United Pac. Ins. Co. v. Truck Ins. Exchange

• Decision Date: 16 October 1975
• Citation: 273 Or. 283,541 P.2d 448
• Parties: UNITED PACIFIC INSURANCE COMPANY, a corporation, Respondent, v. TRUCK INSURANCE EXCHANGE, a corporation, Appellant.
• Court: Oregon Supreme Court

Page 448

541 P.2d 448

273 Or. 283

UNITED PACIFIC INSURANCE COMPANY, a corporation, Respondent, v. TRUCK INSURANCE EXCHANGE, a corporation, Appellant.

Supreme Court of Oregon.

Argued and Submitted July 8, 1975.

Decided Oct. 16, 1975.

Sam F. Speerstra, Salem, argued the cause for appellant. With him on the briefs were Rhoten, Rhoten & Speerstra and Keith J. Bauer, Salem.

John C. Sihler, Eugene, argued the cause for respondent. With him on the brief were Darst B. Atherly and Thwing, Atherly & Butler, Eugene.

Before McALLISTER, P.J., and DENECKE, HOLMAN, ^* TONGUE, HOWELL and BRYSON, JJ.

McALLISTER, Justice.

This is an action for common law indemnity brought by United Pacific Insurance Company as plaintiff against Truck Insurance Exchange as defendant. The court found for plaintiff and defendant appeals.

The facts are complicated, but for the most part were stipulated. It appears that Donald B. Stockton, doing business as Stockton Lime Company, had a contract to haul mercury mine tailings from Cottage Grove to Portland. Stockton was operating under a permit issued to him by the Public Utilities Commissioner. Stockton was insured by plaintiff United Pacific, which, as required by law, had filed with the PUC a Certificate of Insurance.

Sometime in July, 1969, Stockton leased from Ernest Leon vehicles for use in his hauling operation, including a tractor unidentified in the record and a 1968 Triway trailer. United Pacific admits that both vehicles were leased by Leon to its insured Stockton pursuant to PUC regulations.

On August 12, 1969, the tractor-trailer combination, while being driven by Lloyd Wright, collided with a vehicle driven by James Michael Reaume in Linn County. Reaume had been traveling west on Highway 228 and Wright was traveling south on Highway 99E. Both vehicles arrived at the intersection of the two highways at about the same time, and both stopped. The collision occurred when Wright made a left turn onto Highway 228 and the trailer portion of his rig struck Reaume's automobile, which was still stopped. Reaume was severely injured. The plaintiff and the defendant in this case have agreed that the accident was caused by Wright's negligence.

Reaume sued Stockton, Leon and Wright for damages on account of his personal injuries, and Mrs. Reaume filed a companion action against the same defendants for loss of consortium. United Pacific defended Stockton. Truck Insurance denied that it insured Leon and Wright, but defended them both under a standard reservation of rights agreement. Both actions were settled for $45,000, of which United Pacific paid $35,000 and Truck Insurance paid $10,000.

Plaintiff United Pacific is subrogated to the rights of its insured Stockton. It contends that Stockton was vicariously liable for his employee Wright's negligence based on the doctrine of respondeat superior and that it therefore has a common law right of indemnity against Wright. The parties agreed that United Pacific might sue Truck Insurance direct and litigate in this action Wright's liability to Stockton instead of requiring United Pacific to establish Wright's liability to Stockton in a preliminary action.

United Pacific further contends (a) that Wright was covered by insurance issued by Truck Insurance to Leon and (b) was not covered by United Pacific's policy issued to Stockton.

Truck Insurance contends that it did not cover Leon at the time of the accident. In the alternative, Truck Insurance argues that even if the court found that it insured Leon there would be no common law right of indemnity, either because its policy excluded Wright from coverage or because United Pacific is only contending that the trailer was covered by Truck Insurance's policy and the negligence of the trailer was passive. Truck Insurance further contends that if the court finds it had coverage at the time of the accident, United Pacific also had coverage in force and the two policies contain repugnant 'other insurance' clauses requiring equal apportionment of the loss under Oregon law.

The case was tried without a jury, and the court found for the plaintiff. Judgment was entered in plaintiff's favor for $35,000, the full amount prayed for. The effect of this judgment was to require Truck Insurance to pay the entire $45,000 paid in settlement of the Reaume claims.

The first issue is whether there was sufficient evidence to support a finding by the trial court that Truck Insurance had liability insurance in force covering Leon's Triway trailer on the day of the accident.

