Opinion
Bronson, Bronson & McKinnon, San Francisco for Allstate Ins. Co. (appellant).
Walcom & Harmon, San Francisco, for Mission Ins. Co. (respondent).
SHOEMAKER, Presiding Justice.
Plaintiff Mission Insurance Company (hereinafter referred to as 'Mission') brought this action against defendants Jasper Bailey, Florence Feldt and Vincent Gandolfo to obtain a judicial declaration that it was not liable under a policy which it issued to defendant Bailey.
The complaint alleged that the policy in question insured defendant Bailey only in the operation of automobiles not owned by him; that while said policy was in full force and effect, defendant Bailey drove a vehicle owned by him and collided with a vehicle owned and operated by defendant Defendants Bailey, Gandolfo and Feldt answered, denying that the Mission policy did not afford coverage for the accident. The latter two defendants also cross-complained against Mission, Bailey and Allstate Insurance Company (hereinafter referred to as 'Allstate'), seeking a judicial declaration that if the Mission policy did not cover the accident, the uninsured motorist provisions of a policy issued by Allstate to Gandolfo were applicable. Bailey was subsequently dismissed as a cross-defendant.
On October 14, 1960, Bailey visited the Imperial Insurance Agency and applied for issuance of a policy of nonownership liability insurance, preparatory to the restoration of his driver's license by furnishing proof of financial responsibility. The insurance agent, upon being assured that Bailey did not own a car, ordered a Mission policy of the type requested. Mission then furnished Bailey with a policy containing the following endorsement provision: 'The insurance does not apply: (a) as respects the named insured, to any automobile owned by the named insured * * *.' Mission also furnished Bailey with a certificate of financial responsibility, which was filed with the Department of Motor Vehicles. On November 2, 1960, the department issued Bailey a probationary driver's license which also restricted him to operating vehicles not owned or registered in his name.
The relevant provisions of the California Financial Responsibility Laws (Veh.Code, § 16000 et seq.) are as follows:
Bailey and Frank Johnson thereafter discussed going into the business of conducting public dances. On April 8, 1961, Bailey and Johnson visited Hacker Motors in Oakland with the intent of purchasing a car which Bailey could use for transporting bands. They selected a 1961 Mercury station wagon on which a downpayment of $410 was required. Bailey supplied $400, and Johnson furnished $10. The car was registered under the name 'J & B Enterprises.' The conditional sales contract listed the purchaser of the car as 'J & B Enterprises, by Frank L. Johnson,' the bank refusing to accept Bailey as a party to the contract, informing him and Johnson that Bailey's credit was bad. J & B Enterprises never engaged in any On April 23, 1961, while Bailey was driving the Mercury station wagon on a pleasure trip, he was involved in the accident which allegedly resulted in liability to Gandolfo and Feldt. On the following day, Bailey visited his insurance agent, reported the accident, and stated that it had occurred while he was driving a car which he had recently purchased and which was owned by him.
It was stipulated by Allstate that the uninsured motorist provisions of the Gandolfo policy were applicable in the event that the Mission policy did not afford coverage for the accident.
The trial court found that the Mission policy, which was in full force and effect on the date of the collision between the cars driven by Bailey and Gandolfo, by its terms excluded coverage for any automobile owned by Bailey; that the car driven by Bailey was registered in the name of 'J & B Enterprises,' a joint venture composed of Bailey and Johnson; that Bailey was 'an owner' of the automobile, and Mission was therefore under no obligation to defend the action brought by Gandolfo and Feldt against Bailey nor to make payments of any kind under the terms of its policy; that Bailey was uninsured on the date of the accident, and a policy issued by Allstate and containing uninsured motorists' coverage was in full force and effect. Judgment was accordingly entered that the Mission policy did not insure Bailey for any liability resulting from the accident involving Feldt and Gandolfo, and that the uninsured motorist coverage of the Allstate policy was applicable to said accident. Allstate appeals from this judgment.
Appellant does not challenge the sufficiency of the evidence to support the finding that Bailey, as one of the joint venturers, was an owner of the Mercury station wagon. (Corp.Code, §§ 15024, 15025.) Appellant does assert, however, that the California Financial Responsibility Laws recognize only sole ownership, and were it to be construed that Bailey 'owned' the vehicle within the meaning of the exclusionary clause contained in the Mission policy, the basic purpose of the statute would be defeated. Respondent Mission, on the other hand, contends that a contrary decision can be reached only by ignoring the plain language of the exclusionary clause, and that to uphold the judgment would not defeat the statute.
Although research discloses no California decision directly in point, the parties have directed this court's attention to several cases which are factually similar to the instant case. Booth v. American Casualty Company (4th Cir.1958) 261 F.2d 389, and Van Erem v. Dairyland Mutual Insurance Company (1958) 5 Wis.2d 450, 93 N.W.2d 511, best represent the opposing contentions of the parties.
