Opinion
For Opinion on Hearing, see 54 Cal.Rptr. 385, 419 P.2d 641. Mento, Buchler & Littlefield, George K. Littlefield, Theodore H. Morrison, Sacramento, for appellant, Pacific Employers Ins. Co.
Hersh & Hadfield, James D. Hadfield, San Francisco, Joseph F. Rankin, Oakland, for appellant, American Mut. Liability Ins. Co., Richard G. Logan, Oakland, of counsel.
Johnson, Davies & Greve, by Claire H. Greve, Sacramento, for respondents Maryland Cas. Co. and Libby, McNeill & Libby.
Sedgwick, Detert, Moran & Arnold, John S. Howell, San Francisco, for respondent, Underwriters at Lloyd's, London.
SIMS, Justice.
Plaintiff Pacific Employers Insurance Company (Pacific) and defendant American Mutual Liability Insurance Company (American) have each appealed from a judgment in an action for declaratory relief which was brought to determine the respective rights and obligations of those parties and of the defendants and respondents Maryland Casualty Company (Maryland) and Underwriters at Lloyd's, London (Lloyd's) in regard to a claim for personal injuries arising out of an accident in which named insureds of each insurer were allegedly concerned.
The case was submitted upon an agreed statement of facts and the trial court made its findings of fact and conclusions of law from which the following uncontroverted matters appear: On November 12, 1959, Pacific's named insured, a trucker, sent a truck and two trailers with two employees
The remaining findings of fact and conclusions of law relate to the coverage and priority of obligation of the respective insurers, and must be reviewed herein in connection with the attack on the judgment. It provides that the policies of American and Pacific are each primary insurance to the extent of the limits of each policy ($100,000 each for injuries to one person) and orders them to pay any loss on an equal basis; and that Maryland's and the attendant Lloyd's insurance are excess and only payable after the total insurance of Pacific and American is exhausted.
American contends that the provisions of its policy do not in fact or in law impose any obligation on it to defend or pay the claims made against the plant owner and its employee; and that, in any event, the coverage of Maryland is not excess.
Pacific, while resisting American's attempt to escape liability, for its part seeks a determination that its coverage is excess over American and Maryland, or that, in any event, the loss should be prorated between all three carriers.
The relevant policy provisions and such additional findings as bear on their interpretation are set forth below.
The provisions of the American policy do not include coverage of the claim against the plant owner and its employee by their express terms
American's policy provides, insofar as is material herein, as follows: 'Comprehensive General Liability Policy
'American * * * agrees with the insured, named in the declarations made a part hereof [the owner and lessor of the forklift], * * * and subject to the limits of liability, exclusions, conditions and other terms of this policy:
'INSURING AGREEMENTS
'I Coverage A--Bodily Injury Liability
'To pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of bodily injury [changed to 'personal injury' by endorsement], * * * sustained by any person and caused by accident.'
* * *
* * *
'III Definition of Insured
'The unqualified word 'insured' includes the named insured and also includes any executive officer, director or stockholder thereof while acting within the scope of his duties as such and any organization or proprietor with respect to real estate management for the named insured. If the named insured is a partnership, the unqualified word 'insured' also includes any partner No definition pertaining to additional insureds, and no provisions which expressly or impliedly refer to lessees or operators of leased equipment or permissive users of owned equipment has been pointed out by Pacific or Maryland, or found on independent review. It is concluded that the findings of the trial court insofar as they limply that American expressly agreed to protect the plant owner and its employee are in error.
The provisions of the American policy do not include coverage of the claims against the plant owner and its employee by operation of law
The trial court also found: 'that at the time in question the said forklift was an automobile and was insured as such under the * * * American * * * policy; that at the time in question [the plant owner and its employee] were using the said forklift with the permission and consent of [the owner-lessor]; that [they] were not employees of [the owner-lessor], but were using the forklift with the permission and consent of [the owner-lessor] as independent contractors as defined and used in American['s] policy; that [the plant owner and its employee] are insureds under said policy by operation of law; * * * that the liability, if any, arises out of the operation and use of said forklift--automobile owned by [lessor]. That any provisions in American['s] policy which purport to exclude coverage to [plant owner and its employee] is void and against public policy of this State; * * *' The last sentence was also incorporated in the conclusions of law.
