Columbia Southern Chemical Corp. v. Manufacturers and Wholesalers Indem. Exchange

Decision Date16 March 1961
Citation190 Cal.App.2d 194,11 Cal.Rptr. 762
PartiesCOLUMBIA SOUTHERN CHEMICAL CORPORATION, a corporation, Plaintiff and Respondent, v. MANUFACTURERS AND WHOLESALERS INDEMNITY EXCHANGE, a Reciprocal Exchange, Defendant and Appellant. Civ. 6079.
CourtCalifornia Court of Appeals Court of Appeals

Hunter & Liljestrom and Gerald V. Barron, Los Angeles, for appellant.

Mack, Bianco, King & Eyherabide and R. S. Cooney, Bakersfield, for respondent.

SHEPARD, Justice.

This is an appeal by defendant from a judgment against it in favor of plaintiff in the amount of $23,177.22 on account of its alleged liability under a public liability insurance policy.

The facts shown by the record are, in general substance, as follows: Columbia Southern Chemical Corporation, plaintiff and respondent herein, operates a soda ash manufacturing plant to which buyers send trucks to obtain the product. Respondent was insured against public liability by Indemnity Insurance Co. of North America (hereinafter referred to as 'North'), with a $25,000 deductible clause. T. Gai Warehouse Co. (hereinafter called 'gai') operated certain trucks and was insured against public liability by Manufacturers and Wholesalers Indemnity Exchange, a reciprocal exchange, defendant and appellant herein. Leslic Goddard was the driver of one of Gai's trucks, which he drove to respondent's plant to pick up a load of soda ash, on March 29, 1956. The loading operation was conducted by driving the truck to respondent's delivery machinery, there parking it, and receiving the ash into the body of the truck through a flexible spout maintained by respondent. The operative procedure of loading involved control by an employee of respondent of a conveyor belt by which the ash was deposited through the flexible spout. The truck operator directed the spout into that portion of the truck unfilled, the spout being so constructed that it could be moved from one hatch of the truck to another as the respective compartments were filled. The entire proceeding was on the premises and apparently under the general directive control of respondent. Respondent had a rope attached to the flexible loading spout for convenience in moving the spout from one hatch to another and to lift the spout out of the hatch after the loading was completed.

Goddard, in accordance with loading practice followed on many previous trips, drove to the spout, parked, and received the load of ash. An employee of respondent controlled delivery of the ash through the spout. When he had received all the ash his truck would hold, Goddard attempted to use the rope to lift the loading spout out of the hatch. The rope was so worn and frayed that it unexpectedly broke. Goddard fell backward from the truck and thereby received very serious injuries. He brought an action against respondent for damages on account of these injuries, and alleged that respondents was negligent in the maintenance of the defective rope and that the injuries were the proximate result of such negligence. He asked for damages in the amount of $150,000. Respondent transmitted the summons and complaint to appellant, claiming coverage as an insured under the public liability policy issued by appellant on Gai's trucks. This claim was predicated on the fact that the injury had been allegedly caused in the process of loading, and on the coverage clauses contained in appellant's policy. These clauses, insofar as here pertinent, provide as follows:

'I. Coverage A--Bodily Injury Liability. To pay on behalf of the Insured all sums which the Insured shall become obligated to pay by reason of the liability imposed upon him by law, or assumed by him under contract as defined herein, for danages, including damages for care and loss of services, because of bodily injury, sickness or disease, including death at any time resulting therefrom, sustained by any person or persons.

'II. Defense, Settlement, Supplementary Payments. As respects the insurance afforded by the other terms of this policy the company shall: (a) defend any suit against the insured alleging such injury, sickness, disease or destruction and seeking damages on account thereof, even if such suit is groundless, false or fraudulent; but the company may make such investigation, negotiation and settlement of any claim or suit as it deems expedient; * * *

'(c) pay all expenses incurred by the company, all costs taxed against the insured in any such suit and all interest accruing after entry of judgment until the company has paid, tendered or deposited in court such part of such judgment as does not exceed the limit of the company's liability thereon; * * * 'III. Definition of Insured. The unqualified word 'insured' includes the named insured and also includes * * * (2) any person while using an owned automobile or a hired 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, * * *

'Special Conditions Applicable Only to Part I. (e) Use. Use of an automobile includes the loading and unloading thereof.'

