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Court of Appeal, Second District, Division 4, California.

Dorothy BILLINGTON, Plaintiff and Appellant, v. INTERINSURANCE EXCHANGE OF SOUTHERN CALIFORNIA et al., Defendant and Respondent.

Civ. 32118.

Decided: October 23, 1968

Bernard A. Leckie, Los Angeles, for plaintiff and appellant. Gilbert, Thompson & Kelly, and Jean Wunderlic, Los Angeles, for defendant and respondent.

The critical question presented by this appeal is whether under all the facts defendant insurance carrier was justified in its refusal to pay to the extent of its policy limits an earlier judgment rendered against its insured under an assigned risk automobile liability policy.1

The relevant facts are these: Effective December 16, 1961, defendant Interinsurance Exchange of the Automobile Club of Southern California (hereafter the Exchange) issued to Michael James Giesler, as insured, an automobile liability insurance policy. So far as pertinent here, the policy obligated the insurer to ‘pay for the insured all sums which the insured shall become legally obligated to pay as damages because of: A. bodily injuries sustained by any person; * * *’ limited to the sum of $10,000 for each person.

‘Conditions' stated in the policy included the following:

‘6. Notice * * * If claim is made or suit is brought against the insured, he shall immediately forward to the Exchange every demand, notice, summons or other process received by him or his representative.

‘7. Assistance and Cooperation of the Insured: The insured shall cooperate with the Exchange and, at the Exchange's request, attend hearings and trials and assist in making settlements, securing and giving evidence, obtaining the attendance of witnesses and in the conduct of suit. * * *

‘8. Action Against Exchange: No action shall lie against the Exchange unless, as a condition precedent thereto, the insured shall have fully complied with all the terms of this policy, nor until the amount of the insured's obligation to pay shall have been finally determined either by judgment against the insured after actual trial or by written agreement of the insured, the claimant and the Exchange. * * *’

Chronologically stated these are the facts pertinent to the claim:

On March 20, 1962, at approximately 1:50 a. m. plaintiff, Mrs. Dorothy Billington, was riding in a 2–door Chevrolet Sports model vehicle, owned and then operated by Giesler, the insured. Edward G. Robinson, Jr., and plaintiff were occupants of the back seat. Giesler was driving westerly on Exposition Boulevard in the City of Los Angeles, between bagley and Cardiff Avenues, when his car crossed into the oncoming traffic lane, struck a parked car, forcing it over the curb into a wood fence; then the Giesler car struck a second parked car, shoving it across Exposition Boulevard where it and the Giesler car finally came to a stop more than 100 feet from the second point of impact. All of the occupants suffered some facial injuries in the collision. Plaintiff's principal injuries were fractures of the nasal and jaw bones and related facial abrasions and lacerations.

Police officers were summoned to the scene. They interviewed the three persons involved in the accident. Giesler denied that he had been driving his car at the time of the accident; he stated that a friend was driving but he would not give the officers the friend's name because he didn't want the friend to get mixed up in the matter. Plaintiff and Robinson both stated that Giesler was the driver. The officers reported that Giesler offered them a bribe. Later Giesler changed his story and admitted that he was the driver.2

On June 14, 1962, Giesler furnished the Exchange a handwritten statement in which he stated that on March 19, 1962, he was visiting Robinson at the latter's apartment in Studio City; that while there plaintiff phoned telling Robinson that she wanted to come to the apartment3 with a couple of gifts, it being his birthday; that plaintiff arrived at the apartment at approximately 7:30 p. m.; that all three persons had a ‘Vodka and tonic,’ and then went to the Embassy Room where Giesler and Robinson had a dinner reservation; that the three of them had a round of drinks4 there and after having dinner went to the Whittinghill restaurant in the San Fernando Valley; that later they went to the Roaring Twenties Restaurant, where each of them had two drinks apiece; that plaintiff then suggested that they all go to her apartment for coffee; that as Giesler drove the car along Exposition Boulevard, an unfamiliar area to him, he passed around detour signs; then an animal ran in front of his car causing him to swerve to the left, and in so doing he struck the parked cars on the opposite side of the street.

