State Farm Mut. Auto. Ins. Co. v. Travelers Ins. Co.

• Decision Date: 22 March 1966
• Docket Number: No. 1654,1654
• Parties: STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Plaintiff-Appellee-Appellant, v. The TRAVELERS INSURANCE COMPANY, Defendant-Appellant-Appellee.
• Court: Court of Appeal of Louisiana — District of US

Page 750

184 So.2d 750

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY Plaintiff-Appellee-Appellant, v. The TRAVELERS INSURANCE COMPANY, Defendant-Appellant-Appellee.

No. 1654.

Court of Appeal of Louisiana, Third Circuit.

March 22, 1966.

Rehearings Denied April 19, 1966.

Cavanaugh, Brame, Holt & Woodley, by Edmund E. Woodley, Lake Charles, for defendant-appellant-appellee.

Gist, Gist, Methvin & Trimble, by DeWitt T. Methvin, Jr., Alexandria, for plaintiff-appellee-appellant.

Before TATE, SAVOY and CULPEPPER, JJ.

SAVOY, Judge.

State Farm Mutual Automobile Insurance Company (State Farm) brought suit against The Travelers Insurance Company (Travelers), seeking to recover judgment for $2,109.35 that State Farm paid to third parties on behalf of its automobile liability assured.

Plaintiff's petition alleges that it had issued a policy of liability insurance to Hazel P. Grigsby on a 1959 Chevrolet automobile; that Mrs. Grigsby traded that car in on a new one; that while she was awaiting delivery of the new car, the dealer from whom she made the purchase loaned her a 1963 Ford automobile; that while using the loaned automobile, she was involved in an accident with certain third parties; that in a lawsuit arising therefrom, State Farm, Travelers and Mrs. Grigsby were made parties defendant; that State Farm negotiated a settlement of that suit with the plaintiffs therein, obtaining, in the process, an assignment of plaintiffs' rights as against Travelers and reserving the right to proceed against Travelers for reimbursement or contribution; that Travelers was the liability insurer of the 1963 Ford and is, therefore, solely responsible for the damages sustained in the accident referred to, or alternatively, that it is responsible to State Farm for one-half thereof as a co-excess insurer.

Travelers answered the petition, denying any responsibility whatsoever.

Upon trial on the merits, the lower court gave judgment for State Farm against Travelers for one-half of the amount paid, as aforesaid, by State Farm.

Both companies have appealed from that judgment.

The issues thus presented are whether Travelers should be made responsible for some part of the amount paid by State Farm, and, if so, how much of it.

We have previously considered the first question in the case of Lincombe v. State Farm Mutual Automobile Insurance Company, (La.App., 3 Cir., 1964), 166 So.2d 920. For the sake of clarity, however, we will repeat the pertinent portion of that decision, beginning at page 925, as follows:

'The policy issued by State Farm contains the following provision:

"* * * the insurance with respect to a temporary substitute automobile or non-owned automobile shall be Excess insurance over any other valid and collectible insurance.'

'The insurance policy issued by Travelers, covering the 1963 Ford which was being driven by Mrs. Grigsby, defines an 'Insured' under that policy as any person other than the named insured, while using an automobile covered by the policy with the permission of the named insured,

"but only if No(t) other valid and collectible automobile liability insurance, either primary or excess, with limits of liability at least equal to the minimum limit specified by the financial responsibility law of the state in which the automobile is principally garaged, Is available to such person.'

'Each of these insurers, relying on the above quoted provisions of the policies, denies liability on the ground that the insurance provided by the other is available to Mrs. Grigsby. State Farm contends that it provides only excess coverage over and above that afforded by the Travelers policy. And Travelers contends that it provides no coverage because the insurance afforded by the State Farm policy is available to the insured.

'In our opinion there is no real difference between the quoted provisions of these policies. In each the purpose is to relieve the insurer from all or a portion of the liability which it otherwise would have if there is other valid and collectible insurance of the same type available to the insured. Actually, the insurance afforded by one of these policies is not any more 'available' to the insured than is the insurance provided by the other. We think, therefore, that the 'excess insurance' clause in the State Farm policy and the 'other insurance' or escape clause in the Travelers policy are mutually repugnant to each other, and that insofar as the claim in this case is concerned those provisions of the policies are ineffective. See Nationwide Mutual Ins. Co. v. State Farm Mutual Automobile Ins. Co. (Md. W.Va.) 209 F.Supp. 83; Oregon Auto Ins. Co. v. USF&G (9 Cir.) 195 F.2d 958; Bradshaw v. St. Paul & Marine Insurance Company (Ga.) 226 F.Supp. 569.

