Travelers Insurance Co. v. Peerless Insurance Co.

• Decision Date: 27 February 1961
• Docket Number: No. 16617.,16617.
• Citation: 287 F.2d 742
• Parties: TRAVELERS INSURANCE COMPANY, a corporation, Appellant, v. PEERLESS INSURANCE COMPANY, a corporation, Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

287 F.2d 742 (1961)

TRAVELERS INSURANCE COMPANY, a corporation, Appellant, v. PEERLESS INSURANCE COMPANY, a corporation, Appellee.

No. 16617.

United States Court of Appeals Ninth Circuit.

February 27, 1961.

Tooze, Kerr & Tooze, Lamar Tooze, Lamar Tooze, Jr., Edwin Peterson, Portland, Ore., for appellant.

Mautz, Souther, Spaulding, Kinsey & Williamson, Wayne A. Williamson, James B. O'Hanlon, A. Allan Franzke, Portland, Ore., for appellee.

Before POPE, HAMLEY and MAGRUDER, Circuit Judges.

POPE, Circuit Judge.

This was an action between two corporations of diverse citizenship the object of which was to procure a declaration of their respective responsibilities under their separate policies insuring against personal injury liability.

The appellant Travelers had issued to St. Johns Motor Express Co., Inc., its so-called comprehensive liability policy which provided bodily injury liability insurance to various persons coming within the definition of the term "insured" as stated in the policy.

The appellee Peerless had issued to Publishers' Paper Company, a corporation, doing business at Oregon City, a similar policy.

One Christian, a truck driver for St. Johns, was making delivery of tanks of chemicals from his St. Johns truck at the loading dock of Publishers' Paper Company at Oregon City. Assisting in the unloading at the time was an employee of Publishers' who was using an overhead traveling crane to lift the tanks from the truck. In the operation of that crane one of the tanks swung against Christian, injuring him. Christian sued Publishers' and its employee for injuries alleged to have been caused by their negligence.

It is conceded that any liability on the part of Publishers' was covered under either policy. Not only would such liability come within the policy of appellee Peerless which had promised to pay on behalf of the insured all sums which the insured should become obligated to pay by reason of liability imposed by law because of bodily injury, but wholly apart from the Peerless liability the Travelers' policy covered this liability also.

Travelers' policy provided that "use of an automobile includes the loading and unloading thereof". It also contained a definition of persons insured under the policy as follows: "With respect to insurance for bodily injury liability * * * the unqualified word `insured' includes the named insured and also includes 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. * * *" An "owned automobile" was defined as an automobile owned by the named insured and "automobile" was defined as including any land motor vehicle or trailer.

The policy contained a further provision which while not at this stage insisted upon as determinative of liability, has another significance which will presently appear. That further provision is found in the statement that: "This policy does not apply: (f) under Coverage A bodily injury to any obligation for which the insured or any carrier as his insurer may be held liable under any workmen's compensation, unemployment compensation or disability benefits law, or under any similar law. (g) under Coverage A, except with respect to liability assumed by the insured under a contract as defined herein, to bodily injury or sickness, disease or death of any employee of the insured arising out of and in the course of his employment by the insured. * * *"

At the trial Travelers argued that clauses (f) and (g), supra, operated to eliminate any coverage on its part for the accident mentioned here since Christian was an employee of the named insured, St. Johns. But such contention has been abandoned and is not made upon this appeal. It therefore appears that the basis of Travelers' responsibility stems from the fact that Publishers' employee in unloading the St. Johns' truck was using the same and since it was thus using it with the permission of the "named insured", Publishers' was included under the above quoted definition of persons insured under the policy.

