Farmers Insurance Exchange v. Frederick

244 Cal. App. 2d 776, 53 Cal. Rptr. 457, 1966 Cal. App. LEXIS 1628

• Court: California Court of Appeal
• Decided: September 14, 1966
• Docket: Civ. 29655
• Status: Published

Opinions

ROTH, P. J.

This appeal from a declaratory judgment comes to us by way of an agreed statement pursuant to rule 6 (a) of the California Rules of Court. The essential facts are not in dispute.

Karl Frederick, Jr. (Frederick), appellant herein, owned a 1960 half-ton pickup truck, which was licensed as a eommercial vehicle but which he used for personal purposes. He owned no other vehicle. He testified that the truck “was used . . . solely to drive to and from work, for camping trips and to carry [his] skindiving equipment. ’ ’ The truck was not used in his work.

On August 26, 1961, Frederick, being an occupant, permitted Paul 0. Edwards III (Edwards) to drive the truck. Frederick and Edwards were injured when Edwards drove the truck off the road into an embankment.

Frederick was the named insured under a public liability automobile insurance policy covering the truck. The policy had been issued to him by Farmers Insurance Exchange (Farmers). Edwards’ father had a policy covering Edwards’ liability substantially similar to the Farmers policy issued by Factory Mutual Liability Insurance Company of America, (Factory Mutual). This latter policy was limited in coverage to a “private passenger automobile.” Both companies had denied liability to Frederick or Edwards.

Farmers brought this action for declaratory relief against Frederick and Edwards seeking a judicial determination of its responsibilities under its policy. Frederick cross-complained against both companies and Edwards, seeking a declaration of coverage as to him under both policies. Edwards cross-complained against both companies and Frederick for the same purpose. Judgment went against both on their respective cross-complaints. Edwards does not appeal.

On the Frederick cross-complaint the judgment was in favor of Farmers against Frederick on the Farmers policy on the theory that he was specifically excluded from coverage as a “named insured.” The trial court also held that the Factory Mutual coverage for an uninsured motorist did not include Frederick because its policy covered only a “private passenger automobile” and that the truck here involved did not come within that definition.

This appeal is by Frederick.

We treat first the Farmers policy. In part I thereof under coverages A and B, Farmers contracted liability insurance for “(A) Bodily Injury Liability, . . . which the insured becomes legally obliged to pay because of (A) bodily injury to any person, . . . arising out of the ownership ...” with respect to the described vehicle and in the same part 1 proceeds as follows under caption of “Definition of ‘Named Insured’and‘Insured’. . . .

“ (1) If the insured named in Item 1 of the [policy] is an individual, the term ‘named insured’ includes his spouse if a resident of the same household ;

“(2) The unqualified word ‘insured’ includes .... the named insured and his relatives, (b) with respect to the described automobile, any other person . . . , provided the actual use of the automobile is by the named insured or with his permission, . . . ;

“(3) The term ‘the insured’ is used severally and not collectively, but the inclusion herein of more than one insured shall not increase the limits of the Exchange’s liability.”

Under the caption “Exclusions” in paragraph II of said exclusions, the policy reads:

‘ ‘ This policy does not apply under part 1:

“11. To bodily injury to the insured or any member of the family of the insured residing in the same household as the insured. ’’ (Italics added.)

It need hardly be added that thereafter in approximately 11 closely printed pages of the policy the word “insured” is used many times. However, in portions of various contextual subject matter, the word “insured” is departed from and the designation “named insured” is used. Thus, in the paragraph on “Assignment” policy reference is to the legal representative of the “named insured.” Under paragraph on “Cancellation,” reference is “This policy may be cancelled by the named insured. . . .”

The use and repeated use of the word “insured” in the Farmers policy demonstrates that it is used as a word of art. It has an artificially definite contractual meaning which is of considerable convenience to the drafting and reading of the insurance contract.

We start with the assumption that any interpretation of the Farmers policy is governed by the settled rule that where there are two possible constructions of an insurance policy, the one more favorable to the insured should be adopted. (Continental Casualty Co. v. Phoenix Constr. Co., 46 Cal.2d 423, at p. 437 [296 P.2d 801, 57 A.L.R.2d 914] ; Norton v. Farmers Automobile Inter-Insurance Exchange, 40 Cal.App.2d 556 [105 P.2d 136].)