At the trial plaintiff's testimony was at variance with Giesler's statement in the following significant particulars: She was invited to Robinson's apartment and did not go there at her own solicitation. Neither she nor Giesler nor Robinson had any drinks at the apartment prior to going to the Embassy Room. They spent one and one-half hours at the Embassy Room where each of them had one or two stingers. At 11 p. m. they went to the Whittinghill restaurant in the San Fernando Valley, where she was served, but did not consume a drink because she did like the type of brandy it contained. Giesler did have a drink there. At about midnight the party then went to the Roaring Twenties Restaurant on La Cienega Boulevard. She had one stinger there and the men also had stingers. They left the restaurant at about one o'clock a. m. with Giesler at the wheel and plaintlff in the back seat with Robinson, who was sleepy but not intoxicated. Giesler did not appear to be intoxicated or sleepy or drowsy. The accident occurred three or four miles, a 15-minute ride, from the Roaring Twenties. The car did not appear to accelerate in speed until onequarter block before the accident when plaintiff observed Giesler heading on to the wrong side of the street. Then she screamed. She had not admonished him or screamed prior to that time.

On November 5, 1962, plaintiff filed an action against Giesler to recover $100,000 general damages, $4,132.65 medical expenses, $655.50 loss of earnings and for costs and such additional expenses and special damages as might be incurred.5 Plaintiff's attorney informed an Exchange representative that Giesler had been served with summons and complaint during the latter part of November. When Giesler had not informed the Exchange of the service, the Exchange sent him a letter on November 30 and a second letter on December 7 requesting him to forward the papers. Finally, on December 7th, Giesler was reached by telephone and asked to forward the papers. When he failed to do so, the Exchange obtained a copy of the summons and complaint directly from plaintiff's attorneys. On December 14, 1962, the Exchange sent Giesler a letter informing him that it had received a copy of the summons and complaint, which was being referred to attorneys chosen by it in accordance with its rights under the policy, also advising him that, since the claim exceeded the monetary limits of the policy, Giesler could employ counsel at his own expense to be associated with the attorneys hired by the Exchange. Giesler did not reply or act on these latter suggestions. An unverified answer to the complaint was filed; if denied liability and alleged affirmatively that plaintiff was guilty of contributory negligence and had assumed the risk of the accident by riding in the vehicle with Giesler when she knew him to be under the influence of intoxicating liquor.

After issue was joined, the parties submitted their respective interrogatories to which answers were filed. The attorneys stipulated to the taking of depositions of their respective clients. Pursuant thereto plaintiff's deposition was taken and a medical examination of her was granted and made. Giesler failed to appear for his deposition on numerous successive dates which had been fixed either by stipulation or notice, to-wit: March 11, 1964, June 15, 1964, August 10, 1964, October 23, 1964, and November 20, 1964. In each instance the Exchange's attorneys sent a letter to Giesler well in advance of the scheduled deposition date instructing him to appear. In most instances the letters were returned to the sender marked ‘unclaimed’ or ‘moved—left no address.’ Some of the letters had been forwarded to a second address before being returned as indicated. In addition, registered or certified letters and telegrams were sent in some instances.6

In December 1964, after plaintiff's attorney had filed a motion to strike defendant's answer and to enter his default on grounds of his failure to appear for deposition upon notice, arrangements were made to reschedule the deposition for January 4, 1965. Again Giesler failed to appear; letters directed to his last known addresses were returned.

At the default trial, the Exchange's attorneys were barred from presenting any defense either by cross-examining plaintiff or by evidence in support of the affirmative defenses of contributory negligence and assumption of the risk of injury on the part of plaintiff. On February 10, 1965, a judgment in favor of plaintiff and against Giesler was entered in the principal sum of $51,716.32 plus costs and interest.

On March 9, 1965, the Exchange's claims representative directed a letter to Giesler advising him that a motion to strike his answer had been granted and a default judgment against him had been entered.

Then followed plaintiff's suit against the Exchange to collect the liability limits of the policy (i. e., $10,000) on the ground that she is a creditor-beneficiary under the policy. The Exchange's answer to the complaint denied liability and in some detail pleaded Giesler's failure to cooperate in the original litigation against him, which resulted in his answer being stricken and his default entered therein; and further alleged that these factors operated to the prejudice of the Exchange which thereby was prevented from asserting good and legitimate defenses to the claim; and that for all of these reasons the Exchange is relieved of any and all duties and obligations pursuant to the policy, either to Giesler or to plaintiff.

In appellant's opening brief she (plaintiff) asserts for the first time that the failure on the part of respondent (the Exchange) to plead any affirmative defenses should preclude it from relying upon the breach of the cooperation clause as an affirmative defense.

This ground of attack is baseless in fact and is utterly lacking in merit under all the circumstances here presented. As already noted the answer actually pleaded the ultimate facts of contributory negligence and assumption of risk.

