SHENK, J.
The defendants have appealed from an adverse judgment in an action on an insurance policy.
The plaintiff, as the owner of an automobile, was insured against so-called public liability by a policy issued February 6, 1931. The defendant insurance companies were the insurers. After the policy was issued the plaintiff sold the automobile to one Kin on an oral contract of conditional sale under which Kin paid a portion of the purchase price and received possession of the car. The plaintiff retained both the certificate of ownership and the certificate of registration which had been issued to him pursuant to the California Vehicle Act. (Stats. 1923, p. 517, as amended.) Neither the plaintiff nor Kin made a report of the sale to the department of motor vehicles, as required by the statute. Such was the status of the several parties on June 3, 1933, when the automobile, in the possession of and being operated by Kin, caused personal injuries to one Bunch, who • sued the plaintiff and Kin for damages for alleged negligent operation of the car. Judgment was rendered against Kin in the sum of $4,341.27 and in favor of Mr. Votaw. On appeal by the plaintiff therein Mr. Votaw was held to be equally liable in that amount on the ground that no notice of the sale had been given as required by law and that Mr. Votaw continued to be liable for injuries to a third person under the provisions of section 17143/4 of the Civil Code. Judgment was directed accordingly. (Bunch v. Kin, 2 Cal. App. (2d) 81 [37 Pac. (2d) 744].) Upon the issuance of execution, Mr. Votaw satisfied the judgment and brought the present action to recover the amount paid by him.
By the terms of the policy as originally issued the defendants herein were relieved from liability “if the interest in the automobile described herein is at any time other than sole and unconditional ownership”. The defendants eon-[26]*26tend that upon the sale to Kin the insured ceased to possess the ownership required by the provisions of the policy. Much argument is addressed to that point, but it is unnecessary to consider it because of our conclusion that the judgment in any event should be affirmed.
Prior to the accident involved in Bunch v. Kin, supra, the defendants sent to Mr. Yotaw a rider having the heading “Extended Coverage (omnibus clause) ”, to be attached to and to become a part of the policy. The pertinent portions of that rider read as follows:
“It is made a condition of the policy to which this endorsement is attached that, beginning at noon, standard time, January 1, 1933, at the address of the named insured stated herein, the insurance granted to the named insured under Part II relating to Property Damage and Public Liability and subject to all the terms, conditions and limitations of the policy, shall also inure to the benefit of any person or persons while riding in or legally operating the automobile described herein, and to any person, firm or corporation legally responsible for the operation thereof, provided such use or operation is with the permission of the named insured.”
In transmitting the foregoing endorsement or omnibus clause the defendants addressed a letter to Mr. Yotaw in which it was stated:
“We are enclosing an endorsement form which you will please attach to your policy. It is for the purpose of broadening the terms of the same to meet present automobile driving conditions. This endorsement provides for the extension of insurance under your policy to others who may be driving your ear (with your permission), and gives to them all the protection afforded you by your policy. It also provides for compliance with the Owners Responsibility Laws of the various states in which the Exchange operates or in which you may be traveling at the time of an accident involving your insured car. There will be no additional charge for the extension of this coverage. In granting the extension of this coverage the Governing Board of the Exchange is keeping to the policy of providing its members with adequate coverage to meet the various changes in laws and conditions affecting the driving of automobiles.”
It is the contention of the defendants that the provisions of the rider had no effect upon the coverage of the [27]*27original policy for the reason that the terms of the rider were to be “subject to all the terms, conditions and limitations of the policy”, including the sale and unconditional ownership clause.
The plaintiff contends that the purpose of the rider was fairly expressed by the letter of the defendants in transmitting it; that such purpose was to “broaden the terms” of the policy “to meet present day driving conditions”, and to make the “endorsement” cover “Owners Responsibility Laws of the various states in which the Exchange operates”, and that this “extension of coverage” was to furnish the insured with protection “to meet the various changes in laws and conditions affecting the driving of automobiles”.
The letter of transmittal undoubtedly described the purpose and effect of the omnibus clause correctly, at least in so far as it applies to the facts in this ease. By its terms the rider was intended to protect the insured in the event that he be held liable under any “Owners Responsibility Laws” of the states in which the defendants operated, which would include this state. If the language of the rider did not have that effect, it was meaningless.