In respect of its liability to Frederick, Farmers argues that Frederick, the named insured, is by definition an “insured” within the meaning of the exclusion “. . . bodily injury to the insured or any member of the family of the insured . . . ,” and as such he cannot, even though he is an injured claimant, sue himself and seek damages under the policy. If Frederick were driving, no one could quarrel with this construction.¹

Frederick’s position is that a proper construction of the exclusion clause read in the full context of the insurance contract, with settled rules of construction in mind, and considered in the light of the settled public policy of this state (see Atlantic Nat. Ins. Co. v. Armstrong, 65 Cal.2d 100 [52 Cal.Rptr. 569, 416 P.2d 801]) impels the conclusion that . the unqualified word insured . . .’’in the policy does by definition refer to the person who actually drives the vehicle, whether such driver be the named insured or some other who drives with the permission of the named insured. Thus, the exclusion quoted does not prevent the named insured from a recovery for bodily injuries suffered as a consequence of negligent operation when someone other than the named insured is properly driving his vehicle.

Frederick argues that Edwards, who was driving his truck, was the insured and that any injuries Frederick suffered as the result of negligent operation of his truck by Edwards, who drove it with his permission, must be compensated for under the policy.

It is clear, we think, without any ambiguity, that when Frederick purchased the policy, and Farmers issued and sold it to him, that both parties contracted not only that it would insure Frederick against public liability, but that it would in addition insure anyone who drove the vehicle with Frederick’s permission. Frederick therefore is not suing himself. He is suing Edwards, a third person, for whom he also contracted and for whose liability Farmers agreed to become responsible.

Farmers ’ claim of exclusion has a complexion of plausibility because Frederick was an occupant of the truck at the time of the accident. It is not suggested that Frederick was in control of the truck directly or indirectly. However, if Frederick or his spouse or both were negligently hit by their insured truck, which was being driven by Edwards with their permission, while either or both were walking through a pedestrian zone in another part of town, any semblance of plausibility would vanish. (See Armstrong, supra.)2

If Farmers intended to exclude Frederick or his spouse by contract from claiming benefits to which any member of the public is automatically entitled, then it seems to us that its policy must do more than use a word of art such as “insured,” which, when read in the context of the whole policy, has an ambiguous application to the facts at bench and to many other situations which can be posed. The exclusion at bench, assuming that public policy is not involved,³ might have reached appellant if its language were as specific as it is in the policy construed in the ease of Armstrong, supra.

In our opinion, if Farmers, by the exclusion meant to include within its operative effect injuries to the named insured even though some other insured was driving, the language of the exclusion must be such as to leave no doubt that the definition of “insured” is not merely for contractual convenience, but that the named insured can never recover under the policy, or recover only in certain situations, irrespective of who drives. The exclusion at bench is not that certain.

We note too that the policy, following section 16451 of the Vehicle Code, contracts to insure against “. . . bodily injury to any person. ...” (Italics added.) This language is analyzed at length in Bachman v. Independence Indem. Co., 214 Cal. 529 [6 P.2d 943] and in Travelers Ins. Co. v. Norwich Union Fire Ins. Soc., 221 Cal.App.2d 150 [34 Cal.Rptr. 406], In Norwich, the court discussing said phrase in respect of whether a named insured is covered by the phrase “bodily injury to any person, ’ ’ says at page 152:

“The question has not been determined in California. One case (Bachman v. Independence Indem. Co., 214 Cal. 529 [6 P.2d 943]) holds that similar policy language indemnifies the additional insured against wrongful death claim by heirs of the named insured. But it expressly leaves open the question whether a like result would follow if the named insured were himself seeking damages for injuries.

“Norwich argues that its policy, viewed as a whole, should not be construed to require it to pay or to defend against claims of the named insured arising from his own injuries. It points to conflicts which could arise under the cooperation clause if the coverage be so broad, and argues that the purpose of the policy is to indemnify against liability, rather than to insure against injury.

“But the policy on its face undertakes to indemnify either the named or the additional insured against liability for bodily injury ‘sustained by any person.’ To construe this as meaning ‘any person except the named insured’ would be to rewrite the policy. Other jurisdictions have uniformly held comparable policy language to cover claims of the named insured against the additional insured [citing eases].” (See Armstrong, supra.)

We recognize that in Bachman and in Norwich the court was not called upon, nor did it apply its construction of “any” to a specific situation such as we have at bench. However, our construction does no violence to the clear exclusion in the policy. If Frederick had been driving and Edwards had been the passenger, Edwards and not Frederick would have the cause of action.

