Home Indemnity Co. v. King
| Decision Date | 07 May 1982 |
| Citation | 182 Cal.Rptr. 490,131 Cal.App.3d 545 |
| Court | California Court of Appeals Court of Appeals |
| Parties | The HOME INDEMNITY COMPANY, Plaintiff and Appellant, v. Frederick William KING et al., Defendants and Respondents. Frederick William KING, Plaintiff and Appellant, v. TRANSPORT INDEMNITY COMPANY, Defendant and Respondent. Civ. 45669. |
Ralph A. Lombardi, Hardin, Cook, Loper, Engel & Bergez, Oakland, for plaintiff and appellant, The Home Indem. Co.
Bryce C. Anderson, Martinez, Michael P. McCabe, Trembath, McCabe & Schwartz, Concord, for Frederick King.
Toff, Toff, Newton & Toff, Melville A. Toff, Stephen L. Newton, Mountain View, for defendant and respondent, Transport Indem. Co.
This appeal encompasses two separate actions which were consolidated at trial, and which both involve questions as to insurance coverage for a single accident. The Home Indemnity Company, plaintiff in the first action, appeals from a judgment in favor of defendants Frederick King and Tony Martin, declaring Martin to be an insured under an automobile liability insurance policy which Home issued. King and Martin, plaintiffs in the second action, appeal from a judgment in favor of defendant Transport Indemnity Company declaring it not bound by a stipulated judgment in a previous action between King and Martin, and granting it a trial de novo on all issues involved in that action.
On January 31, 1972, Frederick King, who was employed as a truck driver by the Bonded Drayage Company, drove a tractor truck and trailer to the Oakland Army Terminal to deliver and pick up cargo pursuant to his employment. Bonded Drayage owned the tractor truck; however, the trailer was owned by Transcon Lines, another cargo carrier, and was being used pursuant to an interchange agreement. Bonded Drayage was insured by the Home Indemnity Company (Home) and Transcon Lines was insured by Transport Indemnity Company (Transport). 1
At the Oakland Army Terminal, Tony Martin, an independent forklift operator, was hired by King to load the trailer. Martin was insured for business operations by United States Fidelity and Guaranty Company (USF&G). As Martin was loading cargo, he dislodged some of the crates, which fell onto King and severely fractured his right leg and left ankle.
King filed suit against Martin; Martin was defended by counsel provided by USF&G and by private counsel. USF&G made a tender of the defense to Home, which Home rejected. The action was settled with a stipulated judgment in favor of King in the amount of $300,000; USF&G agreed to pay its entire policy limit of $100,000; King agreed not to execute against Martin; Martin assigned all his rights against any other carriers to King.
Although King, Home and USF&G at all times knew that the trailer was owned by Transcon Lines, there was no effort made to notify Transcon or its insurance company (Transport) of the accident until after the settlement conference which resulted in the stipulated judgment.
Home then brought an action for declaratory relief, seeking a declaration that the liability policy it issued to Bonded Drayage did not cover the act of Martin which gave rise to the stipulated judgment. King and Martin brought an action for declaratory relief against Transport, seeking a declaration that Martin was covered by the Transport policy, and that Transport was therefore obligated to satisfy the outstanding balance of the stipulated judgment. The two actions were consolidated for trial.
In the first action, the court found Home's policy and the PUC endorsement of that policy together provided Martin with coverage in the amount of $200,000. The court also found King entitled to a declaration that Home was liable for the $200,000 unpaid balance of the judgment rendered against Martin in favor of King. In the second action, the court found Martin was Transport's insured. However, because Transport was not given notice of the accident, the action between King and Martin, or the settlement of that action, Transport was not bound by the stipulated judgment, and was entitled to a trial de novo on all the issues.
Home v. King et al.
