Home Indem. Co. v. Mission Ins. Co.

• Decision Date: 22 June 1967
• Citation: 251 Cal.App.2d 942,60 Cal.Rptr. 544
• Court: California Court of Appeals Court of Appeals
• Parties: HOME INDEMNITY COMPANY, and AAA Leasing Corporation, Plaintiffs and Appellants, v. MISSION INSURANCE COMPANY, and Thomas Clark, Defendants and Respondents. Civ. 23252.

Page 544

60 Cal.Rptr. 544

251 Cal.App.2d 942

HOME INDEMNITY COMPANY, and AAA Leasing Corporation, Plaintiffs and Appellants, v. MISSION INSURANCE COMPANY, and Thomas Clark, Defendants and Respondents.

Civ. 23252.

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

June 22, 1967.

Hearing Denied Sept. 20, 1967.

Elke, Farella, Braun & Martel, San Francisco, for appellants.

Walcom & Harmon, Leo J. Walcom, San Francisco, for respondent Mission Ins. Co.

Quinn, Quinn & Quinn, James H. Quinn, San Francisco, for respondent Clark.

SIMS, Associate Justice.

Plaintiffs Home Indemnity Company and AAA Leasing Corporation, its insured, have appealed from a judgment denying them any relief in an action in which they sought a declaration of their rights against Mission Insurance Company, the alleged insurer of a lessee of a car from AAA, and against Thomas Clark, the agent who allegedly undertook to secure the latter insurance for the lessee.

Other parties named in the original complaint for declaratory relief were Jimmie Ray Vega, the lessee; Tower Indemnity Company, which, through Clark, issued to Vega a basic public liability policy covering $10,000/$20,000 of a total sum of $100,000 /$300,000 for which Vega applied (the excess of $90,000/$280,000 was applied for with Mission); and Thomas Leland Quinlan, who suffered injuries on September 14, 1963 when struck by the leased car while it was operated by Vega, and who, on December 10, 1963, filed suit against Vega and the leasing corporation.

Mission at all times denied that it had any insurance in effect at the time of the accident. Plaintiffs commenced this action March 18, 1964. In November 1964, on the eve of the trial of the Quinlan action a settlement was negotiated for the sum of $40,000; $9,000 was paid by Tower and $31,000 by Home. Mission agreed that the settlement was reasonable, that Home was not a volunteer in making such payment and that the settlement would be without prejudice to the rights of any party in this action. In consideration of the sum paid by Tower, the plaintiffs released Tower and Vega from further liability, and dismissed this action as to them. The action was dismissed as to Quinlan at the pretrial hearing.

The case was set for trial on issues revolving about the nature and extent of the authority of Clark, the existence of and extent of any coverage afforded by Mission at the time of the accident, the existence and extent of the coverage afforded by Home at the time of the accident, and the right of Home to contribution from Mission if the latter had insurance in force.

The findings of the trial court, insofar as they are pertinent to this appeal, are as follows:

'That defendant Thomas Clark was a duly licensed insurance agent authorized and acting on behalf of the defendant, Mission Insurance Company, a corporation, and also for the Tower Indemnity Company, a corporation, to bind insurance risks and liability excess coverage. (Finding II)

'That on or about February 25, 1963, plaintiff, AAA Leasing Corporation, a corporation, leased to Jimmie Ray Vega, defendant herein, a 1963 Chevrolet Impala automobile. That under the terms of the leasing agreement, the lessee was required to furnish and supply insurance in which he and AAA Leasing Corporation, a corporation, would be named insureds, in the sun of $100,000/$300,000 public liability, $25,000 property damage, $100 deductible collision and comprehensive insurance. That pursuant thereto Jimmie Ray Vega took possession of the vehicle from AAA Leasing Corporation and obtained insurance through Commonwealth Thrift Company with an insurance company or companies not disclosed to the record. That this insurance was cancelled, effective as of August 12, 1963. (Finding III)

'That on or about the 10th day of August, 1963, said Jimmie Ray Vega applied to Thomas Clark for insurance in the limits of $100,000/$300,000 public liability, $25,000 property damage, $100 deductible collision and comprehensive insurance. That he told defendant Thomas Clark that he was leasing the automobile from AAA Leaning Corporation, that the insurance must protect him and also the leasing corporation, that he showed his lease agreement to defendant Clark, and that defendant Clark took an application from Jimmie Ray Vega for Tower Indemnity Company for $10,000/$20,000 bodily injury, $100 deductible, $5000 property damage, and comprehensive insurance. As loss payee the Bank of Tokyo of California was named with relation to the collision and comprehensive insurance as it appeared on the registration of the Chevrolet Impala automobile to be the legal owner thereof. Jimmie R. Vega appeared on the application as the named insured. On the same day defendant Clark took an application from Jimmie R. Vega for excess insurance with Mission Insurance Company, with Jimmie R. Vega as the named insured, in the sum of $90,000/$280,000 for public liability insurance only. That defendant Clark informed defendant Vega that he was covered effectively from August 12, 1963 to August 12, 1964 in total limits of $100,000/$300,000 public liability and $25,000 property damage. That defendant Clark received at the time of the taking of the application and thereafter a total sum of $100 premium to be applied on a total premium charge of $422. (Finding IV)

