Ethel M. HUGGINS, as Administratrix, Plaintiff and Appellant, v. Ben YOSHIWARA et al., Defendants and Respondents.
On April 4, 1966, defendant Yoshiwara was involved in an automobile accident in which plaintiff's husband was killed. In her capacity as administratrix of his estate, she sued Yoshiwara for damages. A settlement was negotiated and by a stipulation, joined in by Yoshiwara's insurance carrier, The Travelers Insurance Company, the carrier agreed to pay her $50,550 (the limit of its liability under one of the two policies hereinafter discussed) and she agreed to accept that sum in full settlement of Yoshiwara's liability, unless it should be determined that the carrier was also liable under another policy, which had a policy limit of $25,000. In the latter case, the carrier agreed to pay to plaintiff such additional amount, which would then constitute a full satisfaction of Yoshiwara's liability. The stipulation then converted the pending action into one for declaratory relief among the three parties to determine the issue of Travelers' liability under the $25,000 policy above referred to.
After a hearing, the trial court held that the $25,000 policy did not impose any liability on Travelers in connection with the accident in question and entered its judgment accordingly. Plaintiff has appealed. We conclude that the trial court was wrong and reverse the judgment.
As above indicated, Yoshiwara had two policies of insurance with The Travelers Insurance Company. One policy was an ordinary automobile liability insurance policy, with limits of $50,000 for bodily injury or death and $1,000 for property damage. The applicability of that policy to the accident is admitted and, as above indicated, the insurance company is prepared to pay to plaintiff its full liability thereunder.2 The other policy, affording coverage from July 26, 1965, to July 26, 1968, was a so-called ‘Homeowners' policy under which the insurance company agreed, to a maximum of $25,000, to insure Yoshiwara against a variety of risks occurring in or about certain described premises, but with a proviso that the policy did not apply ‘* * * to the ownership, maintenance, operation, use, loading or unloading of (1) automobiles or midget automobiles while away from the premises or the ways immediately adjoining, * * *’ Since the accident in which plaintiff's interstate was killed did not occur on the described premises or on ways ‘immediately adjoining’ them, Travelers contends that this policy was not applicable to that accident. The trial court agreed with that contention. We conclude that it was in error.
It is admitted that, prior to certain statutory enactments in 1963, the quoted exclusionary clause would have been void as against the policy incorporated in what is now section 16451 of the Vehicle Code.3 (Pacific Employers Ins. Co. v. Maryland Casualty Co. (1966) 65 Cal.2d 318, 54 Cal.Rptr. 385, 419 P.2d 641.) The contention is that legislation enacted in 1963 changed the statutory law in such a manner that the policy involved herein, not being a ‘certified policy’ under section 16431 of the Vehicle Code, could validly contain the territorial exclusion clause. The trial court, as we have said, accepted that contention and, in its findings and judgment, declared the quoted clause to be valid and applicable.
Plaintiff contends that the decision in Abbott v. Interinsurance Exchange (1968) 260 Cal.App.2d 528, 67 Cal.Rptr. 220, in which the Supreme Court denied a hearing, had rejected that argument and that that decision compels a holding that the attempt at territorial exclusion was void. We agree. All of the arguments pressed on us in the case at bench were raised, considered and rejected in Abbott. The only difference is that Abbott was concerned with an attempt to limit liability in the case of a named driver whereas the case at bench involves an attempt at territorial, rather than personal, limitation on coverage. The distinction is without legal significance in the present context. As both parties agree, the law in this area has its start in Wildman v. Government Employees' Ins. Co. (1957) 48 Cal.2d 31, 307 P.2d 359, wherein the Supreme Court held that attempts to limit policy coverage to less than that provided by what is now section 16451 of the Vehicle Code4 were void as against public policy. That section, in a single sentence, requires coverage both as to all persons using the vehicle with the express or implied permission of the insured (the clause involved in Abbott) and as to the use of the vehicle ‘within the continental limits of the United States' (the clause involved in Pacific Employers). The public policy is the same as to both requirements. Since Abbott discusses at length the contentions here made, we need not repeat that discussion here. As we have indicated, the Supreme Court denied hearing in Abbott; it is, therefore, binding on us. (Cole v. Rush (1955) 45 Cal.2d 345, 351, 289 P.2d 450, 54 A.L.R.2d 1137; People ex rel. Dept. of Public Works v. Ramos (1969) 272 Cal.App.2d ——, ——, 77 Cal.Rptr. 130.a
Amici Curiae argue, on the basis of Gray v. Zurich Insurance Co. (1966) 65 Cal.2d 263, 54 Cal.Rptr. 104, 419 P.2d 168—from which we quote at a later place in this opinion—that it is improbable that Mr. Yoshiwara ever regarded his ‘Homeowners' policy as being one that afforded him protection for an automobile accident occurring off his premises. We think that this is true. As we point out below, that fact is important in considering defendant insurance company's alternative argument as to the extent of any liability. But the intent of, or the ‘reasonable expectation’ of, the insured is immaterial where the policy attempts to limit coverage in a manner prohibited by law and public policy. It is equally true that the policy involved in Wildman could have given the named insured no reasonable expectation that it covered him in the case his car was driven by someone else; that fact did not prevent the court from holding that the extended coverage existed by statute, whatever the insured and the company may have thought. The same is true here.
The $50,000 automobile policy also contained the following limitation on liability, as Condition No. 5:
‘With respect to any occurrence, accident or loss to which this and any other automobile insurance policy issued to the named insured by the company also applies, the total limit of the company's liability under all such policies shall not exceed the highest applicable limit of liability under any one such policy.’
