Transamerica Ins. Co. v. Norfolk & Dedham Mut. Fire Ins. Co.

• Decision Date: 10 February 1972
• Citation: 279 N.E.2d 686,361 Mass. 144
• Parties: TRANSAMERICA INSURANCE COMPANY et al. 1 v. NORFOLK AND DEDHAM MUTUAL FIRE INSURANCE COMPANY et al. 2
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 686

279 N.E.2d 686

361 Mass. 144

TRANSAMERICA INSURANCE COMPANY et al. ¹ v. NORFOLK AND DEDHAM MUTUAL FIRE INSURANCE COMPANY et al.²

Supreme Judicial Court of Massachusetts, Suffolk.

Argued Nov. 5, 1971.

Decided Feb. 10, 1972.

Sumner H. Rogers, Boston, for defendant Norfolk and Dedham Mutual Fire Ins. Co.

Timothy H. Donohue, Boston, for plaintiffs.

Before TAURO, C.J., and CUTTER, QUIRICO and BRAUCHER, JJ.

TAURO, Chief Justice.

In this suit in equity for declaratory relief, the defendant Norfolk and Dedham Mutual Fire Insurance Company (Norfolk) appeals from a final decree, declaring that the plaintiff Peirce is an 'insured' under the noncompulsory coverage B of the defendant Wheatley's Massachusetts motor vehicle policy with Norfolk, and further declaring that a similar policy issued by the plaintiff Transamerica Insurance Company (Transamerica) to Peirce provided 'excess' coverage and was thus secondary to Norfolk's 'primary' coverage.

The pertinent facts as agreed to and found by the judge are as follows. On June 20, 1964, Wheatley sustained personal injuries while a passenger in his own car which was being operated with his consent by Peirce. Norfolk learned of the accident upon receipt of an accident report (dated June 26, 1964) from Wheatley's insurance agent on or about June 30, 1964. Wheatley brought suit against Peirce by writ dated September 1, 1964, and returnable the first Monday of October, 1964. Peirce's motor vehicle policy issued by Transamerica had a $100,000/$300,000 coverage. Wheatley had similar coverage with Norfolk. Transamerica mailed the summons served on Peirce to Norfolk. In turn, Norfolk mailed the summons back to Transamerica, together with a letter, dated October 16, 1964, stating its position that Wheatley's Norfolk policy was not valid and collectible insurance as to Peirce; that Norfolk would not enter an appearance in the suit; and that Transamerica might want to enter an appearance in order to avoid a default being entered against Peirce. Transamerica defended the action against Peirce and a verdict was returned for Wheatley in the amount of $18,000. After exceptions taken by Peirce were overruled in the Supreme Judicial Court (Wheatley v. Peirce, 354 Mass. 573, 238 N.E.2d 858), Transamerica satisfied in full the execution issued against Peirce for $22,693.23 and also paid $2,453.67 for legal services.

Norfolk raises three contentions on appeal: first, that the named insured, Wheatley, may not recover from his own insurer; second, that its coverage is not primary in reference to Transamerica's coverage; ³ and third, that Peirce did not comply with 'notice' requirements of its policy.

1. Norfolk relies on MacBey v. Hartford Acc. & Indem. Co., 292 Mass. 105, 197 N.E. 516, and Oliveria v. Preferred Acc. Ins. Co., 312 Mass. 426, 45 N.E.2d 263, to support its contention that there can be no recovery against it by Wheatley, its named insured. In these cases, however, this court was construing the language of coverage A (compulsory motor vehicle insurance) rather than the language of coverage B (noncompulsory insurance) involved in the instant case. ⁴ The language of coverage A follows the statutory language of the Massachusetts compulsory liability insurance statute. G.L. c. 90, § 34A. 'In (the) MacBey . . . (case) we held after careful consideration that a motor vehicle liability policy as defined in . . . (this statute) did not cover liability for bodily injuries suffered by the named assured himself through the operation of the vehicle by another with the named assured's consent. We there pointed out that this statute disclosed an intent to draw a sharp line of distinction between the assured himself on the one hand and 'others' to whom damages are to be paid on the other hand. The assured himself does not belong to the class of the 'others' against whose claims the company has agreed to provide protection.' Oliveria v. Preferred Acc. Ins. Co., supra, at p. 427, 45 N.E.2d at p. 264.

