General Ins. Co. of America v. Truck Ins. Exchange

• Decision Date: 24 May 1966
• Citation: 242 Cal.App.2d 419,51 Cal.Rptr. 462
• Court: California Court of Appeals Court of Appeals
• Parties: GENERAL INSURANCE COMPANY OF AMERICA, a corporation, Plaintiff and Appellant, v. TRUCK INSURANCE EXCHANGE, an inter-insurance exchange, a corporation, Defendant and Respondent. Civ. 10989.

Page 462

51 Cal.Rptr. 462

242 Cal.App.2d 419

GENERAL INSURANCE COMPANY OF AMERICA, a corporation, Plaintiff and Appellant, v. TRUCK INSURANCE EXCHANGE, an inter-insurance exchange, a corporation, Defendant and Respondent.

Civ. 10989.

District Court of Appeal, Third District California.

May 24, 1966.

William W. Coshow, Redding, for appellant.

Tebbe, Correia & Kleaver, by J. P. Correia, Yreka, for respondent.

REGAN, Justice.

In this action for declaratory relief, General Insurance Company of America, plaintiff and appellant herein, seeks a determination of the character of the policies issued by it and by the defendant and respondent herein, Truck Insurance Exchange. General Insurance appeals from a judgment holding Truck Insurance exonerated from liability.

General Insurance had issued a blanket liability policy insuring McDonough Logging Company, the applicable limits for a single injury being $250,000. Truck Insurance was insurer of a logging truck owned by Thomas Wagoner, the decedent herein; the limit on this policy was $25,000.

Wegoner, an independent trucker, hired out his truck, of which he was the driver, to McDonough Logging. While the truck was being loaded with logs under the direction of Beauchamp, and employee of McDonough Logging, who was being assisted by Wagoner, a log rolled from the truck and Wagoner was killed. After a suit by Wagoner's heirs brought against McDonough Logging, General Insurance, as McDonough Logging's insurer, settled the suit for $30,000.

Thereafter, in this action for declaratory relief, the trial court found the accident was due solely to the negligence of ,McDonough Logging and its servants, agents and employees other than employee Beauchamp; that Wagoner was not negligent; that Truck Insurance should be exonerated from liability. Judgment was entered for defendant Truck Insurance.

There is substantial evidence in the record to support the trial court's finding that the accident was due solely to the negligence of McDonough Logging and the judgment in this regard will not be disturbed. The question remaining is the application of the insurance, determining which insurer or insurers cover the liability of McDonough Logging and, if there is more than one insurer, in what proportion each must bear the liability.

When this matter was tried both parties and the trial court overlooked the clause providing that 'use of the automobile includes the loading and unloading thereof,' which is included in the Truck Insurance policy. The trial court's findings and conclusions of law were premised on the fact that this loading clause was not within the Truck Insurance policy. On appeal the parties discovered and conceded that the Truck Insurance policy did contain a 'loading clause,' and thereafter argued and filed supplemental briefs.

We conclude that since the Truck Insurance policy included a 'loading and unloading' clause, McDonough Logging was 'using' Wagoner's truck with Wagoner's permission. (See e.g., American Auto Ins. Co. v. Transport Indem. Co., 200 Cal.App.2d 543, 19 Cal.Rptr. 558; Standard Acc. Ins. Co. of Detroit, Michigan v. Hartford Acc. & Indem. Co., 206 Cal.App.2d 17, 21--22, 23 Cal.Rptr. 424; Colby v. Liberty Mutual Ins. Co., 220 Cal.App.2d 38, 44, 33 Cal.Rptr. 538; Columbia Southern Chemical Corp. v. Manufacturers & Wholesalers Indem. Exch., 190 Cal.App.2d 194, 202--203, 11 Cal.Rptr. 762, disapproved on other grounds in Continental Cas. Co. v. Zurich Ins. Co., 57 Cal.2d 27, 38, 17 Cal.Rptr. 12, 366 P.2d 455.)