The foregoing is predicated upon the law of this state as declared in Wildman v. Government Employees' Ins. Co. (1957) 48 Cal.2d 31, 307 P.2d 359. There the court struck down an endorsement that attempted to limit general provisions of the policy, which covered use by the named insureds an anyone with their consent, to use by the named insureds and members of their immediate family. The opinion concluded: 'Inasmuch as sections 402 and 415 of the Vehicle Code set forth the public policy of this state such laws must be considered a part of every policy of liability insurance even though the policy itself does not specifically make such laws a part thereof. We have here, however, a policy containing a clause which provides that the insurance afforded by the policy shall comply with the provisions of the motor vehicle financial responsibility law 'of any state * * *' wherein the liability arising out of the ownership, maintenance or use of the automobile may occur. We conclude that the restrictive endorsement hereinbefore set forth and discussed is ambiguous; that the construction thereof urged by defendant insurance carrier would be violative of the sections of the Vehicle Code heretofore discussed; and that said sections were intended by the Legislature to be, and are, a part of every policy of motor vehicle liability insurance issued by an insurance carrier authorized to do business in this state.' (48 Cal.2d 31 at p. 40, 307 P.2d 359 at p. 364; and see cases collected: Interinsurance Exchange etc. v. Ohio Cas. Ins. Co. (1962) 58 Cal.2d 142, 150, 23 Cal.Rptr. 592, 373 P.2d 640 and in Bohrn v. State Farm etc. Ins. Co. (1964) 226 Cal.App.2d 497, 501-504, 38 Cal.Rptr. 77; and also Clark v. Universal Underwriters Ins. Co. (1965) 233 Cal.App.2d 746, 748, 43 Cal.Rptr. 822; Pacific Indem. Co. v. Universal etc. Ins. Co. (1965) 232 Cal.App.2d 541, 543, 43 Cal.Rptr. 26.) An examination of Wildman and the cases applying it reflects that in all cases the policy unquestionably covered the vehicle involved, and the issue resolved itself into whether restrictions relating to the person who could operate the vehicle or relating to the manner of its use would be enforced. The basic issue herein is whether or not the forklift involved in the accident was insured by American's policy. (See Pacific Indemnity Co. v. Liberty Mutual Ins. Co. (1966) 239 A.C.A. 365, 367, 48 Cal.Rptr. 667 and passim.)
The provisions formerly found in sections 402 and 415 of the Vehicle Code were reenacted as sections 17150 and 16450-16455, respectively, without substantial change in 1959. (Stats.1959, ch. 3, § 2, pp. 1645 and 1649, effective September 18, 1959.) The affect of 1963 amendments (Stats.1963, ch. 1259, §§ 1 and 3, pp. 2780 and 2781) which added section 11580.1 to the Insurance Code and amended section 16450 of the Vehicle Code is not at issue in this case. (See Bohrn v. State Farm etc. Ins. Co. (1964) 226 Cal.App.2d 497, 504--505, 38 Cal.Rptr. 77.)
The pertinent provisions, in addition to those set forth above, read as follows:
'EXCLUSIONS
'This policy does not apply:
* * *
* * *
'(c) except with respect to operations performed by independent contractors and except with respect to liability assumed by the insured under a contract as defined herein, to the ownership, maintenance, operation, use, loading or unloading of * * automobiles if the accident occurs away from such premises ['owned by, rented to or controlled by the named insured'] or the ways immediately adjoining, * * *
'CONDITIONS
'3. Definitions
* * *
* * *
'(b) Automobile. The word 'automobile' means a land motor vehicle, trailer or semitrailer, provided: [There follows other provisions which are not material here, because, it is agreed by all parties and was found by the court that the forklift in question was an automobile as defined in American's policy. (Cf. Pacific Indemnity Co. v. Liberty Mutual Ins. Co., supra, 239 A.C.A. 365, 373 [48 Cal.Rptr. 667])]' There is also a reference to automobiles in an endorsement relating to operations performed by independent contractors, which will be hereinafter noted, and, in the title of an endorsement which gives discounts for 'the premium for Liability, Elevator Collision, and Medical Payments insurance.' It refers to '(Automobile and General Liability Insurance)'.
The matter came before the lower court on an agreed statement of facts including copies of the respective insurance policies involved. Construction of the meaning to be given to the provisions of the policies is therefore a matter of law. (Continental Cas. Co. v. Phoenix Constr. Co. (1956) 46 Cal.2d 423, 429-430, 296 P.2d 801, 57 A.L.R.2d 914; and see Parsons v. Bristol Development Co. (1965) 62 Cal.2d 861, 865-866, 44 Cal.Rptr. 767, 402 P.2d 839.) The rules to be applied in interpreting insurance contracts were reviewed by this court in Jarrett v. Allstate Ins. Co. (1962) 209 Cal.App.2d 804, at pp. 809-810, 26 Cal.Rptr. 231, and need not be repeated here. Suffice it to say that Pacific and Maryland rely upon the rule that requires liberal construction in favor of the insured--or an injured third person, or one seeking to be indemnified by the terms of the policy; whereas American contends that the applicable rule is that which recites: 'when the terms of the policy are plain and explicit the courts will not indulge in a forced construction so as to fasten a liability on the insurance company which it has not assumed.' (Id., p. 810, 26 Cal.Rptr. p. 234.)
