Opinion
Nos. 134634 and 136397
Decided March 10, 1971.
Insurance — Automobile — Financial responsibility bond — Standard automobile policy — Construction — "Other insurance."
When the owner-driver of an automobile covered by both a standard automobile policy and a financial responsibility bond is found liable for damages resulting from his operation of it, the policy provides the primary coverage and the coverage of the bond is excess to that of the policy.
Mr. William H. Wolff, Jr., and Mr. Robert L. Nolan, for plaintiff Carter.
Mr. J. Robert Rodabaugh, for defendants Nationwide Insurance Co. et al.
Mr. James D. Zachrity, for plaintiffs Motors Insurance Co. et al.
Mr. Clyde H. Collins, for defendant Pioneer Mutual Casualty Co.
The several causes of action in these cases were consolidated and tried to the court.
Jimmy L. Woody and Motors Insurance Corporation claim automobile property damage from James Bernard predicated on his negligent operation of an automobile. Emory H. Carter, a passenger in the Woody vehicle, claims damage from Bernard for personal injuries.
At the time of the collision a policy of automobile liability insurance issued by Nationwide Mutual Insurance Company to James Bernard was in effect, as was a Financial Responsibility Bond issued by Pioneer Mutual Casualty Insurance Company. Upon a finding in favor of one or more of the plaintiffs a declaratory judgment is requested to determine the obligations of the insurance companies to any judgment creditors.
I
The court finds from a preponderance of the evidence that Bernard and Woody were traveling in opposite directions upon two lane State Highway No. 4 approaching its intersection with Soldiers Home-Miamisburg Road. Bernard turned left at the intersection and collided with the Woody vehicle as brakes were applied by Woody in an effort to avoid a collision. Traffic was light except for a car stopped at the intersection on Soldiers Home-Miamisburg Road preparatory to entering upon State Route No. 4 from Bernard's left and Woody's right. Woody was traveling at 45 to 55 miles per hour, a speed reasonable and proper under the conditions then existing, and was keeping a reasonable lookout ahead. Whereupon the court concludes that Woody was traveling in a lawful manner and Bernard failed to yield the right of way thereby proximately causing the collision.
The court further finds that Woody sustained damage to his automobile in the sum of $1,201.00, that it was proximately caused by the negligence of Bernard, that Motors Insurance Corporation is subrogated to Woody's claim in the sum of $1,101.00 and they should recover from Bernard in the sum of $1,201.00.
The court also finds that Carter suffered skin lacerations of the legs. They were deep, ragged, extensive and measured three by four inches in a reversed V-shaped pattern on the lower one third of the left lower leg on the anterior aspect. He was hospitalized, underwent surgery to repair and close the wounds and received hospital care and treatment of the injuries for thirty-one days. He incurred expenses for hospitalization in the sum of $1,630.80 and for a physician in the sum of $150.00. He was unable to work from May 1, 1969, through August 10, 1969, and sustained loss of wages in the sum of $2,882.86. The wounds were slow to heal and there was some sloughing of the tissues together with pain and discomfort accompanying the injury and healing process. Eventually he made a satisfactory recovery with no permanent disability. The only residual was the scaring of the lower extremities. Finally, the court finds that Carter sustained compensable injury and damage proximately caused by the negligence of Bernard and he should recover as and for such damages the sum of $7,500.00.
II
Coming now to the action for judgment declaring coverages under the automobile insurance policy and the financial responsibility bond the court finds that at the time Bernard applied for and the bond was issued and filed by Pioneer, the standard automobile insurance policy of Nationwide was in full force and effect. The bond came into existence to enable Bernard to comply with Ohio's Motor Vehicle Safety Responsibility Act, occasioned by a conviction for driving while intoxicated.
Nationwide bottoms its case on Fleming v. Parsons, 2 Ohio App.2d 12, which appears to be identical on the facts presented here. That case held an excess coverage provision of the financial responsibility bond ineffective as against the insurance policy pro-rata provision, where the insured under the insurance policy and the principal under the bond are the same person.
Pioneer attacked the Fleming case on the proposition that the bond is not "other insurance" as intended by the scriveners of the standard automobile policy.
The bond in question has been created by statute. It is argued that inasmuch as the bond may also be satisfied by the deposit of money or securities or the pledge of real estate the financial responsibility bond, as such, should not be considered "other insurance."
Liability insurance is a contract by which the insurer agrees to indemnify the insured against loss from a specified cause. Suretyship is an undertaking or answer for the debt, default or miscarriage of another, by which the surety becomes bound as the principal is bound. Obviously there are many distinctions between these contractual obligations. On the other hand it is conceivable that certain principles may be common to both. It is quite true, that in one sense, the contract of a surety is strictissimi juris, and it is not to be extended beyond the express terms in which it is expressed. The rule, however, is not a rule of construction of a contract, but a rule of application of the contract after the construction of it has been ascertained. Where the question is as to the meaning of the language of the contract, there is no difference between the contract of the surety and that of anybody else. Moreover, the rule of construction applied to ordinary sureties is not applicable to the bonds of fidelity and casualty companies; any doubtful language should be construed most strongly against the surety and in favor of the indemnity which the insured had reasonable ground to expect.