In the trial court, plaintiff did not attack the answer, either by demurrer or otherwise. Moreover, during the trial no objection to admissibility was made when the Exchange presented its defense based on the issue of lack of cooperation, which the answer had alleged quite lucidly.7 It is well established law in this state that any variance between pleading and proof is deemed to be waived where it is not raised at the trial. (Colbert v. Colbert, 28 Cal.2d 276, 281, 169 P.2d 633.) Furthermore, when a case has been tried on a particular theory without objection as to propriety of such procedure, the issue may not be raised for the first time on appeal. ‘[T]he parties may voluntarily submit and try an issue without any specific pleadings and thus be estopped from complaining thereat after judgment [cases omitted].’ (Baar v. Smith, 201 Cal. 87, 98–99, 255 P. 827, 832; see McAllister v. Union Indemnity Co., 2 Cal.2d 457, 460, 42 P.2d 305; Estate of Pieper, 224 Cal.App.2d 670, 680, 37 Cal.Rptr. 46).

As stated in Swanson v. Hempstead, 64 Cal.App.2d 681, at pages 682–683, 149 P.2d 404, at pages 404–405:

‘* * * We recognize that in the administration of justice pleadings are a means to an end, not an end in themselves, and that an issue which has been tried and determined should not be removed from the foundation of the resulting judgment just because it was not an issue within the framework of the pleadings.’

(Also see Martin v. Henderson, 124 Cal.App.2d 602, 607, 269 P.2d 117.)

Furthermore, plaintiff does not assert,—it is hardly conceivable that she could claim in good faith—that she was prejudiced by any defect in the answer. Any variance between pleading and proof will not be deemed material unless it has actually misled the adverse party to his prejudice. (Hayes v. Richfield Oil Corp., 38 Cal.2d 375, 382, 240 P.2d 580.)

Plaintiff presents the novel argument that the Exchange issued an automobile liability policy to Giesler under compulsion of mandatory requirements of the California Assigned Risk Plans (Ins.Code, §§ 11620 to 11627), and that for this reason public policy intervenes to prevent the insurer from asserting the insured's non-cooperation as a defense to any liability claim under the policy. Plaintiff cites several cases, no single one of which is authority for the entire proposition urged. This jigsaw puzzle mode of synthesizing the law is forensically unimpressive. It is true that the Assigned Risk Plans is a constitutional exercise of the legislative power to provide liability insurance for persons, who, in good faith, are entitled but unable to procure it through ordinary methods, and to impose the burden of providing such insurance upon all licensed insurance carriers on an equitable basis. This is the teaching of Cal. State Auto. Etc. Bureau v. Downey, 96 Cal.App.2d 876, 216 P.2d 882. Akin to the underlying public policy that such insurance be made available is the complementary principle that the insurer may not insert restrictive endorsements in assigned risk policies which are not contained in policies issued to other insureds. Plaintiff cites Royal Indemnity Co. v. Olmstead (9 Cir. 1951) 193 F.2d 451, 31 A.L.R.2d 635 and Kruger v. California Highway Indem. Exch., 201 Cal. 672, 258 P. 602. But in each of these cases the furnishing of liability insurance was a requisite for being granted a municipal license, one to operate a rental car business and the other to operate a ‘jitney bus' service. In each case the court held that in defending liability claims under the policies, the insured could not rely on the defense of non-cooperation on the part of the insured for the reason that the insurance was required by law and was for the benefit of the public rather than the insured. These cases are distinguishable from the present one on the basis of the compulsory requirements of legislation applicable to business activities which are affected with a public interest and which dictate that the public be protected. Despite plaintiff's characterization of the Assigned Risk Plans as compulsory insurance, it is not such in the sense that a private vehicle owner such as Giesler is compelled to avail himself of the Assigned Risk Plans. He may elect initially and prior to being involved in any uncompensated liability incident to operate his vehicle without any insurance protection; or if he has incurred such liability which bars him from operating a vehicle until he shows that he is financially responsible, he may elect to deposit security as required by Vehicle Code, section 16020, or, alternatively, if he qualifies, he has the election of procuring some other form of liability insurance which meets the requirements of the law. (Veh. Code, §§ 16057, 16059.) In other words, insurance obtained under the Assigned Risk Plans is merely one of the alternative modes of satisfying the law. There is no compulsion in any legal sense, however much a vehicle operator may be impelled by economic or practical considerations to resort to the Plan.