The concession and the finding that the definition of 'automobile' in American's policy includes the forklift is not a concession of coverage. Maryland and Pacific must show that the forklift is an automobile in order to come within the Wildman doctrine, because there is no general principle that the insurance of the owner on any power tool or equipment must cover all users of such equipment regardless of the policy terms and restrictions. On the other hand, American wants to show that its agreement does not cover the forklift because its policy does not cover hazards created by the general ownership or operation of automobiles.
It is first asserted that since the provisions set forth under 'Coverage A--Bodily Injury Liability' are broad enough to cover loss from any cause, they cover loss from the operation or use of motor vehicles, and any attempt to limit the coverage is illegal. (1) 'if the accident occurs [on] such premises ['premises owned by, rented to, or controlled by the named insured'] or the ways immediately adjoining.'
(2) 'the ownership, maintenance, operation, use, loading or unloading of * * * automobiles * * * with respect to operations performed by independent contractors.'
(3) 'the ownership [etc.] * * * with respect to liability assumed by the insured under a contract as defined [in the policy].
It is asserted that because the foregoing exceptions to the general automobile liability exclusion contemplate some liability on account of injuries resulting from the ownership, maintenance, operation, use, loading or unloading of automobiles, the provisions of the Vehicle Code, as then extant, required the extension of coverage to the plant owner and its employee as permissive users of the forklift. The provisions of the Vehicle Code require no such result. Section 16450 stated: 'A 'motor vehicle liability policy,' * * * means an owner's policy or an operator's policy, or both, of liability insurance, * * * issued * * * to or for the benefit of the person named therein as assured.' Section 16451 referred to an owner's policy as follows: 'An owner's policy of liability insurance shall: (a) Designate by explicit description or by appropriate reference all motor vehicles with respect to which coverage is thereby intended to be granted. (b) Insure the person named therein and any other person, as insured, using any described motor vehicle with the express or implied permission of said assured, against loss from the liability imposed by law for damages arising out of ownership, maintenance, or use of such motor vehicle * * *.' (Emphasis added.) Inquiry is therefore directed to a determination of whether the forklift is designated as a motor vehicle to which coverage was intended to be granted by American's policy.
The provisions requiring the description of the vehicle or vehicles insured was deleted effective as of January 1, 1966 (Stats.1965, ch. 2003, § 2, p. 4531), but an 'owner's policy' must still cover the vehicle involved. Although an operator's policy (Veh.Code § 16452) by the terms of the statute cannot be limited in its territorial scope, it did not confer derivative rights on others. (See Wisdom v. Eagle Star Ins. Co. (1963) 211 Cal.App.2d 602, 605-606, 27 Cal.Rptr. 599; and cf. Mission Ins. Co. v. Feldt (1964) 62 Cal.2d 97, 41 Cal.Rptr. 293, 396 P.2d 709; and note amendments effective Jan. 1, 1966 by Stats.1965, ch. 2003, § 3, p. 4532.)
It nowhere appears that the accident occurred on premises owned by, rented to, or controlled by the named insured. Maryland complains that this provision is ambiguous and that the entire exclusion should be declared void. The efficacy of such provision has been upheld (Employers etc. Ins. Co. v. Pac. Indem. Co. (1959) 167 Cal.App.2d 369, 374-375, 334 P.2d 658). The insurer may limit the territorial extent of the coverage in its inception (Mc-Farland v. New Zealand Ins. Co. (1959) 176 Cal.App.2d 422, 424-425, 1 Cal.Rptr. 482) even though it may not by a partial exclusion territorially restrict an attribute of the general coverage which is required by statute (see Mission Ins. Co. v. Brown (1965) 63 A.C. 532, 533-535, 47 Cal.Rptr. 363, 407 P.2d 275).
