Ohio Cas. Ins. Co. v. Armendariz

• Decision Date: 07 January 1964
• Court: California Court of Appeals Court of Appeals
• Parties: OHIO CASUALTY INSURANCE COMPANY, Plaintiff and Appellant, v. Manuel ARMENDARIZ, Defendant and Respondent. Civ. 7151.

Page 274

36 Cal.Rptr. 274

224 Cal.App.2d 56

OHIO CASUALTY INSURANCE COMPANY, Plaintiff and Appellant, v. Manuel ARMENDARIZ, Defendant and Respondent.

Civ. 7151.

District Court of Appeal, Fourth District, California.

Jan. 7, 1964.

Parker, Stanbury, McGee, Peckham & Garrett, Los Angeles, and Kenneth R. Garrett, Santa Ana, for appellant.

Murphy & Donahue, Santa Ana, for respondent.

GRIFFIN, Presiding Justice.

Plaintiff-appellant Ohio Casualty Insurance Company filed this action seeking declaratory relief against defendant Henry J. Martinez and defendant-respondent Manuel Armendariz, alleging that Martinez received a policy of automobile insurance issued by plaintiff; that said policy of automobile insurance contained a 'non-owner' endorsement thereon limiting coverage; that on May 23, 1960, Martinez, while driving a certain truck, was involved in a collision with defendant Armendariz who, as a result of said collision, filed a personal injury action in Orange County against Martinez and others. Armendariz, respondent herein, filed an answer in this action, admitting the collision and alleging negligence on the part of Martinez and asserts that if judgment is rendered in his favor he will proceed against all persons responsible to effect collection. Defendant Martinez defaulted in the action in the trial court and in this action. The prayer for relief is for a declaration that the policy of insurance did not apply to this accident and that plaintiff is not obligated to defend the action on behalf to Martinez.

Basically, the facts in the case are not in dispute. Prior to 1959, Henry J. Martinez had his driver's license suspended by the Department of Motor Vehicles. Subsequently he was advised that he could have his suspension lifted and his license returned provided he established proof of insurance coverage in conformance with driving restrictions to be placed upon his driver's license. Martinez then went to a Mr. LeJun, whose father was bail bondsman, told him of his desires and asked him to get some insurance for him. Martinez obtained the necessary printed application blank form published by the California Automobile Assigned Risk Plan from some source, filled it out and swore to it before a notary public on July 18, 1959. This application is directed to the California Automobile Assigned Risk Plan (a state agency) at a San Francisco address.

In answer to question #10 on the application, as to the description of vehicle requiring insurance, applicant answered 'None.' (There is a footnote to this question reading, in part: 'If proof of ability to respond in damages * * * is required list all vehicles registered to the applicant.) (Italics ours.)

Question: '11b. Is there any operator under 25 years of age resident in the applicant's household * * *? (No answer.) [If no, skip to question 11b.]'

Question: '11c. There are no such operators of the automobile under 25 years of age except the following: * * *'

Answer: 'Applicant, (age) 19 * * *'

Question: '13. The purposes for which the vehicle is to be used are:'

Answer: 'Pleasure.'

Question: '14. Registered owner of vehicle to be insured is:'

Answer: 'None.'

Question: '16. Has applicant a valid Driver's License?'

Answer: (indicated no)

Question: '27. Is applicant required to file proof of ability to respond in damages?'

Answer: (indicated yes)

Question: '27a. If answer is 'Yes,' indicate Motor Vehicle Department file or case number and what form of certificate should be filed with the Motor Vehicle Department. Operator--Owner--Owner and Operator.'

Answer: (indicated 'Operator')

Question: '28. If applicant has not been convicted of any of the offenses listed above, why is filing required * * *?'

Answer: (indicated 'Because of an uninsured accident' and 'because applicant is a minor.')

Question: '32. Has applicant within the past sixty days attempted but have been unable to secure automobile bodily injury and property damage liability insurance in this State?'

Answer: (indicated 'Yes.')

Statement #33 provides:

'I hereby designate as Producer of Record for this insurance W. H. Neessen of Westminster, State of California.'

