Wisdom v. Eagle Star Ins. Co.

• Decision Date: 08 January 1963
• Citation: 211 Cal.App.2d 602,27 Cal.Rptr. 599
• Court: California Court of Appeals Court of Appeals
• Parties: John M. WISDOM, Hermain Wisdom, aka Hermoine Wisdom, Bobbie Lee Wisdom, Plaintiffs and Appellants, v. EAGLE STAR INSURANCE CO., Ltd., a corporation, Defendant and Respondent. Civ. 20079.

Page 599

27 Cal.Rptr. 599

211 Cal.App.2d 602

John M. WISDOM, Hermain Wisdom, aka Hermoine Wisdom, Bobbie Lee Wisdom, Plaintiffs and Appellants, v. EAGLE STAR INSURANCE CO., Ltd., a corporation, Defendant and Respondent.

Civ. 20079.

District Court of Appeal, First District, Division 3, California.

Jan. 8, 1963.

Lacey, Holbrook & Meyenberg, Richard E. Holbrook, Salinas, for appellants.

Hoge, Fenton, Jones & Appel, Robert O. Angle, Monterey, for respondent.

DEVINE, Justice.

Plaintiffs, appellants, are husband and wife, John and Hermain Wisdom, and their son Bobbie Lee Wisdom and they have brought this action against an insurance company which had issued an automobile garage liability policy to plaintiff John Wisdom. During the effective period of the policy, on August 9, 1958, Bobbie Lee Wisdom, then a minor, drove an automobile which became involved in an accident in which persons named Moore and Vierra were injured. The automobile driven by Bobbie was not owned by the Wisdoms, but by Virgil Scott, who is not a party to this case. There is no allegation that the son was agent of his parents at the time. The Wisdoms, father and mother, had signed a driver's license application for their son. The injured persons brought an action against all of the Wisdoms. Demand was made upon defendant herein to provide defense, but it refused to do so. Judgments totaling $18,732.50 were awarded to the injured parties against Bobbie Lee Wisdom, and judgment against the senior Wisdoms in amount $10,000, as the maximum allowable for injuries to more than one person by imputed liability because of signing the application, under Vehicle Code section 17709.

Demurrer to plaintiffs' complaint on the insurance policy was sustained with leave to amend, plaintiffs declined to amend, judgment for defendant was entered, and from this plaintiffs appeal.

Appellants' contentions are: (1) that the insurance policy is an 'operator's policy'; (2) that under section 415 of the Vehicle Code (this was the number of the code section at the time of the accident), an operator's policy must cover liability imposed on the insured arising out of use by him of a non-owned motor vehicle; and (3) that use by the insured includes use by anyone whose application for driver's license was signed by the insured.

The policy contains the following clause with reference to non-owned automobiles: 'Definition of Hazards. * * * Division 2--Premises--Operations--Automobiles Not Owned or Hired: The ownership, maintenance or use of the premises for the purpose of an automobile repair shop, service station, storage garage or public parking place, and all operations necessary or incidental thereto; and the use in connection with the above defined operations of any automobile not owned or hired by the named insured, a partner therein or a member of the household of any such person.' It will be observed that the policy limits the coverage to use in connection with the garage operations. This limitation, however, cannot avail respondent if the policy is an operator's policy, because section 415 of the Vehicle Code is incorporated into every such policy. (Interinsurance Exchange v. Ohio Casualty Ins. Co., 58 A.C. 143, 23 Cal.Rptr. 592, 373 P.2d 640.) The section ¹ reads as follows: 'An operator's policy of liability insurance shall insure the person named as insured therein against loss from the liability imposed on him by law for damages arising out of use by him of any motor vehicle not owned by him, within the same territorial limits and subject to the same limits of liability as are set forth above with respect to an owner's policy of liability insurance.' The code section does not limit the coverage to use in connection with any particular business.

The Vehicle Code does not define 'operator's policy.' It is evident, however, from reading section 415 (since 1959, by reading sections 16450, 16451 and 16452 of the Vehicle Code) that distinction is made between an 'owner's policy' and an 'operator's policy,' the former covering particular vehicles, and the latter covering persons using non-owned vehicles. Because of our decision, expressed below, as to the meaning of the code section relating to use of non-owned vehicles, and because of the lack of definition of 'operator's policy,' we shall assume, for present purposes, without deciding, that Division 2 of the garage owner's policy constitutes an operator's policy, and that under the Vehicle Code section it is not limited to the garage operations.

We are of the opinion that the code section, by its requirements that the policy cover liability imposed 'on him' by law for damages arising out of use by 'him' of any motor vehicle not owned by 'him' (the antecedent of the pronoun being 'the person named as insured'), does not incorporate into the policy coverage for liability imposed on the named insured for damages arising out of use by his son, whose application the insured had signed. We believe 'use by him' does not mean 'use by him or by anyone through whose use liability may be imputed to him.' We recognize that the purpose of financial responsibility laws is to give monetary protection to the persons lawfully using the highways, and that they are to be construed liberally. (Continental Casualty Co. v. Phoenix Constr. Co., 46 Cal.2d 423, 434, 435, 296 P.2d 801, 57 A.L.R.2d 914; ...