It is not contended that the plant owner or its employee are entitled to coverage by reason of any terms of its lease contract between
The trial court did find that the lessee-plant owner and its employer 'were using the said forklift * * * as independent contractors as defined and used in American['s] * * * policy.' The words 'independent contractors' are not included within the portion of the policy relating to 'Definitions,' so it must be assumed that the reference is to the exception to the exclusionary clause which has been noted above. In a sense a lessee of equipment may be considered as an independent contractor as distinguished from an agent or employee of his lessor. The phrase in question, however, does not purport to restrict the exclusion by leaving within the general coverage liability for accidents involving the use of automobiles owned by the named insured and used by its lessee as an independent contractor. It plainly states that the liability, if any, of the named insured for operations performed by independent contractors, which is ostensibly within the general coverage, is not affected by the exclusion, and shall apply even though it may arise from the ownership, maintenance, operation, use, loading or unloading of automobiles. There is no designation of any particular or general class of motor vehicles in this coverage. The vehicle involved may belong to the named insured, the independent contractor, or a third person. The predicate of the liability which is referred to in the exception is not the vicarious liability attached to the ownership of a motor vehicle under California law, but the liability which one contracting party may have to bear because of the acts or omissions of the party with whom he has contracted. (Cf. Kuntz v. Del E. Webb Constr. Co. (1961) 57 Cal.2d 100, p. 107, with pp. 104-105, 18 Cal.Rptr. 527, 368 P.2d 127; McDonald v. Shell Oil Co. (1955) 44 Cal.2d 785, pp. 788-790, with pp. 790-791, 285 P.2d 902; and Woolen v. Aerojet General Corp. (1962) 57 Cal.2d 407, pp. 412-413; and dissent pp. 413-414 with pp. 410-411, 20 Cal.Rptr. 12, 369 P.2d 708; and see Employers etc. Ins. Co. v. Pac. Indem. Co., supra, 167 Cal.App.2d 369, 375, 334 P.2d 658.) The owner and lessor of the forklift in no sense contracted with the lessee-plant owner for any particular operation of the forklift. The lessee's actual use and operation of the forklift was dictated by its desires and needs, and not by the necessity of fulfilling any contractual obligations to the lessor. The facts, if they be facts, that the plant owner and its employee were using the forklift as an independent contractor in performing an obligation to the trucker to load the truck, or, contrariwise, that the trucker was an independent contractor in respect to the obligation to the plant owner to load and haul the case goods, are completely irrelevant and immaterial insofar as the obligations of the lessor and American, as its insurer, are concerned.
Pacific and Maryland have failed to show that the vehicle involved was covered by American's policy. 'The general rule clearly is that the insurer may limit the risks as to which the policy is written. (7 Appleman, Insurance Law and Practice, § 4255, p. 17.) In Continental Cas. Co. v. Phoenix Constr. Co., 46 Cal.2d 423, 432, 296 P.2d 801, 57 A.L.R.2d 914, the technique applicable to restrictions of coverage in an insurance policy is thus formulated: '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.' San Pedro Properties, Inc. v. Sayre & Toso, Inc., 203 Cal.App.2d 750, 754, 21 Cal.Rptr. 844, 847, States: 'The insurer had the right to limit the coverage of the policy in plain understandable language and in conformity with Fullerton v. Houston Fire & Cas. Ins. Co.
United Services Auto. Ass'n v. Fidelity & Cal. Co. Industrial Indem. Co. v. General Ins. Co. Employers etc. Ins. Co. v. Pac. Indem. Co., Amer. Auto. Ins. Co. v. Amer. Fid. & Cas. Co.The reference to automobiles in the endorsement referring to independent contractors further narrows that exception to the exclusion which has just been reviewed. It provides that such liability as might be imposed from automobiles through operations of an independent contractor will not be covered if 'the named insured [the lessorowner] has other valid and collectible insurance against such hazard.' This endorsement in no sense restricts the application of the general automobile exclusion. It does not increase, but rather decreases the scope of the exception to that exclusion, and does not in any way affect the conclusion that the coverage remaining is not motor vehicle coverage within the scope of Wildman and the provisions of the California Vehicle Code.
Nor can a title on an endorsement which indicates its applicability to 'Automobile and General Liability Insurance' Change the coverage of the policy when the provisions contained therein have no possible relationship to the scope of the coverage in dispute.
It may be assumed, as was done by the trial court, that if the policy insured the vehicle and the owner's liability for its operation and use, that a provision which purported to exclude liability from permissive use by a lessee would be against the public policy of this state. (See Financial Indem. Co. v. Hertz Corp. (1964) 226 Cal.App.2d 689, 695-700, 38 Cal.Rptr. 249.) Here, however, there is an absence of an agreement to furnish any coverage to the owner for the vehicle in question.
The foregoing conclusions are buttressed by examination of the policies issued by Pacific and Maryland. The former is entitled 'Comprehensive Liability Policy,' and includes both as to bodily injury and death, and as to property damage three categories: 'Division 1--Automobiles: The ownership, maintenance or use including loading and unloading thereof; Division 2--Products: * * *; Division 3--Other than Automobile or Products.' The policy purports to cover permissive users of owned or hired automobiles and recites that it shall comply with the provisions of financial responsibility laws. Significantly, the policy contains an exclusion for the coverage under Divisions 2 and 3 (non-automobile) which is strikingly similar to that in the American policy which has been reviewed herein.
The Maryland policy is entitled 'Comprehensive Liability Policy (Automobile and General Liability).' The coverage by endorsement is divided into four categories: 'A--Bodily Injury Liability--Automobile; B--Property Damage Liability--Automobile; C--Personal Injury Liability--Except Automobile; D--Property Damage Liability--Except Automobile.' This policy also purports to cover permissive users of owned The American policy on the other hand is entitled 'Comprehensive General Liability Policy' as distinguished from the qualifying '(Automobile and General Liability)' found in Maryland's policy, and the unqualified 'Comprehensive Liability Policy' which identifies both Maryland's and Pacific's policies. It only has two categories of coverage, 'Bodily Injury Liability' and 'Property Damage Liability,' and both are subject to the general automobile exclusion.
