Continental Cas. Co. v. Zurich Ins. Co.

• Decision Date: 27 November 1961
• Citation: 57 Cal.2d 27,366 P.2d 455,17 Cal.Rptr. 12
• Court: California Supreme Court
• Parties: , 366 P.2d 455 CONTINENTAL CASUALTY COMPANY et al., Plaintiffs and Respondents, v. ZURICH INSURANCE COMPANY, Defendant and Appellant; General Insurance Company of America, Cross-complainant and Appellant. Sac. 7199.

Page 12

17 Cal.Rptr. 12

57 Cal.2d 27, 366 P.2d 455

CONTINENTAL CASUALTY COMPANY et al., Plaintiffs and Respondents, v. ZURICH INSURANCE COMPANY, Defendant and Appellant General Insurance Company of America, Cross-complainant and Appellant.

Sac. 7199.

Supreme Court of California, In Bank.

Nov. 27, 1961.

Rehearing Denied Dec. 20, 1961.

Wilbur J. Russ, San Francisco, for defendant and appellant.

Cooley, Crowley, Gaither, Godward, Castro & Huddleson and Augustus Castro, San Francisco, for cross-complainant and appellant.

Johnson, Davies & Greve and Claire H. Greve, Sacramento, for plaintiffs and respondents.

SCHAUER, Justice.

This is a declaratory relief suit to determine the respective liabilities of three contesting insurance companies with respect to a judgment rendered in favor of Roderick Gudger, as plaintiff, in a personal injury action against Jack Hiatt. There is also in issue a question as to the duty of two of the companies to contribute to the costs of defense and attorney's fees incurred by the third company in defending the personal injury action. We have concluded that the trial court correctly determined these issues, and that its judgment should be affirmed.

The controversy arose as follows: Simpson Redwood Company, hereinafter called Simpson, purchased timber from the United States Forest Service and hired Hiatt, an independent logger, to log and haul the timber. General Insurance Company of America, hereinafter called General, had issued a liability policy to Simpson, and Continental Casualty Company, hereinafter called Continental, had issued one to Hiatt. Simpson knew that Hiatt did not have sufficient trucks of his own to do the hauling, and agreed with Hiatt that Hiatt could hire trucks owned by one Waldkirch, to whom a policy had been issued by Zurich Insurance Company, hereinafter called Zurich. Thereafter Waldkirch supplied trucks with drivers to haul the logs to Simpson's mill.

In August 1956, one of the trucks owned by Waldkirch was being loaded with Simpson logs by Hiatt's employes at a landing in the woods, when one of the logs fell, injuring Gudger, who was the driver of the truck and an employe of Waldkirch.

Gudger sued Hiatt under the doctrine of respondeat superior and recovered judgment for $20,000, which Hiatt paid in full. ¹ The action against Hiatt was defended by attorneys employed by Continental. Hiatt had demanded of both Zurich and General that they defend the action and pay any judgment that might be rendered against him, but both refused.

Continental and Hiatt thereupon instituted this declaratory relief suit, and the trial court held that Zurich (the insurer for Waldkirch, owner of the involved truck) was primarily liable to the $15,000 limit of its policy, that Continental and General were liable for the balance of the Gudger judgment on a pro rata basis, and that the costs of defense of the Gudger action should be shared on a pro rata basis by all three insurers. This appeal by Zurich and General followed.

All Three Policies Cover Hiatt

The Zurich policy issued to Waldkirch provided liability coverage to Waldkirch for accidents involving the use of trucks owned by Waldkirch. Zurich concedes that Hiatt was an additional insured under provisions of its policy extending coverage to persons using the Waldkirch trucks. The limit of liability of the Zurich policy for the accident to Gudger is $15,000. As already indicated, the trial court held Zurich to be primarily liable for payment to that extent on account of the $20,000 Gudger judgment against Hiatt.

Continental concedes that as its named assured Hiatt is also covered by its policy.