The court below held not only that Travelers' policy furnished coverage but under the facts of this case that coverage was "primary", and that the policy of Peerless was merely "excess" insurance above all other applicable insurance; Peerless had defended the action brought by Christian against Publishers' in an Oregon court after first tendering the defense to Travelers. It settled the action with Christian by payment to him. The court held that Peerless was now entitled to judgment against Travelers for the amount paid on the settlement together with its costs and attorneys' fees incurred in connection therewith.¹

On this appeal the appellant's first contention is that it did not become liable for the defense of the action by Christian or for settlement of his claim because of a failure to give it notice of the accident as required by its policy. The policy provision here referred to was as follows: "When an accident occurs written notice shall be given by or on behalf of the insured * * * as soon as practicable. Such notice shall contain particulars sufficient to identify the insured and also reasonably obtainable information respecting the time, place and circumstances of the accident, the names and addresses of the injured and of available witnesses." The trial court found that notice to Travelers was given "as soon as practicable", and that the requirements of this condition of the policy had been satisfied.

The evidence shows that shortly after the accident which occurred on June 19, 1957, one Ross, an employee of a concern known as "Industrial Claims Service", which did the adjusting for Peerless, began an investigation of the accident. He knew nothing about the Travelers' policy and it did not then occur to him that there might be coverage in any other policy. Shortly before July 22, 1957, Ross sent a preliminary report of the accident to the underwriters for Peerless in San Francisco. Under date of July 22, 1957, they wrote to Industrial Claims Service acknowledging the report and stating: "We are curious to know if you have considered that this loss may actually be under the automobile policy for the truck owned by the St. Johns Motor Express, under the loading and unloading provisions of the policy." They suggested that Ross' concern "look into this matter very carefully." Ross called St. Johns and inquired of the person in charge there the name of the company which had insured the St. Johns truck and learned that it was Travelers. He also learned the name of the agent who had written the policy for Travelers. He called him inquiring about "the matter of the accident and who I should report it to and about their claims department", and it was suggested that he contact the claims manager of Travelers, one Johnson. Ross called Johnson, gave him a brief summary of what had occurred at the time of the accident, of how it happened, and inquired about the benefits and coverage under their policy for a loading operation. Ross also mentioned that he understood that the insured man was covered under State Workmen's Compensation. He was told by Johnson that Travelers' policy would not apply under the circumstances.

Ross accepted that statement and did nothing more about notifying Travelers and no formal written notice was given to Travelers until the following March 20, 1958. At that time Industrial Claims Service wrote to Travelers giving the circumstances, date and particulars of the accident to Christian and stating their understanding that Travelers' policy covered and would be primary coverage inasmuch as Publishers' was an additional insured under the Travelers' policy. The letter stated that on behalf of Publishers' and Peerless, "we are tendering this case to you". At that time no action had been filed by Christian but the letter informed Travelers the name of the Attorney representing Christian. Christian's action against Publishers' was filed approximately five months later on August 27, 1958.

The record does not show the exact date on which Ross made his inquiry of Johnson about Travelers' coverage. Ross testified that he talked to Johnson about the same time that he had talked to the representative of St. Johns inquiring about the name of the latter's insurance company. Hence it can be inferred that substantially immediately following the inquiry of St. Johns, Ross had his conversation with Mr. Johnson. The representative of St. Johns, with whom Ross talked, was asked when the inquiry was made of him as to whether St. Johns had a policy of insurance, and he replied that he could not give the date other than to say that "It was probably in July or August. It was sometime within the next couple of months after the accident." Two months after the accident would be August 19.

It will be noted that we are considering here two different periods which elapsed. The first is the period from the date of the accident, June 19, to the date of the telephone call. The inquiry is whether at the date of such call, perhaps as late as August 19, so much time had elapsed as to release Travelers for want of notice up to that time. The condition as to notice above quoted states the notice shall be given "as soon as practicable". The parties here concede that the trial court was correct in stating that the requirement meant that notice should be given "within a reasonable time".

In view of the fact that neither Ross, the adjuster, nor Publishers', knew initially that the Travelers' policy existed, and that the first time either of them was alerted to the fact that there might be such a policy was when Ross received from the underwriters at San Francisco their letter of July 22, 1957, it would appear to follow that failure to give notice prior to that time would be altogether excusable and the whole question as to...