Farmers Ins. Group v. Home Indem. Co.
| Citation | 108 Ariz. 126,493 P.2d 909 |
| Decision Date | 09 February 1972 |
| Docket Number | No. 10466--PR,10466--PR |
| Parties | FARMERS INSURANCE GROUP, a corporation, and Linda M. Espinoza, Appellants, v. The HOME INDEMNITY COMPANY, a corporation, Appellee. |
| Court | Supreme Court of Arizona |
Chandler, Tullar, Udall & Richmond, by Jack Redhair, Tucson, for appellant Farmers Ins. Group.
Richard D. Grand, by Thomas J. McHugh, Tucson, for appellant Linda M. Espinoza.
Robertson & Fickett, by David C. Bury, Tucson, for appellee The Home Indemnity Co.
Miller, Pitt & Feldman, by David J. Leonard, Tucson, for amicus curiae American Trial Lawyers Assn.
This case is before us on a petition for review of a decision of the Court of Appeals, 14 Ariz.App. 211, 481 P.2d 897, reversing a summary judgment in favor of Home Indemnity Company and against Farmers Insurance Group. Opinion of the Court of Appeals vacated. Judgment of the Superior Court reversed.
Paul C. Daly, a crane operator, was employed as an independent contractor to load refrigerating equipment into a truck owned by Rite-Way Ventilating Company. Juan F. Espinoza, an employee of Rite-Way, was assisting in the loading when the crane touched an electric wire and Espinoza was killed. Farmers Insurance Group insured the crane and Home Indemnity Company insured the truck. The policy of the latter company had the customary clause insuring bodily injury arising out of the use, including the loading and unloading of the truck.
Farmers Insurance defended the suit for wrongful death brought by Linda M. Espinoza, surviving spouse, against Daly. Home Indemnity refused to defend. A judgment was obtained which Farmers Insurance paid, and this action was brought for a declaration that the Home Indemnity policy provided the primary coverage.
Ordinarily, Home Indemnity would cover for the negligence of Daly while loading and unloading the truck. Morari v. Atlantic Mutual Fire Insurance Company, 105 Ariz. 537, 468 P.2d 564 (1970). To defeat recovery, however, Home Indemnity relies on this policy provision:
'II. This insurance does not apply: * * *
(c) To bodily injury to any employee of the insured arising out of and in the course of his employment by the insured, but this exclusion does not apply to any such injury arising out of and in the course of domestic employment by the insured unless benefits therefor are in whole or in part either payable or required to be provided under any workmen's compensation law;'
and this paradoxical language found in A.R.S. § 28--1170, subsec. E:
'The motor vehicle liability policy need not insure liability under any workmen's compensation law nor liability on account of bodily injury to or death or an employee of the insured while engaged in the employment * * * of the insured * * *.'
Farmers Insurance relies on the omnibus clause of the Home Indemnity policy extending coverage to anyone using the truck with permission of the insured, arguing that since Daly was loading the truck, he was using it with permission of Rite-Way when Espinoza was killed; therefore, Daly was insured under the Home Indemnity policy. Farmers Insurance concludes that the exclusion in section II(c) does not apply to Daly because Espinoza was an employee of Rite-Way, and Daly was not 'the insured.'
Both parties recognize that Daly is 'an' insured. But Home Indemnity takes the position that both Daly and Rite-Way are 'the insured,' hence, irrespective of Espinoza's relation to Daly, he was still an employee of Rite-Way and the exclusion is applicable to prevent a recovery against it even though a recovery is had against Daly. The controversy, therefore, centers around the meaning of the words 'the insured' as used in the exclusion clause. The question to be settled is what effect must be given to the Home Indemnity policy excluding employees of the owner where Daly, who was not the insured owner, did not employ Espinoza but committed the negligent act.
Numerous authorities are cited in which the language of similar exclusionary clauses have been restricted to the insured, the owner named in the policy, and numerous others cited, extending the exclusion to any person who fortuitously becomes an insured under the policy. The cases are collated in the decision of the Court of Appeals, 14 Ariz.App. 211, 481 P.2d 897, and it would serve no useful purpose to repeat them here.
It is our conclusion that the exclusion is not applicable to the permissive user, Daly, although it may be given force and effect in a suit by Espinoza or his personal representative against Rite-Way. Any other judgment would be inconsistent with the law of this state as pronounced in our former decisions.
Arizona has held that an insured cannot set up a restrictive endorsement negating coverage where it would conflict with the principal purpose of the Financial...
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