The record further reflects that in a first amended complaint another insurance company was named as the liability insurer of the lessor-owner. This company answered and admitted that it had insured specific automobiles of the lessor-owner but denied other allegations of the amended complaint. It joined in a stipulation for the filing of a second amended complaint, but was not named therein. Whether this insurer covered the forklift or whether the lessor-owner was satisfied to rely on an alleged indemnity agreement with its lessee without insuring its possible liability is not disclosed by the record. It is uncontrovertible, however, that American did not agree to cover the liability of the lessor which might arise from the 'ownership, maintenance, operation, use, loading or unloading of' the forklift. Under these circumstances, and, in the absence of any policy provision to the contrary, there is no warrant for imposing derivative coverage for the acts or omissions of those who might use the forklift with the express or implied permission of the owner.
Compare Pacific Indemnity Co. v. Liberty Mutual Ins. Co. (1966) 239 A.C.A. 365, 370, fn. 4, 48 Cal.Rptr. 667.
The policies of Pacific and Maryland are each primary and must prorate the liability
Consideration of the remaining points raised on this appeal leads to what a former member of this court termed 'the legalistic labyrinth of the provisions of the policies' when he noted that 'each case apparently presents a particularistic and unique problem.' (American Auto. Ins. Co. v. Transport Indem. Co. (1962) 200 Cal.App.2d 543, 554, 19 Cal.Rptr. 558, 559.)
Before examining the provisions of the policies which purport to control the situation where other insurance exists, it is necessary to review just what insurance coverage the respective policies purport to furnish.
It has been determined that American furnished no coverage at all in respect to either the plant owner or its employee.
Under the theory advanced by Maryland and Pacific, the American policy, if it had covered the owner of the forklift, would have covered the plant owner and its employee under the statutory provision which required indemnity for 'any other person * * * using any described motor vehicle with the express or implied permission of said assured.' (Veh.Code § 16451.)
Pacific's policy, issued to the trucker, expressly covers the loading and unloading of the vehicle in question. Its definition of insured includes 'any person [the plant owner's employee] while using ['including loading and unloading'] an owned * * * automobile [the truck and two trailers] and any * * * organization [the plant owner] legally responsible for the use [loading and unloading] thereof, provided the actual use * * * is with his [the named insured's] permission.' Maryland's policy purports to cover the plant owner as named insured for any liability 'arising out of the ownership, maintenance or use of any automobile' (Coverages A and B), and, as well, all liability for personal injuries and property damage 'Except Automobile' (Coverages C and D). Its definition of insured under the automobile coverage includes 'any person [plant owner's employee] while using * * * a hired automobile [the forklift] * * * with his [the named insured's] permission.' Under the general liability coverage--'Except Automobile'--the coverage does not include the liability of an ordinary employee. The latter coverage apparently includes liability for 'loading or unloading of automobiles if the accident occurs [on the] premises owned by, rented to, or controlled by the named insured or the ways immediately adjoining' because accidents involving automobiles which occur away from that location are excluded from the general liability coverage as was the case in the American policy.
The following cases review the coverage for loading and unloading: Continental Cas. Co. v. Zurich Ins. Co. (1961) 57 Cal.2d 27, 33, 17 Cal.Rptr. 12, 366 P.2d 455; General Pump Service, Inc. v. Travelers Ins. Co. (1956) 238 A.C.A. 85, 89-92, 47 Cal.Rptr. 533; Miller v. Western Pioneer Ins. Co. (1965) 237 A.C.A. 145, 148-149, 46 Cal.Rptr. 579; San Fernando valley Crane Service, Inc. v. Travelers Ins. Co. (1964) 229 Cal.App.2d 229, 234-237, 40 Cal.Rptr. 165; Travelers Ins. Co. v. Norwich Union Fire Ins. Soc. (1963) 221 Cal.App.2d 150, 153, 34 Cal.Rptr. 406; Colby v. Liberty Mutual Ins. Co. (1963) 220 Cal.App.2d 38, 42-44, 33 Cal.Rptr. 538; Industrial Indem. Co. v. General Ins. Co. (1962) 210 Cal.App.2d 352, 356-358, 26 Cal.Rptr. 568; Standard Acc. Ins. Co. v. Hartford Acc. & Indem. Co. (1962) 206 Cal.App.2d 17, 21-22, 23 Cal.Rptr. 424; American Auto. Ins. Co. v. Transport Indem. co. (1962) 200 Cal.App.2d 543, 549-550, 19 Cal.Rptr. 558; Columbia Southern Chemical Corp. v. Manufacturers & Wholesalers Indem. Exch. (1961) 190 Cal.App.2d 194, 202-203, 11 Cal.Rptr. 762; Pleasant Valley etc. Ass'n v. Cal-Farm Ins. Co. (1956) 142 Cal.App.2d 126, 131, 298 P.2d 109; Amer. Auto. Ins. Co. v. Amer. Fid. & Cas. Co. (1951) 106 Cal.App.2d 630, 635-638, 235 P.2d 645; and see Suter, Loading and Unloading (1946) 31 Ins. Counsel J. 112; Brown & Risjord (1962) Loading and Unloading: The Conflict Between Fortuitous Adversaries (1962) 29 Ins. Counsel J. 197; Risjord, Loading and Unloading (1960) 13 Vanderbilt L. Rev. 903.
