Landis A. JURD, Plaintiff and Appellant, v. PACIFIC INDEMNITY COMPANY, a corporation, Defendant and Respondent.*
Plaintiff, Landis A. Jurd, brought this action to recover from defendant, Pacific Indemnity Company, on a judgment had against one Ed Johnson, an employee of the Yuba City Union High School District. Johnson was head janitor for the school. As a special defense to plaintiff's cause of action, defendant pleaded res judicata by way of estoppel. The court proceeded to trial on the special defense, found in favor of defendant, and entered judgment against plaintiff.
Plaintiff was injured when he was struck by a jeep owned by the school district and being operated at the time by Johnson. Following the accident plaintiff brought suit against the school district based on the theory that at the time of the accident Johnson was acting within the course and scope of his employment, and against Johnson individually on the basis of negligence. The court specifically found that Johnson was not acting within the course and scope of his employment and that Johnson was negligent. Accordingly, judgment was entered in favor of the school district and against Johnson.
Because the judgment against Johnson had not been satisfied, plaintiff brought the present action against the defendant, Pacific Indemnity Company, to recover on the judgment, alleging that Johnson was an additional insured within the meaning of the insurance policy issued by defendant to the school district.
In its answer defendant denied that Johnson was an additional insured and, by way of a separate defense, alleged that the matter of whether Johnson was acting in the course and scope of employment or not had been finally adjudicated against plaintiff in the previous action; that since Johnson was not acting in the course and scope of his employment it resulted as a matter of law that the school district did not have the power to grant Johnson permission to drive the jeep for a private purpose, and therefore Johnson could not be an additional insured within the coverage of the policy.
On motion of defendant the court proceeded to trial on the special defense of res judicata and found that such defense was good, and that, as a matter of law, Johnson was not and could not have been a permissive user. Plaintiff appeals from the judgment.
At the hearing of the special defense and upon appeal there is no dispute but that in the prior action there was a determination on the issue of the course and scope of employment; nor does appellant question the proposition that defendant may plead as against him that said issue was decided in that action, even though defendant was not a party thereto. Bernhard v. Bank of America, 19 Cal.2d 807, 122 P.2d 892. Indeed, appellant makes the assertion that the determination upon that issue in the prior action is immaterial in this action because, as plaintiff argues, the issue of the contractual liability of defendant as an insurance carrier was not before the court in the prior trial, and hence the issue therein decided on the question of scope and course of employment is irrelevant to this action.
The policy issued to the school district by the defendant herein includes a so-called omnibus coverage clause, which reads as follows:
‘The company agrees to pay the amounts incurred under this incurring agreement * * *.
‘III. Definition of ‘Insured’. The unqualified word ‘insured’ includes the named insured and also includes (1) under Coverages A and C, any partner, executive officer, director or stockholder thereof while acting within the scope of his duties * * * (2) under Coverages A and B, any person while using an owned automobile * * * provided the actual use of the automobile is with the permission of the named insured * * *.' (Emphasis added.)
The trial court found herein:
‘That in said action, 10120 [the prior action], evidence was introduced concerning the employment of defendant Ed Johnson by the defendant Yuba City Union High School District, and it appeared therein that defendant Ed Johnson was on a hunting trip using the Yuba City Union High School District's jeep out of the County of Sutter wherein said high school was located and in the County of Colusa, and that said hunting trip did not benefit in any way the defendant Yuba City Union High School District, and in the aforesaid action, No. 10120, Colusa County, the Court made a specific finding that the defendant Ed Johnson was not in the course and scope of his employment with the Yuba City Union High School District at the time of the aforedescribed accident.
‘That defendant Ed Johnson was not a permissive user of said Yuba City Union High School District automobile at the time of the aforedescribed accident within the meaning of the aforesaid insurance policy, and that said defendant Ed Johnson therein was not an insured of the Pacific Indemnity Company, defendant herein, under the aforesaid policy.’
