Interinsurance Exch. of the Auto. Club of Southern Cal. v. Ohio Cas. Ins. Co.

• Decision Date: 20 November 1961
• Citation: 17 Cal.Rptr. 259
• Parties: INTERINSURANCE EXCHANGE OF THE AUTOMOBILE CLUB OF SOUTHERN CALIFORNIA, an interinsurance exchange, Plaintiff and Appellant, v. OHIO CASUALTY INSURANCE COMPANY, Defendant and Respondent. Civ. 25476.
• Court: California Court of Appeals Court of Appeals

Page 259

17 Cal.Rptr. 259

INTERINSURANCE EXCHANGE OF THE AUTOMOBILE CLUB OF SOUTHERN CALIFORNIA, an interinsurance exchange, Plaintiff and Appellant, v. OHIO CASUALTY INSURANCE COMPANY, Defendant and Respondent.

Civ. 25476.

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

Nov. 20, 1961.

As Modified Dec. 19, 1961.

Hearing Granted Jan. 17, 1962.

Opinion vacated 23 Cal.Rptr. 592, 373 P.2d 640.

William J. Mansell, Los Angeles, for appellant.

Parker, Stanbury, McGee, Peckham & Garrett, Raymond G. Stanbury, Los Angeles, for respondent.

FOURT, Justice.

This is an action by one insurance company against another for declaratory relief to have their respective obligations under policies of liability insurance determined. The appeal is 'from the judgment entered in this action in favor of the defendant on the Motion for Judgment on the Pleadings.'

A 'Complaint for Declaratory Relief' was filed September 8, 1960. In substance appellant's (plaintiff's) complaint discloses the following:

Effective April 1, 1957, Ohio Casualty Insurance Company, hereinafter referred to as 'Ohio', issued a policy of insurance number CLP 30459 to Helms Pontiac-Cadillac, Inc., et al., hereinafter referred to as 'Helms', for the liabilities and upon the terms, Conditions and exclusions set forth in the policy. This policy covered a certain 1951 Pontiac four-door sedan, hereinafter referred to as '1951 Pontiac', owned by Helms. Attached to the policy was an endorsement entitled 'Garage Liability (Limited Additional Interest).' This endorsement contains the following definition of an insured:

'Definition of Insured. The unqualified word 'insured', except as otherwise provided herein, includes the named insured and, if the named insured is an individual, his spouse if a resident of the same household, and also includes (1) any partner, employee, director or stockholder thereof, while acting within the scope of his duties as such, and any person or organization having a financial interest in the business of the named insured covered by this policy, and (2) any partner, employee, director or stockholder of the named insured and any member of the family of the named insured, such partner, employee, director or stockholder while using any automobile covered by this policy, and any person or organization legally responsible for the use thereof by any such partner, employee, director, stockholder or family member, provided the actual use of the automobile is by the named insured or with his permission. The words, 'any person or organization legally responsible for the use thereof by any such partner, employee, director, stockholder or family member,' shall not be construed to mean, and the benefits of this policy shall not be extended to, any person or organization or the agent, servant or permittee of such person or organization, to which has been relinquished the use or possession of any automobile because such person or organization is a buyer or prospective buyer from the named insured or a customer or prospective customer of the named insured.' (Emphasis added.)

The above endorsement was attached to and formed a part of the Ohio-Helms policy, effective as of April 1, 1957, and was attached to and in force and effect at the time of the accident which occurred on September 14, 1957. The expiration date of the Ohio-Helms policy was April 1, 1958.

Effective January 28, 1957, and expiring January 28, 1958, the Interinsurance Exchange of the Automobile Club of Southern California (hereinafter referred to as 'Auto-Club') issued a policy of insurance number BB 403445, hereinafter referred to as 'Auto-Club policy,' to one Ross M. Evenstad as named insured for the liabilities and upon the terms, conditions and exclusions set forth in said policy.

On September 14, 1957, Evenstad delivered his 1955 Cadillac automobile to Helms for the purpose of having it repaired, and in exchange did receive from Helms a loan vehicle, namely, the 1951 Pontiac, to be driven by himself during the period of time occupied in the repair of the 1955 Cadillac. Thereafter, on the same date, Evenstad was driving the 1951 Pontiac within the course and scope of the permission given to him by Helms when he was involved in a collision with two other automobiles on Woodman Avenue, near the intersection of Vanowen Street in the County of Los Angeles. The occupants of the other two automobiles claimed personal injuries and property damages.

The complaint for declaratory relief further indicates that thereafter a controversy arose between Auto-Club and Ohio as to which policy of insurance insured Evenstad for said accident or if both policies insured Evenstad, then as to which policy was primarily liable for said loss and which policy was secondarily liable, or if said policies were jointly and proratably liable.

