Motor Vehicle Cas. Co. v. LeMars Mut. Ins. Co. of Iowa

• Decision Date: 24 July 1962
• Docket Number: No. 50659,50659
• Citation: 254 Iowa 68,116 N.W.2d 434
• Parties: MOTOR VEHICLE CASUALTY COMPANY, Appellee, v. LeMARS MUTUAL INSURANCE COMPANY OF IOWA, Appellant.
• Court: Iowa Supreme Court

Page 434

116 N.W.2d 434

254 Iowa 68

MOTOR VEHICLE CASUALTY COMPANY, Appellee, v. LeMARS MUTUAL INSURANCE COMPANY OF IOWA, Appellant.

No. 50659.

Supreme Court of Iowa.

July 24, 1962.

D. W. Baird and McMullin, Test & Baird, Des Moines, and H. Richard Smith and Mahoney, Jordan, Statton & Smith, Boone, for appellant.

Clyde Putnam, Jr., and Putnam, Putnam & Putnam, Des Moines, for appellee.

GARFIELD, Chief Justice.

This is a law action in which plaintiff Motor Vehicle Casualty Co. seeks contribution from defendant LeMars Mutual Insurance Association of half the sums plaintiff paid third persons, Mr. and Mrs. Dies and daughter and Mr. and Mrs. Carlson, injured in an automobile collision between a Plymouth car owned by Mr. Dies and a Ford car owned by Mrs. Helen Jenkins, driven by her husband Charles. Contribution is also claimed of half the amount plaintiff paid the collision insurer of the Dies car. Following trial to the court without a jury judgment was entered against defendant from which it appeals.

Plaintiff issued to Mrs. Jenkins its automobile insurance policy on the Ford. As to coverages A and B, for bodily injury and property damage respectively, the 'insured' also included her spouse. Defendant issued to Charles Jenkins its policy covering any automobile not owned by him. Limits of liability under both policies were the same--$10,000 to each person injured bodily, $20,000 for each occurrence of bodily injuries, and $500 property damage.

The policy held by Charles was issued by defendant under the Motor Vehicle Financial Responsibility Act, chapter 321A, Code 1958, I.C.A. Charles' operator's license was previously suspended for a violation of Iowa motor vehicle statutes.

Plaintiff caused an investigation to be made of the accident and after extended negotiations settled with the five occupants of the Dies automobile for the bodily injuries they sustained and State Farm Mutual Insurance Co., which wrote the collision insurance on the automobile, for 75 per cent of the amount it paid Dies for damage thereto. Before the settlements were made, plaintiff requested defendant to enter into the negotiations and to pay a share of the settlement but it declined. No question is raised as to the reasonableness of the settlements. Plaintiff paid the five injured persons a total of $12,084.87 and State Farm Mutual $1124.56.

I. Defendant-appellant's first assigned error is, in effect, that the trial court erred in not finding that the policy it issued to Jenkins provided only excess insurance over any other valid and collectible insurance available to the insured and that the policy plaintiff issued to Mrs. Jenkins provided valid and collectible insurance to Jenkins in amounts in excess of the payments made to the injured third persons and State Farm Mutual.

Plaintiff-appellee contends that a 'prorata' other insurance clause in defendant's policy was in effect at the time of the collision notwithstanding the excess insurance provision in the endorsement, upon which defendant relies, which was attached to its policy.

The body of the policy defendant issued to Jenkins contains this provision, numbered 20 in the long list of 'Conditions': 'Other Insurance * * *: If the insured has other insurance against a loss covered by this policy the company shall not be liable under this policy for a greater proportion of such loss than the applicable limit of liability stated in the declarations bears to the total applicable limit of liability of all valid and collectible insurance against such loss; provided, however, under coverages A and B the insurance with respect to temporary substitute automobiles under Insuring Agreement IV or other automobiles under Insuring Agreement V shall be excess insurance over any other valid and collectible insurance.'

Plaintiff's policy issued to Mrs. Jenkins contains a provision practically identical with that just quoted from defendant's policy. The quoted language which precedes the semicolon is commonly called a pro rata clause. Some of the cases refer to similar language as a standard other insurance clause. See e. g., General Accident Fire & Life Assur. Corp. v. Piazza, 4 N.Y.2d 659, 176 N.Y.S.2d 976, 152 N.E.2d 236, 241.