In our view, the words 'by any person' in coverage B indicate an intention on the part of the insurer to provide broader coverage than is available under the more restrictive words 'to others' in coverage A. This construction is in accordance both with the plain and ordinary meaning of the words and with authority in other jurisdictions. Bachman v. Independence Indem. Co., 214 Cal. 529, 6 P.2d 943 (construing words, 'to any person or persons'). Farm Bureau Mut. Ins. Co. v. Waugh, 159 Me. 115, 188 A.2d 889 (construing words, 'by any person'). See Chicago Ins. Co. v. American So. Ins. Co., 115 Ga.App. 799, 800--802, 156 S.E.2d 143, 144 (policy covering " bodily injury,' sustained by any person'), and cases cited therein. Compare Frye v. Theige, 253 Wis. 596, 34 N.W.2d 793 (construing policy with exclusionary clause, 'This policy does not apply . . . to bodily injury to . . . any person who is a named insured'). Furthermore, in contrast to the language of coverage A, the language of coverage B is not required by statute but was selected by the insurer itself. It is well established that, where an insurer drafts the policy, the language is strictly construed and all ambiguities are resolved against the insurer. Edward Rose Co. v. Globe & Rutgers Fire Ins. Co., 262 Mass. 469, 473, 160 N.E. 306; Lustenberger v. Boston Cas. Co., 300 Mass. 130, 134--135, 14 N.E.2d 148; Schroeder v. Federal Ins. Co., 343 Mass. 472, 475, 179 N.E.2d 328. This rule of construction, combined with 'the fact that if coverage in such (a) case were not intended, the insurer could have readily so declared by the addition of an express exclusion in the policy to that effect,' confirms our conclusion that 'by any person' includes the insured. Couch, Insurance (2d ed.) § 45:483. Iowa Mut. Ins. Co. v. Meckna, 180 Neb. 516, 525, 144 N.W.2d 73. See Farm Bureau Mut. Ins. Co. v. Waugh, 159 Me. 115, 119--120, 188 A.2d 889.

2. The trial judge ruled correctly that Norfolk's coverage was primary while Transamerica's was for excess only. We adopt the rule of the majority of jurisdictions. Where, as in the instant case, the driver does not own the vehicle he was driving in the accident, the coverage on the car is primary while the coverage of the driver is excess as between two automobile insurers whose policies contain identical 'other insurance' clauses. ⁵ American Auto. Ins. Co. v. Republic Indem. Co., 52 Cal.2d 507, 511--513, 341 P.2d 675; Chicago Ins. Co. v. American So. Ins. Co., 115 Ga.App. 799, 802--803, 156 S.E.2d 143; Schweisthal v. Standard Mut. Ins. Co., 48 Ill.App.2d 226, 230--231, 198 N.E.2d 860; Maryland Cas. Co. v. American Family Ins. Group, 199 Kan. 373, 384--385, 429 P.2d 931; Zurich Ins. Co. v. Continental Cas. Co., 239 Md. 421, 427--429, 212 A.2d 96; Fidelity & Cas. Co. v. Western Cas. & Sur. Co., 337 S.W.2d 566, 574--577 (Mo.App.). ⁶ Couch, Insurance (2d ed.) § 62:81. Norfolk's reliance on Beattie v. American Auto. Ins. Co., 338 Mass. 526, 156 N.E.2d 49, for a contrary view is misplaced. The Transamerica policy issued to Peirce in the present case provides that 'the insurance with respect to temporary substitute motor vehicles as defined in Condition 5 or other motor vehicles under Insuring Agreement IV shall be excess insurance over any other valid and collectible insurance' (emphasis added). Since Peirce had permission to operate Wheatley's car, the car was a covered motor vehicle under Insuring Agreement IV, ⁷ and the excess insurance provision applies. In the Beattie case, supra, at 530, 156 N.E.2d at 51, however, there was no applicable contractual provision in either policy 'making any relevant coverage under one policy 'excess' to any coverage under the other.' While it is true the policies in the Beattie case contained 'other insurance' clauses such as the one involved here (see p. 528, n. 2, 156 N.E.2d 49), the excess insurance provision in neither clause applied because the vehicle in the case, a truck leased by the named insured and regularly used in his business, was neither a 'temporary...