California Packing Corp. v. Transport Indem. Co.

• Decision Date: 01 August 1969
• Citation: 275 Cal.App.2d 363,80 Cal.Rptr. 150
• Court: California Court of Appeals Court of Appeals
• Parties: CALIFORNIA PACKING CORPORATION, a corporation, Plaintiff and Appellant, v. TRANSPORT INDEMNITY COMPANY, a corporation, Defendant and Respondent. Civ. 24921.

Page 150

80 Cal.Rptr. 150

275 Cal.App.2d 363

CALIFORNIA PACKING CORPORATION, a corporation, Plaintiff and Appellant, v. TRANSPORT INDEMNITY COMPANY, a corporation, Defendant and Respondent.

Civ. 24921.

Court of Appeal, First District, Division 1, California.

Aug. 1, 1969.

Rehearing Denied Aug. 26, 1969.

Hearing Denied Sept. 24, 1969.

Bronson, Bronson & McKinnon, San Francisco, for appellant.

Toff, Gordon & Royce, Mountain View, for respondent.

ELKINGTON, Associate Justice.

Plaintiff California Packing Corporation (Cal-Pack) appeals from a judgment entered in a declaratory relief action brought against defendant Transport Indemnity Company (Transport) for the purpose of determining the respective liabilities of Cal-Pack's insurance carrier Fireman's Fund Insurance Company (the Fund) and Transport, for personal injuries sustained by one David E. Thomas.

Thomas, an employee of Miles Motor Transport System (Miles), drove his employer's truck onto premises of Cal-Pack to pick up a load of empty boxes. He was injured when a forklift, operated by Cal-Pack's employee Moses Melton, became entangled in the truck's tie-down cable. At the time Melton (as was determined by a jury in the instant action) was engaged in loading the Miles truck. Thomas commenced an action for personal injuries, naming both Cal-Pack and Melton as defendants. These parties tendered defense of the action to Transport whose insurance policy covered the Miles truck. The tender was rejected by Transport. Subsequently, the case was settled by the Fund, as Cal-Pack's insurer, for $13,875. The Fund incurred an obligation of $700 in attorney fees in defending the Thomas action.

Under its policy, the Fund's liability limit was $100,000 for each person injured. Transport's limit, as indicated by a policy in evidence at the trial, appeared to be $10,000 for each person injured. The trial court concluded that the two insurance carriers were liable for the Thomas settlement in proportion to their respective coverage limits. The Fund's liability was computed at $100,000/110,000 of the whole, or $13,250, and Transport's share at $10,000/110,000, or $1,325. It was accordingly adjudged that Transport pay to the Fund's insured, Cal-Pack, $1,325.

Cal-Pack contends, as a matter of law, that the trial court's allocation of liability was erroneous. It points out that Miles and its insurance carrier have a 'primary' liability for Thomas' injuries since Melton, the tort-feasor, was directly insured as a permissive user of the Miles truck. Cal-Pack then argues that its own liability is 'secondary' since it arises solely by virtue of the doctrine of Respondeat superior.

Relying on Continental Cas. Co. v. Phoenix Constr. Co., 46 Cal.2d 423, 296 P.2d 801, 57 A.L.R.2d 914; United States Fire Ins. Co. v. Transport Indem. Co., 244 Cal.App.2d 110, 52 Cal.Rptr. 757; and Pleasant Valley Lima Bean Growers and Warehouse Ass'n v. Cal-Farm Ins. Co., 142 Cal.App.2d 126, 298 P.2d 109, Cal-Pack contends that Transport must contribute toward the Thomas settlement the full amount of its policy limit, which the parties in their briefs agreed was $10,000. These cases hold that where an employer's tort liability exists solely by virtue of the unauthorized negligence of an employee, automobile liability insurance directly covering the employee must first be exhausted before resorting to insurance covering only the secondarily liable employer.

This contention of Cal-Pack is unacceptable for the reason that its liability for Thomas' damages is also Primary. This liability arises from the admitted fact that Melton's permissive use of the Cal-Pack owned forklift, during the loading operation, proximately contributed to Thomas' injuries.

