Transport Ins. Co. v. Employers Cas. Co.
| Decision Date | 30 July 1971 |
| Docket Number | No. 17667,17667 |
| Parties | TRANSPORT INSURANCE COMPANY, Appellant, v. EMPLOYERS CASUALTY COMPANY, Appellee. |
| Court | Texas Court of Appeals |
Jack Pew, Jr., Jackson, Walker, Winstead, Cantwell & Miller, Dallas, for appellant.
James H. Holmes, III, Burford, Ryburn & Ford, Dallas, for appellee .
Employers Casualty Company issued its liability policy to Prior Products, Inc., covering its vehicles, with liability limits of $100,000/$300,000. Transport Insurance Company issued its liability policy to Hunsaker Truck Lease, Inc., with liability limits of $300,000/$500,000. Both policies contained identical 'Other Insurance' clauses providing for a pro rata division of losses.
By written agreement, Hunsaker leased to Prior Products a truck. The leased truck, while being driven by a Prior Products employee, was involved in a collision with an automobile in Indiana and as a result Mr. and Mrs. Peter Siegel suffered personal injuries. At the time of the accident the leased truck was being used to pull a trailer which was owned by Prior Products. The Siegels filed suit against Prior Products, Inc. to recover damages. The defense of the suit was tendered to Transport on the theory that Prior Products was an additional insured under the policy issued by Transport to Hunsaker. Transport denied liability under its policy and Employers Casualty assumed the defense of the suit. Thereafter Employers paid the Siegels $6,750, together with accrued attorney's fees of $607.50, or a total of $7,357.50. It is agreed that such sum was a reasonable settlement and that Employers consummated the same in good faith.
Employers filed suit against Transport seeking pro rata contribution and the trial court granted summary judgment in favor of Employers for five-eighths of the settlement, or $4,598.44. Transport appealed and the Court of Civil Appeals at Waco reversed and remanded the judgment of the trial court holding, as a matter of law under authority of Traders & General Insurance Co. v. Hicks Rubber Co., 140 Tex. 586, 169 S.W.2d 142 (1943), that there was no right of contribution between two insurance companies subject to pro rata liability. Transport Insurance Co. v. Employers Casualty Co., 434 S.W.2d 704 (Tex.Civ.App., Waco 1968). The Supreme Court granted a writ of error and by a divided court affirmed the judgment of the Court of Civil Appeals. Employers Casualty Co. v. Transport Insurance Co., 444 S.W.2d 606 (Tex.Sup.1969). After upholding its decision in Hicks Rubber Company, and thereby denying recovery for contribution, the Supreme Court went on to say that Employers' remedy would lie in a suit asserting its right to payment through contractual, conventional or equitable subrogation.
Following the suggestion of the Supreme Court, Employers returned to the trial court and amended its pleadings wherein it sought a declaratory judgment decreeing that it was subrogated to the rights of Prior Products, which it alleged was an additional insured under the liability policy issued by Transport to Hunsaker. Transport amended its answer and alleged that by virtue of the express exclusionary provisions of its policy Prior Products did not become an additional insured and therefore there was no liability. Transport further pled that the lease agreement between Hunsaker and Prior Products expressly provided that Prior Products would not be covered by any liability insurance carried by Hunsaker and that since Employers was suing only a subrogee of Prior Products it could have no greater right than Prior Products. Both Employers and Transport filed motions for summary judgment supported by affidavits, depositions, admissions, and the opinions in the prior cases. The trial court sustained the motion filed by Employers and denied the motion filed by Transport. Judgment was thereafter rendered in favor of Employers against Transport in the sum of $4,598.44 representing five-eighths pro rata share of the settlement with the Siegels.
Seeking reversal and rendition of the trial court's judgment Transport, in two points of error, asserts that the record demonstrates, as a matter of law, that the policy issued by Transport did not afford coverage to Prior Products for the accident involving the Siegels and therefore Employers could not recover anything as subrogee of Prior Products. Transport argues that the trial court should have sustained its motion for summary judgment and rendered a take nothing judgment against Employers.
The crucial question presented, therefore, is whether the liability policy issued by Transport to Hunsaker extended coverage to Prior Products. Proper resolution of this question requires a careful study and analysis of not only the basic provisions contained in the policy itself but also of certain endorsements appearing thereon.
The basic policy issued by Transport to Hunsaker appears to be the standard Texas automobile public liability policy which affords the insured liability protection for bodily injury in Coverage A, and property damage protection in Coverage B. Paragraph III of the insuring agreements contains 'Definitions of Insured' and provides in (2) that the unqualified word 'insured' includes the named insured and 'under coverages A and B, any person while using an owned automobile or a hired automobile and any person or organization legally responsible for the use thereof, provided the actual use of the automobile is by the named insured or with his permission * * *.' Immediately following this we find the following exclusion:
'* * * The insurance with respect to any person or organization other than the named insured does not apply under division (2) of this insuring agreement:
(a) With respect to an automobile while used with any trailer owned or hired by the insured and not covered by like insurance in the company * * *.
(b) To any person or organization, or to any agent or employee thereof, operating an automobile sales agency, repair shop, service station, storage garage or public parking place, * * *.'
Subsequently there was added to and attached to the policy Emdorsement No. 80 which applied to '(Garage Premises--operations--Automobiles)' and which had the effect of abrogating the exclusion for garage employees appearing in Paragraph III(2)(b) set out above. This endorsement contained the specific exclusion for 'any automobile while rented to others by the named insured * * *.'
On the same date Endorsement No. 81 entitled 'DRIVERLESS CARS--GROSS RECEIPTS OR MILEAGE BASIS-COMMERCIAL AUTOMOBILES' was added to the policy. The material parts of this endorsement are as follows:
'It is agreed that such insurance as is afforded by the policy for Bodily Injury Liability, * * * applies with respect to all automobiles, including trailers, used for the purposes stated as applicable thereto in the schedule forming a part hereof, subject to the following provisions:
1. Definition of Insured. Subject otherwise to the provisions of the Definition of Insured agreement of the policy:
(a) the insurance with respect to any driverless car applies to the named insured and rentee;
7. Definitions. 'Driverless Car' means an automobile of the commercial type including trailers and semitrailers while rented without the named insured or a chauffeur of the named insured in attendance.'
The 'Schedule' appears at the bottom of the endorsement and under the column labeled 'Purposes of Use' there appears the word 'Commercial'.
The basic policy contains the usual pro rata clause and a provision for subrogation rights to the company.
The identical provisions with reference to pro rata payment and subrogation were contained in the policy issued by Employers Casualty Company.
Employers takes the position here, as it did in the trial court, that the provisions of the policy issued by Transport to Hunsaker, and especially Endorsement 81 thereon, extended public liability coverage to Prior Products, the...
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