In any case, we fail to perceive any analogue between cases arising under compulsory insurance laws and financial responsibility legislation on the one side and an assigned risk law on the other side which requires us to apply the latter in a manner which would deprive an insurer of those defenses normally available under policies issued on a mutually volitional basis to members of the general public.

It must be borne in mind that here the claimant is not the insured with whom the Exchange had contractual engagements under the policy, but is a third party who has no vicarious rights, absent express contractual provisions for her benefit. Here plaintiff's rights are wholly and entirely derivative.

The California Insurance Code recognizes this distinction by requiring that a liability insurance policy provide that ‘whenever judgment is secured against the insured * * * then an action may be brought against the insurer on the policy and subject to its terms and limitations, by such judgment creditor to recover on the judgment.’ (Ins.Code, § 11580, subd. (b)(2).) (Italics supplied.)

As stated in Hynding v. Home Acc. Ins. Co., supra, 214 Cal. 743, at page 752, 7 P.2d 999, at page 1002:

‘* * * The proviso that the action is subject to the terms and limitations of the policy, if it means anything, means that the right of action is not absolute, but that there are some defenses available to the company. Of course, no defense can be set up which defeats the statutory object, and of this type is a stipulation involving the financial responsibility of the assured, or a requirement of proof of insolvency or bankruptcy, or return of execution unsatisfied. [Cited case omitted.] We also of the opinion, and we think most of the authorities are agreed, that the provision must be one reasonably necessary for the protection of the insurance company, and one which can readily be complied with by the assured; and that the violation of the condition by the assured cannot be a valid defense against the injured party unless in the particular case it appears that the insurance company was substantially prejudiced thereby. [Cited cases omitted.] Here these elements are all present. To require the co-operation of the assured to the extent of attendance at the trial, when he is a material and important witness, is a perfectly reasonable condition. Failure to testify may be as damaging as failure to give notice of the accident or of the suit. There is, of course, no obligation on his part to testify favorably to the company's interests, but here his report of the accident indicated that a defense existed, and it would normally be expected that his testimony would bear this out. Under these circumstances the company was clearly prejudiced by his failure to appear. In any event, the question of such prejudice should have been considered below.’

(Also see Western Machine Co. v. Bankers Indemnity Ins. Co., 10 Cal.2d 488, 492–493, 75 P.2d 609.)

We turn now to the issue whether or not there is substantial evidence in the record that Giesler failed to cooperate with the Exchange.

Plaintiff's brief argues that the Exchange is estopped to rely on Giesler's non-cooperation because such negative behavior was made possible, if not encouraged, by the Exchange's own failure to track him down each time he moved. The record shows that Giesler used at least four successive addresses in the metropolitan Los Angeles area and on one occasion, when contact was had, he reported that he was leaving for Las Vegas; that the Exchange always sent him letters directed to his latest reported address and in some cases sent identical letters and even telegrams, simultaneously, to the two last reported addresses; that, in addition to its own investigators, it hired an independent investigative agency to endeavor to make personal contact to apprize him of the date scheduled for his deposition; that on one occasion when the Exchange was able to reach Giesler by telephone, he stated that he would be unable to attend on the scheduled date, but promised to appear on a later date mutually agreed to, but thereafter not kept by Giesler.

Despite this record, plaintiff now contends that the Exchange, and its attorneys, were not diligent in their efforts to locate Giesler. It is urged, for example, that they should have covered Giesler's preliminary hearing and trial on the drunk driving charge and thereafter they should have maintained contact with his probation officer; examined his criminal file; made inquiries of relatives; checked with the bank which was handling the estate of his late father; and inspected the voters register and other public records.

This recommended mode of sleuthing, whatever its merit as an investigator's guide, is irrelevant here, because personal contacts with Giesler were actually had some time before the default was taken and he was personally warmed that it was imperative that he make himself available for a deposition. It may be noted, too, that plaintiff's attorneys, acting independently of the Exchange's representatives, were unsuccessful in their efforts to make contact with Giesler.

The related issue of bad faith on the part of the Exchange falls of its own weight and deserves no further comment in view of the record just reviewed.

Viewing the record in its entirety, it cannot be gainsaid that Giesler was consistently and repeatedly most uncooperative for a period in excess of 18 months, during which time the Exchange, its claims representatives and attorneys showed unusual forbearance and patience with Giesler, and at all times cooperated fully with plaintiff's attorneys in attempting to schedule his deposition on at least seven successive dates.

