Travelers Indem. Co. v. Chappell
| Decision Date | 15 March 1971 |
| Docket Number | No. 46130,46130 |
| Citation | 246 So.2d 498 |
| Parties | TRAVELERS INDEMNITY COMPANY v. Bessie V. CHAPPELL. Bessie V. CHAPPELL v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY. |
| Court | Mississippi Supreme Court |
John R. Poole, and Harry L. Kelley, Jackson, for Bessie V. Chappell.
Daniel, Coker, Horton, Bell & Dukes, Jackson, and L. F. Sams, Jr., Tupelo, for Travelers Indemnity Co.
Lipscomb, Barksdale, Steen & Caraway, Jackson, for State Farm Mut. Automobile Ins. Co.
This is an appeal from the Circuit Court of the First Judicial District of Hinds County, Mississippi, wherein a decision was rendered resulting in a judgment prorating the damages to be paid by two insurance companies, State Farm Mutual Automobile Insurance Company and Travelers Indemnity Company.
The basis of this action arose with the filing of suit by Bessie V. Chappell against Willie D. Lane (Hankins) in the Circuit Court of the First Judicial District of Hinds County, Mississippi, seeking recovery for injuries sustained in an automobile accident. A default judgment was entered against the defendant in the amount of $20,000. Pursuant thereto, a writ of garnishment was issued suggesting that both Travelers Indemnity Company and State Farm Mutual Automobile Insurance Company were liable for payment of the judgment. Issue was joined on contest of the answers filed by both insurance companies and the case was tried on stipulation.
The facts stipulated show that Willie D. Lane owned a certain four-door Mercury automobile and that she took it to Smith Brothers Auto Service of Jackson, Mississippi, to be repaired. Smith Brothers loaned her a certain 1963 Ford automobile owned by them for her use while the Mercury was being repaired. During the time while she had the Ford, and while operating it for her own business and pleasure, she collided with another automobile driven by Bessie V. Chappell. As a result of this accident Bessie V. Chappell was seriously injured. She filed suit and obtained a judgment against Willie D. Lane (sometimes called Willie Lane Hankins) for the sum of $20,000.
The record also discloses that in due time a garnishment was served upon the State Farm Mutual Automobile Insurance Company and upon Travelers Indemnity Company. It was the contention of the plaintiff, Bessie V. Chappell, that both insurance companies were liable to plaintiff for the judgment for the following reasons. State Farm Mutual Automobile Insurance Company was the insurer on a certain insurance policy upon the Mercury automobile and that this policy also insured Willie D. Lane against liability while she was operating a temporary substitute automobile, as was true on the occasion of the accident. The Smith Brothers Auto Service had an insurance policy with Travelers Indemnity Company covering liability for the use, operation and maintenance of an automobile by persons with the permission of the insured. The State Farm Mutual Insurance Company policy (hereafter called State Farm) issued to Willie D. Lane (hereafter called Mrs. Hankins) had a limit of $10,000 liability for any one person injured in an accident. The policy issued to Smith Brothers by Travelers Indemnity Company (hereafter called Travelers) had a basic limit on its policy in the sum of $100,000 liability for any one person injured in an accident.
Each of the insurance companies answered the garnishment and denied liability to the plaintiff upon the ground that each policy contained an 'escape' clause relieving it of liability in the event the insured had 'other insurance' covering the liability arising from injury in the accident. Travelers also contended, as an alternative, that in any event, under the 'excess' clause of its policy, it afforded no more coverage than the financial responsibility limit of Mississippi of $5,000.
The answers were duly contested by the plaintiff, Bessie V. Chappell. The circuit court entered judgments in favor of the plaintiff against both insurance companies as garnishees. He prorated their liability to accord with the respective limits of liability shown in each policy. A judgment for the sum of $18,000 was entered against Travelers Indemnity Company and a judgment of $2,000 was entered against State Farm. All of the parties involved in the action appealed to this Court, including Bessie V. Chappell, so that the issue as to liability under the terms of each policy is properly before this Court. We must, therefore, examine the policies to determine whether or not there is liability attributable to one or both of the insurance policies.
