Exchange Cas. & Sur. Co. v. Scott

• Decision Date: 18 September 1961
• Citation: 56 Cal.2d 613,15 Cal.Rptr. 897
• Court: California Supreme Court
• Parties: , 364 P.2d 833 EXCHANGE CASUALTY AND SURETY CO., Plaintiff and Respondent, v. James L. SCOTT, Defendant and Respondent; Harold Lee Garmon, Cross-complainant and Respondent; Standard Accident Insurance Company et al., Cross-defendants and Appellants. L. A. 25886.

Page 897

15 Cal.Rptr. 897

56 Cal.2d 613, 364 P.2d 833

EXCHANGE CASUALTY AND SURETY CO., Plaintiff and Respondent, v. James L. SCOTT, Defendant and Respondent Harold Lee Garmon, Cross-complainant and Respondent Standard Accident Insurance Company et al., Cross-defendants and Appellants.

L. A. 25886.

Supreme Court of California, In Bank.

Sept. 18, 1961.

Rehearing Denied Oct. 11, 1961.

Gilbert, Thompson & Kelly, Los Angeles, and Jean Wunderlich, No. Hollywood, for cross-defendants and appellants.

Sanford I. Carter and Gerson Marks, Beverly Hills, for cross-complainant and respondent.

WHITE, Justice.

This is an appeal by Standard Accident Insurance Company (hereinafter referred to as Standard), and its insured, O. N. Sebastian, from a declaratory judgment which determined that Standard is primarily liable for the payment of a judgment for personal injuries which judgment was obtained by Harold Lee Garmon against James L. Scott, who was the operator of an automobile owned by Sebastian and which caused the above injuries to Garmon.

The principal contention by Standard is that it may not be adjudged in the instant action that Scott was operating Sebastian's automobile with that owner's permission, so as to become an 'additional insured' under the omnibus coverage clause in the policy it issued to Sebastian, since it has already been adjudicated that Scott was not operating the Sebastian automobile at the time and place of the accident with Sebastian's permission within the meaning of Vehicle Code, then section 402.

On April 11, 1957, Sebastian drove his automobile onto the permises of Quick Way Car Wash (hereinafter referred to as Quick Way), in Inglewood. He drove up to the point where the driving chain is hooked onto the cars, alighted leaving his keys in the car, and paid the attendant. He spoke to no one, and immediately left the premises.

When the Sebastian automobile reached the end of the washing process, it was driven by Scott, an employee of Quick Way, away from the end of the washing machinery. Garmon, also a Quick Way employee, was inside an enclosure on the premises polishing another automobile a short distance from the end of the washing machine. Scott drove Sebastian's car into the automobile on which Garmon was working, pinning Garmon against the wall of the enclosure and thereby injuring him.

Garmon brought an action against Scott as the operator, and against Sebastian as the owner of the automobile. Sebastian's alleged liability was predicated exclusively on the provisions of Vehicle Code, then section 402, which made the owner responsible for the negligence of persons operating his vehicle with the owner's express or implied permission. ¹ Garmon obtained a judgment for $17,500 against Scott based on the latter's negligence, but judgment was in favor of the owner Sebastian. Scott did not appeal, but Garmon appealed from the judgment in favor of Sebastian, contending that as a matter of law the evidence established Sebastian's liability for Scott's negligence under Vehicle Code, section 402. The judgment was affirmed. Garmon v. Sebastian, 181 Cal.App.2d 254, 5 Cal.Rptr. 101.

In the case just cited the District Court of Appeal held that: 'Under the evidence in this case the jury was not bound to find that * * * (Sebastian) had reason to anticipate that his car would be moved near the polishing enclosure. * * * We cannot say that there was not substantial support in the evidence for the implied finding of the jury that the permission given by * * * (Sebastian) did not embrace driving the automobile to a point away from the usual place of parking cars freshly washed but that such permission was limited to such usual movement.' Garmon v. Sebastian, supra, 181 Cal.App.2d 254, 260, 5 Cal.Rptr. 101, 106.

The present action for declaratory relief was instituted by Exchange Casualty and Surety Company (hereinafter referred to as Exchange), Scott's insurer, against Scott, Garmon, and Sebastian. Exchange alleged that because of certain exemptions in the automobile liability policy which it issued to Scott, Exchange was not responsible for the driver's liability to Garmon. Garmon filed a cross-complaint against Scott, Exchange, Sebastian, and Standard, which alleged that Scott was an additional insured under the terms of the policy which Standard issued to Sebastian. Garmon's theory was that Scott was operating the automobile with Sebastian's implied permission within the meaning of Standard's insurance contract with Sebastian, so that Standard was liable for Garmon's judgment against Scott. ² The policy which Standard issued to Sebastian provided under 'Definition of Insured,' that: '* * * the unqualified word 'insured' includes the named insured (Sebastian) and, * * * any person while using the automobile * * * provided the actual use of the automobile is * * * with the permission of * * * (Sebastian or his spouse).'

