HERZOG v. NATIONAL AMERICAN INSURANCE COMPANY

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Court of Appeal, Fourth District, Division 1, California.

Maxine L. HERZOG et al., Plaintiffs and Appellants, v. NATIONAL AMERICAN INSURANCE COMPANY, etc., et al., Defendants and Respondents.

Civ. 9359.

Decided: July 09, 1969

Banyard & Portigal and Allan Portigal, Santa Ana, for plaintiffs and appellants. Leonard Sacks, Los Angeles, amicus curiae on behalf of plaintiffs and appellants. Bolton, Groff & Dunne, and R. E. Shallcross, Los Angeles, for defendants and respondents.

OPINION

Plaintiffs, as heirs at law of Kenneth Herzog, appeal from a judgment declaring a policy of insurance issued by defendant National American Insurance Company did not cover their claim for wrongful death against the Estate of Gerald Mason, deceased.

On September 24, 1965 a collision between a motor bike operated by Gerald Mason and an automobile operated by Kenneth Herzog resulted in the death of both of them. On that date Gerald Mason was an included insured under the comprehensive personal liability provisions of a homeowner's insurance policy issued by defendant National American Insurance Company to his father, Robert Mason.

Under the personal liability provisions of the policy defendant agreed to ‘pay on behalf of the Insured all sums which the Insured shall become legally obligated to pay as damages because of bodily injury’ not to exceed $25,000 for any one occurrence. For policy purposes ‘bodily injury’ included ‘death resulting therefrom, sustained by any person’. Expressly excluded from the foregoing personal liability coverage was the ‘* * * operation, use, loading or unloading of (1) automobiles or midget automobiles while away from the premises or the ways immediately adjoining’. For policy purposes the term ‘automobile’ included the motor bike operated by the insured Gerald Mason. The ‘premises' to which the exclusionary provision refers were those at 859 N. Lenz Dr., Anaheim, California, where Gerald Mason and his parents lived. The collision occurred on the Anaheim Boulevard overpass of the Santa Ana Freeway, a public highway in the City of Anaheim.

The motor bike operated by Gerald Mason was owned by Richard Parker who was the named insured in an owner's motor vehicle liability policy of insurance issued by Elite Insurance Company, with maximum coverage of $10,000 for one occurrence.

Plaintiffs, as heirs at law of Kenneth Herzog, claim the latter's death was caused by the negligent manner in which Gerald Mason operated the motor bike.

Gerald Mason's father, Robert Mason, also was the named insured in an owner's motor vehicle liability policy issued by Farmers Insurance Group covering two automobiles.

The annual premium paid by Robert Mason for the homeowner's policy which is the subject of his action was $30.92.

The court found the collision on September 24, 1965, resulting in the death of Kenneth Herzog, was away from the premises or the ways immedately adjoining the premises insured under the homeowner's policy issued by defendant; concluded coverage for liability resulting from that collision was excluded from the insurance provided by that policy; and decreed accordingly.

The issue on appeal is whether the statutory requirement that motor vehicle liability insurance shall cover liability resulting from the use of a motor vehicle ‘within the continental limits of the United States' (Veh.Code, §§ 16451, 16452) applies to the subject policy and for this reason the exclusionary clause therein is void.

The law applicable to the case at bench is stated and applied in Pacific Employers Ins. Co. v. Maryland Casualty Co., 65 Cal.2d 318, 54 Cal.Rptr. 385, 419 P.2d 641, where the Supreme Court held an insurance policy identical in pertinent part to the policy issued by defendant provided motor vehicle liability insurance contemplated by the Automobile Financial Responsibility Law, now set forth in Motor Vehicle Code, Sections 16000–16503; coverage under a policy providing such insurance must conform to the requirements prescribed by the statute; and, by virtue of those requirements, such a policy covers liability for damages arising out of the use of a motor vehicle ‘within the continental limits of the United States.’ (Veh.Code, §§ 16451, 16452.) The decision in Pacific Employers Ins. Co. v. Maryland Casualty Co., supra, is predicated upon the public policy declared in Wildman v. Government Employees' Ins. Co., 48 Cal.2d 31, 37–40, 307 P.2d 359. Where an insured under a motor vehicle liability policy is liable in damages for the wrongful death of another, the persons entitled to such damages may recover under the policy. (Vehicle Ins. Code, § 11580.) The coverage in favor of such persons on account of the statutorily imposed provisions in such a policy may not be avoided by an agreement between the insurer and the insured. (Abbott v. Interinsurance Exchange, 260 Cal.App.2d 528, 531–536, 67 Cal.Rptr. 220; Clark v. Universal Underwriters Ins. Co., 233 Cal.App.2d 746, 748, 43 Cal.Rptr. 822.) As to those persons, an attempt to limit coverage to liability arising out of the use of a motor vehicle at a particular place on the highway is superceded by the statutory provision prescribing the territorial coverage of the policy. (Pacific Employers Ins. Co. v. Maryland Casualty Co., supra, 65 Cal.2d 318, 323–324, 54 Cal.Rptr. 385, 419 P.2d 641; Insurance Company of North America v. Greene, 9 Cir., 373 F.2d 526; see also Interinsurance Exchange of Automobile Club of Southern California v. Ohio Cas. Ins. Co., 58 Cal.2d 142, 150, 23 Cal.Rptr. 592, 373 P.2d 640; Bohrn v. State Farm etc. Ins. Co., 226 Cal.App.2d 497, 502–504, 38 Cal.Rptr. 77.)