We conclude that the language of the policy at bench excludes only the one who actually drives the insured vehicle and the resident members of his family. This construction is fortified by Armstrong, supra, and Globe Indem. Co. v. Universal Underwriters Ins. Co. (1962) 201 Cal.App.2d 9 [20 Cal.Rptr. 73], In the latter case property damage instead of bodily injury was involved. The court held the permissive driver to be the insured rather than the owner and allowed the owner to recover for damages to his own vehicle. At pages 18, 19, the court said:

“We do not believe that the provision in the policy excludes liability as to property owned by the named insured necessarily when the automobile is operated by a permissive user. The exclusion reads: ‘This policy does not apply: . . . (f) under coverage B, to injury to or destruction of (1) property owned by or rented to the insured. . . . ’ But, here, Moore, the permissive user, did not own the car. He became an additional assured under the policy by operation of law. Moore damaged Hacker’s car; Moore is liable; the policy protects him because the damaged car was not ‘property owned’ by him but by Hacker. We construe the policy against the insurer because it ‘ “prepared the policy” ’ [citation] ; the ‘presumption favors’ the insured [citation]. Universal cannot invoke the language of the exclusion, which it limited to the insured’s ‘owned’ property, to embrance property not owned, but borrowed by, an additional insured. ’ ’

Frederick also appeals the judgment of the court denying liability under the Factory Mutual policy issued to Edwards’ father. That policy, as pointed out, insures a . . private passenger automobile.” It states in part: “The following are insureds under Part I: ... (b) with respect to a non-owned automobile, ... (2) any relative, but only with respect to a private passenger automobile or trailer provided the actual use thereof is with the permission of the owner. ’ ’

The sole question on this portion of the appeal is whether Frederick’s one-half-ton pickup truck was a private passenger automobile within the meaning of the policy. The policy defines “private passenger automobile” as follows:

“ ‘ [P]rivate passenger automobile’ means a four wheel private passenger, station wagon or jeep type automobile; . . . ‘ utility automobile ’ means an automobile other than a farm automobile, with a load capacity of fifteen hundred pounds or less of the pick-up body, sedan delivery or panel truck type not used for business or commercial purposes. ’ ’

On the admitted facts it would appear that the pickup truck here involved was a utility vehicle.

Frederick contends, however, that the actual use of the vehicle, as well as its construction, is the test, citing Poncino v. Sierra Nevada Life & Casualty Co., 104 Cal.App. 671, 674-675 [286 P. 729]. The vehicle involved had a commercial license. The court in Poncino discusses the interpretation of the insurance clause “private passenger motor-driven car” and says “the manner in which a vehicle is used, as well as its construction, is an important factor in determining its character, . . .” (Id. p. 674.) The court’s quoted statement was in respect of the validity of instructions to the jury which required the jury to determine the character of the vehicle. The question, therefore, was one of fact, not one of law for the court. This conclusion is supported by Gaumnitz v. Indemnity Ins. Co. of North America, 2 Cal.App.2d 134 [37 P.2d 712], wherein the court allowed the jury to determine on the basis of expert evidence whether a particular vehicle was an “automobile truck” within the meaning of the policy. The vehicle involved was a Ford pickup truck. The type of license is not disclosed by the opinion. Mattson v. Maryland Casualty Co., 100 Cal.App. 96 [279 P. 1045] (hearing denied) poses a situation similar to the one at bench. “Automobile truck” was specifically excluded from an insurance policy. The vehicle consisted of a Model T chassis upon which was constructed a rectangular body. It was used among other things for delivery and it had a commercial license, but it was also used for personal purposes. The defense was that plaintiff was driving an automobile truck.

This case is before us, as pointed out in the beginning, on an agreed statement. Attached to the statement as Exhibit C is a transcript of the evidence taken as to the manner in which the truck was used and a stipulation that it had a commercial license.

Thus, there was before the trial court a definite question of fact. In this age of rubber wheels, in which autos of all description, irrespective of age or type, are used by the mass of the population, it is probable that many so-called trucks, even though they have a commercial license, are exploited solely for personal transportation by large segments of the working population, because they are within economic reach. It is probable too for similar reasons, that passenger vehicles with passenger licenses may be used for commercial purposes. However, since there is no specific finding on this facet of the case, we must assume, since there is a conflict and the judgment was in favor of Factory Mutual, that the trier of fact found that the vehicle in question was what it looked like, and what it was licensed for, to wit: a pickup truck and not a ‘ ‘ private passenger automobile. ’ ’

The judgment is reversed as to Farmers and affirmed as to Factory Mutual.

