Truck Insurance Exchange v. American Surety Co. of NY

• Decision Date: 13 November 1964
• Docket Number: No. 19137.,19137.
• Citation: 338 F.2d 811
• Parties: TRUCK INSURANCE EXCHANGE, an Interinsurance Exchange, a Corporation, Appellant, v. AMERICAN SURETY COMPANY OF NEW YORK, a Corporation, Appellee. AMERICAN SURETY COMPANY OF NEW YORK, a Corporation, Appellant, v. TRUCK INSURANCE EXCHANGE, an Interinsurance Exchange, a Corporation, Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

338 F.2d 811 (1964)

TRUCK INSURANCE EXCHANGE, an Interinsurance Exchange, a Corporation, Appellant, v. AMERICAN SURETY COMPANY OF NEW YORK, a Corporation, Appellee.

AMERICAN SURETY COMPANY OF NEW YORK, a Corporation, Appellant, v. TRUCK INSURANCE EXCHANGE, an Interinsurance Exchange, a Corporation, Appellee.

No. 19137.

United States Court of Appeals Ninth Circuit.

November 13, 1964.

Clifford Mitchell, Mitchell & Henderson, Eureka, Cal., for appellant-cross appellee American Sur. Co. of N. Y.

Gerald P. Martin, Richard G. Logan, Clark, Heafey & Martin, Oakland, Cal., for appellee-cross appellant Truck Ins. Exchange.

Before BASTIAN, sitting by designation, MERRILL and DUNIWAY, Circuit Judges.

MERRILL, Circuit Judge.

The parties to this diversity action are insurers of persons whom a California state court has adjudged liable for damages in wrongful death resulting from their negligent conduct. The issue here is as to the apportionment of the California court judgment between the insurers. Defense of the state action was tendered to Truck Insurance Exchange and was refused. Defense was then undertaken by American Surety Company. Judgment in the sum of $73,561.56 was paid by American which then brought this action to secure a declaration of the proper apportionment between the insurers.

The accident occurred when a logging trailer owned by one Dixon was being unloaded on premises of the J & W Lumber Company in Orrick, California. During the course of unloading a log fell from the trailer, killing Dixon. The action was brought against J & W Lumber Company and one Wescott, its employee, who had been assisting Dixon in the unloading operation. The complaint charged Wescott with negligence in the unloading of the trailer. It charged J & W with negligence in the maintenance and operation of the log landing and also stated a cause of action against the company for Wescott's negligence on the theory of respondeat superior. The jury brought in a general verdict against both defendants.

At the time of the accident a liability policy issued by American Surety Company was in effect, insuring J & W with a limit of $200,000 for injuries to one person. It did not cover J & W for the acts of its employees. At that time a liability policy issued by Truck Insurance Exchange was in effect, issued to Dixon covering the logging truck and trailer which were in use at the time of his accident, with a limit of $100,000 for injuries to one person. The policy did not by its terms extend coverage to non-owners using the truck and trailer with the owner's permission. Section 16451 of the California Vehicle Code, however, provides such extended coverage by operation of law as to loss arising out of such use.

Section 875 of the California Code of Civil Procedure provides for equal contribution between joint tortfeasors against whom judgment has been rendered.

The District Court concluded that Wescott was insured by Truck Insurance Exchange as a user of the trailer under the extended coverage provided by California Vehicle Code § 16451; that J & W was insured by both companies: by American under the policy issued by that company and, as a user of the trailer, by Truck Insurance. The Court adjudged Truck Insurance liable for Wescott's half of the judgment and that J & W's half should be apportioned between the two companies on the basis of their policy limits, one third to Truck Insurance and two thirds to American, and that American was entitled to contribution from Truck Insurance on this basis. The judgment against Truck Insurance included interest from the date American satisfied Dixon's claim in the wrongful death action until the entry of the judgment below. The sum upon which interest was due consisted of Truck Insurance's pro rata share of the judgment in Dixon's suit and the costs of the defense conducted by American.

Both companies have appealed from that judgment.

Appeal of Truck Insurance Exchange

1. Appellant contends that since its liability arises by operation of law, due to the requirements of § 16451 of the California Vehicle Code, and that since that section only requires coverage to the extent of $10,000, its liability should be limited to that amount.

California law, as evidenced by Globe Indemnity Co. v. Universal Underwriters Ins. Co., 201 Cal.App.2d 9, 20 Cal. Rptr. 73 (Dist.Ct.App.1962), is to the contrary.

2. Appellant contends that § 875 of the California Code of Civil Procedure should not apply in an action between insurance companies to secure proration of their liability for the same loss; that the apportionment in such cases should be on the basis of the respective policy limits.

Section 875, however, implicitly recognizes that the loss suffered by...