This court construes the bond to cover the legal liability of Bernard in the operation of any motor vehicle. It is then, in legal effect, automobile liability insurance. To this extent the court agrees with the reasoning in the Fleming case.
III
The ultimate question is whether the losses herein should be apportioned between Nationwide and Pioneer or be borne alone by Nationwide. A subscription to the rationale of the Fleming case would be determinative and decree proration of the losses.
Conceding to the Fleming case is tantamount to ignoring the excess proviso of the bond.
The Nationwide policy provides that: "with respect to the protection afforded herein * * *, if the person entitled to protection has other insurance against a loss covered by this policy, the company shall not be liable for a greater proportion of such loss than the applicable limit of liability stated in the declarations bears to the total applicable limit of liability of all collectible insurance against such loss (this provision is commonly characterized as a "pro-rata" provision), except * * * any insurance afforded for the use of other land motor vehicles shall be excess over any other collectible insurance against such loss."
The Pioneer bond states: "If there exists at the time of accident, any insurance taken out by the Principal or any insurance taken out by or effected on behalf of anyone other than the Principal and under the terms of which the Principal is entitled to protection and coverage, then the coverage provided by the Bond shall be excess protection over and above the amount of such insurance."
It should be observed that it is of more than passing interest to note that it is abundantly clear that Bernard would be covered under both the bond and the policy were it not for the "other insurance" language contained in each.
Upon examination of the Fleming case the conclusion is inescapable that the court there relied upon mere dicta in Motorists Mutual Ins. Co. v. Lumbermans Mutual Ins. Co., 1 Ohio St.2d 105; and American Automobile Ins. Co. v. Republic Indemnity Co. of America, 52 Cal.2d 507, 341 P.2d 675. The dicta is logical under the facts of these cases, but it is not logical under the facts of Fleming or the case here for determination.
The conflicting policies in the Motorists Mutual and American Automobile cases each provided that coverage would be prorata where there is other insurance except where the insured is driving a vehicle owned by another in which case it would be in excess of other insurance coverage. Thus it is clearly evident that the excess coverage provisions in either of the policies in either of these cases could not come into play unless the insured was driving a vehicle owned by another and insured by another company. Further it is quite obvious that in those situations where the excess coverage provisions could not be applied the prorata provisions must necessarily have application.
Moreover it is manifest that where two policies containing these provisions are the only policies in question and are issued to the same person, neither of the excess coverage provisions can be effective. First of all, of course, they would not be effective where the insured was driving his own automobile, and, secondly, they would cancel each other out in that there can be no excess coverage without primary coverage and giving effect to the excess coverage provisions would preclude primary coverage under either policy. Therefore, rather than entering such an unending circle of logic, justice would require that the provisions be ignored and that each policy furnish coverage under its prorata provision.
The facts of the Motorists Mutual and American Automobile cases differ from the facts in Fleming and the case here. The bonding company in Fleming, and here, did not agree to provide prorata coverage in any instance where the risk was covered by other insurance. In addition, at least in the case here, the insured under the policy and the principal under the bond was driving his own vehicle that was specifically covered under the policy. Thus the insurance coverage afforded by the policy is first and original, fundamental and basic, highest in rank and importance and is therefore primary coverage. The logic of the facts presented here is irresistible in concluding that the provisions of Nationwide's policy belong to the first stage of this process. Accordingly, there is no justification for disregarding the excess coverage provision of the bonding company. Upon the facts and circumstances there is no question about the policy walking as primary insurance, which is therefore "other insurance," and so long as there is other insurance the bonding company has not obligated itself to provide anything but excess coverage.
IV
With all due respect to the court in Fleming this court must decline to approve and follow that case. It may be that the difficulty in Fleming arises from the fact that the Supreme Court in Motorists Mutual Ins. Co. v. Lumbermans Mutual Ins. Co., supra, and in Trinity Universal Ins. Co. v. General Accident, Fire and Life Assurance Corp., 138 Ohio St. 488, failed in each case to delineate with precision the concept or rationale obtaining in each case. That court has now laid the matter to rest by its unequivocal pronouncement in the case of State Farm Mutual Automobile Ins. Co. v. Home Indemnity Co., 23 Ohio St.2d 45. Referring to the Motorists Mutual and Trinity Universal cases, the Supreme Court said: "It was, in each case (reference prorata provision), held ineffective to prevent liability on the policy in which it appeared, for the reason that the "excess insurance" provided by the other policy was not `other insurance'."
Wherefore the court declares, orders, decrees and renders judgment in case No. 136397 as follows:
That the policy of Nationwide Mutual Insurance Company is primary and the bond of Pioneer Mutual Casualty Company is excess coverage. Costs of this declaratory judgment action to be segregated and assessed against defendant, Nationwide.
Finally it is the order of the court that the plaintiffs in each case draft the appropriate judgments in their respective tort actions conforming to the decision herein and submit them for approval and journalization.