Fleming, J., concurred.

1 The ease at bench involves only a question of policy construction. We are not confronted with any question which might be raised under section 17158 of the Vehicle Code, to wit:

“§17158. Liability to ‘Guest’. No person riding in or occupying a vehicle owned hy him and driven hy another person with his permission and no person who as a guest accepts a ride in any vehicle upon a highway without giving compensation for such ride, nor any other person, has any right of action for civil damages against the driver of the vehicle or against any other person legally liable for the conduct of the driver on account of personal injury to or the death of the owner or guest, during the ride, unless the plaintiff in any such action establishes that the injury or death proximately resulted from the intoxication or willful misconduct of the driver.’’

2 We concede the logic of the dissent that a liability policy such as at bench is not a ‘'Health and Accident” policy. ” [I]t does not provide compensation for injuries, per se, but merely provides indemnity coverage for [others] . . . [and that] ... no legislative act would be required to demonstrate that no recovery under such conditions would be possible.” We agree with the statement: “If the limitation provided in section 16454 means anything, it means that a motor vehicle liability policy need not cover any third person’s liability for injury to the named insured ’ ’ on the assumption the insured means the driver.

Arguendo, we concede too, (though it is not settled), that section 16454 may extend beyond workmen’s compensation eases, and that if exclusions in the policy at bench were limited to a named insured and/or his relatives while riding in their insured vehicle which is being operated with the permission of the named insured, such limited exclusions may be consistent with public policy.

3 The public policy of this state, as codified by section 16451 of the Vehicle Code, is that a policy of public liability insurance covering any vehicle shall insure not only the owner but also ”... any other person . . . using any described motor vehicle with the express or implied permission of said assured.” (Section 16451, Veh. Code.)

We do not decide that it is against public policy for an insurance company to clearly exclude a named insured or members of his family from recovering for injuries suffered by the negligent operation of the vehicle owned by such named insured, but lawfully driven by another. We hold only that if such exclusion is intended, the contract must be without ambiguity. Thus, in the recent ease of Travelers Indemnity Co. v. Colonial Ins. Co., 242 Cal.App.2d 227 [51 Cal.Rptr. 724], it was held that a named insured who was injured on his truck while engaged in a joint operation with a forklift truck, could not recover from his insurer and that the specific exclusion which prevented such recovery, was not against public policy. In Travelers, supra, one David Boss rented a forklift truck from Converse Trucking Service (Converse) to use in demolition work. David had a comprehensive liability policy issued by Travelers. Converse, owner of the forklift truck, had an occupational comprehensive liability and a comprehensive automobile damage policy from Transport.

David hired one Jasper Payne to operate the forklift truck, which, insofar as pertinent here, consisted of lifting steel beams and depositing them on a separate truck, owned by Ralph Ross. In the course of this process, Payne so negligently loaded one of the steel beams, as to cause it to fall upon the truck owned by Ralph Ross, as a consequence of which Ralph suffered personal injuries. Ralph had a commercial vehicle policy covering his truck with Colonial. Ralph brought an action for damages and named as defendants therein David (insured, as noted above, by Travelers) and his employee Payne.

In Travelers, the exclusionary clause construed was “. . . (1) Coverage A—Bodily Injury or Death suffered by any person or persons, other than the insured or his employees, as the result of an accident occurring while this policy is in force; . . .’ (Italics added.) ”

The court in Travelers at page 234 said:

“Did the italicized portion of the above provision effectively exclude from coverage under Colonial’s policy a claim made by Ralph Ross, its named insured (Insured), as distinguished for example from a claim made by a third person? We believe it did. Section 415 subdivision (e) (now § 16454) as in effect at the time of the accident provided: ‘Any liability policy issued hereunder need not cover any liability for injury to the assured or any liability of the assured assumed by or imposed upon said assured under any workmen’s compensation law . . .’ (Italics added.) Thus the above exclusion from coverage was not violative of any public policy; indeed it was expressly sanctioned by the very section which required coverage for permissive users.”

In Armstrong, supra, the policy in question specifically said “This policy does not apply to: (B) any liability of the renter or driver . . . with respect to bodily injury to . . . or death of . . . (2) any person sustained while riding in, alighting from or getting into or upon any of the automobiles insured hereunder. ’ ’ In the case at bench the policy does not specifically exclude the named insured who would be comparable to the ‘ ‘ renter ’ ’ in Armstrong, while ‘ ‘ riding in ’ ’ the truck. The situation at bench is therefore stronger than Armstrong.