It is settled law that public agencies, such as the school district here, cannot give consent to the use of public property save in the business of furthering the interests of the agency. Brindamour v. Murray, 7 Cal.2d 73, 79, 59 P.2d 1009, 1011. Said the Supreme Court in that case:
‘Stress is laid by the Plaintiffs on the statement in evidence of the defendant Murray [a police officer using a city-owned automobile] that at the time involved he was using the car with the city's consent, * * *. A complete answer to the contention is that, since the defendant Murray was admittedly then using the automobile for his own private purposes it was beyond the power of the city to grant consent to use it for those purposes * * *.’
The language of the policy of insurance is clear. The omnibus clause covers ‘any person while using an owned automobile * * * provided the actual use * * * is with the permission of the named insured * * *.’ It was legally impossible for any person in the employ of the school district, whether he be trustee, principal, teacher, or a janitor subordinate to Johnson, to give permission to Johnson to take the jeep on a hunting trip. It was not the possession or custody of the jeep that was in issue, but the permission to use the jeep on a hunting trip. No person could speak for the school district—the owner of the jeep—and give such permission.
The judgment appealed from is affirmed.
I dissent. Although no comparable case (that is, one involving a public agency) has been cited, it is apparent that the decisions in those jurisdictions which require the insertion of an omnibus clause in an automobile liability policy clearly reflect a public policy to protect the public when an automobile is operated by one other than the insured owner, and the courts have stated that such statutes should be construed to carry out such policy. See Chatfield v. Farm Bureau Mut. Auto. Ins. Co., 4 Cir., 208 F.2d 250; Continental Casualty Co. v. Phoenix Const. Co., 46 Cal.2d 423, 434, 296 P.2d 801, 57 A.L.R.2d 914; Collins v. New York Cas. Co., 140 W.Va. 1, 82 S.E.2d 288; Pavelski v. Roginski, 1 Wis.2d 345, 84 N.W.2d 84.
Defendant Pacific Indemnity contends on appeal that the prior adjudication as to the course and scope of employment of Johnson now precludes Jurd's present suit against Pacific Indemnity. The present action by Jurd against Pacific Indemnity is founded exclusively on the claim that Johnson is an additional insured within the terms of the insurance contract issued by Pacific Indemnity, which was not litigated in the prior action, and hence, Pacific Indemnity may not invoke the principle of res judicata. Exchange Cas. & Surety Co. v. Soctt, 56 Cal.2d 613, 15 Cal.Rptr. 897, 364 P.2d 833.
In the instant case the policy issued to the school district included an omnibus clause which reads:
‘The company agrees to pay the amount incurred under this insuring agreement, * * *
‘III. Definition of ‘Insured.’ The unqualified work [sic] ‘insured’ includes the named insured and also includes (1) under Coverages A and C, any partner, executive officer, director or stockholder thereof while acting within the scope of his duties * * * and (2) under Coverages A and B, any person while using an owned automobile or a hired automobile and any person or organization legally responsible for the use thereof, provided the actual use of the automobile is with the permission of the named insured, * * *.' (Emphasis added.)
The majority has interpreted subsection (2) of the omnibus clause to mean that it applies only if the person using the automobile is doing so in a situation where the owner can legally give permission, and in support relies upon the Brindamour case. That case was not concerned with the question of the contractual liability of an insurer as we are here; nor does the clause here in question contain such a qualification. To so construe the omnibus clause defeats the legislative purpose and is unwarranted.
In the construction of insurance policies, it is an elementary rule that the whole contract is to be taken together with each clause helping to interpret the others. 27 Cal.Jur.2d, Insurance, sec. 280, p. 778. Here there is nothing in subsection (2) to indicate that the liability of a person other than an officer or director as provided in subsection (1) is to be limited to that liability incurred while acting solely within the course and scope of employment. Subsection (1) does limit liability to that incurred by executive personnel while acting within the scope of their duties, and subsection (2) clearly provides that insurance is available to any person operating a school district vehicle, subject only to one condition: that the vehicle, must be operated with the permission of the named insured.
It follows, therefore, that the conclusion that Johnson was not acting within the course and scope of his employment is not determinative of whether or not Johnson was a permissive driver within the terms of the policy.
I would reverse the judgment.
VAN DYKE, Presiding Justice.
SCHOTTKY, J., concurs.