It should be noted that section 171414 of the Civil Code had recently been enacted (1929) and was, very significantly, an “Owners Responsibility Law”, as reasonably contemplated by the omnibus clause. That section made it possible to impose liability by reason of ownership of the mere legal title of the car provided at the time of the injury the car was being operated with the consent of such owner. There can be no doubt that at the time of the accident the automobile in question was being operated by Kin with the consent of the plaintiff. (Sly v. American Indemnity Co., 127 Cal. App. 202 [15 Pac. (2d) 522]), and it had been established by final judgment that the plaintiff was “legally responsible” for such operation, notwithstanding the fact that he had contracted to sell it and had delivered it to Kin.
The effect of the omnibus clause was to modify in favor of the insured the terms of the original policy. Instances where this result has been declared are cited in the briefs. For example, the case of Firkins v. Zurich General A. & L. Ins. Co., 111 Cal. App. 655 [295 Pac. 1051], involved the public liability provisions of a policy which [28]*28provided that said policy should not cover “in respect of any automobile . . . while driven or manipulated by any person . . . under sixteen years of age in any event”. An endorsement attached to the policy provided: “The policy to which this endorsement is attached is hereby extended to apply to any person . . . legally responsible for the operation thereof, provided such use or operation is with the permission of the named insured, or if the named assured is an individual,' with the permission of an adult member of the named assured’s household ...” The accident occurred while the car was being operated, with the permission of the insured, by his fourteen-year-old son. The insurance company denied liability because of the age of the driver.
Free access — add to your briefcase to read the full text and ask questions with AI
SHENK, J.
The defendants have appealed from an adverse judgment in an action on an insurance policy.
The plaintiff, as the owner of an automobile, was insured against so-called public liability by a policy issued February 6, 1931. The defendant insurance companies were the insurers. After the policy was issued the plaintiff sold the automobile to one Kin on an oral contract of conditional sale under which Kin paid a portion of the purchase price and received possession of the car. The plaintiff retained both the certificate of ownership and the certificate of registration which had been issued to him pursuant to the California Vehicle Act. (Stats. 1923, p. 517, as amended.) Neither the plaintiff nor Kin made a report of the sale to the department of motor vehicles, as required by the statute. Such was the status of the several parties on June 3, 1933, when the automobile, in the possession of and being operated by Kin, caused personal injuries to one Bunch, who • sued the plaintiff and Kin for damages for alleged negligent operation of the car. Judgment was rendered against Kin in the sum of $4,341.27 and in favor of Mr. Votaw. On appeal by the plaintiff therein Mr. Votaw was held to be equally liable in that amount on the ground that no notice of the sale had been given as required by law and that Mr. Votaw continued to be liable for injuries to a third person under the provisions of section 17143/4 of the Civil Code. Judgment was directed accordingly. (Bunch v. Kin, 2 Cal. App. (2d) 81 [37 Pac. (2d) 744].) Upon the issuance of execution, Mr. Votaw satisfied the judgment and brought the present action to recover the amount paid by him.
By the terms of the policy as originally issued the defendants herein were relieved from liability “if the interest in the automobile described herein is at any time other than sole and unconditional ownership”. The defendants eon-[26]*26tend that upon the sale to Kin the insured ceased to possess the ownership required by the provisions of the policy. Much argument is addressed to that point, but it is unnecessary to consider it because of our conclusion that the judgment in any event should be affirmed.
Prior to the accident involved in Bunch v. Kin, supra, the defendants sent to Mr. Yotaw a rider having the heading “Extended Coverage (omnibus clause) ”, to be attached to and to become a part of the policy. The pertinent portions of that rider read as follows:
“It is made a condition of the policy to which this endorsement is attached that, beginning at noon, standard time, January 1, 1933, at the address of the named insured stated herein, the insurance granted to the named insured under Part II relating to Property Damage and Public Liability and subject to all the terms, conditions and limitations of the policy, shall also inure to the benefit of any person or persons while riding in or legally operating the automobile described herein, and to any person, firm or corporation legally responsible for the operation thereof, provided such use or operation is with the permission of the named insured.”
In transmitting the foregoing endorsement or omnibus clause the defendants addressed a letter to Mr. Yotaw in which it was stated:
“We are enclosing an endorsement form which you will please attach to your policy. It is for the purpose of broadening the terms of the same to meet present automobile driving conditions. This endorsement provides for the extension of insurance under your policy to others who may be driving your ear (with your permission), and gives to them all the protection afforded you by your policy. It also provides for compliance with the Owners Responsibility Laws of the various states in which the Exchange operates or in which you may be traveling at the time of an accident involving your insured car. There will be no additional charge for the extension of this coverage. In granting the extension of this coverage the Governing Board of the Exchange is keeping to the policy of providing its members with adequate coverage to meet the various changes in laws and conditions affecting the driving of automobiles.”
