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

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, a corporation, Plaintiff and Appellant, v. Joyce JACOBER et al., Defendants and Respondents.

Civ. 38920.

Decided: May 04, 1972

Spray, Gould & Bowers, Daniel O. Howard, Los Angeles, for plaintiff and appellant. Herbert H. Hiestand, Jr., Los Angeles, for defendants and respondents.

On July 2, 1968, at approximately 11:10 p. m., a 1965 International pickup truck, owned by Warren Jacober and being operated by Roger Marcus Dell with said owner's consent and permission, was involved in an accident. Warren Jacober was riding in said truck as a passenger and sustained fatal injuries. A State Farm policy of automobile liability insurance, issued to Warren Jacober and Joyce Jacober as named insureds, covering the involved vehicle with limits of $100,000 for injuries to or the death of each person, was in force and effect on the date of the accident. Thereafter the heirs of Warren, including Joyce, filed suit for damages for wrongful death against Mr. Dell upon grounds of negligence, wilful misconduct and intoxication. State Farm, after declining coverage to Mr. Dell, assumed defense of this action on his behalf under a nonwaiver of rights agreement claiming that it was not obligated under the policy either to defend the action or to extend coverage by virtue of an exclusion dealing with the insuring agreements, which read as follows: ‘This insurance does not apply under: . . . (i) coverage A, to bodily injury to the insured or any member of the family of the insured residing in the same household as the insured.'1

In the instant action State Farm sought a declaration of its rights under the policy to the effect that it was not obligated to defend or indemnify Dell and further that Volkswagen Insurance Company has that obligation under its policy issued to Dell. The matter was submitted to the court on stipulated facts. In an announcement of intended decision the trial court determined that the State Farm policy afforded coverage to Dell as a permissive user and that State Farm was obligated to defend and indemnify Dell up to the policy limits in the wrongful death action. Judgment was entered accordingly from which plaintiff State Farm appeals.

In Paul Masson Co. v. Colonial Ins. Co., 14 Cal.App.3d 265, 92 Cal.Rptr. 463, the court said at page 268, 92 Cal.Rptr. at page 464:

‘The case was submitted for decision pursuant to a written ‘stipulation of facts.’ The respective insurance policies were received without any evidence in aid of their construction. Under such circumstances an appellate court is not bound by the trial court's interpretation of the insurance policies and construction of the policies is a matter of law. (Continental Cas. Co. v. Phoenix Constr. Co. (1956) 46 Cal.2d 423, 430, 296 P.2d 801, [57 A.L.R.2d 914].)'

Considering the facts, which are not in dispute, and our own independent review of the insurance policy before us, we are in accord with the judgment of the trial court for the reasons hereinafter set forth. The parties agree that Mr. Dell was covered by the State Farm policy as a permissive user of Mr. Jacober's vehicle. State Farm contends, however, ‘that under the particular and very limited factual situation of this case the insurance coverage extended to a permissive user may exclude liability for injury or death to the named insured.’ In support of this contention we are referred to Vehicle Code section 164542 and the cases of Hale v. State Farm Mut. Auto. Ins. Co., 256 Cal.App.2d 177, 63 Cal.Rptr. 819, Tenopir v. State Farm Mut. Auto. Ins. Co., 403 F.2d 533, and American Home Assur. Co. v. State Farm Mut. Auto. Ins. Co., 1 Cal.App.3d 355, 81 Cal.Rptr. 732. Defendants argue in support of the decision of the court below that (1) the exclusion is not applicable to this wrongful death action citing Bachman v. Independence Indem. Co., 214 Cal. 529, 6 P.2d 943 and Atlantic Nat. Ins. Co. v. Armstrong, 65 Cal.2d 100, 52 Cal.Rptr. 569, 416 P.2d 801, (2) it is inapplicable under the case of Farmers Ins. Exch. v. Frederick, 244 Cal.App.2d 776, 53 Cal.Rptr. 457, and (3) Vehicle Code section 16454 is void as against public policy.

It appears clear that the insuring clause of the State Farm policy extended coverage to Mr. Dell as a permissive user of the vehicle and obligated the insurer to pay, on his behalf, all sums that he shall become obligated to pay for damages sustained by ‘other’ persons as a result of his operation of the vehicle in question. ‘Other’ persons would normally include the Jacober heirs. It appears equally clear that the policy exclusion when considered alone excluded coverage for damage sustained because of bodily injury to ‘the insured.’ Ordinarily the deceased, Warren Jacober and his surviving wife Joyce Jacober, named insureds, would be excluded from the insurer's obligation to pay for damages sustained by them. Assuming arguendo that such an exclusion would be valid as interpreted by State Farm, despite the requirements of Vehicle Code section 164513 , the insurer's obligation to pay is materially different under the insuring agreement from that modified by the exclusion which creates an ambiguity in the terms of the insurance contract. The applicable provisions of the insuring agreement and the exclusion in State Farm's policy are virtually identical to those contained in the Farmers' policy involved in Farmers Ins. Exch. v. Frederick, supra, 244 Cal.App.2d 776, 53 Cal.Rptr. 457, with the lone exception that Farmers covered injuries sustained by any person while State Farm covered injuries sustained by other persons. The end result is the same because of the exclusion. Coverage is extended to injuries sustained by any person other than the insured. The ambiguity arises in what is meant by the word ‘insured.’ In Farmers Ins. Exch., supra, the court determined that the unqualified word ‘insured,’ as used in the insuring agreement, referred to the driver of the vehicle whether he was the named insured or one driving with permission of the owner, saying at pages 783–784, 53 Cal.Rptr. at pages 459–460:

