Hartford Fire Ins. Co. v. Aetna Ins. Co.

• Decision Date: 24 October 1974
• Citation: 270 Or. 226,527 P.2d 406
• Parties: HARTFORD FIRE INSURANCE COMPANY, a corporation, Appellant, v. AETNA INSURANCE COMPANY, a corporation, et al., Respondents, Mt. Hood Radio & Television Broadcasting Corp., a corporation, Respondent, Cross-Appellant. . Banc. *
• Court: Oregon Supreme Court

Page 406

527 P.2d 406

270 Or. 226

HARTFORD FIRE INSURANCE COMPANY, a corporation, Appellant, v. AETNA INSURANCE COMPANY, a corporation, et al., Respondents Mt. Hood Radio & Television Broadcasting Corp., a corporation, Respondent, Cross-Appellant.

Supreme Court of Oregon, In. Banc. ^*

Argued and Submitted Nov. 6, 1973.

Decided Oct. 24, 1974.

Bert E. Joachims of Klosterman & Joachims, Portland, argued the cause and filed briefs for appellant.

R. R. Bullivant, Portland, argued the cause for respondents Aetna Ins. Co., American Star Ins. Co., Canadian Indem. Co., Centennial Ins. Co., Federal Ins. Co., Hanover Ins. Co. and Zurich Ins. Co. With him on the brief were James L. Knoll and Bullivant, Wright, Leedy, Johnson, Pendergrass & Hoffman.

Thomas A. Davis, Portland, argued the cause for respondent, cross-appellant, Mt. Hood Radio & Television Broadcasting Corp. With him on the brief were Benson & Arenz, Portland.

Edward H. Warren, Portland, argued the cause for respondents The Western Fire Ins. Co. and Groninger & Co. On the brief were Hershiser, Mitchell & Warren, Portland.

McALLISTER, Justice.

This is a declaratory judgment proceeding instituted by Hartford Fire Insurance Company asking for a determination of the amounts which it and other insurance companies should contribute to a loss in the sum of $746,408.90 sustained on February 27, 1971 by the insured Mt. Hood Radio & Television Broadcasting Corporation when its television tower collapsed. The defendant insurance companies include: Aetna Insurance Company, American Star Insurance Company, Canadian Indemnity Company, Centennial Insurance Company, Federal Insurance Company, Hanover Insurance Company, and Zurich Insurance Company, all hereinafter referred to as the Aetna group. Additional defendants are the Western Fire Insurance Company, the insured Mt. Hood Radio & Television Broadcasting Corporation and two general agencies, Groninger & Co. and Dooly & Co., Inc. Mt. Hood counterclaimed against Hartford and cross-complained against Western for interest and attorney fees.

It will be helpful to first determine the nature of this proceeding which will, in turn, fix our scope of review. A declaratory judgment proceeding will be treated as either legal or equitable depending upon its nature. May v. Chicago Insurance Co., 260 Or. 285, 291--292, 409 P.2d 150 (1971); Mayer v. First National Bk. of Oregon, 260 Or. 119, 133, 489 P.2d 385 (1971). However, we have uniformly held that declaratory judgment proceedings to determine coverage under insurance policies are legal in nature rather than equitable. May v. Chicago Insurance Co., supra; Transamerica Ins. v. Signal Ins., 261 Or. 390, 393, 494 P.2d 885 (1972); Frontier Ins. v. Hartford Fire Ins., 262 Or. 470, 478--479, 499 P.2d 1302 (1972); Oregon Auto. Ins. Co. v. Watkins, 264 Or. 464, 467, 506 P.2d 179 (1973); Lee v. State Farm Auto. Ins., 265 Or. 1, 2, 507 P.2d 6 (1973). As a result we are bound by the trial court's findings in such a proceeding if they are supported by any substantial evidence. Falk v. Sul America Terrestres, 255 Or. 246, 248, 465 P.2d 714 (1970); May v. Chicago Insurance, supra.