United Pacific does not contend that Truck Insurance had coverage on Leon's Tractor under lease to Stockton and involved in this accident. It does contend that Truck Insurance had liability coverage on the trailer which struck Reaume's automobile, and as a result Truck Insurance is liable for the full amount paid in settlement of Reaume's claim.

We will summarize some of the evidence tending to prove that Truck Insurance had coverage on Leon's Triway trailer at the time of the accident. Don Brooks was Truck Insurance's agent at Albany. He testified that in July, 1969, Leon asked him about obtaining a comprehensive liability policy for his trucking business. Leon gave Brooks a list of the vehicles he wanted covered, and Brooks asked Leon for $400 as a down payment on the policy. At this first interview Leon gave Brooks a check for $142 to apply on the down payment, which check was held by Brooks. The $400 was paid by Leon in installments of $100 each, with the final $100 paid on September 15, 1969, at which time Leon's $142 check was returned to him. An insurance application, dated September 15, was signed by Leon and a policy dated September 15 was issued pursuant to his application.

In the meantime, Milo F. Gubrud, an equipment dealer in Goshen, had sold the Triway trailer to Leon under a conditional sales contract dated August 7, 1969. Gubrud asked Leon for evidence that Leon had colliison and upset insurance that would cover any damage to the trailer. Leon told collision and upset insurance that would with the Don Brooks' Agency. Gubrud called Brooks' office on August 7th to verify that the trailer was covered. Gubrud was assured by 'a man' in Brooks' office that Leon had arranged for insurance.

Gubrud later received in the mail a 'binder' dated August 4, 1969. The binder was on an 'Application for Automobile Insurance' form listing Ernest Leon as the applicant. The coverage and limits of liability included $100,000/300,000 bodily injury liability, $50,000 property damage liability, and collision or upset for actual cash value less a $500 deductible. The application listed as the vehicles insured the Triway trailer and another trailer not involved in this case. Milo F. Gubrud was listed under the caption of 'Mortgagees, Additional Insured's or Certificate Holders'. The word 'Binder' was written by Brooks at the bottom on the left side of the form, and the form was signed at the bottom on the right side by Don Brooks, where the signature of the applicant would normally appear. Don Brooks testified that this binder was in the form regularly used by him.

There was considerable additional evidence tending to prove that Truck Insurance had issued a valid binder covering the Triway trailer effective August 4th. It is not necessary to relate all of that additional evidence in this opinion. It is sufficient to say that viewing the evidence in the light most favorable to the plaintiff there was ample evidence to support the finding of the trial court that a binder effective August 4, 1969, was issued by defendant's agent Don Brooks, who testified that he had authority to execute such binders.

A binder ordinarily evidences a contract for temporary insurance until such time as issuance of permanent insurance is approved or disapproved or some other temporary impediment is removed. 1 Couch on Insurance 2d § 14:26 (1959); Annotation, Temporary Automobile Insurance, 12 A.L.R.3d 1304, 1307 (1967); 43 Am.Jur.2d, Insurance § 216. Oregon authorizes binders in ORS 743.075(1):

'Binders or other contracts for temporary insurance may be made orally or in writing, and shall be deemed to include all the usual terms of the policy as to which the binder was given together with such applicable indorsements as are designated in the binder, except as superseded by the clear and express terms of the binder.'

A binder need not contain all the necessary elements of an insurance contract so long as the protection for which the parties contracted can be determined. Couch, supra, § 14:30. A binder need not express any consideration or state the premium because the agreement, express or implied, to pay the regular insurance premium is sufficient consideration. Couch, supra, § 14:29; 12 A.L.R.3d, supra at 1318.

The binder in the present case listed the parties to the agreement, indicated the type of coverage and limits of liability, and described the Triway trailer in which Milo Gubrud had a security interest. The binder was effective on its face from August 4, 1969. The protection for which the parties contracted can easily be determined by looking at the policy issued by defendant to Leon pursuant to the application which was dated September 15, 1969.

The plaintiff United Pacific contends that the coverage of Leon's trailer by defendant Truck Insurance extended to the driver, Lloyd Wright, and that United Pacific has a common law right of indemnity against Wright covered by Truck Insurance's policy.

Although Wright was carried on Leon's payroll as his employee, United Pacific has alleged in its complaint that pursuant to the PUC regulations ¹ in effect at the time of the accident on August 12, 1969, the driver, Wright, 'was as to the plaintiff's insured (Stockton Lime) as employee to employer and was acting within the course and scope of his employment.' The parties agree that Stockton was liable for the negligence of Wright in operating the tractor-trailer...