Wilks v. Allstate Ins. Co.

• Decision Date: 15 February 1967
• Docket Number: No. 1889,1889
• Citation: 195 So.2d 390
• Parties: Jimmie WILKS et ux., Plaintiffs-Appellees, v. ALLSTATE INSURANCE COMPANY et al., Defendants-Appellants.
• Court: Court of Appeal of Louisiana — District of US

Page 390

195 So.2d 390

Jimmie WILKS et ux., Plaintiffs-Appellees, v. ALLSTATE INSURANCE COMPANY et al., Defendants-Appellants.

No. 1889.

Court of Appeal of Louisiana, Third Circuit.

Feb. 15, 1967.

Hall, Raggio & Farrar, by Louis D. Bufkin, Lake Charles, for defendants-appellants.

Francis E. Mire, Lake Charles, for plaintiffs-appellees.

Before TATE, SAVOY, and CULPEPPER, JJ.

TATE, Judge.

This is a tort suit. On a previous appeal we overruled the defendant insurer's contentions of no coverage and remanded for trial. La.App., 177 So.2d 790.

On the remand, the plaintiffs recovered judgment on the merits against the two defendants, a garageman (Jacobs) and an insurer (Allstate). The defendants now appeal this adverse judgment. We have previously overruled the plaintiff-appellee's motion to dismiss this present appeal. La.App., 191 So.2d 663.

There is no serious dispute with regard to the negligence or to the amount of the award. The chief issue of this appeal is raised by the contention of Allstate, the defendant insurer, that the award against it should be reduced by one-half because of its policy provision allegedly limiting its liability if there is other valid and collectible insurance. (The alleged other insurer was not brought into this action, either by the plaintiff as a defendant to the principal demand or by the defendants by a third-party demand.)

Facts.

The plaintiff wife was driving the family car when it was struck by a vehicle which negligently ran a stop sign. An employee of the garageman Jacobs was driving the other vehicle. It belonged to a customer (Calhoun) to whom Allstate had issued a liability policy. Allstate was held liable as the omnibus insurer of the garageman Jacobs or his employee, who were using the car with the consent of Calhoun, Allstate's named insured. See 177 So.2d 790 (opinion on first appeal).

Allstate contends, however, that its liability is limited to one-half of the amount for which cast. Allstate relies upon an 'other insurance' clause of its policy, which provides for the apportionment of its liability when there is other insurance covering the same loss. ¹ Allstate contends that immediately before the accident the garageman Jacobs himself had applied for and been granted an oral binder for a garage liability policy, which--being valid and collectible insurance--had the effect of reducing Allstate's liability proportionately under its 'pro rata' clause.

We may say that the showing in support of this contention indicates its probable weakness. According to this showing:

A local agent had issued garage liability policies to Jacobs which covered periods in 1961--62 and 1962--63, the last of which had expired nineteen days before the accident of December 3, 1963. ² On December 3rd, the day of the accident, Jacobs appeared at his local agent's office, paid up arrearages on his expired policy, and requested further coverage.

The agent testified, and the agent's correspondence indicates, that Jacobs did apply for insurance, but a couple of hours After the accident. An affidavit from Jacobs states that he telephoned the agent in the morning of the day and received assurance of coverage then, ³ although he did not pay the arrearages until later in the day, presumably after the accident in the afternoon. The agent actually forwarded an Application for coverage to a new company which had never previously insured Jacobs, merely recommending that the insurer issue and forward a policy, which further complicates the coverage question. ⁴

Procedural Context.

The question of other insurance might easily have been resolved if presented on the merits. However, the manner is which the issue was tried has greatly increased the difficulties in determining this issue.

The plaintiffs chose a motion for summary judgment as the procedural vehicle for determining the question of Allstate's right to have its liability limited because of its pro rata 'other insurance' clause. (The defendant first raised the issue by amended and supplemental answer immediately prior to trial. By pre-trial conference it was agreed this issue would be disposed of separately after trial.) The trial court sustained the plaintiffs' motion for summary judgment as to Allstate's defense that the recovery against it would be reduced for this reason.