It is the contention of the defendants that the provisions of the rider had no effect upon the coverage of the [27]*27original policy for the reason that the terms of the rider were to be “subject to all the terms, conditions and limitations of the policy”, including the sale and unconditional ownership clause.
The plaintiff contends that the purpose of the rider was fairly expressed by the letter of the defendants in transmitting it; that such purpose was to “broaden the terms” of the policy “to meet present day driving conditions”, and to make the “endorsement” cover “Owners Responsibility Laws of the various states in which the Exchange operates”, and that this “extension of coverage” was to furnish the insured with protection “to meet the various changes in laws and conditions affecting the driving of automobiles”.
The letter of transmittal undoubtedly described the purpose and effect of the omnibus clause correctly, at least in so far as it applies to the facts in this ease. By its terms the rider was intended to protect the insured in the event that he be held liable under any “Owners Responsibility Laws” of the states in which the defendants operated, which would include this state. If the language of the rider did not have that effect, it was meaningless.
It should be noted that section 171414 of the Civil Code had recently been enacted (1929) and was, very significantly, an “Owners Responsibility Law”, as reasonably contemplated by the omnibus clause. That section made it possible to impose liability by reason of ownership of the mere legal title of the car provided at the time of the injury the car was being operated with the consent of such owner. There can be no doubt that at the time of the accident the automobile in question was being operated by Kin with the consent of the plaintiff. (Sly v. American Indemnity Co., 127 Cal. App. 202 [15 Pac. (2d) 522]), and it had been established by final judgment that the plaintiff was “legally responsible” for such operation, notwithstanding the fact that he had contracted to sell it and had delivered it to Kin.
The effect of the omnibus clause was to modify in favor of the insured the terms of the original policy. Instances where this result has been declared are cited in the briefs. For example, the case of Firkins v. Zurich General A. & L. Ins. Co., 111 Cal. App. 655 [295 Pac. 1051], involved the public liability provisions of a policy which [28]*28provided that said policy should not cover “in respect of any automobile . . . while driven or manipulated by any person . . . under sixteen years of age in any event”. An endorsement attached to the policy provided: “The policy to which this endorsement is attached is hereby extended to apply to any person . . . legally responsible for the operation thereof, provided such use or operation is with the permission of the named insured, or if the named assured is an individual,' with the permission of an adult member of the named assured’s household ...” The accident occurred while the car was being operated, with the permission of the insured, by his fourteen-year-old son. The insurance company denied liability because of the age of the driver. In passing upon the effect of the rider the court said: “There appears to be no difficulty in reconciling the language of the policy with that of the rider on the subject of liability on account of the age of the chauffeur. It may be reasonably construed to mean that the surety company shall not be liable upon the policy ‘while [the machine was] driven or manipulated by any person . . . under sixteen years of age’ unless such minor was operating the car ‘ with the permission of an adult member of the assured’s household ’, in which event the company is liable. To construe the language of this instrument otherwise would defeat the apparent intent of the parties and render the quoted language of the rider valueless.” A like result was reached in Swift v. Zurich General A. & L. Ins. Co., 112 Cal. App. 709 [297 Pac. 578], where it was held that a policy providing that coverage should not apply when the car was being operated by a person under sixteen years of age was superseded by a rider attached to the policy which provided that the coverage was extended to apply to any person legally responsible for the operation of the car with the owner’s consent.
It must be conceded that the omnibus clause here under consideration, together with the letter of transmittal, rendered the contract of insurance as a whole ambiguous and consequently subject to construction, and that this ambiguity was caused by the insurer. Any fair and reasonable interpretation of the original contract as modified by the rider leads to the conclusion that the insured would be protected against any change in the laws of the state with reference to “Owners Responsibility”, such as the enactment of see[29]*29tion 1714]4 of the Civil Code, especially when considered in connection with sections 45 and 45% of the California Vehicle Act in force at the time of the accident. Furthermore, any doubts arising by reason of ambiguities caused by the insurer must, under familiar rules of construction of insurance contracts, be resolved in favor of the insured.
The judgment is affirmed.
Houser, J., Gibson, J., and Waste, C. J., concurred.
Carter, J., deeming himself disqualified, did not participate.