ATLANTIC NATIONAL INSURANCE COMPANY v. ARMSTRONG

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District Court of Appeal, Second District, Division 3, California.

ATLANTIC NATIONAL INSURANCE COMPANY, Plaintiff and Respondent, v. Joseph A. ARMSTRONG, as Administrator of the Estate of Robert Stanley, Deceased, et al., Defendants and Appellants.

Civ. 28257.

Decided: February 16, 1966

Betts & Loomis and Ingall W. Bull, Jr., Los Angeles, for appellants. Moss, Lyon & Dunn, Gerold C. Dunn and Henry F. Walker, Los Angeles, for respondent.

The question presented on this appeal is the extent of the coverage afforded, under the circumstances hereinafter related, by a policy of insurance issued by Atlantic National Insurance Company which was applicable to an automobile that had been rented by Kenneth McKeown from The Hertz Corporation in Bakersfield on August 7, 1958.

A collision between the rented car and an automobile driven by Norman Sobel occurred on August 17, 1958, while Robert Stanley was driving the rented vehicle and Mr. McKeown was in the front seat beside him. Both Mr. Stanley and Mr. McKeown were fatally injured. Mr. Sobel and members of his family sued the administrators of the Stanley and McKeown estates for damages for personal injuries alleged to have been sustained by them. Mr. McKeown's heirs brought an action against the administrator of Mr. Stanley's estate for damages arising out of the death of Mr. McKeown.

In the present action in which declaratory relief was sought, the trial court determined that the policy afforded coverage to the administrators of the Stanley and McKeown estates in the Sobel action and that the Atlantic National Insurance Company had the obligation to defend the administrators in that action. (Cf. Financial Indemnity Co. v. Hertz Corp., 226 Cal.App.2d 689, 38 Cal.Rptr. 249.) The court held, however, that the provisions, limitations and restrictions of the rental agreement, and the provisions of the insurance policy to which reference was made therein, were such as to exclude coverage in the action brought by the McKeown heirs against the administrator of the Stanley estate. The present appeal is by the McKeown heirs and the administrator of the Stanley estate from such adverse judgment.

On the face of the rental agreement between The Hertz Corporation and Mr. McKeown were the following provisions: ‘(4) Renter being one of the assured under the insurance policy covering said vehicle agrees to comply with all the terms and conditions of said policy, which by reference thereto are incorporated herein and made a part thereof [sic], and to comply with the terms and conditions appearing on reverse side hereof. (5) Renter further expressly agrees to indemnify the Insurance Company for any and all loss, damage, cost and expense paid or incurred by the Insurance Company because of injuries or damages sustained by occupants of said vehicle, in states where the law makes Hertz or its Insurance Carrier liable for injuries to occupants of aid vehicle or because of injuries or damages resulting from the use or operation of said vehicle in violation of any of the terms and conditions appearing on the reverse side hereof.’

A provision contained on the reverse side of the rental agreement was: ‘The renter of the automobile described on the reverse side hereof participates in the benefits of an automobile public liability and property damage insurance policy subject to the terms, conditions, limitations and restrictions thereof and is bound by such terms, conditions, limitations and restrictions even though all of them are not outlined in this rental agreement. Said policy does not cover the renter or driver for injuries sustained by passengers or guests or any person while riding in * * * said vehicle * * *’

Another provision on the reverse side of the rental agreement was in part as follows: ‘The vehicle described on the reverse side hereof shall not be used or operated: * * * (d) By any person other than the renter who signed the rental agreement or, provided he is a qualified licensed driver, by a member of the renter's immediate family, the renter's employer, or a person driving the car pursuant to said person's usual and customary employment by the renter, and in the course of said driver's regular and usual employment for the renter.’

The insurance policy, under the heading of ‘Exclusions', provided in part as follows: ‘This policy does not apply to: * * * (B) any liability of the renter or driver * * * with respect to bodily injury to * * * or death of * * * (2) any person sustained while riding in, alighting from or getting into or upon any of the automobiles insured hereunder.’

Under the heading of ‘Definition of Insured’ the policy provided in part as follows: ‘The unqualified word ‘insured’ includes the named insured and also includes (1) any person * * * to whom an automobile has been rented without a chauffeur by the named insured (herein referred to as the ‘renter’) * * *' Under the heading of ‘Financial Responsibility Laws' was the following provision: ‘When this policy is certified as proof of financial responsibility for the future under the provisions of the motor vehicle financial responsibility law of any state or province, such insurance as is afforded by this policy for bodily injury liability or for property damage liability shall comply with the provisions of such law which shall be applicable with respect to any such liability arising out of the ownership, maintenance or use of the automobile during the policy period, to the extent of the coverage and limits of liability required by such law, but in no event in excess of the limits of liability stated in this policy. The insured agrees to reimburse the company for any payment made by the company which it would not have been obligated to make under the terms of this policy except for the agreement contained in this paragraph.’