In the Booth case, upon which respondent relies, Thompson, whose license had been suspended, purchased a car in his sister's name and, also in her name, applied for and obtained license plates for the car. Under the South Carolina Motor Vehicle Safety Responsibility Act, Thompson could obtain a renewal of his driver's license only upon submitting proof of financial responsibility. He did so by securing from the American Casualty Company, under the assigned risk plan, an operator's or nonowner's policy, and having this fact certified to the highway department by the insurer. He obtained the policy only by concealing the fact that he actually owned the automobile registered in the name of his sister. Thompson was thereafter involved in an accident which resulted in personal injuries to one Booth. After the latter had filed suit, the American Casualty Company brought a declaratory relief action to obtain a judicial determination that it was not liable under the policy. The trial court so held, and the judgment was affirmed on appeal. The appellate court pointed out that the Motor Vehicle Safety Responsibility Act did not require an insurance policy In the Van Erem case, upon which appellant relies, Gunderson, whose license had been revoked by reason of a serious traffic violation, transferred title to all the automobiles owned by him to his wife, without consideration, and then applied to defendant insurer for issuance of an operator's or nonowner's policy and a certificate which he could file with the Commissioner of Motor Vehicles in order to secure a new driver's license. The policy issued to Gunderson excluded coverage as "to any automobile owned in full or in part by or registered in the name of the insured." (93 N.W.2d p. 512.) Gunderson subsequently collided with Van Erem, who thereafter brought suit against Gunderson's insurer to recover for personal injuries. The trial court found that the exclusion clause of the policy was applicable and that the insurer was not liable for any damages resulting from the accident. On appeal, the judgment was reversed, with the court holding that the insurer, by its act of issuing a certificate of financial responsibility, was estopped from taking advantage of the broad exclusion clause in the policy. Since the Wisconsin Financial Responsibility Law defined 'owner' as "A person who holds the legal title of a motor vehicle" and since defendant insurer had undertaken to certify the existence of a nonowner's policy, the court concluded that the purpose of the legislation would be defeated if the defendant were permitted to show that its policy contained an exclusion clause negating such coverage.
Appellant asserts that the recent case of Ohio Cas. Ins. Co. v. Armendariz (1964) 224 A.C.A. 51, 36 Cal.Rptr. 274, compels a reversal of the judgment herein. We are not persuaded that this is so. In Armendariz, the court had before it a policy issued under the assigned risk plan to the minor insured. The opinion shows that the procedures in the issuance of such a policy are decidedly different from those found in the purchase of the usual liability policy. Under the facts of that case, the court determined that an insurance company cannot lead the insured to believe that so long as a car was not registered in his name, he would be protected by its policy; and it was while driving the automobile registered to his father that he was involved in an accident.
We have noted the discussion in the opinion as to a claimed equitable ownership by the minor insured, but the case was resolved upon the purported coverage of the policy as represented at the time it was purchased by the minor. The court justifiably condemns the exclusionary clause as containing matter not brought to the attention of the insured, and further, for omitting all reference as to automobiles registered to him. The court's conclusion is stated succinctly 224 A.C.A. at pages 58-59, 36 Cal.Rptr. at pages 279: 'It is apparent that the ultimate conditional privilege granted the operator was different from that covered by the policy and that the policy contained conditions different from that for which the application was made. These facts fully justified Martinez and the public at large in believing that he was fully authorized to drive a non-registered car and had complied with the Assigned Risk Plan. The sound rule of public policy has not been changed, the Interinsurance Exchange of Automobile Club of Southern California v. Ohio Cas. Ins. Co.,
Our situation is not comparable, for the policy issued and the coverage obtained by Bailey was that which he bargained for and received.
In the present case, the Department of Motor Vehicles required the filing with it of its form SR 22, where, in the words of the statute (Veh.Code, § 16456), the certificate stated that Mission had issued to Bailey '2. OPERATOR'S POLICY covering the use by the insured of any motor vehicle not owned by or registered to him.'
The California Financial Responsibility Laws contain no definition of the word 'owner.' Lacking such a definition, we see no reason to depart from the general rule that the words of a contract are to be taken in their ordinary and popular sense.
In Matsuo Yoshida v. Liberty Mutual Insurance Co. (1957), 9 Cir., 240 F.2d 824, the exclusionary clause of an operator's policy issued to one Gonzales under the provisions of the California Financial Responsibility Laws was in issue. The clause provided: '(2) The insurance does not apply: (a) to any automobile owned by the named insured or a member of his household * * *' (240 F.2d p. 826). The word 'owned' was not defined in the policy and the contention was made that it must be construed in the manner most likely to impose liability, namely, to construe the word 'owner' to mean either legal or registered owner.
