Dart Transportation Service v. Mack Trucks, Inc.
| Decision Date | 22 July 1970 |
| Citation | 88 Cal.Rptr. 670,9 Cal.App.3d 837 |
| Court | California Court of Appeals Court of Appeals |
| Parties | DART EQUIPMENT CORPORATION, and Dart Transportation Service, Plaintiffs and Respondents, v. MACK TRUCKS, INC., and Mack Financial Corporation, Defendants and Appellants. MACK TRUCKS, INC., and Mack Financial Corporation, Cross-Complainants and Appellants, v. DART TRANSPORTATION CO., Dart Transportation Service, Dart Equipment Corporation, and Truck Insurance Exchange, Cross-Defendants and Respondents. TRUCK INSURANCE EXCHANGE, Dart Transportation Co., Dart Transportation Service and Dart Equipment Corporation, Cross-Complainants and Respondents, v. ZURICH INSURANCE COMPANY and Mack Trucks, Inc., Cross-Defendants and Appellants. Civ. 34818. |
Haight, Lyon & Smith, Charles B. Smith and Henry F. Walker, Los Angeles, for appellants.
Hagenbaugh, Murphy & Davies, Sigurd E. Murphy and Ellis J. Horvitz, Los Angeles, for respondents.
The parties to this appeal are (1) appellants Mack Trucks, Inc., and Mack Financial Corporation (hereinafter referred to as Mack, and Zurich Insurance Company (hereinafter sometimes referred to as appellant Zurich), and (2) respondents Dart Transportation Company, Dart Transportation Service, and Dart Equipment Corporation (hereinafter sometimes referred to as Dart), and Truck Insurance Exchange (hereinafter referred to as respondent Exchange).
By its findings, conclusions and declaratory judgment, the trial court determined that the Exchange 'Truckmen's Comprehensive Policy,' issued to respondent Dart and by certificate naming appellant Mack as an additional insured, provided no coverage of appellant Mack in respect to the accident hereinafter described; that the Exchange policy was, in any event, 'excess to the Zurich policy' issued to appellant Mack; that respondent Dart was not liable under its contractual agreement to idemnnity and hold appellant Mack 'harmless from and against any and all claims for personal injury or property damage arising out of the use or operation of the vehicle(s)'; and that respondent Dart had not breached its contract to carry and keep in force insurance (including 'public liability, property damage'), entered into between respondent Dart and appellant Mack.
The principal contentions of appellants are that (1) the Exchange policy provides coverage of appellant Mack as to the accident; (2) the Exchange policy is not 'excess' to the Zurich policy, and (3) if the Exchange policy provides no such coverage of appellant Mack, then respondent Dart is responsible for the ensuing loss under its agreement to indemnify and hold harmless and also by reason of breach of its agreement to carry and keep in force the insurance coverage.
Appellant Mack Trucks, Inc. was, at all times pertinent, engaged in the business of manufacturing and selling motor trucks and tractors.
On August 10, 1960, appellant Mack Trucks, Inc. entered into a written agreement with respondent Dart Equipment Corporation 'for the lease with option to purchase of ten MACK Model G73LT tractors including one known as and referred to in these proceedings as tractor No. 1658.' The agreement provided for monthly 'rental' payments totaling the sale value of the vehicles plus deferred rental or time price differential and, among other things, further provided that when the total rent was paid by respondent Dart the latter had the option to purchase 'for the sum of $1.00 for each vehicle.'
Dart Equipment Corporation received the tractors and the vehicles were registered with the Department of Motor Vehicles by means of the Dealers Report of Sale and Application for Registration. These documents showed Dart Equipment Corporation as the purchaser and registered owner, and Mack Trucks, Inc. as the legal owner of the tractors.
Approximately nine months after the sale and registration of the vehicles, one D. M. Hall, an employee of Dart Transportation Service, on May 12, 1961, was operating tractor number 1658 in the course and scope of his employment, using the vehicle in the business of Dart Transportation Company, Dart Transportation Service, and Dart Equipment Service. At that time and place, Hall lost control of the vehicle when it became unmanageable because of the defective steering apparatus of the vehicle, causing it to strike a light post, wrecking the vehicle and causing personal injuries to Hall. There was no collision with any other vehicle.
