STATE FARM MUTUAL AUTOMOBILE INSURANCE CO., Plaintiff and Appellant, v. Virginia Louise THOMPSON et al., Defendants and Respondents.
Gail Thompson died from injuries sustained in an accident while he was riding as a passenger in his own automobile at a time it was driven with his permission by Ed William Rhoades. Thompson's wife and son sued Rhoades for the wrongful death of Thompson.
Thompson's automobile liability insurer, State Farm Mutual Automobile Insurance Company (State Farm), brought this action for declaratory relief against Rhoades' automobile liability insurer, Government Employees Insurance Company (Government), to determine the rights and obligations of the two insurance companies in the wrongful death action by the Thompsons against Rhoades.
It is conceded that the Government policy covers Rhoades. However, if Rhoades is also covered by the State Farm policy, which covers persons driving with Thompson's permission, then by the terms of the policies State Farm is the primary insurer and Government is an excess insurer. The trial court found that Rhoades was covered by the State Farm policy, and State Farm appeals.1
The question is whether the State Farm policy effectively excludes coverage when recovery is sought by the named insured. The policy provides in pertinent part:
Gail and Virginia Thompson are the ‘named insured.’
‘State Farm . . . agrees with the named insured . . . [to] pay on behalf of the insured . . . damages because of . . . bodily injury [including death] sustained by other persons . . .’
‘. . . [T]he unqualified word ‘insured’ includes
‘(1) the named insured, and
‘(2) if the named insured is a person or persons, also includes his or their spouse(s), if a resident of the same household, and
(3) if residents of the same household, the relatives of the first named person in the declarations, or of his spouse, and
‘(4) any other person while using the owned automobile, provided the operation and the actual use of such automobile are with the permission of the named insured or such spouse and are within the scope of such permission, and
‘(5) . . . any person or organization legally responsible for the use of such owned automobile by an insured as defined under the four subsections above.’
‘This insurance does not apply . . . to bodily injury to the insured or any member of the family of the insured residing in the same household as the insured. . . .’
State Farm argues that these provisions effectively exclude Gail Thompson from coverage because as ‘named insured’ he is an ‘insured,’ and the policy excludes coverage for bodily injury to the ‘insured.’
We disagree. This case is controlled by our decision in Farmers Insurance Exchange v. Frederick, 244 Cal.App.2d 776, 53 Cal.Rptr. 457. In that case Frederick owned a truck and was insured by Farmers insurance Exchange. Frederick was injured while riding as a passenger in the truck when Edwards, driving with Frederick's permission, ran the truck into an embankment. Frederick's policy provided insurance for sums ‘which the insured becomes legally obliged to pay because of . . . bodily injury to any person. . . .’ The policy also provided that ‘The unqualified word ‘insured’ includes . . . the named insured and his relatives' and permitted users, and excluded coverage for ‘bodily injury to the insured or any member of the family of the insured residing in the same household as the insured.’
We concluded in Frederick ‘that ‘. . . the unqualified word insured . . .’ in the policy does by definition refer to the person who actually drives the vehicle, whether such driver be the named insured or some other who drives with the permission of the named insured. Thus, the exclusion quoted does not prevent the named insured from a recovery for bodily injuries suffered as a consequence of negligent operation when someone other than the named insured is properly driving his vehicle.' (244 Cal.App.2d at 780, 53 Cal.Rptr. at 459.) It was our opinion that, if the insurer, ‘by the exclusion meant to include within its operative effect injuries to the named insured even though some other insured was driving, the language of the exclusion must be such as to leave no doubt that the definition of ‘insured’ is not merely for contractual convenience, but the named insured can never recover under the policy, or recover only in certain situations, irrespective of who drives. The exclusion at bench is not that certain.' (244 Cal.App.2d at 782, 53 Cal.Rptr. at 461.)
There is no significant distinction between the language of the policy in Frederick and the language of State Farm's policy in the instant case. The only difference between the language of the policies is that in Frederick the policy provided coverage for the insured against bodily injury to any person, and in the instant case the policy provides coverage for the insured against bodily injury to other persons. The reasoning of Frederick applies equally to either phrase: the ‘insured’ is the person who actually drives the automobile. A passenger in the automobile is still not the ‘insured’, whether he is any person or an other person. The definition of ‘insured’ to include ‘named insured,’ found elsewhere in the policy, is not sufficient to clearly exclude coverage for the named insured no matter who is driving. (State Farm Mutual Auto Ins. Co. v. Jacober, 25 Cal.App.3d 360, 101 Cal.Rptr. 792 (filed 4 May 1972); but see Hale v. State Farm Mutual Auto Ins. Co., 256 Cal.App.2d 177, 63 Cal.Rptr. 819.)