It was argued that under the policy the insured could not be the 'owner' or 'own' a car because (1) he was not the 'legal owner's being only a conditional vendee, and (2) that he was not the 'registered owner' at the time policy was issued.
The 'registered owner' argument was disposed of summarily. He was the registered owner, although somewhat tardy in registering, but by relation back, the insured was the registered owner at the time of issuance of the policy.
In determining whether or not the insured was the owner of the car within the policy terms, the court observed, '* * * where ambiguity or uncertainty exists in an insurance contract, such ambiguity or uncertainty will be resolved adversely to the insurer. [Citations.] The rule has particular application where exclusions are involved. [Citation.] However, the rule is not without limitation. Some actual or apparent ambiguity must be present before the rule comes into play. [Citations.] Where there is no ambiguity, there is nothing to be construed. [Citation.] And a court cannot and should not do violence to the plain terms of a contract by artificially creating ambiguity where none exists. In situations in which reasonable interpretation favors the insurer and any other would be strained and tenuous, no compulsion exists to torture or twist the language of the contract. As stated by the California Supreme Court in Continental Cas. Co. v. Phoenix Construction Co., supra, [46 Cal.2d 423, 296 P.2d 806 [57 A.L.R.2d 914]] 'An insurance company has the right to limit the coverage of a policy issued by it and when it has done so, the plain language of the limitation must be respected.' [Citations.]' (240 F.2d p. 826-827.)
After referring to the fact that the definition of 'owner' in the California Vehicle Code includes 'the person entitled to the possession of a vehicle as the purchaser under a conditional sale contract,' the court states, 'Of course, the statutory definition is not necessarily controlling for the words of a contract are to be taken in their ordinary and popular sense. California Civil Code, § 1644; Massachusetts Mut. Life Ins. Co. v. Pistolesi, 9 Cir., 160 F.2d 668, certiorari denied, 332 U.S. 759, 68 S.Ct. 59, 92 L.Ed. 345. We believe, however, that common understanding of the words In the present case, we have a similar contention in that we are asked to construe the term of the policy to mean 'sole owner.' Under the California law of joint venture, Bailey was an owner. Further, in the common and popular meaning of the term, a person in Bailey's position 'owned' the car. We need look no further than Bailey's action in reporting the accident, wherein he stated he was the owner of the automobile. As a result of this lawsuit and no doubt a bringing home to him of his standing under the policy, he would change his position.
The company issued a nonowner policy. Bailey is presumed to have known the conditions of his policy. (Rice v. California-Western States Life Ins. Co. (1937), 21 Cal.App.2d 660, 70 P.2d 516.) In the absence of an invalidating clause, where a contract of insurance is delivered to and retained by the insured, he will be bound by the terms thereof. (Madsen v. Maryland Casualty Co. (1914) 168 Cal. 204, 142 P. 51.)
Finally, appellant urges that even though Bailey be the owner of the automobile under the policy, nevertheless, under another clause of the coverage, Mission is liable. The clause referred to provides, 'the * * * word 'insured' includes * * * any other person or organization legally responsible for the use by such named insured or spouse of an automobile not owned or hired by such other person or organization.' This clause is found in the endorsement, which also contains the clause we have discussed above.
We are satisfied that the coverage provided by the Mission policy was strictly limited to nonownership. It did not insure any automobile owned by the insured, nor did it give coverage to any person or organization legally responsible for its use, if such other person or organization owned the vehicle.
Under the facts of this case, we find no basis by which the liability of Mission can be predicated upon the cited clause.
Judgment affirmed.
AGEE and TAYLOR, JJ., concur.
Section 16082 provides that an individual whose driver's license has been suspended following an accident and an unpaid judgment, may obtain a renewal license only upon the filing of proof of ability to respond in damages.
Section 16431 provides for the giving of such proof by means of the written certificate of an insurance carrier that it has issued a motor vehicle liability policy in favor of the individual in question.
Section 16450 provides that such motor vehicle liability policy may take the form of either an owner's or an operator's policy.
Section 16451 requires that an owner's policy '[d]esignate by explict description or by appropriate reference all motor vehicles with respect to which coverage is thereby intended to be granted.'
Section 16452 requires that an operator's policy shall insure the person named as insured against liability for damages 'arising out of the use by him of any motor vehicle not owned by him * * *.'
Section 16456 provides that 'Unless the certificate or certificates filed with the department evidencing the issuance of a motor vehicle liability policy show that the person in whose behalf they are filed is covered in the operation of all vehicles registered in his name, and any motor vehicle not owned or registered in his name, the department shall place an appropriate restriction on any driver's license issued to the person.'