Neessen certified thereon that he was a licensed California agent; that:

'I have tried and have been unable to obtain automobile bodily injury and property damage liability insurance for this applicant through ordinary methods. I have read the Assigned Risk Plan for this State and have carefully explained its provisions to the above applicant. * * *'

The applicant therein, under #33, agreed to subscribe to the California Automobile Assigned Risk Plan in its entirety and 'hereby declare myself bound by its provisions' and to pay for the balance of full premiums required. This application is stamped, 'Received July 29, 1959 Los Angeles.' Who or what agency received it is not indicated. An additional stamp is placed thereon, 'Financial Responsibility filing required 15% surcharge permitted.'

At the trial, an underwriter for the Ohio Casualty Insurance Company testified that he processed the application of Martinez; that this type of policy is normally processed in this fashion; that if the applicant is unable to obtain a policy through normal channels, he can obtain, through any agent or broker or the Department of Motor Vehicles, an application such as this to be filled out in duplicate and transmitted with a fee to the San Francisco office of the California Assigned Risk Plan and they in turn assign this case to some insurance company whose turn it might be and that this is on the basis of the volume of business done by the company in the State of California; that after this application has been assigned to that particular company, the company reviews the application and on the same day sends a quotation direct to the insured with a copy to the Assigned Risk Plan and to the broker, indicating that the company would issue a policy upon payment of so many dollars premium, setting a 15-day period for the payment of premium; that in this case the payment was made ($154.22) and in accordance with the plan, a policy was issued effective the day after the company received the premium, i. e. August 6, 1959.

The broker in the instant case was W. H. Neessen. On August 5, 1959, a copy of the policy went to the broker. The policy issued by plaintiff, and countersigned by W. H. Neessen, as agent of the Assigned Risk Plan was for a $10,000-$20,000 public liability and $5,000 property damage. A charge of financial responsibility filing fee was $6.39 and the assigned risk surcharge was $20.12, totaling $154.22 for the full policy. The description of the car insured on the policy was marked 'See endorsement,' The endorsement is entitled 'NON-OWNER POLICY,' and reads in part:

'It is agreed that such insurance as is afforded by the policy for Bodily Injury Liability, for Property Damage Liability and for Automobile Medical Payments applies with respect to the use of any automobile by or on behalf of the named insured or his spouse if a resident of the same household, subject to the following provisions:

* * *

* * *

'2. The insurance does not apply:

'(a) to any automobile owned by the named insured or a member of the same household * * *.' (Italics ours.)

This instrument, dated August 6, 1959, was also signed by plaintiff company and for the Assigned Risk Plan by W. H. Neessen, Agent.

Attached thereto was a duplicate pink paper, entitled 'CALIFORNIA FINANCIAL RESPONSIBILITY INSURANCE CERTIFICATE', SR 22, indicating that it was to be filed with the Division of Drivers Licenses, Sacramento, certifying that plaintiff company has issued to, or for the benefit of, Henry J. Martinez, a motor vehicle liability policy which is in full force and effect on the effective date of this certificate. The certificate states:

'2. OPERATOR'S POLICY covering the use by the insured of any motor vehicle not owned by or registered to him. (Italics ours.)

This certificate, signed by the plaintiff company and the Assigned Risk Plan agent, was dated August 6, 1959. The footnote thereon states:

'As provided in Section 415.5 of the Vehicle Code, the named insured will be granted a license permitting him to operate only such motor vehicles as are covered by this Financial Responsibility Insurance Certificate.'

On cross-examination, plaintiff's agent stated that he determined from the applicant's application the nature of the policy to be issued, i. e., as an owner or non-owner type; that even though the application states that he was only driving for the purpose of pleasure and apparently did intend to drive a car, he made no further inquiry of the applicant as to the facts; that there was no indication in the application that he would or would not be driving a car owned by a member of his household; that even without this information, he issued a policy that precluded the applicant from driving his own car or from driving a car of any member of his household; that, in effect, the pink slip certificate forwarded to the Motor Vehicle Department and to the Assigned Risk Department told them that the policy the company was issuing would cover any vehicle not owned by or registered to the applicant; that the non-owner endorsement provision of the policy is narrower in the scope of insurance coverage than the pink slip notice sent to the Motor Vehicle Department (Division of Drivers Licenses), Sacramento, in that the non-owner endorsement provision states that the insurance does not apply to any automobile 'owned by the named insured or member of the same household,' when the notice to the Motor Vehicle Department indicated that the named insured will be granted a license permitting him to operate only such vehicles as are covered by this certificate, which designates that the operator's policy covers the use by the insured of 'any motor vehicle not owned by or registered to him.' (Italics ours.)

It was apparently upon this notice that the Motor Vehicle Department issued to...