'That on September 14, 1963, Jimmie R. Vega was in an accident with Thomas Leland Quinlan while operating the insured Chevrolet. That no policies had been delivered to Vega prior to the occurrence of this accident. That at all times from August 12, 1963 Jimmie R. Bega was insured by Tower Indemnity Company for $10,000/$20,000 bodily injury limits and by Mission Insurance Company in the sum of $90,000/$280,000 bodily injury limits as excess insurance. That at no time prior to September 17, 1963 which was subsequent to the accident involving Thomas Leland Quinlan was AAA Leasing Corporation a named insured under the policy issued by Mission Insurance Company.' (Finding V)

Finding VI first recites the facts concerning the Quinlan lawsuit and ensuing settlement as outlined above. It concludes:

'That by the terms of the Mission excess policy it incurred no obligation unless and until the primary policy of Tower had paid or had been held to pay the sum of $10,000. That at all times mentioned herein, plaintiff, Home Indemnity Company, had issued a policy of public liability insurance to plaintiff, AAA Leasing Corporation with limits of $250,000/$500,000 public liability bodily injury insurance.'

'That at all times mentioned herein, there was no relationship of privity between plaintiffs and defendant Thomas Clark.' (Finding VII)

Plaintiffs make the following contentions before this court: (1) the trial court erred in holding that there was a failure to exhaust Tower's primary coverage; (2) it erred in failing to hold that AAA was an additional insured with respect to the public liability insurance issued to Vega by Mission; (3) it erred in failing to hold that Home's policy did not cover the vehicle leased to Vega; (4) it erred in failing, at the very least, to prorate the loss between Mission and Home; and (5) it erred in denying plaintiffs recovery from Clark if he in fact did not bind coverage in favor of AAA.

The facts as found and supplemented by uncontradicted evidence lead to the following conclusions which are determinative of the case:

(1) Mission furnished insurance which covered both Vega and AAA at the time of the accident and which was supplemental and excess to the Tower policy;

(2) Home's policy with endorsements purported to exclude the lessor-owner, the leased vehicle, and the lessee-user from coverage when, as was the fact, the lessee-user secured 'owner's' insurance on the vehicle pursuant to his contract with the lessor-owner. No law or decision is found prohibiting the exclusion of vehicles from coverage under such circumstances, or rendering the provisions void because of a limitation on the liability insurance furnished a lessee-user when he is not obligated to or fails to secure such insurance. Final resolution of those issues is rendered unnecessary by the determination that the coverage, if any, furnished by Home would be excess;

(3) The relative coverage of Tower and Home being prorate and excess, the Tower insurance is primary and when exhausted is followed by the Mission coverage;

(4) The compromise between Tower, Vega, Home and Quinlan does not affect the liability of Mission which accrued at the time of loss, and Home is entitled to reimbursement of $30,000 from Mission;

(5) The agent is relieved of any liability by the adjudication that his disclosed principal is liable.

Mission's Coverage

Mission insisted from the outset that at the time of the accident it had no liability insurance in force which covered Vega or anyone else. This contention was predicated on the theory that any insurance originally granted expired September 5, 1963.

Following the receipt of the application, Mission's underwriting agent on August 22 1963 wrote Clark, 'Please let me know the Company, the policy period, policy number, and type of policy which is written for primary coverage. We must write our policy to expire concurrently with the primary policy. If we do not hear from you by 9/5/63, we will assume that you do not wish an annual policy and will issue a short-term policy from 8/12/63 to 9/5/63.'

According to one of Mission's clerks, no reply was received to this inquiry prior to September 19th. At some time after September 5th, and prior to September 17th, a coding sheet and the application, modified to show a termination date of 9/5/63 rather than 8/12/63, were sent to a typing service for the preparation of a policy. This short term policy was countersigned and issued September 17, 1963, and apparently mailed to Clark on September 20th.

Clark testified that he had given Mission the name of the primary insurer, Tower, and had requested and had...