Defendants contend the decision in Pacific Employers Ins. Co. v. Maryland Casualty Co., supra, 65 Cal.2d 318, 54 Cal.Rptr. 385, 419 P.2d 641, does not apply to the case at bench because the facts in the latter differ from those in the former. The contention is without merit. The difference is immaterial. The fact Gerald Mason did not own the motor bike he was operating when the accident occurred is of no consequence. The declaration in Wildman v. Government Employees' Ins. Co., supra, 48 Cal.2d 31, 39, 307 P.2d 359, 364, that ‘the public policy of this state is to make owners of motor vehicles financially responsible to those injured by them in the operation of such vehicles' applies to operators thereof as well as to owners. The statutorily prescribed insurance coverage for each is identical. (Veh.Code §§ 16451, 16452; Glens Falls Ins. Co. v. Consolidated Freightways, 242 Cal.App.2d 774, 780, 51 Cal.Rptr. 789.) The fact Gerald's father owned two automobiles for which he obtained an owner's liability insurance policy, the fact he did not anticipate the homeowner's policy issued to him by defendant insurance company covered loss on account of liability for accidents occurring on the public highways, the fact the owner of the motor bike operated by Gerald obtained an owner's liability insurance policy covering loss on account of liability, and the fact the premium on the homeowner's insurance policy issued by defendant insurance company was $30.92 are not determinative of the rights conferred on plaintiffs by a policy of insurance under which, as stated in Pacific Employers' Ins. Co. v. Maryland Casualty Co., supra, 65 Cal.2d 318, 326, 54 Cal.Rptr. 385, 419 P.2d 641, ‘the carrier [defendant insurance company] has exposed itself to the application of the Wildman principle by purporting to furnish the crucial coverage.’

In support of defendant's position it also is contended the public policy declared in Wildman v. Government Employees' Ins. Co., supra, 48 Cal.2d 31, 307 P.2d 359, does not govern the case at bench because the insurance policy at hand was not certified as proof of ability to respond in damages and was issued after the 1963 amendment to Vehicle Code, Section 16450 which provides:

‘Any requirements set forth in said Chapters 2, 3 and 4 relating to a motor vehicle liability policy [which include the extent of territorial coverage] shall apply only to those policies which have been certified as proof of ability to respond in damages * * *.’

The 1963 amendment did not revoke the public policy declared in Wildman which is concerned with ‘providing compensation for persons who are injured on the highways through no fault of their own.’ (Atlantic Nat. Ins. Co. v. Armstrong, 65 Cal.2d 100, 105, 52 Cal.Rptr. 569, 416 P.2d 801; Interinsurance Exchange of Automobile Club of Southern California v. Ohio Cas. Ins. Co., 58 Cal.2d 142, 150–154, 23 Cal.Rptr. 592, 373 P.2d 640); governs only the relationship between the insurer and the insured in a motor vehicle liability policy; and does not affect the rights of an injured third party to recover under such a policy. (Abbott v. Interinsurance Exchange, supra, 260 Cal.App.2d 528, 534, 537, 67 Cal.Rptr. 220; cf. Valdez v. Federal Mut. Ins. Co., 272 A.C.A. 244, 255, 77 Cal.Rptr. 411.)

Defendants direct attention to the 1968 amendment to Section 11580.1 of the Insurance Code which provides nothing in Section 16450 of the Vehicle Code shall be construed to constitute a homeowner's policy as an ‘automobile liability policy’ or a ‘motor vehicle liability policy’ within the meaning of those code sections ‘notwithstanding that such homeowner's policy may provide automobile or motor vehicle liability coverage on insured premises or the ways immediately adjoining.’ Assuming the amendment in question changes the rule stated and applied in Pacific Employers' Ins. Co. v. Maryland Casualty Co., supra, 65 Cal.2d 318, 54 Cal.Rptr. 385, 419 P.2d 641, it did not apply to the policy under consideration in the case at bench which was issued in 1965. The law in effect at the time of issuance of a policy of insurance governs the rights of parties thereunder. (Interinsurance Exchange of Automobile Club of Southern California v. Ohio Cas. Ins. Co., supra, 58 Cal.2d 142, 148, 52 Cal.Rptr. 569, 416 P.2d 801; American Automobile Ins. Co. v. Republic Indemnity Co., 52 Cal.2d 507, 511, 341 P.2d 675.)

The exclusionary clause in the insurance policy under the status of the law at the time it was issued, was illegal. The insuring clause of the comprehensive personal liability provisions of the policy, absent the limitation imposed by the illegal exclusionary clause, covered the accident resulting in the alleged wrongful death for which plaintiffs seek damages. The deter mination of the trial court to the contrary was error.

The judgment is reversed.

COUGHLIN, Acting Presiding Justice.

WHELAN, J., and AULT, J. pro tem.*, concur.