Appellant refused to defend on the ground that the complaint did not show any facts requiring it, under the terms of the policy, to defend respondent. North, because there was a potential liability in excess of its $25,000 deductible clause and also because its policy provided for defense regardless of the amount claimed, was forced to defend, and employed counsel therefor, with an ultimate cost to it for attorney's fees and costs in the amount of $2,177.22. In the course of that suit a settlement was negotiated with Goddard and paid by respondent in the amount of $21,000.

Respondent then brought this action against appellant, claiming the right to reimbursement as an insured under the policy issued to Gai, a portion of which is above quoted, and alleging, in general substance, the basic facts above outlined. Appellant herein answered and admitted most of the general facts hereinbefore related, but set up as a defense in haec verba the provisions of the policy and the complaint for damages by Goddard against respondent herein. Appellant claims that the face of Goddard's complaint against respondent did not disclose any liability which appellant herein was required to defend under the terms of the policy.

The pertinent portions of the Goddard complaint which we must here consider for purposes of determining whether or not there was any initial showing of potential liability which appellant was required to defend, are as follows: Paragraphs I, II, III and IV relate to respondent's corporate existence and fictitiously named defendants, respondent's employees acting in the scope of employment, and respondent's maintenance and operation of the soda ash manufacturing. Paragraphs V and VI read as follows:

'V That the plaintiff, Leslie Chapman Goddard, at all of the times herein mentioned, was employed as a truck driver for one T. Gai; that on or about March 29, 1956, and pursuant to the instructions of his employer, the plaintiff drove a truck owned by said T. Gai to the premises owned, operated, maintained, and controlled by the defendants Columbia and Does I to V, inclusive for the purpose of obtaining a load of soda ash in the said truck and to deliver said soda ash to the premises of his employer in Colorado; that at all of the times herein mentioned, the plaintiff Leslie Chapman Goddard was upon the premises and was loading his truck with soda ash at the express invitation of said defendants above mentioned and with their knowledge, permission, and consent.

'VI That at said time and place defendants owed to plaintiff the duty to exercise ordinary care to provide him with reasonably safe appliances with which to do his work; that defendants so carelessly and negligently maintained the handle on a spout, which handle consisted of rope, that while plaintiff was in the act of operating said spout by the use of said rope, said rope suddenly broke and plaintiff was caused to be thrown to the ground, proximately receiving the injuries and damages hereinafter set forth.'

Paragraphs VII, VIII, IX and X allege the injuries to be the proximate result of respondent's negligence, and describe the injuries and damage.

A second cause of action repleads all of the first cause of action plus setting up paragraph II, which reads as follows 'II That at said time and place defendants owed to plaintiff the duty to exercise ordinary care to provide plaintiff with a reasonably safe place in which to work; that the defendants so carelessly and negligently maintained the spout and its parts and appurtenances which was then and there being used by plaintiff to convey soda ash to the truck he was loading as to cause plaintiff to be thrown to the ground when the handle on said spout gave way, proximately causing the injuries and damages hereinafter set forth.'

The cause was tried and judgment was rendered for respondent, from which this appeal is taken.

Duty to Defend

Appellant first contends that the duty to defend under the policy must be measured entirely by the policy provisions and the factual allegations of the complaint bringing or failing to bring the cause within the perimeter of the policy coverage. As a general, basic principle, we agree with this contention. Lamb v. Belt Casualty Co., 3 Cal.App.2d 624, 630 , 40 P.2d 311; Greer-Robbins Co. v. Pacific Surety Co., 37 Cal.App. 540, 544, 174 P. 110; Remmer v. Glens Falls Indem. Co., 140 Cal.App.2d 84, 90 , 295 P.2d 19, 57 A.L.R.2d 1379; Ritchie v. Anchor Casualty Co., 135 Cal.App.2d 245, 250 , 286 P.2d 1000; Liberty Bldg. Co. v. Royal Indem. Co., 177 Cal.App.2d 583, 586[1a], 2 Cal.Rptr. 329.

However, modern procedure has made for so much greater flexibility or plasticity in pleading that this rule must be applied with extreme care to include all the potentialities of the pleading and the...

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