Pursuant to the comprehensive automobile liability portion of the insurance policy which Home issued to Bonded Drayage, Home agreed to "pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages ... arising out of the ownership, maintenance or use, including loading and unloading, of any automobile ..." In relevant part, the policy defined the insured as the named insured, and as: "(c) any other person while using an owned automobile or a hired automobile with the permission of the named insured, ... but with respect to bodily injury or property damage arising out of the loading or unloading thereof, such other person shall be an insured only if he is: [p] 1. a lessee or borrower of the automobile or [p] 2. an employee of the named insured or of such lessee or borrower ...."
However, endorsement No. 5 to the policy sets forth an exception to the limitation: "It is agreed that the insurance applies with respect to commercial automobiles, subject to the following additional provisions: (a) The loading and unloading limitation of paragraph (c) of the 'Persons Insured' provision does not apply to any person or organization or any agent or employee thereof engaged in the business of transporting property by automobile for the named insured or for others."
The policy also contained a standard endorsement prepared by the PUC which stated that the policy would cover any final judgment against the insured for bodily injury or property damage "resulting from the operation, maintenance, or use of motor vehicles for which a ... permit is required ...." (Emphasis added.) In addition, that endorsement provided: (Emphasis added.)
The trial court found that forklift operator Martin was Home's insured both because he was a "borrower" of the tractor truck within the meaning of the policy, and because by operating the forklift, he was "engaged in the business of transporting property by 'automobile' for the named insured" within the meaning of the policy. In addition, the court found that Martin was an insured under the PUC endorsement. The court concluded that the policy provided coverage to the extent of $100,000 and the PUC endorsement provided an additional $100,000.
First, appellant contends the court erred when it determined that because of the "no limitation" language in the PUC endorsement, Martin was an insured despite the policy's limitation on the definition of an insured with respect to loading and unloading. We agree.
We recognize that generally, when there is an inconsistency between the language of a PUC endorsement and that of the body of a liability policy, the endorsement controls. (Samson v. Transamerica Ins. Co., supra, 30 Cal.3d at p. 231, 178 Cal.Rptr. 343, 636 P.2d 32.) In Samson, although the policy expressly covered only one particular tractor truck, the PUC endorsement extended coverage to all vehicles covered by the insured's PUC permit.
Nevertheless, we must also read Home's policy and the endorsement in light of Insurance Code section 11580 et seq., which express the "total public policy" of the state with respect to the content of automobile liability insurance policies. (Ins.Code, § 11580.05; Farmers Ins. Exchange v. Cocking (1981) 29 Cal.3d 383, 388, 173 Cal.Rptr. 846, 628 P.2d 1.) Prior to 1970, it was the public policy of the state as expressed in former Insurance Code section 11580.1 that every automobile insurance policy was deemed to include a provision insuring a permissive user of a vehicle to the same extent as the policy afforded coverage to the named insured. A permissive user included one engaged in loading and unloading a truck. (Glens Falls Ins. Co. v. Globe Indem. Co. (1969) 276 Cal.App.2d 643, 644-645, 81 Cal.Rptr. 28; see former Ins. Code, § 11580.1, subd. (d); Stats.1969, ch. 471, p. 1033.) In 1970, a new version of section 11580.1 was enacted, in part permitting insurance for loading and unloading to be limited to the named insured, certain of his relatives, a lessee or bailee of the vehicle, or an employee of any such person. (Ins.Code, § 11580.1, subd. (b)(4).)
Presumably the Legislature meant what it said when it declared section 11580 et seq. to be the total public policy of the state with respect to the content of liability insurance. (See Farmers Ins. Exchange, supra, 29 Cal.3d at p. 388, 173 Cal.Rptr. 846, 628 P.2d 1.) An insurance company is entitled to write a policy which limits its coverage to certain persons unless the law expressly provides otherwise, and the limitations in the policy must be respected. (Argonaut Ins. Co. v. Transport Indem. Co. (1972) 6 Cal.3d 496, 508, 99 Cal.Rptr. 617, 492 P.2d 673.) The law permits rather than forbids the limitation at issue here. (...
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