Glens Falls Ins. Co. v. Consolidated Freightways

• Decision Date: 14 June 1966
• Citation: 51 Cal.Rptr. 789,242 Cal. App. 2d 774
• Court: California Court of Appeals
• Parties: GLENS FALLS INSURANCE COMPANY, a corporation, Plaintiff and Appellant, v. CONSOLIDATED FREIGHTWAYS, a corporation, Defendant and Respondent. Civ. 22810.

Page 789

51 Cal.Rptr. 789

242 Cal.App.2d 774

GLENS FALLS INSURANCE COMPANY, a corporation, Plaintiff and Appellant, v.CONSOLIDATED FREIGHTWAYS, a corporation, Defendant and Respondent.

Civ. 22810.

District Court of Appeal, First District Division 1, California.

June 14, 1966.

Hearing Denied Aug. 24, 1966.

Robert E. Lee, San Francisco, for appellant.

Robert C. Stetson, James R. Hagan, Menlo Park, for respondent.

SULLIVAN, Presiding Justice.

This is an appeal by plaintiffGlens Falls Insurance Co.(Glens Falls) from a summary judgment entered in favor of Consolidated Freightways (Consolidated) in an action for declaratory relief.It is presented on a record consisting of an agreed statement of facts with exhibits attached.(Cal.Rules of Court, rule 6.)

At all times material herein, Consolidated was a common carrier engaged in interstate and intrastate commerce.On august 18, 1961, John C. Pratt, a truck-driver employed by it, drove a truck owned by Consolidated to the premises of the Basalt Rock Company(Basalt) in Napa to pick up a load of concrete beams.At Basalt, Pratt began loading the beams on the truck with the assistance of Forrest M. Jorden, a Basalt employee who was operating a forklift in order to transfer the beams from the loading area to the truck.This forklift, which was owned by Basalt and used only on the premises of its Napa plant, was not licensed by the California Motor Vehicle department.¹

During the loading operation, Pratt, who was working on the truck, bent over to reach for some wooden blocks used to keep the beams separated and as he rose up to place the blocks between the beams struck his head against a steel hook which was at that point suspended from the forklift over the bed of the truck.As a result he sustained injuries.On August 14, 1962 Pratt commenced an action for damages in the sum of $50,000 against Jorden and the latter's employer Basalt, claiming that Jorden was negligent in operating the forklift.

At the time of the above accident there was in full force and effect a 'Comprehensive General--Automobile Liability Policy' issued by Glens Falls to Basalt.On said date, according to the agreed statement on appeal, Consolidated 'was an authorized self-insurer in the State of California and purchased only indemnity insurance to hold itself harmless from loss over the amount of $20,000 in any one occurrence.'On November 29, 1962 Glens Falls tendered defense of the above action to Consolidated on the theory that Jorden and Basalt were permissive users of the truck during the loading operation and therefore additional insureds under Consolidated's insurance coverage.Consolidated rejected the tender, stating that its excess indemnity contract contained neither a 'loading and unloading' clause nor a 'permissive user' clause.As a result Glens Falls continued with the defense of the action, eventually compromising the action for $2,000.

On July 24, 1963 Glens Falls commenced the instant action against Consolidated seeking a declaration of its rights and duties under the respective insurance of the parties.Each of the parties moved for a summary judgment.The court denied plaintiff's motion and granted defendant's motion.In essence the reasoning of the court, as disclosed by its memorandum decision, was 'that unless an insurance policy exists which covers loading and unloading as an expansion of the term 'use' of a vehicle covered, loading and unloading are not such a use of a vehicle which would impose liability on the owner for injuries caused by other parties.On the basis of this conclusion under the facts of this case, the defendant is not legally responsible for the negligence of the employee of Basalt Rock Company.'Summary judgment was entered in favor of defendant.This appeal followed.

The contentions of Glens Falls on appeal substantially reflect its position taken on its motion for summary judgment in the court below.Said plaintiff urges (1) that Jorden was a permissive user of Consolidated's truck and as a matter of law was covered by the latter's '(self)-insurance'; (2) that Jorden had no coverage whatsoever under the Glens Falls policy; and (3) that under the doctrine of equitable subrogation, Consolidated was liable for the costs and expenses incurred by Glens Falls in settling the action brought by Pratt.