Our conclusion as to the nature of this action is reinforced by the fact that the present proceeding is in major part an action for contribution. This court has consistently classified such actions as legal rather than equitable. In Case v. McKinnis, 107 Or. 223, 256, 213 P. 422, 432 (1923) the court said:

'The plaintiff relies upon the doctrine of contribution. This doctrine is founded upon principles of equity and natural justice and in reality is not based upon contract. It had its origin in courts of equity. Equality was deemed to be equity; and so when one was compelled to pay the whole of a debt, which two or more owed either jointly or severally or jointly and severally, equity equalized the burden by compelling the other obligors to pay their respective shares and thus divide the burden. While the doctrine of contribution originated in courts of equity, it was subsequently adopted by courts of law, and is now universally applied in such courts. * * *' Later cases which have recognized that an action for contribution is legal rather than equitable include the following: Carolina Casualty v. Oregon Auto., 242 Or. 407, 418, 408 P.2d 198 (1966); Liberty Mut. Ins. v. Truck Ins., 245 Or. 30, 32, 420 P.2d 66 (1966); Burnett v. Western Pac. Ins. Co., 255 Or. 547, 560, 469 P.2d 602 (1970).

For some time prior to February 1971 Mt. Hood had insured its property, including television towers, under an inland marine all risk insurance policy. Coverage was placed through its agent Dooly & Co. with a number of companies and each insurer agreed with the insured that the amount of its policy represented a pro rata portion of the total risk assumed by all the companies.

Early in 1971 a re-appraisal was made of Mt. Hood's properties and based thereon its was decided to increase the total insurance coverage from $2,674,199 to $3,263,300. It is agreed that Dooly & Co. was authorized to obtain the additional coverage. As some of the policies were to expire in February 1971, it was essential that the agent either increase the limits of the companies already sharing the risk or obtain additional coverage with other insurers.

Plaintiff Hartford was one of the companies insuring Mt. Hood and its policy was in the sum of $495,254 and was to expire on February 10, 1971. Mrs. Candee, an employe of Dooly & Co., was in charge of obtaining the required additional coverage for Mt. Hood. On February 4, 1971, she called a Mr. Lady of Hartford regarding the renewal of the Hartford policy and an increase in the coverage. Mr. Lady informed Mrs. Candee that instead of increasing its coverage, Hartford did not want to renew its policy on the Mt. Hood risk. However, because Hartford had delayed so long in notifying Dooly that it would not renew its policy, Mr. Lady agreed that Hartford would extend the coverage of its policy until March 4, 1971.

This agreement to extend its policy was evidenced by a binder written by Mrs. Candee dee dated February 4th. The binder, or covering note, bound Hartford to cover Mt. Hood for $495,254, effective from February 10, 1971, to March 4, 1971, and was signed by Dooly & Co., Inc., as an authorized agent for Hartford. A copy of the binder was mailed to Hartford.

Although Mrs. Candee had urged Hartford to renew its policy and had some hope that it would do so, she sought to obtain replacement policies. On February 18, 1971 Mrs. Candee solicited the Groninger Agency for coverage on the Mt. Hood risk. On that date Groninger agreed that it would bind one of its companies, the Western Fire Insurance Company, for coverage equal to the Hartford policy. Pursuant to that agreement Mrs. Candee issued a binder obligating Western Fire Insurance Company to cover the Mt. Hood properties for the sum of $495,254 during the period from February 18, 1971 to March 18, 1971. This binder was also signed by Dooly & Co., Inc., and a copy of it was mailed to Groninger & Co.

However, on February 26, 1971, one day before the loss, Groninger notified Dooly that Western was willing to write only $300,000 of the risk. In response to that notice Mrs. Candee on February 26th issued a replacement binder obligating Western to insure Mt. Hood for the sum of $300,000 from February 26, 1971 to March 26, 1971 and delivered a copy to Groninger & Co.

The trial court found that at the time of the loss the insurance covering the Mt. Hood properties was in the total sum of $3,563,300. Each insurer was held liable for its proportionate share of the loss determined by the amount which its policy limit bore to the sum of all policy limits determined to be in effect.

Although the facts are complicated the basic issue in this case is the extent of Hartford's coverage when the loss occurred. Hartford contends that the extension of its policy to March 4, 1971 was conditional and its coverage subject to reduction as Dooly obtained replacement coverage. In its brief Hartford states that its assignments of error raise the question of whether the Hartford binder was cancelled as a matter of law by substitution of replacement coverage. The insured, Mt. Hood, and its agent, Dooly contend that the policy extension by Hartford was unconditional and not subject to fluctuation as temporary coverage was obtained in other companies.

The nature of the agreement between Hartford and its insured Mt. Hood as negotiated by its agent Dooly...