CONSOLIDATED SHIPPERS, INC., v. PACIFIC EMPLOYERS INS. CO. ET AL.
Plaintiff commenced this action to recover under two policies of insurance issued respectively by the Commercial Standard Insurance Company and Pacific Employers Insurance Company hereinafter referred to respectively as Commercial and Pacific. A judgment for $14,522.21, was entered in favor of plaintiff and against Commercial and Pacific, which provided that it was to be first satisfied against Commercial to the extent of the limit of liability under its policy ($9,561.10) and that the balance of the judgment was to be satisfied against Pacific. From this judgment Commercial has appealed.
Commercial issued a policy of public liability insurance wherein it agreed to insure M. L. Harvey “and/or” Consolidated Shippers Inc., plaintiff herein, against any loss arising from or resulting from the ownership, maintenance or use of a certain Chevrolet truck which was owned by Harvey. The limits of liability under Commercial's policy were $5,000 for property damage and $10,000 for injury to or death of more than one person. A non–ownership policy of public liability insurance was issued by Pacific under the terms of which plaintiff alone was insured against loss by reason of any liability imposed by law resulting from the operation of all automobiles and trailers other than those owned by plaintiff which were transporting merchandise on a contract basis for the account of plaintiff. The liability under Pacific's policy was specifically limited to such loss as might result to plaintiff from the operation of trucks and trailers by independent contractors who had executed a prescribed form of hauling contract. The limits of liability under Pacific's policy were $5,000 for property damage and $100,000 for injury to or death of more than one person. Each policy contained a provision for the proration of insurance providing in effect that if the assured carried other insurance against the same loss the insurer would not be liable for a larger proportion of the entire loss than the amount named in the policy bore to the entire amount of collectible insurance.
The yearly premium charged by Commercial for its insurance was $275. Pacific charged a yearly premium of $263.33 for its insurance. The insurance afforded by Commercial's policy specifically covered any liability arising out of the operation of one truck only. Pacific's policy, however, covered liability arising out of the operation of any trucks or trailers operated by independent contractors for plaintiff with no limitation whatever as to the number of trucks or trailers. The evidence shows that while Pacific's policy was in force it actually covered any liability of plaintiff arising out of the operation of four different trucks owned by independent contractors.
During the time that both policies were in effect Harvey, while transporting merchandise in his Chevrolet truck as an independent contractor on a contract basis for the account of plaintiff, became involved in an accident in the state of Arizona which resulted in the death of two persons. Two actions to recover damages for the death of such persons were commenced in Arizona against Harvey and plaintiff herein. Prior to the trial of such actions the parties stipulated without admitting liability that compromise judgments might be entered in favor of plaintiff in each action and against both defendants for an aggregate amount of $11,600. The judgments which were accordingly entered were satisfied in full by plaintiff herein. Both Commercial and Pacific were notified of the accident and of the filing of the Arizona actions. Pacific denied liability and refused either to investigate or defend the actions. Commercial did investigate the accident and entered upon the defense of the actions but withdrew its defense prior to the entry of the judgments and refused to proceed further. By this action plaintiff sought to recover the amount which it had paid in satisfying the Arizona judgments and in addition attorneys' fees and costs incurred in defending such actions.
In order to comply with the provisions of the Arizona law which required a lease agreement when an interstate motor carrier operated equipment not owned by the carrier Harvey entered into an agreement with plaintiff by the terms of which he purported to lease his Chevrolet truck to plaintiff. This lease agreement had been executed and filed in Arizona prior to the happening of the accident. Although the trial court made no findings concerning the relationship existing between Harvey and plaintiff, and therefore no finding as to the manner in which plaintiff's liability arose, it concluded that Commercial was primarily liable for plaintiff's loss and that Pacific's policy was secondary insurance which did not attach or become collectible until the limits of Commercial's policy had been exhausted.
It is earnestly contended by Commercial that the finding and conclusion of the trial court to the effect that Commercial's policy afforded primary coverage and Pacific's secondary coverage is not supported by the evidence and is contrary to the law but we find ample evidence to sustain the ruling of the trial court which is attacked by Commercial. Although both policies contained provisions for the proration of loss in the event that other insurance existed covering the same loss such provisions did not become effective in the instant case for the reason that the policies did not cover the same loss. Commercial's policy covered the primary liability of Harvey arising out of the operation of the Chevrolet truck which he owned and extended coverage to plaintiff for any liability which it might incur as a result of such operation. The insurance afforded by Pacific's policy did not cover the primary liability of Harvey but insured only the secondary liability of plaintiff resulting from the operation by independent contractors of trucks not owned by plaintiff. Under such circumstances the trial court was justified in inferring that the two policies were not concurrent or coextensive because they did not cover the same risk with sufficient identity of scope and purpose.
There are additional reasons why the judgment appealed from must be affirmed. From the fact that Commercial charged a premium of $275 for the coverage of Harvey's Chevrolet truck and that Pacific charged but $263.33 to insure plaintiff against liability arising out of the operation of at least four trucks including Harvey's, it may fairly be inferred that the parties intended Commercial's policy to afford primary coverage and Pacific's secondary or excess coverage. It would be unreasonable to assume that, in view of the fact that Pacific's premium charge for each truck covered was less than one–fourth of the premium charged by Commercial, the parties to the Pacific contract intended that Pacific would incur the same liability as was incurred by Commercial. (For a discussion of the matter of the disparity in the premiums charged in determining which of two insurers is primarily liable, see vol. 7, Ins. Decs. p. 315.)
Where as here the coverage afforded by the two insurance policies is not limited to the same subject matter and the risk involved is not identical or coextensive, in determining which is actually primary or basic insurance and which is secondary or excess insurance the court may properly decide which insurance is general and which is specific in its nature. As a general rule that insurance which is specific is held to be primary and that which is general, secondary or excess insurance. Hartford Steam Boiler I. & Ins. Co. v. Cochran O. M. & G. Co., 26 Ga.App. 288, 105 S.E. 856; Commercial Cas. Ins. Co. v. Hartford Acc. Indem. Co., 190 Minn. 528, 252 N.W. 434, 253 N.W. 888. Unquestionably the Commercial policy afforded specific insurance for it covered the operation of Harvey's Chevrolet truck only and covered the liability of Harvey, who was the primary tort– feasor, and although it extended coverage to plaintiff it covered no other risk nor any other person. Pacific's policy on the other hand was general in nature since it did not specifically cover the truck involved in the accident nor did it cover the liability of the primary tort–feasor. The coverage which was afforded plaintiff by Pacific's policy was not limited to any particular truck or trucks but applied generally to all trucks operated by independent contractors in plaintiff's employ. The trial court properly concluded that Commercial was primarily liable and Pacific secondarily liable.
The judgment is affirmed.
We concur: MOORE, P. J.; McCOMB, J.