Totten v. Underwriters at Lloyd's London Subscribing Certificate E. B. 4102

• Decision Date: 21 December 1959
• Citation: 1 Cal.Rptr. 520,176 Cal.App.2d 440
• Court: California Court of Appeals Court of Appeals
• Parties: Harry TOTTEN and Ethel Totten, husband Harr TOTTEN and Ethel Totten, husband and wife, individually and doing business as Oak Creek Riding Club, Plaintiffs and Appellants, v. UNDERWRITERS AT LLOYD'S LONDON SUBSCRIBING CERTIFICATE E. B. 4102 et al., Defendants and Respondents. Civ. 18419.

Page 520

1 Cal.Rptr. 520

176 Cal.App.2d 440

Harry TOTTEN and Ethel Totten, husband Harr TOTTEN and Ethel Totten, husband and wife, individually and doing business as Oak Creek Riding Club, Plaintiffs and Appellants, v. UNDERWRITERS AT LLOYD'S LONDON SUBSCRIBING CERTIFICATE E. B. 4102 et al., Defendants and Respondents.

Civ. 18419.

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

Dec. 21, 1959.

Hearing Denied Feb. 17, 1960.

Robert H. Kroninger, Oakland, Harold A. Galloway, Oakland, for appellants.

Derby Cook, Quinby & Tweedt, San Francisco, for respondents.

DUNIWAY, Justice.

This is a companion case to Talizin v. Oak Creek Riding Club, 1 Cal.Rptr. 514. Plaintiffs in this case, who will be referred to as 'the Tottens,' are the defendants in that case. They had procured from the defendant insurers a policy of liability insurance, which was in effect at the time of the accident, but the insurers denied that the policy covered the liability asserted in the Talizin case. The Tottens therefore, after judgment went against them in the Talizin case, instituted this action against the insurers.

Two questions are presented: 1. Was the liability asserted against the Tottens in the Talizin case within the coverage of the policy? 2. If not, does the complaint properly plead a cause of action to reform the policy?

The complaint alleges two causes of action. The first asserts liability under the policy as written and the second demands reformation of the policy to include coverage that will bring the accident within the terms of the policy 'if in fact said insurance contract does not contain a provision applying to the incident out of which the loss herein arose.'

The court sustained a demurrer to the complaint, as to the first cause of action, without leave to amend, and as to the second, with leave to amend. The court's order recites that '[c]ounsel for plaintiff * * * stated that the first cause of action alleged the facts as favorably as he believed they could be alleged * * *.' The Tottens then filed a written election 'to stand upon the aforesaid Amended Complaint and each count thereof.'

Under these circumstances, '* * * if the complaint is objectionable upon any ground the judgment of dismissal must be affirmed.' Metzenbaum v. Metzenbaum, 86 Cal.App.2d 750, 752, 195 P.2d 492, 493. See also McClure v. Cerati, 86 Cal.App.2d 74, 82, 194 P.2d 46; Mulligan v. Wilson, 103 Cal.App.2d 664, 668, 229 P.2d 858; Wilson v. Loew's Inc., 142 Cal.App.2d 183, 196, 298 P.2d 152; Ingram v. Glissman, 145 Cal.App.2d 418, 302 P.2d 640.

It appears from the complaint that the Tottens operated a horse stable at the Oakland address described in the policy as 'the premises'; that while the policy was in effect they were the bailees of a horse known as 'Peek-a-Boo'; that the horse was entered in a horse show with the knowledge and consent of the Tottens and that one Talizin was injured by the horse as a result of its misconduct. It also appears that the horse show was held at the St. Francis Riding Club in the City and County of San Francisco, and that the animal was ridden by one Inez Thompson. The complaint does not state that Inez Thompson hired the horse from the Tottens or that 'Peek-a-Boo' was in the Totten's possession as a saddle animal for hire. It is further alleged that Talizin recovered a judgment against the Tottens for damages and costs, that the Tottens demanded that the insurers defend the action, which was refused, and that the liability incurred was within the coverage of the policy but that the insurers refused to pay it.

