Fullerton v. Houston Fire & Cas. Ins. Co.

• Decision Date: 02 June 1965
• Citation: Fullerton v. Houston Fire & Cas. Ins. Co., 44 Cal.Rptr. 711, 234 Cal.App.2d 743 (Cal. App. 1965)
• Court: California Court of Appeals
• Parties: Kathryn FULLERTON and Kenneth Fullerton, Plaintiffs and Appellants, v. HOUSTON FIRE AND CASUALTY INSURANCE COMPANY, Wilshire Insurance Company, and Citizens Casualty Company of New York, Defendants and Respondents. Civ. 378.

Page 711

44 Cal.Rptr. 711

234 Cal.App.2d 743

Kathryn FULLERTON and Kenneth Fullerton, Plaintiffs and Appellants, v. HOUSTON FIRE AND CASUALTY INSURANCE COMPANY, Wilshire Insurance Company, and Citizens Casualty Company of New York, Defendants and Respondents.

Civ. 378.

District Court of Appeal, Fifth District, California.

June 2, 1965.

As Modified on Denial of Rehearing June 23, 1965.

Hearing Denied July 28, 1965.

Elledge & Cantwell and Robert R. Elledge, Modesto, for appellants.

Bledsoe, Smith, Cathcart, Johnson & Rogers and Robet A. Seligson, San Francisco, for respondents Houston and Citizens Cas. Co. of N. Y.

Mayall, Hurley, Knutsen & Smith and Edwin Mayall, Stockton, for respondents Wilshire Ins. Co.

CONLEY, Presiding Justice.

Kathryn Fullerton sustained personal injuries in an automobile collision on March 27, 1960; Eugene Disney was the driver of the other car, a 1960 Pontiac Sedan. The Pontiac was registered to Eugene Disney, doing business as Community Ambulance Service. At that time, Disney was licensed by the City of Modesto as an individual engaging in the ambulance and equipment rental business under the name of Community Ambulance Service. The Pontiac was sometimes used by him in conjunction with that business, but it was stipulated that the automobile was not being so used at the time of the accident. The record shows, in fact, that Mr. Disney was 'on a frolic of his own' at the time of the collision, when he had a bartender and two cocktail waitresses with him, and had just left a bar at Escalon.

Kathryn Fullerton and her husband, Kenneth Fullerton, formerly brought suit against Disney, individually and doing business as Community Ambulance Service. The verdict was merely against Disney without specifying whether he was liable as Community Ambulance Service or as an individual. A judgment was entered in favor of Kathryn Fullerton for $64,250.89, besides costs, and for Kenneth Fullerton in the sum of $12,500 as damage for the loss of his wife's services in his farming activity, besides costs. The judgment for the Fullertons against Disney is final; Disney personally has gone through bankruptcy. As more particularly alleged below, Disney was covered at the time of the accident by a policy of the Ohio Casualty Company, which had been secured under the assigned risk plan, due to the fact that Disney admittedly had a bad driving record. That company has paid Kathryn Fullerton the sum of $10,000, besides costs, and it has fully exhausted its coverage for accidents, some payments having been made to persons other than the Fullertons. Concededly, the Ohio Casualty Company has performed its full duty under the assigned risk policy.

The present declaratory relief suit was brought by the Fullertons against three additional insurance companies which, prior to the accident, had issued policies to Mr. Disney individually and in his capacity as an ambulance service owner. By it, the plaintiffs sought to subject the other insurance companies to a duty to pay the Fullertons the balance of their respective judgments against Disney.

The municipal code, under which Disney was licensed, required that an ambulance business licensee in Modesto must maintain public liability insurance on all ambulances with a minimum coverage of $100,000 for one injury and $200,000 for two or more injuries. Section 3-8.06 of Ordinance No. 132-C.S. of Modesto, 'An Ordinance Adding Chapter 8, Entitled 'Licensing and Regulation of Ambulances' to Title III of the Modesto Municipal Code,' specified the code requirement as follows:

'No license for the operation of an ambulance shall be issued, nor shall such license be valid after issuance, nor shall any ambulance be operated unless there is at all times in force and effect to provide adequate protection against liability for damages which may be or have been imposed for each negligent operation of each such ambulance, its driver, or attendant a liability insurance policy or policies approved by the Director of Finance and issued by an insurance company authorized to do business in the State of California.

