Chicago Ins. Co. v. American Southern Ins. Co.

• Decision Date: 10 May 1967
• Docket Number: 42740,Nos. 42725,No. 1,s. 42725,1
• Citation: 156 S.E.2d 143,115 Ga.App. 799
• Parties: CHICAGO INSURANCE COMPANY v. AMERICAN SOUTHERN INSURANCE COMPANY et al. AMERICAN SOUTHERN INSURANCE COMPANY et al. v. CHICAGO INSURANCE COMPANY
• Court: Georgia Court of Appeals

Page 143

156 S.E.2d 143

115 Ga.App. 799

CHICAGO INSURANCE COMPANY v. AMERICAN SOUTHERN INSURANCE COMPANY et al.

AMERICAN SOUTHERN INSURANCE COMPANY et al. v. CHICAGO INSURANCE COMPANY.

Nos. 42725, 42740.

Court of Appeals of Georgia, Division No. 1.

May 10, 1967.

Rehearing Denied May 30, 1967.

Certiorari Denied July 14, 1967.

Syllabus by the Court

1. When a liability policy insured a person driving an automobile with the permission of the owner as an additional insured against liability for bodily injury and property damages sustained by any person arising out of the use of the automobile, and did not expressly exclude liability for injury to the owner of the insured automobile, the policy covered the driver's liability to the owner for injury he received when riding as a passenger due to negligence of the permissive driver.

2. When one driving an automobile with the permission of the owner becomes liable for injuries arising out of the use of the automobile, and both the driver and the owner have automobile liability policies which cover one driving the insured automobile with the permission of the owner as an additional insured, and cover liability incurred by the policyholder while driving a non-owned automobile, and both policies provide that when the insured has other insurance the liability shall be prorated between all carriers of collectible insurance and that with respect to a non-owned automobile the policy shall be excess insurance over any other collectible insurance, (a) the owner's policy is the primary policy and his insurer is liable up to the limits of the policy without apportionment, (b) after the owner's policy is exhausted the driver's insurer is liable up to its limit of liability.

In this case two insurance policies were involved. American Southern Insurance Company undertook to defend the driver in an automobile negligence action arising out of the use of the automobile which it insured. The driver was driving with the permission of the owner of this insured automobile, who was riding as a passenger and was injured. The driver was insured by a separate policy of Chicago Insurance Company. American Southern brought a declaratory judgment action to determine the rights and duties of each company, and appeals from the judgment holding that the driver was entitled to all the rights and privileges of an insured under the American Southern policy and to all the rights and privileges of a named insured under the Chicago Insurance Company policy, and that both companies were liable pro rata for the driver's liability in the negligence action.

Richardson, Doremus & Karsman, W. Ward Newton, Savannah, T. Ross Sharpe, Lyons, J. Max Cheney, Reidsville, for appellant.

Spivey & Carlton, Milton A. Carlton, Sr., Swainsboro, for appellees.

HALL, Judge.

1. The following provisions are pertinent and identical in each of the policies: The insurer agrees 'to pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of: * * * 'bodily injury,' sustained by any person; * * * arising out of the ownership, maintenance or use of the owned automobile or any non-owned automobile.'

The policy provides that under the coverages for bodily injury and property damage liability 'persons insured' include '* * * (a) with respect to the owned automobile, (1) the named insured * * * (2) any other person using such automobile with the permission of the named insured.' 'Non-owned automobile' means an automobile or trailer not owned by or furnished for the regular use of either the named insured or any relative, other than a temporary substitute automobile.' 'Other insurance: If the insured has other insurance against a loss covered by Part I of this policy the company shall not be liable under this policy for a greater proportion of such loss than the applicable limit of liability stated in the declarations bears to the total applicable limit of liability of all valid and collectible insurance against such loss; provided, however, the insurance with respect to a temporary substitute automobile or non-owned automobile shall be excess insurance over any other valid and collectible insurance.' (Part I is entitled 'Liability' and includes both bodily injury and property damages.)

American Southern argues that the named insured cannot recover under its contract for personal injuries to himself arising from the negligence of another person to whom liability coverage is extended as an additional insured under its policy, because this would be contrary to its contract to pay damages 'on behalf of the insured.' Considering the obligation to pay damages 'on behalf of the insured' with the definition of 'insured' quoted above, under the facts here presented, is the obligation to pay damages on behalf of the named insured and any other person using the named automobile with the permission of the named insured. The...