The portion of the above quoted language providing for excess insurance, commonly called an excess clause, following the semicolon is not applicable to this case. It applies only to temporary substitute automobiles and any other automobile than one owned by the named insured or spouse which is covered by the policy. No such substitute or other automobile was involved in this collision. Citizens Mutual Auto Ins. Co. v. Liberty Mutual Ins. Co., 6th Cir., Mich., 273 F.2d 189, 191; Travelers Insurance Co. v. Peerless Insurance Co., 9th Cir., Or., 287 F.2d 742, 748; Celina Mutual Gas. Co. v. Citizens Gas. Co., 194 Md. 236, 71 A.2d 20, 21, 21 A.L.R.2d 605, 607.

Attached to defendant's policy in front of the first page is an 'Endorsement' headed 'NON-OWNER OR NAMED DRIVER POLICY' which provides: 'It is agreed that such insurance as is afforded by the policy for Bodily Injury Liability, and for Property Damage Liability applies with respect to the use of any automobile or truck by the named insured, only, subject to the following provisions: 1. * * *

'2. The insurance does not apply: (a) to any automobile owned by the named insured. * * *

'3. The insurance shall be excess insurance over any other valid and collectible insurance available to the insured, either as an insured under a policy applicable with respect to any such automobile or otherwise.'

Defendant's claim it is an excess insurer only with respect to the injury and damage resulting from the collision with the Dies car rests upon the last quoted provision 3 of this endorsement. Plaintiff contends the endorsement does not eliminate the 'pro rata' provision, quoted above, from Condition 20 of defendant's policy.

II. The general rule is that an endorsement attached to a policy is part of the contract (this endorsement so states); the provisions of the endorsement and of the body of the policy are to be construed together and harmonized if possible; if they are in irreconcilable conflict the provisions in the endorsement will prevail. Farmers Insurance Exchange v. Ledesma, 10th Cir., N.M., 214 F.2d 495, 498; LeBlanc v. American Employers Ins. Co., 5th Cir., La., 155 F.2d 969, 970; Konrad v. Hartford Acc. & Indem. Co., 11 Ill.App.2d 503, 137 N.E.2d 855, 866-867; Bobich v. Oja, 258 Minn. 287, 104 N.W.2d 19, 24.

To like effect are 13 Appleman's Insurance Law and Practice, § 7538, page 294; 44 C.J.S. Insurance § 300, pages 1206-1208; 29 Am.Jur., Insurance (1960), § 256; Anno. 48 A.L.R.2d 704, 711. See also Hawkeye Clay Works v. Globe & R. F. Ins. Co., 202 Iowa 1270, 1274, 1277, 211 N.W. 860.

The conclusion is inescapable the provision of the endorsement that the insurance is excess insurance over any other valid and collectible insurance available to the insured is in irreconcilable conflict with the provision in the body of the policy for pro rata liability. Plaintiff itself so argues and it is obvious there cannot be at the same time pro rata coverage and coverage which is excess only as to the same loss. The many precedents which recognize this need not be cited at this point. Hence the excess clause in the endorsement to defendant's policy must prevail over the pro rata clause in the policy itself.

This endorsement this language which plaintiff says must be construed as retaining the pro rata clause of the policy as part of defendant's contract: 'This entry and endorsement is made subject to all of the conditions of the policy and to such conditions as may be endorsed hereon or added hereto; * * *' and, in larger type near the bottom of the endorsement, 'Subject otherwise to the terms, conditions and limitations of the policy.' (Emphasis added.)

We think plaintiff claims too much for this language and it affords insufficient ground for not applying the rule above referred to where there is irreconcilable conflict between provisions of an endorsement and of the policy itself. Certainly the endorsement, which covers most of the first page of the policy proper, is much more conspicuous than the pro rata clause in the long list of conditions on the last page of the policy. We note too another endorsement attached to the first page of the policy contains this typed-in warning, 'This policy does not afford the Broader Coverages of the Family Automobile Policy.'

III. The question whether defendant must bear pro rata share (here 50 per cent) of the loss resulting from Jenkins' collision with the Dies car or plaintiff must bear it all rests upon a construction of the language used by the respective insurers, not upon any arbitrary rule or circumstance. Travelers Indemnity Co. v. National Indemnity Co., 8th Cir., Minn., 292 F.2d 214, 221; McFarland v. Chicago Express, Inc., 7th Cir., Ill., 200 F.2d 5, 7; Woodrich Construction Co. v. Indemnity Insurance Co., 252 Minn. 86, 89 N.W.2d 412, 420-421.

This is a question of first impression in this state. However, it has been decided in many other jurisdictions--so many it is strange defendant has not cited a single precedent that bears directly on the point. I...