Unlike the situation in Financial Indemnity Co. v. Hertz Corp., supra, 226 Cal.App.2d 689, 38 Cal.Rptr. 249, there was no evidence that Mr. McKeown did not read the rental contract and was unaware of any specific clause. Mrs. McKeown testified that Mr. McKeown had a Hertz credit card and had used it many times. For reasons hereinafter stated we have concluded that, as applied to the particular facts of the present case which involves the death of the renter, the provisions of the rental agreement and the policy excluding coverage for injuries sustained by a person while riding in the rented vehicle were neither unreasonable nor in violation of public policy.

Any ambiguity in an insurance policy must, of course, be resolved against the insurer. But, as long as public policy is not violated, there must be adherence to the law as stated in Continental Cas. Co. v. Phoneix Constr. Co., 46 Cal.2d 423, at page 432, 296 P.2d 801, 806, 57 A.L.R.2d 914; ‘An insurance company has the right to limit the coverage of a policy issued by it and when it has done so, the plain language of the limitation must be respected.’ In the present case the broad language of the policy that the policy did not apply to ‘any liability of the renter or driver * * * with respect to bodily injury to * * * or death of * * * any person sustained while riding in * * * any of the automobiles insured hereunder’ made it clear that it was not intended that there be any coverage for liability of a driver for the death of another person riding in the rented vehicle. The language of the rental agreement that the policy did not cover ‘the renter or driver for injuries sustained by passengers or guests or any person while riding in * * * said vehicle’ conveyed the same meaning as applied to the facts of this case, even though the word ‘death’ was not used. Although the cause of action for wrongful death is not derived from the decedent but arises only in favor of other persons upon his death (see Grant v. McAuliffe, 41 Cal.2d 859, 864, 264 P.2d 944, 42 A.L.R.2d 1162), it would be unreasonable to interpret the language of the rental agreements as expressing an undertaking that there would be coverage for the death of a person as to whom there was no coverage for bodily injuries not resulting in death. With respect to the particular facts of the present case, there is no sound basis for a conclusion that the policy provided accident insurance upon the life of the renter of the car for the benefit of his family. (Cf. Oliveria v. Preferred Accident Ins. Co. of New York, 312 Mass. 426, 428–429, 45 N.E.2d 263, 264–265, 143 A.L.R. 1391, 1394.)

Such construction of the policy with relation to the death of Mr. McKeown, an insured under its terms, does not violate the concept of public policy as expressed in Wildman v. Government Employees' Ins. 48 Cal.2d 31, at pages 39–40, 307 P.2d 359. This is so because, at the time of the execution of the rental agreement as well as at time of the accident, subsection (e) of section 415 of the Vehicle Code was in part as follows: ‘Any liability policy issued hereunder need not cover any liability for injury to the assured.'1 (Cf. Hepburn v. Pennsylvania Indemnity Corporation, 71 U.S.App.D.C. 257, 109 F.2d 833.) The reasonable interpretation of that statutory provision is that it embraced liability for all injuries, whether fatal or not. (See Hindel v. State Farm Mut. Auto Ins. Co., 7 Cir., 97 F.2d 777, 784.)

The conclusion we have reached is not altered by the circumstance that the trial court found that on and prior to August 17, 1958, The Hertz Corporation, with the knowledge of the Atlantic National Insurance Company (98.9 per cent of the stock of which was owned by The Hertz Corporation), openly represented to the public through national advertising, magazines and telephone books that ‘proper insurance’ would be provided as a regular part of the rental of its automobiles. We do not believe that ‘proper insurance’, in the context in which it is here used, should be construed to mean coverage greater than that required by law under the factual situation here presented. Since our construction of the policy as to the extent of coverage under the particular factual situation is consonant with the applicable law, it cannot be held that ‘proper insurance’ was not afforded to the renter of the vehicle, Mr. McKeown. (See Stearns v. Hertz Corp., 8 Cir., 326 F.2d 405, 408–409.)

The judgment is affirmed.

FOOTNOTES

1.  Section 16454 of the present Vehicle Code is as follows: ‘Any motor vehicle liability policy need not cover any liability for injury to the assured or any liability of the assured assumed by or imposed upon the assured under any workmen's compensation law nor any liability for damage to property in charge of the assured or the assured's employees or agents.’

FORD, Justice.

SHINN, P. J., and KAUS, J., concur.