U.S. Fire Ins. Co. v. Transport Indem. Co.

• Decision Date: 08 August 1966
• Citation: 52 Cal.Rptr. 757,244 Cal.App.2d 110
• Court: California Court of Appeals Court of Appeals
• Parties: UNITED STATES FIRE INSURANCE COMPANY, Plaintiff and Respondent, v. TRANSPORT INDEMNITY COMPANY, Defendant and Appellant. Civ. 639.

Page 757

52 Cal.Rptr. 757

244 Cal.App.2d 110

UNITED STATES FIRE INSURANCE COMPANY, Plaintiff and Respondent, v. TRANSPORT INDEMNITY COMPANY, Defendant and Appellant.

Civ. 639.

District Court of Appeal, Fifth District,

California.

Aug. 8, 1966.

[244 Cal.App.2d 112] Cardozo, Trimbur & Nickerson, A. A. Cardozo, Jr., and Paul L. Martelli, Modesto, for appellant.

Bradford, Cross, Dahl & Hefner, and Cavan Hardy, Sacramento, for respondent.

OPINION

CONLEY, Presiding Justice.

This judgment in declaratory relief determines which of two insurance companies is ultimately liable to a workman injured by the negligence of other workmen when removing telephone poles from a truck.

THE FACTS

Arthur C. Walker was employed as a driver by Speedy Transport, Inc., a corporate carrier. The vehicle was employed in moving a load of telephone poles from Stockton to Sacramento by contract for Pacific Telephone & Telegraph Company. Arrangements had been made with the McLaughlin Draying Company to unload the poles at Sacramento, and that organization sent two of its employees, Charles W. Rose and Edward Geigle, to do the required work. Concededly, they acted negligently and, as a proximate result, Mr. Walker was injured. He filed a suit against various defendants, including the McLaughlin Draying Company, which was charged with having so 'negligently unloaded' the truck as to cause the poles to strike and injure Walker. The list of parties in the complaint includes two fictitious defendants employed by McLaughlin Draying Company; it is conceded that Messrs. Rose and Geigle were the persons referred to.

At the time of the accident, three policies of insurance were outstanding. Two of them had been issued by Transport Indemnity Company to Speedy Transport, Inc.; they covered that carrier for liability arising out of the ownership, maintenance, or use of motor vehicles owned by it; by operation of law, the primary policy in the amount of $15,000 also extended coverage to anyone Using such a vehicle with the permission of the owner and to any organization legally liable for such use. (Wildman v. Government Employees' Ins. Co., 48 Cal.2d 31, 307 P.2d 359.) The second policy issued by Transport was an excess policy with a maximum limit of $285,000, which by its terms would not take effect, however, until exhaustion of any existing policy for primary liability. Under our view of the applicable law and the facts, the second, or excess, policy of Transport Indemnity Company is not of any moment in this case, and will not be mentioned again in this opinion.

The third policy was issued by the plaintiff, United States Fire Insurance Company, to McLaughlin Draying Company and covered, generally, that company's liability for negligence, including negligent acts of its employees. When the Walker complaint and summons were served upon McLaughlin Draying Company, that organization referred the case to the United States Fire Insurance Company and it, in turn, immediately notified Transport Indemnity Company of the filing of the suit and requested that company to defend the action pursuant to its duty under the policy first above described. Transport Indemnity Company responded promptly with a complete denial of coverage.

United States Fire Insurance Company, thereupon filed the instant action against Transport Indemnity Company for declaratory relief. In due course, after the denial of coverage by Transport Indemnity Company, United States Fire Insurance Company initiated and consummated settlement of the Walker case, paying in compromise the sum of $11,250 to Mr. Walker; it expended besides the sums of $950, for the services of its attorneys in defending the Walker action and $278.07 for miscellaneous costs. The judgment in the present case is in favor of plaintiff and against defendant for the total of those sums, pursuant to the prayer of an amended and supplemental complaint reciting details of the settlement.

THE DUTY OF PAYING THE DAMAGES OF A TRUCK DRIVER INJURED THROUGH THE NEGLIGENT USE OF THE TRUCK BY PERSONS INSURED RESTS UPON THE INSURANCE COMPANY WHICH ISSUED THE PUBLIC LIABILITY POLICY ON THE TRUCK.

The leading case of Pleasant Valley, etc., Assn. v. Cal-Farm Ins. Co., 142 Cal.App.2d 126, 298 P.2d 109, is directly in point; it holds that the burden of payment of damages to a person injured by the negligence of an insured person using the truck falls upon the insurance company which issued the public liability policy on the truck.

