Cimarron Ins. Co. v. Travelers Ins. Co.

• Decision Date: 28 September 1960
• Citation: 224 Or. 57,355 P.2d 742
• Parties: CIMARRON INSURANCE COMPANY, Inc., Appellant, v. TRAVELERS INSURANCE COMPANY, Travelers Indemnity Company, Travelers Fire Insurance Company, Shell Oil Company, Cecil C. Daugherty, Joe Bookshnis and Albert Sammons, Respondents.
• Court: Oregon Supreme Court

Page 742

355 P.2d 742

224 Or. 57

CIMARRON INSURANCE COMPANY, Inc., Appellant, v. TRAVELERS INSURANCE COMPANY, Travelers Indemnity Company Travelers Fire Insurance Company, Shell Oil Company, Cecil C. Daugherty, Joe Bookshnis and Albert Sammons Respondents.

Supreme Court of Oregon, Department 1.

Argued and Submitted June 7, 1960.

Decided Sept. 28, 1960.

Joseph Larkin and John Gordon Gearin, Portland, argued the cause for appellant. On the brief with them were Koerner, Young, McColloch & Dezendorf, Portland.

Lamar Tooze, Portland, argued the cause for respondents Travelers Insurance Company, Shell Oil Company and Cecil C. Daugherty. On the brief were Tooze, Kerr & Tooze, Portland.

Before McALLISTER, C. J., and ROSSMAN, PERRY, GOODWIN and HOLMAN, JJ.

ROSSMAN, Justice.

This is an appeal by the plaintiff, Cimarron Insurance Company, Inc., from a declaratory judgment which the circuit court entered in favor of the defendants, Shell Oil Company, Cecil C. Daugherty, Joe Bookshnis, Albert Sammons and three insurance companies (only one of whom, Travelers Insurance Company, is material to this appeal).

At the times material to this case the defendant Albert Sammons was a truck driver for the defendant Bookshnis who operates a fleet of motor trucks. February 6, 1955, the plaintiff Cimarron Insurance Company issued a policy of automobile insurance which covered the truck driven by Sammons and which designated Bookshnis as the named insured. The coverage clause of the policy, in addition to naming Bookshnis as the named insured provided that others who used the vehicle with Bookshnis' permission were also insured. The exclusion clause of the policy denied liability on the part of Cimarron for an injury to 'any employee of the insured while engaged in the employment * * * of the insured * * *.' September 1, 1955, Sammons, as Bookshnis' employee, drove the truck to the Portland plant of the defendant Shell Oil Company to obtain a load of hot asphalt; and while Shell's employee Daugherty was pouring the asphalt into the truck he negligently injured Sammons, so Sammons avers. Sammons has threatened to sue Daugherty and Shell Oil Company. The two defendants, just named, as additional or omnibus insureds demand that Cimarron protect them from Sammons' claim. Cimarron instituted this suit to secure a declaration of its duty.

The coverage clauses of the policy stated:

'I Coverage A--Bodily Injury Liability: To pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of bodily injury, sickness or disease, including death at any time resulting therefrom, sustained by any person, caused by accident and arising out of the ownership, maintenance or use of the automobile.'

'III Definition of Insured: With respect to the insurance for bodily injury liability and for property damage liability the unqualified word 'insured' includes the named insured and also includes any person while using the automobile and any person or organization legally responsible for the use thereof, provided the actual use of the automobile is by the named insured or with his permission. * * *'

A clause of the policy stated that 'Use of the automobile for the purposes stated includes the loading and unloading thereof.' It is conceded that the coverage clauses included Shell and Daugherty as insureds. Therefore, as we proceed we shall deem that Shell and Daugherty while using the truck came within the coverage clauses as additional or omnibus insureds. An omnibus insured is entitled to the same protection as the named insured.

Since the coverage clauses accepted Shell and Daugherty as additional insureds those two defendants would be entitled to the policy's protection against the claim presented by Sammons unless some other provision of the policy excluded them from it. Cimarron depends upon the exclusion clause which we have mentioned and argues that the clause denies Shell and Daugherty protection from liability to Sammons. The purpose of an exclusion clause is the opposite of that of a coverage clause. A coverage clause brings within the protection of a policy some one favored by the policy, such as a person who uses the automobile mentioned in the policy with the policyholder's permission. On the other hand, the effect of an exclusion clause is to deny the protection of the policy to some one who, but for the denial, would be an insured. The exclusion clause of the policy now before us excludes from coverage 'injury to * * * any employee of the insured while engaged in the employment * * * of the insured.'

