Liberty Mut. Ins. Co. v. Truck Ins. Exchange
| Decision Date | 16 November 1966 |
| Citation | 420 P.2d 66,83 Or.Adv.Sh. 497,245 Or. 30 |
| Parties | LIBERTY MUTUAL INSURANCE COMPANY, Plaintiff and Respondent, v. TRUCK INSURANCE EXCHANGE, Appellant, Jack Norman Cresswell et al., Defendants and Respondents. |
| Court | Oregon Supreme Court |
John L. Luvaas, Eugene, argued the cause for appellant. On the briefs were Luvaas, Cobb, Richards & Fraser, Eugene.
Wayne A. Williamson, Portland, argued the cause for plaintiff and respondent, and Howard K. Beebe, Portland, argued the cause for defendants and respondents. On the brief were Mautz, Souther, Spaulding, Kinsey & Williamson and Morrison & Bailey, Portland.
Before McALLISTER, C.J., and PERRY, SLOAN, O'CONNELL, GOODWIN, DENECKE, and HOLMAN, JJ.
This is a suit 1 for contribution between a general liability carrier and a motor-vehicle liability carrier. Truck Insurance Exchange appeals a decree ordering it to pay four fifths of a personal-injury loss settled and paid by Liberty Mutual.
The injury and loss occurred as follows: Robert Gordineer, a log-truck driver employed by Butler Transport, Inc., delivered a load of logs to a pond operated by U.S. Plywood. Allegedly through the negligence of employees of U.S. Plywood, a log fell off the truck while it was being unloaded, and injured Gordineer, who was walking from the cab of the truck to the rear of the load.
Gordineer filed a claim against U.S. Plywood, Liberty Mutual's insured. The cost of settlement was $18,720.13, well within Liberty Mutual's policy limits of $25,000. Truck Insurance, which originally had refused a tendered defense of the claim, had insured Butler Transport as the owner of the truck involved in the accident.
There is no dispute about the facts of the original accident for which the settlement was made. The controversy before this court begins with Liberty Mutual's contention that Truck Insurance was the primary insurer of U.S. Plywood under the 'permissive user' clause of the Truck Insurance policy. Truck Insurance, with policy limits of $100,000, was found liable to Liberty Mutual in the sum of $14,976.10. (U.S. Plywood also carried certain 'excess' liability coverage, which presented questions that will be considered later.)
If the unloading of the log truck was a 'permissive use' of Butler Transport's truck by the U.S. Plywood employees, U.S. Plywood was an 'insured' under Butler Transport's Truck Insurance policy. If the unloading operation was not a permissive use of the truck by U.S. Plywood, U.S. Plywood was not an 'insured' under the Truck Insurance policy, and Truck Insurance would have a complete defense to any claim for contribution in this case.
There is no 'loading or unloading' clause in the Truck Insurance policy as there is in some policies. See, e.g., General Ins. Co. v. Saskatchewan Gov. Ins. Office, 238 Or. 8, 391 P.2d 616 (1964). In the Saskatchewan case, we held that the lumber company which was scaling logs as they were loaded on the truck of a third party was a permissive 'user' of the truck and was thus an 'insured' under a motor-vehicle policy covering a loss similar to the one before us. A distinction based upon contract language could be drawn between the two cases. But there is adequate precedent for the view that when the contract is silent on the point loading and unloading is 'using' an insured motor vehicle. 2 We hold that the trial court properly treated the pleadings below as a statement of facts which, if true, would make U.S. Plywood an 'insured' under the Truck Insurance policy.
The next, and more difficult, issue is whether Truck Insurance, by acquiring U.S. Plywood as an insured, thereby lost a specific exclusion written into its policy with Butler Transport. The policy purports to exclude from coverage all employees of 'the insured' who may be injured within the scope of their employment. The employee exclusion was abandoned as a defense in the trial court, because the question had been resolved against the motor-vehicle-insurance carrier in Cimarron Ins. Co. v. Travelers Ins. Co., 224 Or. 57, 355 P.2d 742 (1960). The Cimarron rule was reiterated in General Ins. Co. v. Saskatchewan Gov. Ins. Office, supra. While there is a split of authority on this point, we adhere to our holdings in Cimarron and Saskatchewan to the effect that the employee-exclusion clause is not available as a defense when the injured workman is not an employee of the 'insured' against whom the claim is being made.
After concluding that the Truck Insurance policy covered U.S. Plywood as an 'insured,' and that Gordineer's claim was not that of an 'employee' of the 'insured,' the trial court turned its attention to the remaining issue of prorating the loss between the two insurance carriers under the so-called 'Lamb-Weston' formula. 3 In- as much as Liberty Mutual had policy limits of $25,000, and Truck Insurance had policy limits of $100,000, Liberty Mutual's prorata share of the loss was 25/125, or $3,744.03, and Truck Insurance was liable to reimburse Liberty Mutual in the amount of $14,976.12. This disposition of the case was in keeping with the loss-to-limits prorating that has been practiced in this state since the adoption of the Lamb-Weston formula, but it raised new questions with reference to the excess insurance under the Saskatchewan case.
In the management of U.S. Plywood's insurance business, Liberty Mutual was the primary carrier for public-liability insurance, but Liberty Mutual's limits for any one loss were set at $25,000. Additional, or 'excess,' insurance was provided, with limits up to $10,000,000, by a number of separate contracts with Lloyd's Underwriters. The first 'layer' of excess insurance covered U.S. Plywood's public-liability losses, after the exhaustion of Liberty Mutual's limits, up to $1,000,000. The second excess layer covered the risks between $1,000,000 and $6,000,000. The third excess layer covered risks between $6,000,000 and $10,000,000. Each of the Lloyd's policies specifically undertook to insure only those losses that might be payable after the limits of other designated policies had been exhausted. Premiums were paid the excess carriers in light of the relatively remote risks so insured.
Because none of the excess insurance was required to satisfy the Gordineer claim, the trial court refused to consider the excess policies in fixing the formula upon which the loss paid by Liberty Mutual was prorated between Liberty Mutual and Truck Insurance. The result was, as noted, that Liberty Mutual paid one fifth of the loss and Truck Insurance paid four fifths.
Truck Insurance now says that, if prorating is to be the rule, all of U.S. Plywood's insurance should be thrown into the prorating calculation on one 'side,' with that of Truck Insurance on the other 'side,' for a total of $10,125,000. Truck Insurance then argues for the following prorating formula:
Fraction of Approximate
Company Limits Risk Borne Dollar Risk
--------- ------- ----------- -----------
Liberty Mutual $25,000 1/405 $46.20
Truck Insurance 100,000 4/405 184.90
First Excess 1,000,000 40/405 1,848.80
Second Excess 5,000,000 200/405 9,244.00
Third Excess 4,000,000 160/405 7,395.20
In the case at bar, none of the excess carriers would have been required to pay any part of the loss whether or not Truck Insurance had been brought into the case. 4 The excess carriers, by the terms of their contracts, were not bound to pay anyone anything until Liberty Mutual had exhausted its $25,000, and therefore their policies provided no...
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