'The Travelers policy also provides, with respect to a person occupying Mrs. Grigsby's position in this case, that the following 'limits of liability' are applicable:

"I) The applicable limit of the company's liability shall be the amount by which (1) the applicable minimum limit of liability for bodily injury or property damage specified in the financial responsibility law of the state in which the automobile is principally garaged exceeds (2) the sum of the applicable limits of liability under all the other Valid and collectible insurance available to the insured, and

"II) The insurance under this policy shall not apply to any loss with respect to which The insured has other valid and collectible insurance unless the total amount of the loss exceeds the sum of the limits of liability of all other policies affording such other insurance and the company shall then be liable, subject to clause (1) foregoing, only for the excess.'

'We have already pointed out that because of some mutually repugnant provisions of both insurance contracts, the insurance afforded by the State Farm policy is not any more 'available' to the insured than is the insurance provided by Travelers, and for that reason these conflicting or irreconcilable provisions in both policies were held to be ineffective. For the same reasons we think the above quoted provisions of the Travelers policy are ineffective here insofar as they purport to reduce the liability of Travelers to a figure less than would be applicable if no other insurance at all was available to Mrs. Grigsby. In our opinion the last quoted provisions of the Travelers policy do not have the effect of relieving that insurer from liability in this case.

'We conclude, for the reasons herein set out, that Mrs. Grigsby is an 'insured' under both the State Farm and the Travelers policies, and that under the facts and circumstances presented here both of these companies must be regarded as primary insurers of her in connection with the claim asserted by the original plaintiff in this suit. State Farm, as the assignee of the plaintiff, or as one of the two debtors who has paid the entire debt, is entitled to recover from Travelers, the other debtor, at least a portion of the amount which it was required to pay, provided, of course, that it is established that the insured is or would be liable for the damages allegedly sustained by Lincombe as a result of this accident.'

It has now been established that the insured is liable for the damages sustained inasmuch as, at the time of trial of the instant case, the parties to this appeal stipulated that Mrs. Grigsby was legally responsible to the third parties involved in the accident referred to, and that the amount paid in settlement by State Farm was reasonable and commensurate with their damages.

The second issue for determination, then, is what portion should be assessed against Travelers. We have held in the Lincombe case, supra, that under the facts and circumstances, both companies must be regarded as primary insurers. The rule of apportionment thus applicable is that each company is liable in proportion to its respective policy limits where each policy so provides as in the instant case. Peterson v. Armstrong, (La.App., 3 Cir., 1965), 176 So.2d 453, and cases therein cited.

In the instant case, State Farm's policy limits are $10,000/$20,000; Travelers' limits are $5,000/$10,000. Thus, State Farm should bear twice the loss of Travelers, or conversely, Travelers should bear one-third of the loss rather than one-half.

Accordingly, the judgment of the lower court is amended so as to award judgment in favor of State Farm against Travelers for the sum of $703.12, and as amended, the judgment is affirmed. Costs of this appeal are assessed equally between the parties.

Amended and affirmed.

TATE, J., assigns additional concurring reasons.

TATE, Judge (concurring).

This is a sequel to Lincombe v. State Farm Mutual Automobile Ins. Co., La.App. 3 Cir., 166 So.2d 920. There, in a suit by a party injured by the negligent driving of Mrs. Hazel Grigsby, we held that her driving of the car involved in the accident was insured by both State Farm and Travelers and that Both insurers were primary insurers because the 'excess' or 'escape' clauses of both policies were mutually repugnant. See 7 Am.Jur.2d 'Automobile Insurance', Sections 201, 202, for discussion of clauses.

If so, then our present majority opinion is correct in enforcing the respective pro rata 'other insurance' provisions of both policies, which (after deleting the mutually repugnant 'excess' or 'escape' clauses) read in both policies to identical effect: '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 * * *.'

These pro rata clauses in each policy are not repugnant to one another. We are therefore required to enforce them and allocate the liability in proportion to the policy limits, accepting as correct our original holding that both...