Pacific Employers Ins. Co. v. American Mut. Liability Ins. Co.

• Decision Date: 29 March 1966
• Citation: 50 Cal.Rptr. 414
• Court: California Court of Appeals
• Parties: PACIFIC EMPLOYERS INSURANCE COMPANY, a corporation, Plaintiff, Appellant and Respondent, v. AMERICAN MUTUAL LIABILITY INSURANCE COMPANY, a corporation, Defendant, Respondent and Appellant, Maryland Casualty Company, a corporation, Libby, McNeill & Libby, Inc., a corporation, and Underwriters at Lloyd's, London, Defendants and Respondents. Civ. 21756.

Page 414

50 Cal.Rptr. 414

PACIFIC EMPLOYERS INSURANCE COMPANY, a corporation, Plaintiff, Appellant and Respondent, v. AMERICAN MUTUAL LIABILITY INSURANCE COMPANY, a corporation, Defendant, Respondent and Appellant Maryland Casualty Company, a corporation, Libby, McNeill & Libby, Inc., a corporation, and Underwriters at Lloyd's, London, Defendants and Respondents.

Civ. 21756.

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

March 29, 1966.

For Opinion on Hearing, see 54 Cal.Rptr. 385, 419 P.2d 641.

Mento, Buchler & Littlefield, George K. Littlefield, Theodore H. Morrison, Sacramento, for appellant, Pacific Employers Ins. Co.

Hersh & Hadfield, James D. Hadfield, San Francisco, Joseph F. Rankin, Oakland, for appellant, American Mut. Liability Ins. Co., Richard G. Logan, Oakland, of counsel.

Johnson, Davies & Greve, by Claire H. Greve, Sacramento, for respondents Maryland Cas. Co. and Libby, McNeill & Libby.

Sedgwick, Detert, Moran & Arnold, John S. Howell, San Francisco, for respondent, Underwriters at Lloyd's, London.

SIMS, Justice.

Plaintiff Pacific Employers Insurance Company (Pacific) and defendant American Mutual Liability Insurance Company (American) have each appealed from a judgment in an action for declaratory relief which was brought to determine the respective rights and obligations of those parties and of the defendants and respondents Maryland Casualty Company (Maryland) and Underwriters at Lloyd's, London (Lloyd's) in regard to a claim for personal injuries arising out of an accident in which named insureds of each insurer were allegedly concerned.

The case was submitted upon an agreed statement of facts and the trial court made its findings of fact and conclusions of law from which the following uncontroverted matters appear: On November 12, 1959, Pacific's named insured, a trucker, sent a truck and two trailers with two employees to the plant of Maryland's ¹ named insured so that the trailers could be loaded with case goods. Two employees of the plant commenced and conducted the loading operation by moving cases of goods which were inside the building standing on pallets onto the trailers with forklifts which were leased by the plant from American's named insured. During the operation severe injuries were received by one of the trucker's employees. He thereafter filed suit against the plant owner and one of its employees in which he alleged that the latter negligently operated one of the forklifts, causing it to become entangled in a rope which he was using to tie down a portion of the load, and that he was thereby thrown to the floor and received the injuries of which he complained. ²

The remaining findings of fact and conclusions of law relate to the coverage and priority of obligation of the respective insurers, and must be reviewed herein in connection with the attack on the judgment. It provides that the policies of American and Pacific are each primary insurance to the extent of the limits of each policy ($100,000 each for injuries to one person) and orders them to pay any loss on an equal basis; and that Maryland's and the attendant Lloyd's insurance are excess and only payable after the total insurance of Pacific and American is exhausted.

American contends that the provisions of its policy do not in fact or in law impose any obligation on it to defend or pay the claims made against the plant owner and its employee; and that, in any event, the coverage of Maryland is not excess.

Pacific, while resisting American's attempt to escape liability, for its part seeks a determination that its coverage is excess over American and Maryland, or that, in any event, the loss should be prorated between all three carriers.

The relevant policy provisions and such additional findings as bear on their interpretation are set forth below.

The provisions of the American policy do not include coverage of the claim against the plant owner and its employee by their express terms

American's policy provides, insofar as is material herein, as follows: 'Comprehensive General Liability Policy

'American * * * agrees with the insured, named in the declarations made a part hereof [the owner and lessor of the forklift], * * * and subject to the limits of liability, exclusions, conditions and other terms of this policy:

'INSURING AGREEMENTS

'I Coverage A--Bodily Injury Liability

'To pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of bodily injury [changed to 'personal injury' by endorsement], * * * sustained by any person and caused by accident.'