'Such policy or policies shall provide protection against liability of the licensee of an ambulance for the payment of damages in amounts, at least, as follows:'

[The amounts provided were $100,000 on account of bodily injuries to or death of one person and $200,000 as the total liability of the licensee on account thereof, as a result of any one accident, also $10,000 for property damage.]

'A liability insurance policy required by this section shall inure to the benefit of any persons who shall be injured or who shall sustain damage to property proximately caused by the negligence of the licensee insured by such policy, his employees or agents.'

Section 3-8.01 of the code contained the following definition:

'Ambulance means any privately owned vehicle equipped or used for transporting those who are wounded, injured, or sick, and shall include, but is not restricted to, emergency vehicles used for such purposes.'

It will be noted that the code required insurance only on the ambulances used in the business. The automobile involved in the collision with Mrs. Fullerton's car was not an ambulance. There was no evidence that the Pontiac automobile was equipped or used as an bulance at any time.

In its findings, the court referred to the ordinance as follows:

'The court finds that at the time and place of the accident the 1960 Pontiac passenger car was not being operated so as to come within the purview of the ordinance of the City of Modesto, Ordinance No. 132 C.S., chapter 8, section 3-8.06, or of any related sections of said ordinance.'

After hearing the evidence at the lengthy trial, and heeding the arguments of counsel and their briefs, the trial court announced, in a memorandum opinion which constitutes part of the record on appeal:

'That at the time said insurance policies of defendant companies were issued to Eugene Disney, Eugene Disney entered into said agreements of insurance with said defendant companies and accepted said policies of liability insurance with no misapprehension, but rather with a full understanding and with the knowledge that the 1960 Pontiac sedan involved in said accident was not covered by any of said policies of insurance; nor did Disney pay to any of said defendant companies a premium for liability insurance on said Pontiac; nor was a premium charged by any of the defendant companies for liability insurance on said Pontiac.

'That it was never the intention of the parties to the insurance contracts that the 1960 Pontiac automobile was to be covered by any of the policies issued to Disney by the defendant companies.'

Both in his purely personal capacity and doing business as Community Ambulance Service, Mr. Disney had a complicated problem to solve when it became necessary to meet the requirements for total coverage by insurance policies. Carl Henry Triplett was the broker who finally worked out the necessary elements of his insurance program. The broker and his client were faced with the following rather unusual facts which had to be carefully weighed by them:

a) Disney unquestionably had a bad driving record so that, generally speaking, insurance companies would not readily accede to any request to insure him for his personal automotive operations; he was forced to take an assigned risk coverage for the Pontiac car which he customarily drove on personal missions; this type of coverage, enforced by the state, is, of course, only turned to by people with bad operational records; the assigned risk sections of the Insurance Code are 11620 to 11629.5, inclusive, and the coverage provided in that portion of the code is intended for those '* * * who are in good faith entitled to but are unable to procure such insurance through ordinary methods'; the premiums under this system are much higher than for ordinary coverage, and the record indicates that the rates required for insurance in addition to the minimum required by the code were so great that Mr. Disney did not secure additional or excess risk insurance on the 1960 Pontiac passenger car;

b) The existence of the Modesto Municipal Code sections, which required as a condition to a permit to carry on business as an ambulance service the existence of insurance against public liability in the sum of $100,000-$200,000, such insurance being limited by that law to ambulances as defined in the code; and

c) The practical necessity of having insurance for the automobile personally driven by Mrs. Disney and for the risks involved in the operation of his business at the premises occupied by him and at his home and for products insurance, none of which were required by the municipal code section relating to ambulances, but which were necessary for the peace of mind of a careful business man.

Mr. Disney and his insurance broker attempted to meet all of these needs in the manner adopted by them as shown by the evidence; they assumed, as did the court in its findings, that the requirements of the situation had been met; and this conclusion by them is supported by the palpable fact that no attempt was made in the current case or otherwise to amend the policies actually issued. That Mr. Disney and the broker might have been mistaken as to the exact extent of the coverage is, of course, possible and forms the basis of the present action. For, while the intentions of an insured and his company are not to be disregarded, mere intent cannot overcome the objective provisions of an insurance policy as actually issued. The plaintiffs contend that, notwithstanding what Mr. Disney and his insurance broker thought as to the extent of the coverage, such viewpoints would have to yield to specific provisions of the insurance contracts, if, objectively, they were contrary to the assumption of the parties.

Mr. Disney's insurance program consisted of the following four policies:

1) Ohio Casualty Company Policy No....