Unambiguous language excluding coverage for the named insured when injured by an additional insured can and has been written. Exclusions were upheld in Farmers Ins. Exchange v. Geyer, 247 Cal.App.2d 625, 55 Cal.Rptr. 861, and in Farmers Ins. Exchange v. Brown, 252 Cal.App.2d 120, 60 Cal.Rptr. 1, where the policies specifically provided that coverage ‘does not apply . . . to the liability of any insured for bodily injury to . . . the named insured.’
The judgment is affirmed.
The majority decision in this case is in direct conflict with the following recent decisions which interpret and give full effect to the identical policy provisions: State Farm Mut. Auto. Ins. Co. v. Stapler, 25 Cal.App.3d 287, 101 Cal.Rptr. 698 (filed May 3, 1972); American Home Assur. Co. v. State Farm Mut. Auto. Ins. Co., 1 Cal.App.3d 355, 81 Cal.Rptr. 732 (hearing denied); Hale v. State Farm Mut. Auto. Ins. Co., 256 Cal.App.2d 177, 63 Cal.Rptr. 819 (hearing denied), and Tenopir v. State Farm Mutual Co., 403 F.2d 533 (9th Cir. 1968).
In each of the following additional cases the appellate court rejected the reasoning and the conclusion of the majority opinion in Farmers Ins. Exch. v. Frederick, 244 Cal.App.2d 776, 53 Cal.Rptr. 457, which is an earlier decision of this division of the court and which the same majority now cite as controlling here: Farmers Ins. Exch. v. Geyer, 247 Cal.App.2d 625, 55 Cal.Rptr. 861 (hearing denied), and Farmers Ins. Exch. v. Brown, 252 Cal.App.2d 120, 60 Cal.Rptr. 1 (hearing denied). I dissent from the instant decision for the same reasons that I set forth at length in my dissent in Frederick, supra, 244 Cal.App.2d at pages 785–795, 53 Cal.Rptr. 457. I now incorporate that dissent by reference.
The only other California precedent which lends support to the decision in this case is State Farm Mut. Auto. Ins. Co. v. Jacober, 25 Cal.App.3d 360, 101 Cal.Rptr. 792 (filed May 4, 1972). This last cited decision also relies entirely upon the authority of the lonely and oft-rejected decision in Frederick.
Not only is the majority decision in this case in conflict with all but two of the numerous California decisions which have interpreted and applied either the same identical policy provisions, or provisions so nearly the same as to provide no substantial basis for distinction, but also, as I shall later proceed to demonstrate, the great weight of authority found in the decisions of other appellate courts throughout the United States supports the conclusion that the policy provisions here involved are clear, unambiguous, valid and effective.
The well considered opinion of the Court of Appeals for the Ninth Circuit in Tenopir v. State Farm Mutual Co., supra, was authored by Judge Duniway and received the concurrence of Judges Koelsch and Foley. That opinion merits careful reading because it construes the identical policy provisions involved in the case at bench in a practically identical factual context. It discusses and rejects every argument advanced in support of the decisions in Frederick and Jacober which are the sole supporting precedents cited in the majority decision in the instant case.
The appellant Tenopir, like the respondents in the case at bench, relied upon the established rule that ‘ambiguity in an insurance policy is to be resolved in favor of the insured.’ However, as Judge Duniway so aptly expressed it, ‘this rule does not require that the court search for an ambiguity when the meaning of the policy is clear. [Citations.]’ The following from the opinion at 403 F.2d page 536 is particularly apposite:
‘Here we deal with injuries to the ‘named insured.’ And if one thing seems clear to us it is that, whatever else the term ‘the insured’ may include in the exclusion clause, it does include the named insured. He is the one person among the five categories listed in the definition clause who is always an insured.'
Judge Duniway cites at least 12 decisions from other state and federal jurisdictions supporting the conclusion that the exclusionary provision here involved is unambiguous and valid. Only two decisions are cited as contra, one of them being Frederick.
Examination of the annotation entitled Construction And Application Of Provision. Of Automobile Liability Policy Excluding From Coverage Injury Or Death Of Insured' in 50 A.L.R.2d 131, and the more recent A.L.R. Supplements thereto, discloses that the overwhelming weight of authority supports the following statement of the annotator:
‘In the absence of statutory provisions forbidding their inclusion, clauses providing that the coverage does not extend to liability for bodily injury or death of an annuted have usually been held valid and effective to protect the insurer.’
In several of the recent decisions digested by the annotator, the appellate courts of other jurisdictions have expressly declined to follow the construction adopted in Frederick. (See, for example, Tickner v. Under Insurance Company (Mo. Court of Appeals). 425 S.W.2d 483.) And as recently stated by the Supreme Court of Arizona in New York Underwriters Insurance Company v. Superior Court, 104 Ariz. 544, 456 P.2d 914, 915:
‘In the absence of any legislative mandate to the contrary, the rule is generally well settled that policies containing clauses which specifically exclude from coverage injuries sustained by the named assured, are effective to preclude the company's liability to such named assured.’ Cited in report of the foregoing text are 7 Applement. Insurance Law and Practice § 4409 p. 377 and numerous decisions, including Tenopir v. State Farm Mutual Co., supra, 433 P.2d 533.