The Fund's policy insures against liability arising out of the use of any 'automobile.' It then proceeds to define that term rather enigmatically. ¹ Our best effort to understand this definition and apply it to the facts and circumstances of the instant case leads us to this meaning: An insured automobile is an owned automobile or land motor vehicle, unless it is equipment designed for use principally off public roads and is not subject to motor vehicle registration. ²

The parties concede that a forklift is a 'land motor vehicle.' Such a vehicle is obviously designed 'for use principally off public roads.' But if it is subject to motor vehicle registration it is nevertheless an insured automobile under the Fund policy.

Vehicle Code section 4000 generally provides that all motor vehicles used upon highways shall be registered. An exception is provided by Vehicle Code section 4013 which states: 'Any forklift truck which is designed primarily for loading and unloading and for stacking materials and is operated upon a highway only for the purpose of transporting products or material across a highway in the loading, unloading or stacking process, and is in no event operated along a highway for a greater distance than one-quarter mile is exempt from registration.' It is apparent that whether a forklift which is a motor vehicle is subject to registration, can be determined only by reference to the use to which the individual machine is put.

It follows that forklifts generally Are subject to registration when operated on a highway, other than for crossing, and in any event when used along a highway for more than a quarter mile. On the other hand they Are not subject to registration when operated within the limits set by section 4013.

The Fund policy exempts from coverage certain motor vehicles 'not subject to motor vehicle registration.' It is not clear whether the reference is only to classes of motor vehicles which are per se exempt from registration (e.g., special construction equipment; see Veh.Code, § 4010), or if it includes individual vehicles ordinarily subject to such registration, but exempt therefrom because of the limited nature of their use (e.g., forklifts; see Veh.Code, § 4013.)

'If the insurer uses language which is uncertain any reasonable doubt will be resolved against it; if the doubt relates to extent or fact of coverage, * * * the (policy's) language will be understood in its most inclusive sense, for the benefit of the insured.' (Continental Cas. Co. v. Phoenix Constr. Co., 46 Cal.2d 423, 437--438, 296 P.2d 801, 809--810; Pleasant Valley Lima Bean Growers and Warehouse Ass'n v. Cal-Farm Ins. Co., 142 Cal.App.2d 126, 132, 298 P.2d 109.) This rule is particularly applicable where, as here, the insurance carrier claims a certain risk is excluded, or property excepted, from coverage. (California Compensation & Fire Co. v. Industrial Acc. Comm., 62 Cal.2d 532, 534, 42 Cal.Rptr. 845, 399 P.2d 381.) And just what is excluded from the coverage of an insurance policy must be Conspicuous, plain and clear. (Gray v. Zurich Insurance Co., 65 Cal.2d 263, 273, 54 Cal.Rptr. 104, 419 P.2d 168.)

Applying the foregoing wellknown rules of construction, we interpret the Fund policy as covering the subject forklift and providing 'primary' coverage to Melton, its permissive user at the time of Thomas' injury.

It follows that the superior court's conclusion that Transport and the Fund should contribute toward the Thomas settlement in proportion to their coverage limits was correct. However, for reasons we shall now discuss, the judgment of the lower court must nevertheless be modified.

As previously indicated, the action below was tried on the theory that Transport's liability limit was $10,000 for each person injured.

Pending this appeal, and after filing of briefs, Cal-Pack moved, under the authority of Code of Civil Procedure section 956a (now § 909), for leave to present additional evidence. The subject evidence was alleged to be an undisclosed endorsement to the Transport policy in effect at the time of the Thomas accident.

Supporting the motion was a declaration of counsel which related the following. In a reciprocal exchange of policies before the trial, Cal-Pack was furnished with a copy of the Miles policy written by Transport. A question arose whether it was the effective policy, which resulted in Cal-Pack setting for hearing a 'Motion to Produce.' Thereafter counsel for Transport sent to counsel for Cal-Pack a letter as follows:

'Enclosed herein please find a copy of a letter received from Transport Indemnity Company verifying the fact that the policy that you have in your possession is the same as the policy effective at the time of the subject accident.

'I trust this will eliminate the necessity of appearing at the Motion to Produce on June 7, 1965.

'If not, please advise.'

Enclosed with the letter was a copy of a letter from Transport to its attorney reading:

'Please be advised that the policy of insurance that I forwarded to your office on December 3, 1964, pertaining to the coverage afforded to Miles and Sons Trucking Service was...