The Truck Insurance policy does not expressly provide coverage for permissive users falling within the class of McDonough Logging. However, under Vehicle Code section 16451 (formerly section 415), which requires that an owner's policy of liability insurance shall insure any person using the mator vehicle with the permission of the insured, McDonough Logging is an insured by operation of law, for this section is deemed part of the policy. (Wildman v. Government Employees' Ins. Co., 48 Cal.2d 31, 38--39, 307 P.2d 359; Bohrn v. State Farm etc. Ins. Co., 226 Cal.App.2d 497, 38 Cal.Rptr. 77; American Auto Ins. Co. v. Transport Indem. Co., supra, 200 Cal.App.2d at p. 553, 19 Cal.Rptr. 558.)

General Insurance is also obligated within its policy limits to pay all sums which McDonough Logging would become obligated to pay for damages resulting from injury or death arising out of the use of non-owned automobiles, including the loading and unloading thereof.

Where, as here, two insurance policies apply to the same risk, the relative application thereof is generally determined by the explicit provisions of the respective 'other insurance' clauses. (American Automobile Ins. Co. v. Republic Indemnity Co., 52 Cal.2d 507, 341 P.2d 675; Miller v. Western Pioneer Ins. Co., 237 A.C.A. 145, 46 Cal.Rptr. 579.)

'There are three types of limiting clauses in 'other insurance' provisions: (1) a 'prorate' clause provides for apportionment of a loss with other valid and collectible insurance; (2) an 'excess' clause provides coverage for loss only in excess of other valid and collectible insurance; and (3) an 'escape' clause attempts to avoid all liability where there is other valid and collectible insurance.' (Firemen's Ins. Co. of Newark, New Jersey v. Continental Cas. Co., 170 Cal.App.2d 698, 700, 339 P.2d 602, 603; for discussion of these three types, see Peerless Cas. Co. v. Continental Cas. Co., 144 Cal.App.2d 617, 621, 301 P.2d 602, and Firemen's, supra, 170 Cal.App.2d at pp. 700-701, 339 P.2d 602.)

In the instant case, both policies contain an 'other insurance' clause. The Truck Insurance policy provides that 'the insurance afforded by this policy shall be excess insurance over any other insurance available to the insured, either as an insured under a policy applicable with respect to the automobile, or otherwise, against a loss covered by this policy.'

The 'other insurance' clause of General Insurance provides that 'if at the time of an occurrence there is any other insurance available to the insured (in this or any other carrier) there shall be no insurance afforded hereunder as respects such occurrence except that if the applicable limit of liability of this policy is in excess of the applicable limit provided by the other insurance available to the insured this policy shall afford excess insurance over and above such other insurance in an amount sufficient to afford the insured a combined limit of liability equal to the applicable limit of liability offered by this policy. It is further provided that with respect to loss arising out of the operation, maintenance or use of any non-owned automobile the applicable insurance afforded by this policy shall be excess over and above such other available insurance. Insurance under this policy shall not be construed to be concurrent or contributing with any other insurance which is available to the insured.'

The clause of the Truck Insurance policy is an 'excess' clause, for it provides coverage for loss only after exhaustion of other valid collectible insurance. The clause of the General Insurance policy is a composite of escape and excess clauses. That is, excepting non-owned automobiles, where the insured of General Insurance does have other available insurance, General Insurance will not provide coverage for any loss unless its policy limit exceeds the policy limit of the other insurance. In that event, General Insurance will provide coverage for the loss in excess of the other insurance but only to the extent of the maximum limit of its policy less the amount of the other insurance policy limit. As to non-owned automobiles General Insurance will provide coverage for loss only in excess of other available insurance. This latter clause, as the Truck Insurance clause, is the standard 'excess' clause.

Both insurers argue that the other should be primarily liable. Truck Insurance argues that it is only equitable that a negligent permissive user (McDonough Logging) should bear the ultimate burden of the loss rather than the innocent owner or his insurer. We cannot agree with this contention. The purpose of indemnity insurance is to provide protection for the 'wrongdoer.' We can see no difference between the equities of an insurer whose named insured (McDonough) is the actual wrongdoer and another insurer whose named insured (Wagoner) is the owner of the vehicle which the wrongdoer uses. (See Pacific Indemnity Co. v. Liberty Mutual Ins. Co., 239 A.C.A. 365, 371, 48 Cal.Rptr. 667.)

General Insurance argues that...