Truck Ins. Exchange v. Maryland Cas. Co.

• Decision Date: 08 April 1969
• Docket Number: No. 53414,53414
• Parties: TRUCK INSURANCE EXCHANGE, Appellee, v. MARYLAND CASUALTY COMPANY, Appellant.
• Court: Iowa Supreme Court

Page 163

167 N.W.2d 163

TRUCK INSURANCE EXCHANGE, Appellee, v. MARYLAND CASUALTY COMPANY, Appellant.

No. 53414.

Supreme Court of Iowa.

April 8, 1969.

Jones, Hoffmann & Davison, by Paul Moser, Jr., Des Moines, for appellant.

Patterson, Lorentzen, Duffield, Timmons, Wright & Irish, by Roy Irish, Des Moines, for appellee.

STUART, Justice.

Truck Insurance Exchange brought this action for contribution from Maryland Casualty Company claiming both companies provided 'excess' insurance coverage for the loss in question and were liable in proportion to their limits. The trial court allowed contribution. Defendant appealed. We affirm.

Brown Truck Leasing Corporation, hereinafter called Brown, leased a fleet of trucks to Rack Service, Inc., hereinafter called Rack. One of these trucks driven by Dwight Proudfit, an employee of Rack, collided with a car owned and driven by Maxine Krebs. Truck Insurance Exchange insured Brown, the lessor, and Rack, the lessee. Maryland Casualty Company insured Rack and Proudfit, the driver.

The dispute between the insurance companies as to coverage and the liability for the cost of defense was deferred until the claims of Mrs. Krebs and her husband were determined. The total cost of disposing of all claims including court costs and attorneys fees in the amount of $15,548.88 was paid by plaintiff who brought this action for contribution from defendant.

The trial court found each insurance policy provided for 'excess' insurance and, as their coverages were identical, allowed plaintiff contribution equal to one-half of the cost of disposing of the claims.

I. It is essential to a correct understanding of this opinion that the nature of this action be kept in mind. It is Not based on subrogation. The insurance carrier is not seeking contribution or indemnity through some rights his insured might have had against defendant's insured. It is an action for contribution based upon provisions in the respective policies of insurance which create a question as to which company should stand the loss. If it were not for the other, the policy of each company would cover the loss.

Such conflicts over the coverage furnished under different policies are not unusual. As a general rule, when two insurance companies provide insurance on the same loss, the question of their respective insurance obligations is determined by a construction of the language used by the respective insurers and not upon any arbitrary rule or circumstance. Motor Vehicle Casualty Co. v. LeMars Mutual Ins. Co., 254 Iowa 68, 73, 116 N.W.2d 434, 437; Travelers Indemnity Co. v. National Indemnity Co., 8 Cir., 292 F.2d 214, 222; Continental Casualty Co. v. American Fidelity & Cas. Co., 7 Cir., 275 F.2d 381, 384; McFarland v. Chicago Express, Inc., 7 Cir., 200 F.2d 5, 7; Woodrich Construction Co. v. Indemnity Ins. Co., 252 Minn. 86, 89 N.W.2d 412, 420--421; Cosmopolitan Mut. Ins. Co. v. Continental Cas. Co., 28 N.J. 554, 147 A.2d 529, 69 A.L.R.2d 1115, 1119; Continental Casualty Co. v. Buckeye Union Cas. Co., Ohio Com.Pl., 143 N.E.2d 169, 174; Farmers Insurance Exchange v. Fidelity & Cas. Co. of N.Y., Wyo., 374 P.2d 754, 755.

II. The provision in plaintiff's policy concerning coverage for personal injury and property damages provided: 'The insurance afforded by this policy shall not apply to any loss covered by any other insurance, but shall be excess insurance over such other insurance.'

Defendant's policy provided: 'This insurance shall be excess insurance over any other valid and collectible insurance for bodily injury liability or property injury liability and for automobile medical payments.'

Defendant does not disagree with the trial court's finding that both policies provide 'excess' insurance. Although we have settled the responsibility in conflicts between 'pro rata' and 'excess' clauses, Motor Vehicle Cas. Co. v. LeMars Mutual Ins. Co., supra, and 'pro rata' and 'excess-escape' clauses, Burcham v. Farmers Insurance Exchange, 255 Iowa 69, 121 N.W.2d 500, this is a case of first impression involving two simple 'excess' insurance clauses.

Defendant urges us to adopt the rule in such case that owner-lessors provide primary coverage and lessee-operators provide excess coverage. For support it cites: Pacific National Insurance Co. v. Transport Insurance Co. 8 Cir., 341 F.2d 514; Travelers Insurance Co. v. Employers' Liability Assurance Corp., D.C., 242 F.Supp. 627; Carolina Casualty Ins. Co. v. Pennsylvania Threshermen & Farmers' Mut. Cas. Ins. Co., D.C., 216 F.Supp. 325; Farm Bureau Mutual Auto Ins. Co. v. Preferred Accident Ins. Co., D.C., 78 F.Supp. 561.

Pacific National Insurance Co. v. Transport Insurance Co., supra, is not in point. It allows the insurer of lessee, who was vicariously liable, indemnity from the insurer of the driver who was the actual tort-feasor. The fact the insurer also covered the lessor, driver's employer, was not determinative.

We prefer and adopt the majority rule which renders the companies liable on a pro rata share of the judgment of costs and expenses. 7 Am.Jur.2d 545, Automobile Insurance § 202; Anno.: 69 A.L.R.2d 1122. The cases supporting such rule and the reasons therefor are well stated in Cosmopolitan Mut. Ins. Co. v. Continental Cas. Co., 28 N.J. 554, 147 A.2d 529, 534, 69 A.L.R.2d 1115, 1121:

'As applied to the facts of the present case, both policies provide that they shall be 'excess' insurance. However, it is obvious that there can be no 'excess' insurance in the absence of 'primary' insurance. Since neither policy by its terms is a policy of 'primary' insurance neither can operate as a policy of 'excess' insurance. The excess insurance provisions are mutually repugnant, and as against each other are impossible of accomplishment. Each provision becomes inoperative in the same manner that such a provision is inoperative if there is no other insurance available. Therefore, the general coverage of each policy applies and each company is obligated to share in the cost of the settlement and expenses. We think that such a conclusion affords the only rational solution of the present dispute.'

Most cases prorate the liability on the amount of insurance coverage. Anno.: 69 A.L.R.2d 1122, 1124. There is logical authority holding otherwise. Cosmopolitan Mut. Ins. Co. v. Continental Cas. Co., supra, 28 N.J. 554, 147 A.2d 529, 69 A.L.R.2d at 1122. We need not resolve this question here as the coverage on the two policies is identical...