On the first issue, the contrary positions of the parties may be summarized as follows: Glens Falls argues that since, in respect on an owner's policy of automobile liability insurance issued under Vehicle Code section 16451² requiring coverage of permissive users, a person loading or unloading a truck has been held to be 'using' said vehicle within the meaning of the policy and to be an additional insured thereof, such a person should also be considered to be 'using' the truck and to be under similar extended coverage where the owner carries no insurance but is a self-insurer.Thus, according to plaintiff, insurance and self-insurance are, so to speak, equivalent concepts.³Consolidated to the contrary argues that the only possible basis for the imposition of liability upon it is section 17150, ⁴ emphasizing that such liability is imputed from negligence in the Operation of a motor vehicle; that in the instant case Jorden, Basalt's employee, was never in physical control of, and did not Operate, Consolidated's truck; that 'Glens Falls ignores the reality that Consolidated is not an insurance company and attempts to fix liability upon Consolidated by means of a tortured application of Section 16451'; that Consolidated's liability must be determined under section 17150 which must be construed strictly so as to avoid the imposition of liability upon nonnegligent owners; and that under such a construction, the 'use' of a motor vehicle does not include 'loading and unloading.'No reported California case dealing with this precise problem has been cited or found.

At the outset we review the Vehicle Codesections involved.Section 17150(see fn. 4, ante) upon which defendant focuses attention is found in Division 9 of the Vehicle Code entitled 'Civil Liability' and more particularly in a chapter and article thereof dealing with the civil liability of private owners.The liability which it imposes upon the owner of a motor vehicle is predicated upon a theory of imputed negligence in cases where the principle of respondeat superior is inapplicable.(Burgess v. Cahill(1945)26 Cal.2d 320, 323, 158 P.2d 393, 159 A.L.R. 1304;Peterson v. Grieger, Inc.(1961)57 Cal.2d 43, 50, 17 Cal.Rptr. 828, 367 P.2d 420;Casey v. Fortune(1947)78 Cal.App.2d 922, 925, 179 P.2d 99;Rosenthal v. Harris Motor Co.(1953)118 Cal.App.2d 403, 405--406, 257 P.2d 1034.)This section defines the owner's liability in such cases'in order to make him liable for the negligence of any person to whom he had expressly or impliedly given permission to Operate his car, and thereby prevent him from escaping liability by saying that his car was being used without express authority or not in his business.(Citations.)'(Emphasis added.)(Souza v. Corti(1943)22 Cal.2d 454, 457, 139 P.2d 645, 646, 147 A.L.R. 861;Burgess v. Cahill, supra;Anderson v. Wagnon(1952)110 Cal.App.2d 362, 369, 242 P.2d 915.)The foundation of an owner's liability under section 17150 is the permission, express or implied, given by the owner to another to use the motor vehicle.(Krum v. Malloy(1943)22 Cal.2d 132, 134, 137 P.2d 18;Burgess v. Cahill, supra;Davidson v. Ealey(1945)69 Cal.App.2d 254, 258, 158 P.2d 1000;Rosenthal v. Harris Motor Co., supra, 118 Cal.App. at p. 406, 257 P.2d 1034;Scollan v. Government Emp. Ins. Co.(1963)222 Cal.App.2d 181, 184, 35 Cal.Rptr. 40.)

Section 16451, on the other hand, is found in Division 7 of the Vehicle Code which constitutes the Automobile Financial Responsibility Law (§§ 16000--16503).Chapter 1 thereof (§§ 16000--16110) deals with 'Security Following Accident' and Chapter 2 thereof (§§ 16250--16377) deals with 'Suspensions Following Unsatisfied Judgments.'Generally speaking, these sections of the Financial Responsibility Law provide that the driver of a motor vehicle involved in an accident resulting in damage to property of any one person in excess of $100 or in bodily injury or death must deposit security as specified to satisfy any final judgment or judgments for such bodily injury or property damage unless he complies with one of the conditions of exemption therein set forth (§§ 16050,16020).Where the driver fails to deposit the required security and also fails to establish his exemption from security, his privilege of driving a motor vehicle in this state is suspended (§ 16080).Where at the time of the accident, the driver was driving a motor vehicle owned, operated or leased by the employer of the driver and with the permission of said employer, the above-mentioned security provisions apply to the employer and the above-mentioned suspension provisions 'shall apply to the registration of all vehicles not covered by insurance, bond, or self-insurance certificate at the time of the accident which vehicles were owned, operated, or leased by the employer and shall not apply to the driver.'(§ 16022.)

So far as is pertinent to our present discussion, exemption from the requirement of security may be established, among other ways, by showing that the owner of the motor vehicle involved in the accident is a self-insurer (§ 16055)⁵; or by filing with the Motor Vehicle Department satisfactory evidence that the owner had a motor vehicle liability policy or bond complying with statutory requirements in effect at the time of the accident with respect to the driver or the motor vehicle involved or that the driver, if he was not the owner, had such a bond or motor vehicle liability policy with respect to his operation of a non-owned motor vehicle.(§§ 16057,16059.)

Chapter 3(§§ 16430--16487) of the Automobile Financial Responsibility Law...