The applicable provision is, 'The unqualified word 'insured' includes the named insured and also includes (1) under coverages A and C, * * * any executive officer, director or stockholder thereof while acting within the scope of his duties as such and any organization or proprietor with respect to real estate management for the named insured, and if the named insured is a partnership, the unqualified word 'insured' also includes any partner therein but only with respect to his liability as such.'
From the foregoing it is clear that the plant owner is entitled to coverage under Pacific's policy, and under coverages A and C of the Maryland policy. The employee is entitled to be protected as an insured under Pacific's policy and under coverage A of the Maryland policy. The question of which insurance is primary and which is excess or whether the liability should be proportioned between the insurers involves consideration of the provisions of the policies which purport to cover the situation. The Pacific policy provides: 'Other Insurance. If the insured has other insurance against a loss covered by this Policy, the Company shall not be liable under this Policy 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 valid and collectible insurance against such loss; provided, however, the insurance under this Policy shall be excess insurance with respect to (1) loss arising out of the use of any non-owned or hired automobile * *' The Maryland policy provisions are as follows: 'Other Insurance. The insurance afforded by this policy shall be excess insurance over any other valid and collectible insurance available to the insured against any loss covered hereunder.'
If the loss was simply one arising out of the operation by the plant owner and its employee of the truck insured by Pacific the general rule would recognize Maryland's excess clause and place primary coverage on Pacific as insurer of the owner.
See American Automobile Ins. Co. v. Republic Indemnity Co. (1959), 52 Cal.2d 507, 511-513, 341 P.2d 675; Pacific Indemnity Co. v. Liberty Mutual Ins. Co., (1966), 239 A.C.A. 365, 371-372, 48 Cal.Rptr. Ins. Co. (1965), 232 Cal.App.2d 541, 543, 43 Cal.Rptr. 26; Bohrn v. State Farm etc. Ins. Co. (1964), 226 Cal.App.2d 497, 505-506, 38 Cal.Rptr. 77; Fireman's Fund Indemnity Co. v. Prudential Assurance Co. (1961), 192 Cal.App.2d 492, 494, 13 Cal.Rptr. 629; Pac. Indem. Co. v. Cal. State Auto. Ass'n (1961), 190 Cal.App.2d 293, 295-296, 12 Cal.Rptr. 20; Royal Exchange Assur. v. Universal Underwriters Ins. Co. (1961) 188 Cal.App.2d 662, 665 and 667, 10 Cal.Rptr. 686; Firemen's Ins. Co. v. Continental Cas. Co. (1959), 170 Cal.App.2d 698, 705, 339 P.2d 602; and see Barksdale, Conflicting Decisions of Primary and Excess Coverage Under Automobile Liability Policies (1965) 32 Ins. Counsel J. 158; Risjord, Other Insurance or the Tortuous Channels of Litigation Involving the Conflict Between Fortuitous Adversaries (1962) 29 Ins. Counsel J. 612; Annotation, Apportionment of Liability Between Automobile Liability Insurers, etc. (1961) 76 A.L.R.2d 502; Russ, The Double Insurance Problem--A Proposal (1961) 13 Hastings L.J. 183; Note, Insurance: 'Other Insurance' Clauses: Reconciling Conflicting Provisions (1958) 5 U.C.L.A. L.Rev. 157.
The situation is complicated by the unusual nature of the use of a vehicle owned by the named insured which the loading clause imparts, and the fact that a second vehicle is involved. In the usual case the vehicle owned by the named insured is the instrumentality which effects the damage and injury, but in the loading and unloading situation the owned vehicle may or may not be such an instrumentality.
The general approach to multiple coverage when only one operator and one vehicle are involved in the act or omission which causes liability has been noted above. (See Fns. 10 and 11.) Several different approaches have been advanced to solve the problem engendered by the complex factors arising from additional insurance under the loading and unloading clause.
The pragmatic approach which treats the situation as though the liability arose from the operation of the trucker's vehicle by the plant owner's employee is evidenced by the latest pronouncement on the subject.