The final question is whether Giesler's failure to cooperate was prejudicial to the rights of the Exchange. There can be no doubt that Giesler's failure to appear for a deposition ultimately caused his answer to be stricken and a default judgment to be taken. In consequence, the Exchange could not urge in his behalf the pleaded defenses of contributory negligence and assumption of risk. The investigative reports and statements in the record, together with reasonable inferences to be drawn therefrom, indicate that these defenses were urged in good faith and had plausible merit. On the entire record, it is not amiss to say that ‘prejudice must be presumed as a matter of law.’ (Wright v. Farmers Auto., etc., Exch., 39 Cal.App.2d 70, 75, 102 P.2d 352, 355.) But even if we treat prejudice here as a factual issue, there is substantial evidence in the record to support the trial court's finding that prejudice did result in fact. In such case the rule on appeal is that the evidence must be viewed in the light most favorable to the judgment. (Allstate Ins. Co. v. King, supra, 252 Cal.App.2d 698, 707, 60 Cal.Rptr. 892.)

We deem it unnecessary to discuss cited cases dealing with an surer's lack of good faith. They are not relevant because they are factually dissimilar.

We conclude that the findings of the trial court are supported by substantial evidence, that its conclusions of law are properly drawn therefrom and that the judgment is entirely consistent with the findings and conclusions.

Judgment affirmed.



1.  The policy was issued pursuant to the California Assigned Risk Plans (Ins. Code, §§ 11620–11627) because Giesler was unable to procure liability insurance through ordinary methods due to his previous automobile accidents and driving record.

2.  On the basis of the police investigation a criminal complaint was filed charging Giesler with felony drunk driving (Veh. Code, § 23101) to which charge he later entered a guilty plea.

3.  Plaintiff's testimony at trial contradicted this statement. She testified that she came to the apartment on Robinson's invitation and not as a result of any phone call by herself.

4.  Plaintiff's trial testimony identified the post-prandial drinks as ‘stingers,’ (an alcoholic cocktail composed of brandy and creme de menthe).

5.  Since plaintiff was a guest in the Giesler vehicle, she alleged wilful misconduct and intoxication on the part of Giesler in order to avoid the bar of the California Guest Statute (Veh.Code, § 17158).Included in the Exchange's claim file, which was introduced in evidence by plaintiff (Trial Exhibit No. 8), is a status report, dated April 8, 1963, which states that passenger Robinson ‘has also filed suit in this matter but has not served our assured to our knowledge’ and that consequently a witness statement from him would not be forthcoming. The trial court was entitled to draw inferences that Giesler's non-cooperation with his insurer was motivated by a desire that both of his guests receive insurance compensation for their injuries.

6.  On December 1, 1964, the Exchange's attorney sent a letter to Giesler reminding him of the conditions of his policy and his obligation to cooperate with the attorneys and to appear for the taking of his deposition. In part the letter stated:‘You are advised that in failing to appear for your deposition you have not complied with the terms of the above condition and thus have violated the provisions of your policy. Should this failure to cooperate on your part prejudice the defense of this action, you are advised that the Exchange would refuse to pay any judgment that might be rendered against you by reason of your failure to cooperate and comply with the terms of your policy.’Again on December 29, 1964, the Exchange's attorneys sent a special delivery letter to Giesler at an address which an independent investigation agency reported to be his current address. The letter advised that plaintiff's attorney had served notice of intention to take Giesler's deposition on January 4, 1965, and added that if Giesler failed to appear a default judgment might be entered against him which would not be covered by any insurance. The letter repeated earlier advice that if Giesler failed to appear the Exchange would deny him coverage under the policy. The letter was returned to sender with notation of a forwarded address, and also marked ‘Moved—Left No Address.’

7.  On its face the answer adequately complied with the requirements of Code of Civil Procedure, section 437, as to pleading new matter, albeit the defense was not set apart and labelled ‘affirmative defense’ in the manner of form-book pleading. (See Hynding v. Home Acc. Ins. Co., 214 Cal. 743 at 751, 7 P.2d 999, 85 A.L.R. 13 and Allstate Ins. Co. v. King, 252 Cal.App.2d 698, 705–706, 60 Cal.Rptr. 892, as to the propriety of pleading a defense of non-cooperation.)

COLLINS, Associate Justice.* FN* Judge of the Superior Court sitting under assignment by Chairman of the Judicial Council.

FILES, P.J., and JEFFERSON, J., concur.