As the mover for summary judgment, the plaintiffs have the burden of negativing any issue of fact as to the existence of other insurance or of a pro rata clause of the other policy which might make both insurers proportionately liable instead of such other policy providing only excess coverage (see footnote 1 above). Smith v. Preferred Risk Mutual Insurance Co., La.App. 3 Cir., 185 So.2d 857. It is thus not enough for the plaintiffs to suggest that the great preponderance of the evidence may negative these facts. The proponent of a summary judgment must show there is No material factual issue, and all doubts are resolved against a summary judgment and in favor of a trial on the merits to resolve any material facts shown to be disputed. Vallier v. Aetna Finance Co., La.App. 3 Cir., 152 So.2d 112.

Applying this heavy burden, we think that the showing does not exclude issues of fact (1) that Jacobs May have secured an oral binder from the local agent or Employers insuring him before the accident and (2) that the policy which Employers May have issued him Might have contained a 'pro rata' other insurance clause instead of an 'excess only' clause.

'Pro rata' liability of both insurers: Treatise and decisional references.

For purposes of summary judgment, we will therefore assume that at the time of the accident the tortfeasor's automobile was insured by one policy issued by Allstate to the vehicle's owner (Calhoun) and also by another policy issued to the garageman (Jacobs). We further assume that each policy had a bodily injury limit of $5,000 per person and that each contained a pro rata 'other insurance' clause. We further assume that both of these policies were applicable as 'primary' insurance. Since the recovery from Mrs. Wilks's personal injuries was approximately $5,000, or within the limits of both policies, each insurer would be liable proportionate to its limits, i.e., for one-half of this amount (see pro rata clause set forth in footnote 1) If both insurers were joined as parties to this action. See State Farm Mutual Auto. Ins. Co. v. Travelers Ins. Co., La.App. 3 Cir., 184 So.2d 750.

The defendant Allstate's position is, essentially, that, where recovery is within policy limits and two policies with pro rata clauses are each applicable, then each insurer can never be liable for more than its proportionate share of the recovery, even though the other insurer is not a party to the suit. In the present case, then, assuming the facts to be as stated previously, it is contended that the injured plaintiff can recover only $2,500 against Jacobs's insurer Allstate although the judgment against Jacobs himself is $5,000 for Mrs. Wilks's injuries, even though Allstate had issued and received premiums for policy protection up to $5,000 per person injured.

In making this contention, Allstate's counsel particularly relies upon the statement in the Annotation, Insurers--Apportionment of Losses, 21 A.L.R.2d 611: 'The authorities uniformly hold that such an insurance contract, in the absence of statute to the contrary, is valid, and creates a liability that is several and not joint. Consequently, such a contract will not justify a recovery by the insured against the insurance company for more than the pro rata amount stipulated therein.' ⁵ See also to similar effect, 16 Couch on Insurance 2d, Section 62:7.

As we will shortly illustrate, this principle was for the most part applied in decisions where both insurers were parties, where at issue was primary-versus-pro rata liability of the insurers or the right of contribution of one insurer from another.

A different principle may be applicable when the litigation concerns the claim of the insured (or the injured person under the Louisiana Direct Action Statute, LSA-R.S. 22:655) to enforce against either one of the insurers that insurer's full policy limits. This differing principle is stated at 8 Appleman, Insurance Law and Practice, Section 4913, p. 387, as follows: 'The liability of the co-insurers to the insured is several, and not joint, so that the policyholder may collect the full amount from either insurer, leaving the latter to its right of contribution from the other.' ⁶

In support of the Appleman statement are cited sixteen decisions, including the 1966 pocket parts. In support of the Couch statement to apparently opposing effect are cited twelve decisions, including two of those cited by the cited A.L.R. annotation (see footnote 5). Examination of the decisions cited in support of either view indicates that most of them are inapplicable or else authority merely by way of dicta or implication. Very few of the decisions touch the actual issue of this litigation, which concerns the insured's right to collect the full policy limit against the sole insurer which is a party and before the court.

For instance, many of the decisions arose from litigation in which both of the insurers were parties, where the court was simply fixing the liability between the insurers without there being any issue as to the solidary liability vel non of the insurers with regard to the insured himself. ⁷ (Similarly, some of the cases relied upon by the appellant State Farm concern the fixing of proportionate liability between insurers, both of whom were before the court. ⁸)

Again, another group of the treatise cases concerns the right of one insurer who has paid the judgment to obtain contribution from another, with the earlier cases tending to disallow contribution for reasons found upon common law technicalities of pleading or definition, ⁹ and the later cases tending to permit it for a variety of reasons. ¹⁰ See also 46...