Miller v. Western Pioneer Ins. Co. (1965) 237 A.C.A. 145, 46 Cal.Rptr. 579 involved an action by the truck driver against an unloading subcontractor and his employees. The court found that the trucker's insurance covered the subcontractor and his employees as permissive users unloading the truck. The subcontractor had comprehensive liability insurance which covered his general business risks and automobile liability. His employees, however, were not covered as a named insured. Each policy had an 'other insurance' clause which included provisions for prorating coverage and for excess insurance when other automobiles or nonowned automobiles were involved. The court applied the rule in American Automobile Ins. Co. v. Republic Indemnity Co. (1959) 52 Cal.2d 507, 341 P.2d 675; Continental Cas. Co. v. Zurich Ins. Co. (1961) 57 Cal.2d 27, 17 Cal.Rptr. 12, 336 P.2d 455, and other cases which have applied the nonowned excess provision to insurance covering the driver of a vehicle as against the owner's insurer. It concluded that the trucker's insurance was primary, and reversed the judgment of the lower court which had prorated the liability. Having so concluded it did not discuss the principle that since there was only one coverage afforded the negligent employee, Travelers Ins. Co. v. Norwich Union Fire Ins. Soc.
Industrial Indem. Co. v. General Ins. Co. American Auto. Ins. Co. v. Transport Indem. Co. Pleasant Valley, etc. Ass'n v. Cal-Farm Ins. Co.In Pleasant Valley etc., Ass'n, supra, the court applied the excess-prorate formula to the dual coverage afforded the plant owner. It additionally noted, however, that the plant owner, which was covered by its own insurance as well as the additional insurance furnished by the unloading trucker, was only liable under the doctrine of respondeat superior; and that its employee was not covered by two insurances but only by that furnished by the trucker. There was nothing therefore to prorate in regard to the employee, and it may be inferred, as noted in later cases, that the right of the employer to reimbursement from the employee, made the employee, and consequently his insurer, subject to the primary liability (142 Cal.App.2d at pp. 135-136, 298 P.2d 109). In Standard Acc. Ins. Co. v. Hartford Acc. & Indem. Co. (1962) 206 Cal.App.2d 17, the above concept was advanced (id., p. 21, 23 Cal.Rptr. 424), but the count found double coverage for the employer and failed to consider the point further. Industrial Indemnity Co., supra, analyzes the coverage to the unloader and his employee and flatly states: 'Industrial concedes that the general liability provisions of its policy cover the crane owners as named insured for liability arising from activities of the crane. It argues however, that the negligent crane operator employee is not covered by its policy as an additional insured. It therefore concludes that General, under whose policy the crane operator is covered, is primary, since the insurance alone covering the negligent employee is deemed primary over a policy covering a person vicariously liable. (See Continental Cas. Co. v. Phoenix Constr. Co., 46 Cal.2d 423, 428-429, 296 P.2d 801, 57 A.L.R.2d 914; Pleasant Valley [etc.] Assn. v. Cal-Farm Ins. Co., supra, 142 Cal.App.2d 126, 136, 298 P.2d 109.) Under the cases just cited, Industrial's conclusion must be sustained if the crane operator is not an additional insured within the meaning of the Industrial policy.' (210 Cal.App.2d at p. 359, 26 Cal.Rptr. at p. 572.) The court then determined that the crane was not an automobile within the automobile liability coverage of the crane owner's policy and that therefore the employee was not covered. (Id., pp. 359-361, 26 Cal.Rptr. 568.) Presumably, if he had been covered, and if the crane were a vehicle, certain partial escape and excess provisions of the trucker's policy would come into play. The court concluded: 'Therefore, since Industrial's policy does not cover the crane operator, and General's does, the General policy is primary with respect to coverage and it then follows that General is also obligated to furnish a defense to the action against the crane operator and its owners. [Citing again the cases last mentioned.]' (Id., p. 362, 26 Cal.Rptr. p. 574.)