In Farmers Ins. Exch. v. Geyer, supra, 247 Cal.App.2d 625, 55 Cal.Rptr. 861, the Court carefully analyzed Vehicle Code section 16450–16454 and numerous decisions during with the exclusion authorized by the latter section. The court declared as follows at pages 629–630, 55 Cal.Rptr. at p. 864:
‘Before proceeding to discuss the interpretation given to section 16454 by the appellate courts, we note that the words ‘the assured’ as used in that section mean the person specifically named in the policy as the assured rather than someone who might become am additional insured by reason of his use of a vehicle owned by the assured with the latter's permission. This is apparent from the language of the sections immediately preceding section 16454. Section 16450, defining a ‘motor vehicle liability policy,’ refers to such a policy as one ‘issued by an insurance carrier . . . to or for the benefit of the person named therein as assured.’ (Italics added.) Similarly, section 16451, which states the statutory requirement of omnibus coverage of permissive users of motor vehicles, provides that ‘An owner's policy of liability insurance shall: . . . insure the person named therein and any other person, as insured, using any owned motor vehicle with the express or implied permission of said assured, . . .’ (Italics added.)'
And at page 630, 55 Cal.Rptr. at page 865, after referring to Travelers Indemnity Co. v. Colonial Ins. Co., 242 Cal.App.2d 227, 51 Cal.Rptr. 724, the court commented further:
‘Our rationale in Travelers Indemnity was concurred in by Justice Herndon in his concurring and dissenting opinion in Farmers Insurance Exchange, supra, 244 Cal.App.2d p. 785, 53 Cal.Rptr. 457. There the majority held that the term ‘insured,’ in an automobile policy excluding from its coverage injuries to the ‘insured,’ referred to the person who actually drives the vehicle and that therefore the exclusionary provision did not prevent the owner of the vehicle from recovering for bodily injuries suffered while a passenger in this vehicle. Noting that the exclusionary provision there involved utilized essentially the same terminology as is found in section 16454, as is the case here, Justice Herndon observed that since the legislature has declared the applicable rule of public policy in such clear language it would be impermissible to reach any other conclusion than that the subject exclusionary language expressly excluded from coverage any liability of the driver for injuries sustained by the named insured.'
As the majority opinion necessarily concedes, the decision in Hale v. State Farm Mut. Auto. Ins. Co., supra, 256 Cal.App.2d 177, 63 Cal.Rptr. 819, contradicts and refuses to follow the reasoning of the majority in Frederick. In American Home Assur. Co. v. State Farm Mut. Auto. Ins. Co., supra, 1 Cal.App.3d 355, 81 Cal.Rptr. 732, the court affirmed a judgment applying and enforcing the exclusionary provision here in question. The following from the decision at page 359, 81 Cal.Rptr. at page 735 is significant:
‘We also conclude that, if McColl's were an additional insured under the State Farm policy, the clause excluding coverage for injury to the insured would operate to prevent coverage under these facts. To quote from Travelers Indemnity Company v. Colonial Insurance Co. (1966) 242 Cal.App.2d 227, 235, 51 Cal.Rptr, 724, 729: ‘The arguments are completely specious and lead to absurd results. An examination of the insuring agreement set forth above satisfies us that Ralph [Crawford] was always in fact the named insured under the policy and that the italicized language of exclusion refers to his [her] claims for injuries.’
‘Consult also: Farmers Insurance Exchange v. Brown (1967) 252 Cal.App.2d 120, 60 Cal.Rptr. 1; Farmers Insurance Exchange v. Geyer (1967) 247 Cal.App.2d 625, 55 Cal.Rptr. 861; Hale v. State Farm Mutual Automobile Insurance Company (1967) 256 Cal.App.2d 177, 63 Cal.Rptr. 819. In respect to the same exclusion involved in this case, the court in those cases distinguished and declined to follow the majority opinion in Farmers Insurance Exchange v. Frederick (1966) 244 Cal.App.2d 776, 53 Cal.Rptr. 457.’ (Emphasis added.)
Since Frederick, which is cited as the controlling precedent for the majority decision herein, has been repudiated by all but one of the more recent California decisions and is contrary to the overwhelming weight of authority elsewhere, we should acknowledge the evident error and reverse the judgment.
1. The wrongful death action has been settled for $40,000. Government and State Farm each paid $20,000. Government's policy has a limit of $50,000. State Farm's policy has a limit of $25,000. If State Farm has primary coverage, State Farm will pay Government $5,000. If State Farm has no liability, Government will pay State Farm $20,000.
FLEMING, Associate Justice.
ROTH, P. J., concurs.