Esfeld Trucking, Inc. v. Metropolitan Ins. Co., No. 43472

• Court: United States State Supreme Court of Kansas
• Writing for the Court: Donald A. Bell, Wichita, argued the cause, and Lawrence Weigand, Lawrence E. Curfman, Byron Brainerd, Charles W. Harris, Orval J. Kaufman, J. Ruse McCarthy; ROBB; FONTRON; ROBB; WERTZ; SCHROEDER; PRICE
• Citation: 193 Kan. 7,392 P.2d 107
• Decision Date: 09 May 1964
• Docket Number: No. 43472
• Parties: ESFELD TRUCKING, INC., a corporation, and General Insurance Corporation, a corporation, Appellees, v. METROPOLITAN INSURANCE COMPANY, a corporation, Appellant.

Page 107

392 P.2d 107 193 Kan. 7 ESFELD TRUCKING, INC., a corporation, and General Insurance
Corporation, a corporation, Appellees,
v.
METROPOLITAN INSURANCE COMPANY, a corporation, Appellant. No. 43472. Supreme Court of Kansas. May 9, 1964.
Rehearing Denied June 17, 1964.

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Syllabus by the Court

In an action between two insurance carriers, by right of subrogation, where one insurer undertakes to recover indemnity from another insurer, the meaning of the word use is discussed as it appears in the omnibus clause of the policy of the defendant, Metropolitan Insurance Company, which clause provides coverage under the words 'ownership, maintenance, or use,' in a situation where a caterpillar tractor by means of a winch and towline was towing a semi-trailer truck, all as more fully set out in the opinion, and it is held, the facts and circumstances as between the two insurance carriers do not constitute coverage under the terms of the policy of Metropolitan and (2) the trial court committed reversible error in its construction of the meaning of the word use.

Darrell D. Kellogg, Wichita, argued the cause, and W. A. Kahrs, Robert H. Nelson, H. W. Fanning, and Richard C. Hite, Wichita, were with him on the briefs, for appellant.

Donald A. Bell, Wichita, argued the cause, and Lawrence Weigand, Lawrence E. Curfman, Byron Brainerd, Charles W. Harris, Orval J. Kaufman, J. Ruse McCarthy, J. L. Weigand, Spencer L. Depew, and Paul M. Buchanan, Wichita, were with him on the briefs, for appellees.

ROBB, Justice.

This is an appeal by defendant, in a subrogation action between two insurance companies (Metropolitan and General Insurance), from the trial court's judgment for plaintiffs and from orders (1) sustaining plaintiffs' motion for judgment notwithstanding the trial court's findings and vacating its prior judgment for defendant, and (2) overruling defendant's motions for new trial, for judgment notwithstanding the trial court's findings, to set aside findings of fact and conclusions of law, and to adopt an additional conclusion of law.

The parties entered into a stipulation of facts, the pertinent portions of which are that on April 24, 1957, defendant Metropolitan issued its combination automobile policy No. CA52918 effective [193 Kan. 8] from May 1, 1957, to May 1, 1958, covering the operation of all motor vehicles belonging to its insured, the Great Bend Pipe and Supply Company, Incorporated, of Great Bend, Kansas, (hereafter referred to as Supply Company), which policy was marked exhibit 'A' and attached to Metropolitan's amendment to answer.

On January 29, 1958, John A. Trimmell was performing his geological services on

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an oil well being drilled by Honaker-Davis Drilling Company on the Hulme B. Lease located approximately eight and one half miles southeast of Great Bend. Plaintiff, Esfeld Trucking, Incorporated, was performing services for the Supply Company consisting of pulling its semi-trailer truck onto the well site with the help of a winch line connected to Esfeld's caterpillar tractor which was being operated by Esfeld's employee, Roy A. Moser. During the pulling operation, Trimmell was injured when he was struck, knocked down and run over by the semi-trailer truck. The semi-trailer truck was specifically described in the Supply Company's insurance policy with Metropolitan, exhibit 'A', as heretofore mentioned.