General, however, questions whether its policy, issued to Simpson as its named insured, covers Hiatt as an additional insured. General's policy will therefore be examined in the light of the principles enunciated by this court in Continental Cas. Co. v. Phoenix Constr. Co. (1956) 46 Cal.2d 423, 437-438(4b, 11, 12), 296 P.2d 801, 57 A.L.R.2d 914 and recently reiterated on several occasions (see e. g., Prickett v. Royal Ins. Co. Ltd. (1961) 56 A.C. 225, 228-229, 14 Cal.Rptr. 675, 363 P.2d 907; Freedman v. Queen Ins. Co. (1961) 56 A.C. 453, 456(1, 2), 15 Cal.Rptr. 69, 364 P.2d 245; Exchange Cas. & Surety Co. v. Scott (1961) 56 A.C. 634, 640-641(2, 3), 15 Cal.Rptr. 897, 364 P.2d 833; McConnell v. Underwriters at Lloyds of London (1961) 56 A.C. 659, 662(1-4), 16 Cal.Rptr. 362, 365 P.2d 418) that any uncertainties in insurance policies, whether as to peril insured against, the amount of liability, or the person or persons insured, will be resolved against the insurer and in favor of imposing liability.

General's policy defines an 'insured' as 'any person while using an automobile owned or hired by the named insured (Simpson) * * * provided the actual use is with the permission of the named insured * * *.' The policy defines 'hired automobile' as a 'non-owned automobile used under contract with the named insured * * *.' As already stated, the evidence establishes and the trial court found, that Simpson consented to the hiring of the Waldkirch truck here involved, to be used in the performance of the contract between Simpson and Hiatt, the logger. The court further found and determined that the Waldkirch truck was a 'hired automobile' as defined by General's policy. It is apparent that under the principles of construction hereinabove stated such determination is supported, if not actually required as a matter of law, upon the facts of this case. General's suggestion that the language 'permission of the named insured' as used in its policy should receive the construction given by the courts to permission within the context of former section 402 (now sections 17150-17157) of the Vehicle Code is answered to the contrary by our decision in Exchange Cas. & Surety Co. v. Scott (1961), supra, 56 A.C. 634, 640-643(1-10), 15 Cal.Rptr. 897, 364 P.2d 833.

General urges, nevertheless, that because the injuries to Gudger were occasioned through the alleged negligent dropping of a log by Hiatt's employes during loading of the Waldkirch truck, Hiatt does not come within its policy definition of an 'insured' as any person 'while using' the truck.

Insuring Agreement I of General's policy declares that the policy provides coverage

'(a) for damages * * * because of bodily injury * * * sustained * * * by any person or persons;

'(b) for damages because of injury to * * * property * * * arising out of the ownership, maintenance or use of automobiles, including the loading and unloading thereof * * *.' (Italics added.)

General contends that because with respect to property damages its policy expressly included the loading and unloading of automobiles, the absence of such an express inclusion with respect to bodily injury coverage indicates its intent that no such coverage was provided. This contention is without merit. As to liability 'imposed upon him (the insured) by law * * * because of bodily injury,' the coverage is unlimited insofar as concerns the cause of the bodily injury. The most that can be said is that the policy is uncertain on the point. And uncertainties are, as already commented, to be resolved against the insurer and in favor of imposing liability.

Moreover, in McConnell v. Underwriters 56 A.C. 659, 662-664(6), 16 Cal.Rptr. 56 A.C. 659, 662-664 (4), 16 Cal.Rptr. 362, 365 P.2d 418, we held that language which states that the policy applies to any accident 'arising out of the * * * use of' a truck included an accident which arose out of use of the truck to tow a negligently attached compressor which came loose on the highway during the towing, resulting in bodily injuries to other motorists. Similar construction of the provisions of General's policy here involved upholds its coverage of Hiatt for the accident which occurred while the Waldkirch truck was being loaded. 'Other Insurance' Clauses.

Each of the three policies contained an 'other insurance' clause. The applicable portion of the 'other insurance' clause of the Zurich (Waldkirch) policy provides: 'Other Insurance. 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 declaration bears to the total applicable limit of liability of all valid and collectible insurance against such loss. * * *'

The 'other insurance' clause of the General (Simpson) policy states so far as here material: 'Other Insurance * * * It is further provided that with respect to loss arising out of the * * * use of any non-owned automobile the applicable insurance afforded by this policy shall be excess over and above such other available insurance. * * *' (Italics added.) Continental's policy (issued to Hiatt) provides in its 'other insurance' clause: '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; provided, however, the insurance under this policy with respect to loss arising out of the * * * use of any non-owned or hired automobile shall be excess insurance over any other valid and collectible insurance available to the insured, either as an insured under a policy applicable with respect to such automobile or otherwise.' (Italics added.)

Both the Zurich and the Continental policies further provide that 'use of an automobile includes the loading and unloading thereof.'

Thus, the 'other insurance' clause of the Zurich policy provides for prorata sharing of losses with other effective insurance, whereas both the General and the Continental policies provide that where, as here, the loss arises out of the use of a nonowned automobile the insurance...