It was agreed by and between Auto-Club and Ohio that Auto-Club would act to represent Evenstad and Helms but that the rights between Auto-Club and Ohio would not be affected thereby and each party reserved the right and would be able to contend thereafter that their policy did not insure Evenstad for said accident, but that coverage was afforded by the policy of the other, or, that in the event that both policies covered Evenstad, that their policy was excess over the other and only secondarily liable on such claim.

Thereafter, pursuant to the above agreement, Auto-Club settled all claims and obtained releases of all claims against Ross M. Evenstad and Helms.

Paragraph XII and the prayer in the complaint provide as follows:

'XII

'A controversy exists between the plaintiff and defendant as to their rights, liabilities, and duties under their respective insurance policies in the following particulars:

'(a) That Ohio * * * contends that the Garage Liability (Limited Additional Interest) endorsement attached to said policy No. CLP 30459 eliminates coverage for Ross M. Evenstad by virtue of its definition of insured, aforequoted.

'(b) That the * * * (Auto-Club) contends that said Garage Liability (Limited Additional Interest) endorsement, which was in force on September 14, 1957 and attached to policy No. CLP 30459, whose effective date was April 1, 1957, and expiration date April 1, 1958, was at that time under the statutes and laws of the State of California, void as against public policy and a violation of the statutes of the State of California.

'(c) That the * * * (Auto-Club) contends that Ross M. Evenstad was on September 14, 1957, entitled to insurance coverage as a person insured under the Ohio * * * policy No. CLP 30459.

'(b) That the Ohio * * * policy No. CLP 30459 was primarily liable for providing insurance protection and defense of any claims for damages arising out of said accident occurring on September 14, 1957.

'(e) That the * * * (Auto-Club) policy was excess over any insurance protection and coverage provided by the Ohio * * * policy and only secondarily liable to or for any claims for damages or injuries resulting from said accident on September 14, 1957.

'Wherefore, plaintiff prays judgment as follows:

'(a) That the Garage Liability (Limited Additional Interest) endorsement attached to the Ohio * * * policy, which was in force on September 14, 1957, was at that time void under the laws and statutes of public policy and pertaining thereto of the State of California.

'(b) That Ross M. Evenstad was, on September 14, 1957, entitled to insurance coverage as a person insured under the Ohio * * * policy.

'(c) That the Ohio * * * policy was primarily liable for providing insurance protection and defense of any claims or damages arising out of any accident on September 14, 1957.

'(d) That the * * * (Auto-Club) policy was excess over the insurance protection and coverage provided by the Ohio * * * policy and only secondarily liable to or for any claims or damages resulting from said accident on September 14, 1957.

'(e) For costs of this action; and

'(f) For such other and further relief as the Court may been just and proper.'

On November 14, 1960, Ohio filed its 'Answer of Defendant Ohio Casualty Insurance Company.' Defendant's answer provides in pertinent part as follows:

'III

'Answering Paragraph XII thereof admits the allegations thereof but alleges in addition thereto that defendant contends that its coverage respecting said accident was limited solely to Helms * * *, whose liability, if any, was limited to that of an owner and was thus a liability secondary to that of the driver, Ross M. Evenstad, insured by plaintiff. It is defendant's contention that it extended no coverage whatsoever to the said Ross M. Evenstad, and that the insurance of that person was sufficient to, and did, provide full settlement for all claims.

'Wherefore, defendant prays judgment as follows:

'(1) For a declaration that the endorsement to defendant's policy was valid and effective at the time of the accident;

'(2) That defendant had no obligation to Ross M. Evenstadt (sic) to defend him, or to provide him indemnity, respecting said accident;

'(3) That the obligation of defendant was limited to that of insurer for the owner of said vehicle, Helms * * *, which was a secondary liability;

'(4) That when plaintiff, as insurer of Ross M. Evenstad, settled all outstanding claims within its policy limits, in behalf of the said Ross M. Evenstad, it automatically discharged the obligation of defendant to its insured.

'(5) For a declaration that plaintiff is not entitled to have or recover anything from defendant.

'(6) For such other relief to which the Court may find defendant entitled.

'(7) For costs of suit herein incurred.'

On January 6, 1961, defendant Ohio filed a 'Notice of Motion for Judgment on the Pleadings.' The Auto-Club filed its 'Points and Authorities Opposing Motion for Judgment on the Pleadings' on January 18, 1961.

A minute order of January 20, 1961, indicates that the trial court granted the 'Motion for defendant for order...