pipe and furniture which he was hauling for his sister who resided at that place. His sister paid him for hauling the property. He testified that after arrival at his sister's place he attempted to procure a load of lumber at Eureka for hauling on his return trip to San Francisco, but finding it impossible to secure such a load he spent a few days at his sister's place vacationing and using the pipe to install a water system for her. The day of the accident the trailer was not completely unloaded, and leaving the trailer at his sister's home, Warner drove the tractor portion of the vehicle to San Francisco. His wife, who had accompanied him on the trip, was riding with him. It was as he was driving toward San Francisco that the accident occurred which caused the injuries to the Boulters.

Warner testified that he operated as a "wildcat" trucker. His headquarters were at his residence in San Francisco, but as such trucker he had no fixed route or schedule; he used his equipment to go from place to place hauling for whoever might hire him. The tractor portion of the vehicle was equipped so that loads could be carried by it when detached from the trailer, and it was frequently used in that manner. On occasions when his own trailer was loaded he used the tractor to haul other loaded trailers. He defined a "wildcat" operator as one who has no definite over-the-road operations of his own but who makes irregular trips generally for big contractors and other haulers.

Warner testified that as he drove toward San Francisco he intended to stop at San Francisco for the purpose of paying to the Insurance Company the premium on this policy, and this was the primary reason for his starting for San Francisco at that time. He testified that it was also his intention to continue his trip on to San Jose, a short distance to the south of San Francisco, for the purpose of making contact with one Dowdell who was in the trucking business and for whom he had previously done hauling, in an effort to obtain hauling from him. Because his tractor, after the accident, required repairs at San Francisco, Warner did not get beyond that point on this trip, but returned to Willow Creek a few days later for his trailer.

A determination of whether Warner's liability on this occasion was covered by the policy turns upon a construction of the two provisions of the policy and the Commission's rider, quoted above. If within the meaning of the first quoted clause the tractor was being used for "transportation of merchandise purposes" this accident was covered by the policy. Also, if any use to which the tractor was then being put was a part of any "operations authorized or for which authorization is required" under the statutes referred to in the rider, the insurance covered.

In considering the meaning of the policy and the significance of the facts here, several preliminary observations should be made. In the first place, it is not of controlling significance that Warner had recently been vacationing at his sister's place. When he started for San Francisco his vacation had ended, and he so testified.²

Also there is nothing in the policy which operates to limit its coverage to times when the truck was actually loaded with merchandise. The provision of the policy to the effect that the vehicle would be "used only for transportation of merchandise purposes" does not exclude coverage when the truck is running light, either on a return trip or in anticipation of procuring a load. Such movement would be one "for which authorization is required" within the meaning of the rider mentioned.

Again, there is nothing in the policy which purports to limit or circumscribe the manner in which the "transportation of merchandise" business is to be conducted. The provision of the policy quoted above which recites that the vehicle will be used only for those purposes, contains the...