* * *

* * *

'III Definition of Insured

'The unqualified word 'insured' includes the named insured and also includes any executive officer, director or stockholder thereof while acting within the scope of his duties as such and any organization or proprietor with respect to real estate management for the named insured. If the named insured is a partnership, the unqualified word 'insured' also includes any partner therein but only with respect to his liability as such.'

No definition pertaining to additional insureds, and no provisions which expressly or impliedly refer to lessees or operators of leased equipment or permissive users of owned equipment has been pointed out by Pacific or Maryland, or found on independent review. It is concluded that the findings of the trial court insofar as they limply that American expressly agreed to protect the plant owner and its employee are in error.

The provisions of the American policy do not include coverage of the claims against the plant owner and its employee by operation of law

The trial court also found: 'that at the time in question the said forklift was an automobile and was insured as such under the * * * American * * * policy; that at the time in question [the plant owner and its employee] were using the said forklift with the permission and consent of [the owner-lessor]; that [they] were not employees of [the owner-lessor], but were using the forklift with the permission and consent of [the owner-lessor] as independent contractors as defined and used in American['s] policy; that [the plant owner and its employee] are insureds under said policy by operation of law; * * * that the liability, if any, arises out of the operation and use of said forklift--automobile owned by [lessor]. That any provisions in American['s] policy which purport to exclude coverage to [plant owner and its employee] is void and against public policy of this State; * * *' The last sentence was also incorporated in the conclusions of law.

The foregoing is predicated upon the law of this state as declared in Wildman v. Government Employees' Ins. Co. (1957) 48 Cal.2d 31, 307 P.2d 359. There the court struck down an endorsement that attempted to limit general provisions of the policy, which covered use by the named insureds an anyone with their consent, to use by the named insureds and members of their immediate family. The opinion concluded: 'Inasmuch as sections 402 and 415 of the Vehicle Code set forth the public policy of this state such laws must be considered a part of every policy of liability insurance even though the policy itself does not specifically make such laws a part thereof. We have here, however, a policy containing a clause which provides that the insurance afforded by the policy shall comply with the provisions of the motor vehicle financial responsibility law 'of any state * * *' wherein the liability arising out of the ownership, maintenance or use of the automobile may occur. We conclude that the restrictive endorsement hereinbefore set forth and discussed is ambiguous; that the construction thereof urged by defendant insurance carrier would be violative of the sections of the Vehicle Code heretofore discussed; and that said sections were intended by the Legislature to be, and are, a part of every policy of motor vehicle liability insurance issued by an insurance carrier authorized to do business in this state.' (48 Cal.2d 31 at p. 40, 307 P.2d 359 at p. 364; and see cases collected: Interinsurance Exchange etc. v. Ohio Cas. Ins. Co. (1962) 58 Cal.2d 142, 150, 23 Cal.Rptr. 592, 373 P.2d 640 and in Bohrn v. State Farm etc. Ins. Co. (1964) 226 Cal.App.2d 497, 501-504, 38 Cal.Rptr. 77; and also Clark v. Universal Underwriters Ins. Co. (1965) 233 Cal.App.2d 746, 748, 43 Cal.Rptr. 822; Pacific Indem. Co. v. Universal etc. Ins. Co. (1965) 232 Cal.App.2d 541, 543, 43 Cal.Rptr. 26.) ³

An examination of Wildman and the cases applying it reflects that in all cases the policy unquestionably covered the vehicle involved, and the issue resolved itself into whether restrictions relating to the person who could operate the vehicle or relating to the manner of its use would be enforced. The basic issue herein is whether or not the forklift involved in the accident was insured by American's policy. (See Pacific Indemnity Co. v. Liberty Mutual Ins. Co. (1966) 239 A.C.A. 365, 367, 48 Cal.Rptr. 667 and passim.)

The pertinent provisions, in addition to those set forth above, read as follows:

'EXCLUSIONS

'This policy does not apply:

* * *

* * *

'(c) except with respect to operations performed by independent contractors and except with respect to liability assumed by the insured under a contract as defined herein, to the ownership, maintenance, operation, use, loading or unloading of * * automobiles if the accident occurs away from such premises ['owned by, rented to or controlled by the named insured'] or the ways immediately adjoining, * * *

'CONDITIONS

'3. Definitions

* * *

* * *

'(b) Automobile. The word 'automobile' means a land motor vehicle, trailer or semitrailer, provided: [There follows other provisions which are not material here, because, it is agreed by all parties and was found by the court that the forklift in question was an automobile as defined in American's policy. (Cf. Pacific Indemnity Co. v. Liberty Mutual Ins....