Hall sued Mack Trucks, Inc. to recover damages for personal injuries, basing his suit on alleged negligence, breach of warranty, and upon strict liability. Upon trial by jury he recovered judgment against Mack Trucks, Inc. for $110,000 plus $325.25 costs, which sums, plus interest of $990.29 were paid by Zurich, the insurance carrier of Mack. Dart Equipment Corporation and Dart Transportation Service sued Mack Trucks, Inc. for property damage to the vehicle wrecked in the accident, basing suit on alleged breach of warranty and upon strict liability. Dart recovered judgment against Mack in the sum of $16,881.61, which was paid by Zurich. In defense of the consolidated damage suits, Zurich additionally paid defense expenses amounting to $6,752. The total of the amounts paid out by Zurich is the sum of $134,949.15. 1
The trial court found that 'the liability' of Mack to Hall and to Dart in the damage actions 'is manufacturer's strict liability and breach of warranty liability in respect to the defective steering apparatus of the tractor No. 1658, * * *'
Over objections and motions to strike, the trial court received in evidence the testimony of Messrs. Dedeaux, Bowers and Mittan.
Raoul Dedeaux, president of the three Dart companies, testified in part that in the month of August 1960, the lease agreement was signed at a meeting with two Mack representatives, one being Mr. C. E. Cole, who was the head of Mack's business on the West Coast; at that time Mr. Cole requested that Dart 'obtain some form of insurance for the benefit of Mack Trucks, Inc.' Mr. Dedeaux testified further that ; at that time, the three Dart companies were the named insured in the policy of Exchange and Mr. Dedeaux instructed Dart's operating manager, Mr. Bowers, to arrange for such insurance with Exchange.
Fred E. Bowers testified in part that he contacted Mr. Mittan, representative of Dart's insurance carrier, Exchange, and 'requested owner's liability insurance or secondary liability insurance that would protect Mack, for instance, arising out of the negligent use of certain vehicles that we had under our lease.' Mr. Bowers testified further that Dart had insurance with Exchange covering public liability, property damage, fire, theft and collision; he was getting the same type of coverage for Mack, the same as Dart had for itself; he did not request other than 'owner's liability or secondary liability while the trucks (were) used by Dart Transportation.'
Ralph L. Mittan testified in part that Mr. Bowers called him in respect to insurance for the benefit of Mack. 'He asked for a Certificate of Insurance and also requested that Mack be added as an additional insured for owner's liability--secondary liability that has been referred to--for liability arising out of the use of these vehicles by Dart Transportation because of the lease arrangement.' He ordered the insurance and had a Certificate of Insurance added to the Exchange policy to carry this out. The certificate is the same as an endorsement to the policy and is so treated by Exchange. No charge was made for the issuance of the certificate.
The certificate of insurance is titled 'Combined Certification of Primary Insurance with Truck Insurance Exchange and Excess Insurance with Mid-Century Insurance Company.' The three Dart companies are designated therein as the 'Named Insured.' The certificate reads
The primary policy and excess policy are referred to and designated by the numbers of the respective policies. The coverages designated in the certificate are 'Bodily Injury Liability'; 'Property Damage Liability'; 'Fire and Theft'; 'Collision' and 'Cargo.'
The amounts of the coverages are set forth in the certificate. The certificate further provides that it is 'Issued to Mack Truck Inc. who is hereby made an additional insured but only as respects liability arising out of the use of automobiles in the business of the named insured, by the named insured, his employees or agents.'
The insurance policy issued by respondent Exchange is titled 'Truckmen's Comprehensive Policy.' The declarations show the named insured to be 'Raoul Dedeaux DBA: Dart Service and Dart Transportation Service.' The coverages are, in pertinent part, shown as follows:
Coverages Limits of Liability Covered or Not Covered
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A-Bodily Injury See Covered
Liability END
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