Cimarron claims that Bookshnis was 'the insured' and after pointing to the fact that Sammons was Bookshnis' employee argues that the policy's exclusion clause rejected from the policy's protection all claims for an injury which an employee incurred in the course of his employment. Shell and Daugherty argue that the exclusion clause does not refer to them. They claim that unless the injured man, in a policy such as this one, was the employee of the insured who invokes the protection of the policy the insured, whether he was the named insured or an omnibus insured, is entitled to the policy's protection. Sammons was not an employee of Shell or of Daugherty, they being the omnibus insureds who seek the policy's protection. At the time of Sammons' injury Bookshnis was not the only insured. At that time there was (1) a named insured, Bookshnis, and (2) two omnibus insureds, Shell and Daugherty. The argument is advanced that it would be at least as reasonable to regard the additional insureds as 'the insured' as it would be to treat the named insured as 'the insured.' The defendants declare that the best that can be said for Cimarron's position is that the term 'the insured,' as employed in the exclusion clause, does not indicate with clarity whether it designates the named insured (Bookshnis) or the additional insureds (Shell and Daugherty) who invoke the protection of the policy. They argue that since the term 'the insured' is therefore ambiguous as to the person to whom it refers the court should embrace the rule that an ambiguity must be resolved against the party who incorporated it in the instrument, which in this instance is Cimarron.

We take the following from the brief submitted by Cimarron:

'Joe Bookshnis' trucking operations were covered by the Oregon Workman's Compensation Act [ORS 656.002 et seq.], and Sammons received compensation from this source, so that he is not and could not make any claim against Bookshnis. Shell has rejected the Act, but its premises were subject to the Act and also subject to the provisions of the Employer's Liability Act [ORS 654.305 et seq.].'

The defendant-respondent Travelers Insurance Company had issued to Shell a policy of liability insurance which provided coverage for that insured and also omnibus coverage for its employees.

The challenged declaratory judgment reads as follows:

'By virtue of the plaintiff's policy of insurance * * * the plaintiff is obligated to pay on behalf of the defendants Shell Oil Company and Cecil C. Daugherty all sums which they or either of them might or have become legally obligated to pay as damages because of bodily injury * * * sustained by the defendant Albert Sammons in the accident which occurred on or about 1 September 1955 at the premises of the defendant Shell Oil Company in the City of Portland * * *.

'As to the defendants Travelers Indemnity Company, Travelers Fire Insurance Company, Joe Bookshnis and Albert Sammons, the plaintiff's complaint be, and the same is hereby, dismissed and the plaintiff is nonsuited as to said defendants only.'

Travelers Indemnity Company and Travelers Fire Insurance Company wrote no policy of insurance which has any bearing upon this case. However, defendant-respondent Travelers Insurance Company wrote the policy which we have mentioned and is a party to this appeal.

The plaintiff-appellant presents these two assignments of error:

'The court erred in declaring and adjudging that the insurance policy issued by plaintiff to Bookshnis afforded liability insurance to Shell and Daugherty for the accident of September 1, 1955, in which Sammons was injured.'

'The court erred in ruling that plaintiff's insurance policy affords 'primary coverage' for this accident and in not ruling that plaintiff is liable only for that part of the loss as its policy limits bear to the limits of all the insurance, including the Travelers' policy.'

Possibly it is well at this point to take note of the following additional provisions of the policy.

'18. Other Insurance--Coverages A, B, D, E, F, G, H, I and J: If the insured has other insurance against a loss covered by 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; * * *'.

'Notice of accident--Coverages A, B and C: When an accident occurs wherein notice shall be given by or on behalf of the insured to the company or any of its authorized agents as soon as practicable * * *.'

The pivotal issue is: to whom does the term 'the insured' allude? Does it refer to the named insured, Bookshnis, or does it refer to the additional (omnibus) insureds, Shell and Daugherty? The questions just stated must be answered because clause (d) provides, as we have seen by quotation from it, that the policy does not afford 'the insured' any protection for an injury to his employee suffered while engaged in his employment. We do not believe that exclusion clause (e) is applicable to this case. In Oregon workmen's compensation is payable out of our Industrial Accident Fund. Shell and Daugherty were not contributors to the fund.

Since it is within the province of the parties to a policy of insurance to determine for themselves who shall be...