Another approach to the question of multiple coverage is that which found expression in Amer. Auto. Ins. Co. v. Seaboard Surety Co. (1957) 155 Cal.App.2d 192, 318 P.2d 84. The case involves the relative responsibility of a lessor's insurer, and a lessee's insurer, admittedly both furnishing coverage to the lessor, for injuries suffered by an employee of the lessee from the negligence of an employee of the lessor. The court observed as follows: 'The reciprocal tights and duties of several insurers who have covered the same event do not arise out of contract, for their agreements are Offer v. Superior Court,
Fireman's Finance Co. v. Palatine Ins. Co., Truck Ins. Exchange v. Torres,The two concepts which have just been examined were brought together in Colby v. Liberty Mutual Ins. Co. (1963) 220 Cal.App.2d 38, 33 Cal.Rptr. 538. The Claimant as in this case and Industrial Indem. co., supra, was the truck driver. The court found, as is conceded in this case, and as was found in Industrial Indem. Co., that the trucker's insurance covered the equipment operator and his employer by virtue of the additional insurance furnished those using the truck in unloading operations. (220 Cal.App.2d at pp. 42-44, 33 Cal.Rptr. 538.) The opinion there referred to those portions (210 Cal.App.2d at pp. 359 and 362, 26 Cal.Rptr. 568) of Industrial Indem. Co., which are set forth above in this opinion, and recited: 'The problem which must be resolved is whether the crane operator is afforded coverage by the policy issued * * to [the equipment owner].' (Id., 220 Cal.App.2d p. 44, 33 Cal.Rptr. p. 542.) The court found that on the facts presented the crane was an automobile within the terms of the crane owner's automobile liability policy and that the operator was covered by virtue of the provisions of the Vehicle Code and Wildman, supra, (48 Cal.2d 31, 307 P.2d 359). (Id., 220 Cal.App.2d pp. 44-45, 33 Cal.Rptr. 538.) Herein it is conceded that the forklift is an automobile and, as has been noted, Maryland's automobile coverage expressly includes permissive use by its employees of hired automobiles. Having determined the applicable coverages, the court in Colby examined the respective other insurance clauses and found that the trucker's policy, as does the one herein, had a prorate clause with excess if loss arose out of use of a nonowned vehicle, and that the crane owner's policy purported to be excess to any other insurance (id., pp. 45-46, 33 Cal.Rptr. 538), a situation which parallels that in this case. The court rejected the contention of the trucker's insurer that the excess insurance clause of its policy should apply because the crane was a nonowned vehicle, and related its coverage to the truck of the named insured (id., p. 46, 33 Cal.Rptr. 538). It refused, however, to approve the finding of the lower court that the excess provision of the crane owner's policy should be given effect. After quoting extensively from it the opinion concludes: 'The reasoning of American Auto. Ins. Co. v. Seaboard Surety Co., supra, 155 Cal.App.2d 192, 318 P.2d 84, is applicable to the present case and requires the determination that each insurer is liable for its pro rata portion of the loss.' (Id., at p. 48, 33 Cal.Rptr. at p. 544.) It is obvious that the court considered the case as one, which in the words of Justice Bray 'involved a conflict between two primary policies' (fn. 12, supra). A similar observation was made in Miller in which it is stated: 'In other words, Colby presents a situation where the use of two vehicles concurs to cause an injury and it was therefore proper to prorate the liability between the two insurers.' (237 A.C.A. at p. 154, 46 Cal.Rptr. at p. 585; and cf. Bigge Drayage Co. v. National Indem. Co. (1966) 239 A.C.A. 1033, 1035, 49 Cal.Rptr. 287.)
The foregoing comments serve also to distinguish Colby and the instant case from the other authorities cited as supporting Miller. There remains for consideration Pacific's contention that it should be excess to Maryland's coverage.
It first contends that the Pacific excess clause applies because the forklift was a nonowned automobile. This contention was advanced and rejected in Colby wherein the court stated: 'It is asserted that the 'crane Pacific further seeks a determination that its coverage is excess on general equitable grounds because Maryland's insured was the employer of the tortfeasor. The cases hereinabove referred to dealing with the loading and unloading coverage clearly demonstrate that liability for the indemnity arises regardless of the manner in which the vehicle unloaded was operated, and that in the usual case where the vehicle is the only one involved the loss will fall on the insurer covering its owner despite the negligence of others who may be covered by general insurance (see fns. 8 and 9, supra).
It is concluded that the Pacific and Maryland insurance should be prorated. The Lloyd's insurance has provisions similar to those found in McConnell v. Underwriters at Lloyd's (1961) 56 Cal.2d 637, 646, 16 Cal.Rptr. 362, 365 P.2d 418, and Peerless Cas. Co. v. Continental Cas. Co. (1956) 144 Cal.App.2d 617, 623-626, 301 P.2d 602. Those cases indicate that the true excess insurance furnished by those policies is not to be computed in the original prorate because no liability can attach until the underlying (here Maryland) insurance is exhausted. Pacific and Maryland must therefore share the first $125,000 of the loss and expense in the proportion of 80 per cent for Pacific and 20 per cent for Maryland. If that insurance is exhausted before all liability is discharged, the excess Lloyd's insurance will then be chargeable.
See Continental Cas. Co. v. Zurich Ins. Co. (1961) 57 Cal.2d 27, 35-38, 17 Cal.Rptr. 12, 366 P.2d 455.
The judgment is reversed with directions to the trial court to amend its findings of fact and conclusions of law and enter judgment declaring the respective rights and obligations of the parties in accordance with the views expressed in this opinion. American to recover all costs of its appeal from respondents Maryland and Pacific. Pacific to recover its costs as appellant from Maryland.
SULLIVAN, P. J., concurs.