The insurance policy is attached to the complaint as an exhibit. The named assured are the Tottens 'DBA Oak Creek Riding Club' and the 'type of coverage' is described as 'Owners' Landlords' and Tenants and Teams' Liability.' The policy recites that the agents have procured insurance 'in accordance with the terms and conditions of the form(s) attached.' Attached is a form headed 'Declarations,' item 2 of which described the 'Location of premises' as '2923 Mountain Blvd, Oakland, 2, California'. Item 3 of the Declarations states that 'The insurance afforded is only with respect to such and so many of the following coverages as are indicated by specific premium charge or charges.' This is followed by a set of blank columns headed 'Premises-Operations', under which appears a column headed 'Classification of Operations', in somewhat smaller capitals. In this are typed, with a premium charge opposite each, two items: 'Boarding of Horses' and 'Riding Instruction'. Each is limited to what is called 'Coverage A.' The 'Agreements' at the bottom of the Declarations form define 'Coverage A' in part as follows: '* * * liability imposed * * * by law for damages, * * * sustained by any person * * *, caused by accident and arising out of the hazards defined in the special provisions.' The 'Special Provisions' contain a paragraph 'A' headed 'Definition of Hazards' and reading in part as follows: 'Premises-Operations. (a) The ownership, maintenance or use of the premises * * *; (b) all operations * * * which are necessary or incidental thereto; * * * (d) equipment or other property rented to or located for use of others but not sold.'

Paragraph 'E' of the special provisions is headed 'Premises Defined' and reads 'The unqualified word 'premises' * * * shall mean: (1) the premises designated in the declarations * * *, including buildings and structures thereon and the ways immediately adjoining; (2) other places while used by or on behalf of the named Assured * * *.'

Attached to the policy is a rider which states '* * * it is hereby understood and agreed that this Certificate shall cover Saddle Animals for Hire anytime [sic] hereunder to the contrary notwithstanding. All other terms and conditions remaining unchanged.'

The first question is, does the policy cover the liability incurred? We hold that it does not.

In considering this question we must apply the following rules recently restated by the Supreme Court:

'It is likewise settled that in the construction of a contract, the office of the court is simply to ascertain and declare what, in terms or in substance, is contained therein, and not to insert what has been omitted or omit what has been inserted. Code Civ.Proc., § 1858.

'This rule is applicable to insurance contracts, as was pointed out by Mr. Justice Spence, speaking for this court, in New York Life Ins. Co. v. Hollender 38 Cal.2d 73, 81 , 237 P.2d 510, 514, where he stated: 'In construing life insurance policies as in the construction of other contracts, the entire contract is to be construed together for the purpose of giving force and effect to each clause. (Citations.) While it is settled law that in case of doubt the provisions of the insurance contract will be construed most strongly against the insurer (citations), the rule is equally well established that where the terms of the policy are plain and explicit, the court will indulge in no forced construction so as to cast a liability upon the insurance company which it has not assumed (citations).' (Italics added.)' Jensen v. Traders & General Ins. Co., 52 Cal.2d 786, 345 P.2d 1, 3.

It is our opinion that the liability here involved does not fall within the plain and explicit terms of the policy. It is not an 'all-risk' policy but is limited by its terms to three types of operations at the Oakland premises. These types of operations are: boarding of horses, riding instruction and saddle animals for hire, including operations necessary or incidental to such operations in the ownership, maintenance or use of the premises. At the oral argument, counsel for the Tottens urged that the entry of the horse in the exhibition at the St. Francis Riding Club was a part of a course of riding instruction to the rider, Inez Thompson. However, the complaint contains no allegation that riding instruction was involved, nor does it allege that the animal in question was a saddle animal for hire or had been hired from the plaintiffs when the accident occurred. According to the allegations of the complaint, the horse was bailed to the Tottens, and being boarded at the premises. However, the accident cannot fairly be said to arise out of the boarding of the horse at the premises, or out of an operation incidental to such use of the premises. The Tottens removed the horse from the premises and exhibited it at a horse show in another location in a different city, allowing a third person to ride it. It can hardly be said that the St. Francis Riding Club was being 'used' by or on behalf of the Tottens. The jumping exhibition by Inez Thompson, at that place, is not a risk which the insurers undertook to cover.

The demurrer raises, as a ground of uncertainty, unintelligibility, and ambiguity, that it cannot be ascertained from the complaint 'what peril or risk set forth in said policy insures against plaintiffs' alleged liability.' As has been shown, the only defined risk that might be claimed to apply, under the allegations of the complaint, is 'boarding of horses.' This, by the terms of the policy, is a risk assumed at the Oakland premises. The complaint does not allege that entering a boarded horse in a jumping exhibition in another city is necessary or incidental to the use of the Oakland premises as a part of one of the three covered operations, or that such an activity constitutes a use, by the Tottens, of the St. Francis Riding Club as a part of one of those operations. The court cannot take judicial notice that such an activity is necessary or incidental to the conduct of one of the covered operations in a riding club in Oakland. 18 Cal.Jur.2d, Evidence, § 19 at pp. 441-442.

The complaint does allege that the horse was entered in the San Francisco exhibition in the course of the Tottens' business, and counsel asserts that this is sufficient. The difficulty with this argument is that the business is described in the complaint as...