The applicable clause in the State Farm policy is as follows:
owned by any person or organization engaged in the automobile business, SHALL NOT APPLY TO ANY LIABILITY OR LOSS AGAINST WHICH THE INSURED OR THE OWNER OF SUCH VEHICLE HAS OTHER COLLECTIBLE INSURANCE APPLICABLE THERETO, IN WHOLE OR IN PART.
(c) Subject to the foregoing paragraph (b), the insurance with respect to any other temporary substitute automobile, trailer or non-owned automobile shall be excess over other collectible insurance.
Travelers' insurance policy contained the following clause:
LIMITED COVERAGE FOR CERTAIN INSUREDS ENDORSEMENT, A5207
In consideration of the reduced rate of premium made applicable to the Garage Liability Insurance, it is agreed that garage customers are not insureds with respect to the automobile hazard except in accordance with the following additional provisions:
1. If there is other valid and collectible insurance, whether primary, excess or contingent, available to the garage customer and the limits of such insurance are sufficient to pay damages up to the amount of the applicable financial responsibility limit, no damages are collectible under this policy.
2. If there is other valid and collectible insurance available to the garage customer, whether primary, excess or contingent, and the limits of such insurance are insufficient to pay damages up to the amount of the applicable financial responsibility limit, then this insurance shall apply to the excess of damages up to such limit.
3. If there is no other valid and collectible insurance, whether primary, excess or contingent, available to the garage customer, this insurance shall apply but the amount of damages payable under this policy shall not exceed the applicable financial responsibility limit.
State Farm argues that the Travelers policy was 'other collectible insurance applicable thereto in whole or in part' and that the 'escape' clause contained in the Travelers policy is repugnant to the 'escape' clause in the State Farm policy.
Both the Travelers insurance policy and the State Farm policy provide for proration in the event there is other collectible insurance against a loss covered by the policy.
State Farm's policy provides as follows:
OTHER INSURANCE. Under coverages A, B, D, F and G if the insured has other insurance against liability or loss covered by this policy, the company shall not be liable for a greater proportion of such liability or loss than the applicable limit of liability bears to the total applicable limit of liability of all collectible insurance against such liability or loss.
Travelers' policy provides for apportionment as follows:
Other Insurance. The insurance afforded by this policy is primary insurance, except when stated to apply in excess of or contingent upon the absence of other insurance. When this insurance is primary and the insured has other insurance which is stated to be applicable to the loss on an excess or contingent basis, the amount of the company's liability under this policy shall not be reduced by the existence of such other insurance.
When both this insurance and other insurance apply to the loss on the same basis, whether primary, excess or contingent, the company shall not be liable under this policy for a greater proportion of the loss than that stated in the applicable contribution provision below:
Contribution by Limits. If any of such other insurance does not provide for contribution by equal shares, the company shall not be liable for a greater proportion of such loss than the applicable limit of liability under this policy for such loss bears to the total applicable limit of liability of all valid and collectible insurance against such loss.
It is apparent that if the escape clause available to each of the insurers were literally enforced, both insurers would escape payment and the insured would not have any insurance simply because there are two policies of insurance covering the insured's liability. This thesis extended would mean that, although one pays for liability insurance, he would also have to pay for his own risk liability that occurred as the result of an accident simply because it was discovered that some other company also had insurance covering the same accident. Neither of the insurance companies in the present litigation contends that the insured was not covered for loss, but each contends that the other company should pay because there is an escape clause in its policy 'but for other insurance.' Since there is no Mississippi case directly in point, we are required to go outside our own jurisdiction in search of light with which to see and interpret the contractual rights of these adverse claims.
When a party is covered by two insurance companies, and both policies have 'other insurance' clauses, a difficult question often arises as to what effect to give the respective provisions of each. See 7 Am.Jur.2d Automobile Insurance § 202 (1963). The clauses with which an insured may be confronted are usually of three general types as stated in 518 Ins.L.J. 151 at 152 (1966):
(a) '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...
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