On January 12, 1960, Trimmell commenced an action against Esfeld seeking $25,494.50 damages for personal injuries. The petition filed in that action was made a part of the stipulation. Esfeld tendered the defense of such action to Metropolitan but it refused to defend Esfeld. Thereafter Esfeld filed pleadings in the case and began settlement negotiations with Trimmell through attorneys furnished by its insurer, General Insurance Corporation of Fort Worth, Texas, (hereafter referred to as General Insurance) by reason of its comprehensive general liability policy No. C780251 issued to Esfeld and effective from October 1, 1957, to October 1, 1958.

On June 21, 1960, Esfeld paid Trimmell $2,000 together with $11.95 court costs in return for dismissal of the action with prejudice and a full settlement release signed by Trimmell and his wife freeing Esfeld from all liability resulting from the accident, which settlement was fair and reasonable. The $2,000 settlement was paid by Esfeld's check made payable to Trimmell and his attorney, and court costs were paid in cash by Esfeld's attorneys. Prior to payment of the settlement Esfeld had received $2,000, pursuant to a loan receipt agreement between it and General Insurance, identified as exhibit 'B'. The attorneys who represented Esfeld received $452.38 including $77.38 expenses.

[193 Kan. 9] It was further stipulated that on December 21, 1959, Metropolitan, acting for the Supply Company and Vernon Rocha, had paid $2,500 to Trimmell, who executed a covenant not to sue the Supply Company or Vernon Rocha for damages arising out of the accident. Finally, neither party contended that its respective policy did not cover the Trimmell accident insofar as its named insured was concerned. However, by this last stipulation General Insurance did not in any way waive its right to assert that its policy coverage was secondary and that Metropolitan's policy coverage was primary as to Esfeld for the Trimmell accident.

The case was tried on the stipulated facts including the petition in Trimmell's action against Esfeld and the two insurance policies.

On June 1, 1962, after oral argument the trial court advised the parties that judgment would be entered for defendant Metropolitan but after numerous posttrial motions had been argued, the trial court, in a letter dated July 20, 1962, reversed its position and stated that plaintiffs' right over theory must prevail.

In its formal journal entry of judgment the court accordingly entered judgment for Esfeld and fixed its attorney fee at $825.00. The journal entry further provided for the adoption of the stipulations above set out as the trial court's findings with one additional finding, requested by Esfeld, that at the time of the Trimmell accident, its employee, Moser, was using the truck of the Supply Company within the meaning of that term as used in Insuring Agreement III of Metropolitan's policy covering the Supply Company and that Esfeld was an organization 'legally responsible for the use' of the semi-trailer truck within the meaning of Metropolitan's policy provision.

The essence of the trial court's conclusions of law was that at the time of the Trimmell accident both Moser and Esfeld

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were insured under Metropolitan's policy but Esfeld was liable for the injuries to Trimmell only under the doctrine of respondeat superior, Esfeld was not guilty of negligence except that it was liable for the negligence of its employee Moser, and under Kansas law, Esfeld 'would have a cause of action over against its employee' to recover any damages which it paid to Trimmell. Hence payment of a settlement to Trimmell by General Insurance, either directly or indirectly by the loan receipt method, entitled General [193 Kan. 10] Insurance to reimbursement through subrogation or from the proceeds of this action pursuant to the loan receipt agreement. Both Esfeld and General Insurance were proper parties plaintiff and all interested parties being before the court, any judgment rendered against Metropolitan should be rendered to plaintiffs to divide as their interests may appear. General Insurance did not insure Moser and under the circumstances its general liability policy afforded only secondary coverage to Esfeld. Metropolitan, having insured both Moser and Esfeld, therefore, provided primary insurance coverage and was primarily responsible to pay for the injuries to Trimmell and to pay all expenses in connection with Trimmell's claim. Esfeld and General Insurance were entitled to recover from Metropolitan all payments made in the Trimmell litigation, together with attorney's fees in this action, in the sum of $2,464.33 plus six per cent interest per annum from June 21, 1960, and Metropolitan...