Cassin v. Financial Indem. Co., 17050

• Decision Date: 20 May 1958
• Docket Number: No. 17050,17050
• Citation: 160 Cal.App.2d 631,325 P.2d 228
• Court: California Court of Appeals Court of Appeals
• Parties: Clifford B. CASSIN and Hazel Cassin, Plaintiffs and Respondents, v. FINANCIAL INDEMNITY COMPANY, Defendant and Appellant.

Page 228

325 P.2d 228

160 Cal.App.2d 631

Clifford B. CASSIN and Hazel Cassin, Plaintiffs and Respondents, v. FINANCIAL INDEMNITY COMPANY, Defendant and Appellant.

No. 17050.

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

May 20, 1958.

Theodore Tamba, Franklin A. Plank, San Francisco, for appellant.

Mullally & Wines, Oakland, for respondents.

FRED B. WOOD, Justice.

Plaintiffs brought this action upon an automobile liability insurance policy issued by the defendant, for reimbursement for the amount of the judgment, costs and attorney fees incurred by them in an action brought against them by Pamela Beaumont who was injured in a collision with plaintiffs' car. Plaintiffs' car was being driven by one Earl Van Dyke, who was 62 years old at the time. Defendant claims that its policy bore a 'preferred rating endorsement' which excluded insurance coverage 'while the automobile is operated by or in the care of anyone who: * * * (2) Is over 60 years of age.'

(1) Was the policy limited by a preferred rating endorsement? No.

The complaint pleads the text of the policy (not showing any such endorsement). The answer shows the text of the alleged endorsement but is not verified. Defendant argues that plaintiffs by failing to file an affidavit sanctioned by section 448, Code of Civil Procedure, admitted execution and genuineness of the endorsement. It is possible that section 448 does not apply to a mere addendum as distinguished from an entire instrument. Moreover, defendant by failing to verify its answer may have admitted the genuineness and completeness of the contract as pleaded in the complaint, which was verified. See § 447, Code of Civ.Proc. It happens that these questions need not be decided. The parties treated the execution and genuineness of the alleged endorsement as issues at the trial. It is too late now for defendant to change its theory in that regard.

There is evidence sufficient to support the finding that the alleged preferred service rating endorsement was not attached to the policy.

Plaintiff Hazel Cassin testified that the endorsement was not attached to the policy when she received it. When applying for insurance, she went to a Mr. Legerton at the office of Fireside Finance Company [agent or broker for defendant herein] and asked to renew her insurance which was then with Norwich. He said he had 'another insurance company that was just as good, and he would offer me the same protection, and it would be cheaper.' He said nothing about restrictions on the new policy, about different rates in case someone less than 25 or more than 60 years of age drove, nor did he mention the words 'preferred rate endorsement.' The application for insurance signed by Mrs. Cassin had 'Pref Rat End' inserted in pencil but Mr. Legerton testified that this was not in his handwriting as were most of the entries in the application. The first page of the policy, in a section labeled 'Physical Damage' contains a section embraced by brackets labeled 'Endorsements Forming a Part of the Policy at Its Inception Date' with two printed entries ('Wrongful conversion--Type WC-1' and SI Coll.--Type VSI--') and a typed entry 'Pref. Rate End.' On the next line and in the right-hand column, instead of the left, there is a typed entry 'Policy Fee End.' with a charge of $5. There appears to be nothing in the policy which explains the entries under endorsements or intimates that these may restrict coverage under the policy. Mrs. Cassin testified that she saw 'Pref. Rate End.' notation on the face of the policy but thought it referred to the endorsement fee explanation attached to the policy.

The only contrary evidence on the issue of whether the endorsement was physically attached to the policy at the time it was issued was given by Nelson C. Neall, who at the time the policy was issued was employed by Financial Indemnity Company. He testified that he 'would say there was a preferred rating endorsement attached to the policy' because the normal practice was to stamp the endorsements and the policy so that part of the stamp would appear on the endorsement and part on the policy, and this particular policy had two partial stamps on the section marked 'Exclusions.' He could not, of course, testify that this particular operation had been done in this manner as to this particular policy. Also, there was a notation 'pref. rat. end' on the front page of the policy and the office copy of the policy had such an endorsement in the file.

Appellant contends the issue was not whether the preferred rating endorsement was attached to the policy but whether the parties intended that such endorsement be included in the policy applied for. We doubt that this point is available at this late date. At the beginning of the trial defendant's counsel said he was prepared to prove that the endorsement was attached; that the only issue of fact was whether the endorsement was 'on there.' Even if this point were now available, we perceive no basis for reversal. Mrs. Cassin testified that she intended to obtain coverage similar to that which she had under the Norwich policy, which did not contain any such exclusion and that Mr. Legerton, the agent of defendant, purported to provide her with such a policy. One could infer from the 'Pref. Rate End.' on the face of the policy either that the insurance company's intention was different from that of the insured or that this was mistake on the part of the company. Neither conclusion is compelled by the evidence, and the trial judge resolved any conflict in favor of the plaintiffs.

Moreover, even if the endorsement had been attached it would not have been effective here. The policy expressly provided: 'Terms of this policy which are in conflict with the statutes of the State wherein this policy is issued are hereby amended to conform to such statutes.' Section 415, Subdivision 2, of the Vehicle Code prescribes as a requirement of a motor vehicle liability policy that it '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.' Thus, the policy (even if the restrictive endorsement were attached) by its very terms amended itself to conform to this statute, which contains no such age restrictions as are contained in the endorsement.

In Wildman v. Government Employees' Ins. Co., 48 Cal.2d 31, 307 P.2d 359, the court held that such provision in a policy prevailed over an endorsement purporting to restrict liability to use only by members of the insured's immediate family. Indeed, it is doubtful if it would have been competent for defendant to restrict the coverage as the endorsement would have done if attached to the policy. '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.' At page 40 of 48 Cal.2d at page 464 of 307 P.2d.

(2) Did plaintiffs incur a liability to Beaumont which is covered by the policy they obtained from the defendant? Yes.

The action of Beaumong against the Cassins and Van Dyke culminated in a stipulated judgment in favor of Beaumong against the Cassins for $5,000 and against Van Dyke for $1,500. Van Dyke's insurer, Farmers Insurance Exchange, paid Beaumont Van Dyke's $1,500 portion of the judgment and loaned the Cassins $5,000 which they deposited and thereupon paid Beaumont their $5,000 portion of the judgment. Defendant herein questions that transaction, claiming that the Cassins had only on owner's liability under section 402, Vehicle Code, based solely on Driver Van Dyke's negligence, which section 402 imputes to the Cassins; hence the latter's liability could not exceed the amount of the driver's liability. Defendant concludes that the loan transaction was really a payment by Farmers to Beaumont, in discharge of its coverage of Van Dyke's liability.

First, it is important to bear in mind that the Beaumont stipulated judgment was the result of a compromise settlement and that the law looks with favor upon the voluntary settlement of doubtful rights and controversies in the absence of fraud. 11 Cal.Jur.2d 3, § 2. Here, there is no evidence of fraud. Second, with what types of liability were the Cassins confronted when they negotiated this settlement? Beaumont in her complaint alleged two. In one paragraph sh...