Standard as a cross-defendant contended that Scott was not operating the automobile with Sebastian's permission, and that the issue of permission had been adjudicated in Sebastian's and thus in Standard's favor in the prior action. Standard asserted the further defense that it was exempt from liability for Garmon's judgment against Scott because its policy did not provide coverage for accidents arising out of the operation of an automobile sales agency, repair shop, service station, storage garage, or public parking place, and which occurred while the Sebastian automobile was being operated by any employee of such establishments. Standard claimed that Quick Way was in the nature of a service station or public parking place, and that therefore the employee Scott was not covered at the time and place of the accident. These contentions present the basic issues in this case.

In support of the finding that Scott drove with Sebastian's permission was the following testimony on the cross-examination of Sebastian:

'Q: Mr. Sebastian, did you ever instruct anyone at the car wash not to drive your car while it was at the car wash? A: No 'Q: Did you ever instruct anyone at the car wash where your car could be driven on the premises of the car wash? A: No.

'Q: When you drove your car up there on this particular day, the day of the accident, did you place any restrictions on the movement or use of your car? A: No.'

The trial court expressly found 'that defendant Scott, at the time and place of said accident of April 11, 1957, was driving the automobile of the defendant Sebastian with the latter's permission within the meaning of the terms of the liability insurance policy which had been issued and sold by cross-defendant (Standard) * * * to defendant sebastian, and which policy was in full force and effect on April 11, 1957.' The evidence furnishes substantial support for this finding. The court also found that 'Quick Way Car Wash is not an automobile sales agency, repair shop, service station, storage garage, or public parking place,' within the meaning of the abovementioned exclusionary clause in Standard's policy.

In his memorandum opinion, the trial judge observed: 'It is common knowledge that after a vehicle is washed it is usually driven to a different place upon the premises for the completion of the operation and that thereafter, if the owner is not present to take immediate delivery of the car, it is driven to some place upon the premises to be parked. In the light of this, it must be assumed that one who entrusts his automobile to an auto-wash thereby manifests his consent to the operation of his automobile by the employees thereof within the premises and for a purpose reasonably related to that for which it is entrusted to them.' The trial court also observed: 'The issues in the two actions are not the same in that in the former action liability as against the defendant Sebastian as owner of the automobile was predicated upon the provisions of the section 402 of the Vehicle Code, wherein the liability here asserted against Standard as Sebastian's insurance carrier is predicated upon the provisions of its policy.' The court concluded that the former judgment was not res judicata on the issue of permission and that Scott was an 'additional insured' within the meaning of Standard's policy.

Judgment was entered in favor of Garmon against Exchange and against Standard, for the payment of Garmon's prior judgment against Scott. But because of the operation of Exchange's 'other insurance' clause, Standard's liability was deemed to be primary, and Exchange's liability to be excess. Exchange did not appeal.

Standard now contends on appeal, in addition to the contentions heretofore set out, that as Sebastian's indemnitor it is favorably bound by the prior judgment in favor of Sebastian, and that the prior adjudiciation precludes Garmon's instant suit against Standard because of the operation of the doctrine of collateral estoppel. But if the question of Sebastian's permission within the context of Vehicle Code, section 402, for Scott to operate his automobile is a different question from that of Sebastian's permission for Scott's operation within the context of the liability insurance policy issued to Sebastian, then Standard may not rely upon the prior adjudication by invoking the doctrine of collateral estoppel as to the instant issues. See Norris v. Pacific Indemnity Co., 39 Cal.2d 420, 424, 247 P.2d 1; Osborne v. Security Ins. Co., 155 Cal.App.2d 201, 208-210, 318 P.2d 94; cf. Harbor Ins. Co. v. Paulson, 135 Cal.App.2d 22, 29-30, 286 P.2d 870.

In that connection the prior action against Sebastian was based solely upon his imputed statutory liability as an owner under Vehicle Code, section 402, which section must be construed in a manner not favoring imposition of liability on the otherwise non-negligent owner. Weber v. Pinyan, 9 Cal.2d 226, 229-230, 70 P.2d 183, 112 A.L.R. 407; Jones v. Allen, 185 Cal.App.2d 278, 281-282, 8 Cal.Rptr. 316. The present action by Garmon...