Were Charles W. Rose and Edward Geigle additional insureds under that policy? By reason of the holding in Wildman v. Government Employees' Ins. Co., supra, 48 Cal.2d 31, 307 P.2d 359, the answer is clearly, 'Yes.' While the primary insurance policy issued by Transport Indemnity Company, purports to limit coverage to persons using only passenger-type vehicles, the Wildman case unquestionably extends the coverage to McLaughlin Draying Company and its employees.

The Pleasant Valley case, supra, first discussed and disposed of the basic problem in this state. There a truck driver drove a truck loaded with lima beans to a warehouse in Oxnard intending to unload the beans into the warehouse pits; he backed the truck onto a platform so that its front end could be sufficiently elevated to allow the beans to slide from the rear of the vehicle into the bin provided to receive them. The truck driver had been directed to the platform by an employee of the Pleasant Valley Lima Bean Growers and Warehouse Association, who had already placed two wooden blocks in front of two stationary blocks attached to the platform so that the truck's rear wheels would rest against the wooden blocks and allow the front of the truck to be elevated in such manner that the overhanging rear-end would be directly over the pit. The driver backed the truck into position, turned off the motor and got down from the vehicle, at which time, the employee of Pleasant Valley, who was operating the machinery, raised the front end of the platform, and most of the load of beans slid into the pit. Some of them, however, were not dislodged, and the truck driver, standing at the rear of the truck with one leg over a pipe railing at the edge of the pit tried to sweep out the remainder of the load. At that moment, the truck moved backwards, the rear wheels mounted the wooden blocks, the driver was pinned between the back of the truck and the concrete wall and he was severely injured. Cal-Farm Insurance Company had issued a policy to Brucker, the owner of the truck, and United States Fidelity and Guaranty Company a policy covering Pleasant Valley Lima Bean Growers warehouse operations. in a suit for declaratory relief, Cal-Farm Insurance Company was required to defend, on behalf of plaintiff, pleasant Valley Lima Bean Growers and its employee, an action for personal injuries brought by the truck driver and to pay, within its policy limits, any judgment for the truck driver; the court held that the defendant's obligations under its policy to Brucker, who owned the truck, were primary to the obligations of United States Fidelity and Guaranty Company, which had issued a comprehensive general liability insurance policy to plaintiff. The truck policy extended coverage to the negligent employee as a permissive user; the warehouse policy did not cover the negligent employee. Since the warehouse company was entitled to indemnity from its negligent employee, so, too, was its liability carrier by virtue of the doctrine of subrogation, and, as the negligent warehouse employee was covered only by the truck policy, that company had to bear the entire loss.

The principles of the Pleasant Valley case, supra, 142 Cal.App.2d 126, 298 P.2d 109, have since been consistently upheld in California. (Entz v. Fidelity & Cas. Co. of New York, 64 A.C. 393, 50 Cal.Rptr. 190, 412 P.2d 382.)

In the instant case, Transport Indemnity policy, issued to Speedy Transport, Inc., protected that company for liability arising out of the ownership, maintenance, or use of motor vehicles owned by it. The occupation of Speedy Transport Inc., the named insured, is described in the policy as 'motor carrier for hire,' and the insuring agreement in the special endorsement attached to the policy reads:

'To pay on behalf of the insured all damages which the insured shall become legally obligated to pay, including contractual obligations for damages which arise out of the occupation of the named insured as stated in the Declarations as a result of personal injury, bodily injury, sickness, disease or death to persons and for loss of or damage to property of others.'

As we have seen, the policy extended coverage by operation of law to anyone using the vehicle with permission of the owner and to any organization legally liable for such use. Wildman v. Government Employees' Ins. Co., supra, 48 Cal.2d 31, 307 P.2d 359, held that Vehicle Code section 402, now renumbered as section 17150, and section 415, now renumbered as 16451, must be considered a part of every motor vehicle policy. The latter section, at the time of the accident, required such policy to insure the person named therein and any other person using or responsible for the use of the vehicle. McLaughlin Draying Company's two employees, Rose and Geigle, were using Speedy Transport's truck with its permission, and these two employees negligently caused Walker's injuries. By virtue of the principle of respondeat superior, the McLaughlin Draying Company was liable to Walker for their negligence and that company, consequently, was also covered by the Transport Indemnity policy.

The United States Fire Insurance Company policy issued to the McLaughlin Draying Company protected the latter for negligent acts of its employees, but the policy did not cover the two employees; they were not named in the policy, and the truck was not owned by the McLaughlin Draying Company. United States Fire Insurance Company, as insurer, was subrogated to the...