‘We conclude that the language of the policy at bench excludes only the one who actually drives the insured vehicle and the resident members of his family. This construction is fortified by [Atlantic National Ins. Co. v.] Armstrong, supra, [65 Cal.2d 100, 52 Cal.Rptr. 569, 416 P.2d 801], and Globe Indem. Co. v. Universal Underwriters Ins. Co. (1962) 201 Cal.App.2d 9, 20 Cal.Rptr. 73. In the latter case property damage instead of bodily injury was involved. The court held the permissive driver to be the insured rather than the owner and allowed the owner to recover for damages to his own vehicle. At pp. 18, 19, 20 Cal.Rptr. at p. 79, the court said:

‘We do not believe that the provision in the policy excludes liability as to property owned by the named insured necessarily when the automobile is operated by a permissive user. The exclusion reads: ‘This policy does not apply: . . . (f) under coverage B, to injury to or destruction of (1) property owned by or rented to the insured. . . .’ But, here, Moore, the permissive user, did not own the car. He became an additional assured under the policy by operation of law. Moore damaged Hacker's car; Moore is liable; the policy protects him because the damaged car was not ‘property owned’ by him but by Hacker. We construe the policy against the insurer because it “prepared the policy” [citation]; the ‘presumption favors' the insured [citation]. Universal cannot invoke the language of the exclusion, which it limited to the insured's ‘owned’ property, to embrace property not owned, but borrowed by, an additional insured.”

We find nothing in the State Farm policy which would import any different meaning to the word 'insured' than was determined in the Farmers' policy. Had State Farm desired to exclude coverage to its named insured under circumstances which exist in this case, it would have been simple to clarify its insuring agreement in defining ‘other persons' by adding after such words a suitable modifying phrase such as ‘than the named insured or his family.’ Under established rules of contractual construction in the face of an ambiguity we conclude that this contract of adhesion must be construed to afford coverage to the Jacober heirs. (Gray v. Zurich Insurance Co., 65 Cal.2d 263, 269, 54 Cal.Rptr. 104, 419 P.2d 168.)

The logic of the situation makes our task relatively easy. Were we to adopt the argument of plaintiff, then under the facts of this case, State Farm Insurance Co. would have no duty to defend the basic action on behalf of the driver, indemnify him, or pay the damages sustained by the decedent's heirs as a result of this accident, despite the fact that the driver of the insured vehicle, admittedly an insured under the policy, caused the accident. The driver would be without the protection required to be afforded him under the State Farm policy by Vehicle Code section 16451.4 We conclude that under the facts of this case the deceased Warren Jacober at the time of the accident in question occupied the status of an ‘other’ person under the terms of the insuring clause of the policy and was not in the status of an insured within the meaning of the term ‘insured’ as used in the exclusion, thus resolving the ambiguity as required by law. In view of the foregoing we do not find it necessary to decide whether or not Vehicle Code section 16454 sanctions the exclusion as contended by plaintiff or is unconstitutional as urged by defendants. Such a decision on our part might have been presented had the insuring clause itself obligated State Farm to pay damages suffered by any ‘other person than the named insured or his family,’ the eliminating the ambiguity in the policy. We expressly refrain from compounding the confusion now existing in the reported cases with another intermediate appellate court decision purporting to determine the constitutionality of the attempted exclusion.

The judgment is affirmed.


1.  Insuring agreement I coverage A reads: ‘To pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of (A) bodily injury sustained by other persons, and . . ..’

2.  Vehicle Code section 16454 reads:‘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.’

3.  Vehicle Code section 16451 reads:‘An owner's policy of motor vehicle 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, against loss from the liability imposed by law for damages arising out of ownership, maintenance, or use of such motor vehicle within the continental limits of the United States to the extent and aggregate amount, exclusive of interest and costs, with respect to exch motor vehicle, of fifteen thousand dollars ($15,000) for bodily injury to or death of each person as a result of any one accident and, subject to said limit as to one person, the amount of thirty thousand dollars ($30,000) for bodily injury to or death of all persons as a result of any one accident and the amount of five thousand dollars ($5,000) for damage to property of others as a result of any one accident.’

4.  We are not called upon to determine the nature and extent of the coverage if any afforded by the Volkswagen policy on Mr. Dell.

ALLPORT, Associate Justice.

COBEY, Acting P. J., and SCHWEITZER, J., concur.

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