The trial court ruled that, assuming the Homeowners policy was applicable to the accident at all, the quoted language operated to exclude liability thereunder since the automobile policy had the higher limit, which was to be paid. Again, we disagree.
The guiding principle is stated in Gray v. Zurich Insurance Co., supra (1966) 65 Cal.2d 263, 269–270, 54 Cal.Rptr. 104, 107–108, 419 P.2d 168, 171–172:
‘In interpreting an insurance policy we apply the general principle that doubts as to meaning must be resolved against the insurer and that any exception to the performance of the basic underlying obligation must be so stated as clearly to apprise the insured of its effect.
‘These principles of interpretation of insurance contracts have found new and vivid restatement in the doctrine of the adhesion contract. As this court has held, a contract entered into between two parties of unequal bargaining strength, expressed in the language of a standardized contract, written by the more powerful bargainer to meet its own needs, and offered to the weaker party on a ‘take it or leave it’ basis carries some consequences that extend beyond orthodox implications. Obligations arising from such a contract inure not alone from the consensual transaction but from the relationship of the parties.
‘Although courts have long followed the basic precept that they would look to the words of the contract to find the meaning which the parties expected from them, they have also applied the doctrine of the adhesion contract to insurance policies, holding that in view of the disparate bargaining status of the parties we must ascertain that meaning of the contract which the insured would reasonably expect. Thus as Kessler stated in his classic article on adhesion contracts: ‘In dealing with standardized contracts courts have to determine what the weaker contracting party could legitimately expect by way of services according to the enterpriser's ‘calling’, and to what extent the stronger party disappointed reasonable expectations based on the typical life situation.' (Kessler, Contracts of Adhesion (1943) 43 Colum.L.Rev. 629, 637.)'
Although, under the compulsion of the Abbott case, we hold that the ‘Homeowners' policy was, as a matter of law, one that provided automobile liability coverage wider than the territorial limits therein set forth, still, as we have pointed out above, we do not think that the insured would have regarded that policy, prominently labeled as a ‘HOMEOWNERS' policy by the insurer, as being an automobile insurance policy within the meaning of the clause above quoted. As we have said, although the insured's interpretation of the policy is immaterial in deciding the extent of the statutory requirement, it is the material factor in interpreting the meaning of an admittedly valid clause. To apply the language of the admittedly labeled ‘automobile’ policy so as to make it refer to the ‘Homeowners' policy clearly would defeat the reasonable expectation of the insured.5
As we noted above, the argument of Amici Curiae, although inappropriate as applied to the issue of coverage, leads necessarily to the conclusion we reach as to the extent of coverage.
In its brief, the insurer also seeks comfort in a provision of the ‘Homeowners' policy. General Condition No. 6(c) of that policy reads as follows:
‘If the insured has other insurance against a loss covered by this policy * * * with respect to a loss arising out of the * * * use * * * of (1) any automobile * * * at the premises or the ways immediately adjoining * * * this insurance shall not apply to the extent that any valid and collectible insurance, whether on a primary, excess or contingent basis, is available to the insured.'6
That language is likewise of no help to the insurer. It expressly applies only to a ‘loss arising out of the * * * use * * * of (1) any automobile * * * at the premises or the ways immediately adjoining * * *.’ The public policy which invalidiates the territorial limitation clause in the insuring agreement is not applicable to the use of the same language in a clause limiting the financial extent of the statutorily required coverage. At least as long as the insured is covered up to the statutory limits, no statute or public policy prohibits an agreement making the coverage of one policy excess over that provided by another. Had the accident herein involved taken place on or near the premises described in the Homeowners policy, liability thereunder admittedly would have been ‘excess' over the coverage provided by the automobile policy. But the accident did not happen at the only place where the ‘excess' provision applied; it is, therefore, inapplicable.
The clause relied on is inapplicable for another reason. It applies only when and if there is other insurance ‘available’ to the insured. But no other insurance was ‘available’ to Yoshiwara beyond the $50,000 automobile policy. Since the settlement granted plaintiff a recovery of $75,000 if the Homeowners policy could be looked to, it follows that the ‘excess' clause in the latter policy, by its terms, did not apply.
The judgment is reversed.
2. The stipulation set the property damage loss at $100 plus $15 per day for 30 days for loss of use, making the $550 included in the agreed settlement.
3. The events involved in the case at bench all preceded the effective date of chapter 1314, Statutes of 1968, which added subdivision (g) to section 11580.1 of the Insurance Code. That subdivision would seem to dictate a different result in the future.
4. Amendments to that section in 1968 are not herein involved.
FOOTNOTE. 272 A.C.A. 112, 117.
5. We think it quite immaterial which policy was first obtained. Whether the ‘automobile’ policy was purchased before or after the ‘Homeowners' policy, in neither case would a reasonable insured have thought that the clause in issue had become applicable.
6. We have examined the copy of the Homeowners policy introduced as an exhibit in this case and cannot find therein the clause referred to. It is apparent from examining the exhibit, which is a photostatic reproduction, that parts of the original policy were not reproduced. The existence of the clause is represented to be a fact in respondents' brief and appellant's reply brief does not contest its existence, but, instead, joins issue as to its effect. Under the circumstances we accept, for the purpose of this opinion, the existence of such clause in the policy delivered to the Yoshiwaras.
KINGSLEY, Associate Justice.
JEFFERSON, Acting P. J., and DUNN, J., concur.