Oregon Auto. Ins. Co. v. United States Fidelity & Guar. Co.

Decision Date29 April 1952
Docket NumberNo. 13092.,13092.
Citation195 F.2d 958
PartiesOREGON AUTO. INS. CO. v. UNITED STATES FIDELITY & GUARANTY CO. et al.
CourtU.S. Court of Appeals — Ninth Circuit

Randall B. Kester and Maguire, Shields, Morrison & Bailey, all of Portland, Or., for appellant.

W. K. Phillips, Wm. C. Ralston, Portland, Or., for appellee, U. S. Fidelity & Guaranty Co.

Harry F. Samuels, Vergeer & Samuels, William Gehlen, all of Portland, Or., for appellees, Beulah Morris and William Morris.

Before HEALY, BONE and POPE, Circuit Judges.

HEALY, Circuit Judge.

This is a proceeding to obtain a judgment declaring which of two insurance companies is obliged to assume liability in respect of suits growing out of personal injury and property damage sustained in an automobile accident involving an insured named Suter.

A bare outline of the facts will suffice to disclose the problem. On October 15, 1949, Suter, while operating a Mercury automobile belonging to the Redmond Motor Company with the latter's consent, collided with a car owned and operated by William Morris, in which Morris' wife, Beulah, was riding. Both the Morrises were injured and their car was damaged. Beulah Morris obtained judgment against Suter in the amount of $7360 for personal injuries, plus costs. The judgment has not been paid. William Morris has brought suit against Suter for personal injury and property damage growing out of the collision, but his action is as yet undetermined.

The insurance companies involved are appellee United States Fidelity & Guaranty Company (plaintiff below) and Oregon Automobile Insurance Company, appellant. On June 4, 1949, U. S. F. & G. issued to Suter for a one year term a public liability and property damage policy insuring him on account of his use of a certain Plymouth car, with limits of $5,000 for each person injured, $10,000 for all injured in one accident, and $5,000 property damage. This policy also provided coverage for Suter while operating any other automobile. On October 1, 1949, Oregon issued its one year combined policy to several affiliated companies, including the Redmond Motor Company, insuring them against public liability and property damage growing out of the operation of designated motor vehicles, including the car later involved in the Suter accident. This policy provided coverage for any person using, with the insured's consent, an auto covered by the policy. The limits were $100,000 for each injury, $100,000 for all injuries in the same accident, and $5,000 property damages.

It is conceded by each of the companies that, in the absence of the other's policy, it would be bound to shoulder the responsibility for the defense of Suter, and would be liable for the damages adjudged against him in the Morris suits to the limit of the amount prescribed in its policy. However, both policies made provision for cases where other insurance existed. The U. S. F. & G. policy provided, in substance, that it would prorate with other valid and collectible insurance, except that, with respect to the use by the insured of an automobile other than that named, it would be excess insurance only. The Oregon policy provided that it would prorate with other valid and collectible insurance, except that as to anyone other than a named insured, if such person had other valid and collectible insurance, then he would not be indemnified under the Oregon policy.

The trial court concluded that Oregon had the primary liability and that U. S. F. & G. was not liable on its policy until the limits of the Oregon policy were reached. Oregon says that the judgment should have been the other way around. It contends that the U. S. F. & G. policy was primary insurance in this stiuation and that Oregon is not liable except as to amounts above the limits of the U. S. F. & G. policy.

It is plain that if the provisions of both policies were given full effect, neither insurer would be liable. The parties admit that such a result would produce an unintended absurdity, and each argues that the court must settle upon some way of determining which policy is primary and which secondary. Unfortunately there is no statute and there appear to be no decisions bearing on the subject in the jurisdiction in which the controversy arose, namely, Oregon.

We have examined cases in other jurisdictions cited by counsel where closely similar or substantially identical disputes between insurance companies have arisen. These decisions point in all directions. One group indicates that the policy...

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