GLENS FALLS INSURANCE CO., Plaintiff, Cross-Defendant and Appellant, v. PACIFIC GAS AND ELECTRIC CO et al., Defendants, Cross-Complainants and Respondents; Travelers Insurance Co. et al., Defendants, Cross-Complainants and Appellants; Transport Indemnity Co. et al., Defendants, Cross-Defendants and Respondents; Jack Norman Creswell et al., Cross-Defendants and Respondents.
Involved in this litigation are six insurance companies and eight insurance policies. The appeal is from a judgment in an action for declaratory relief. The appellants are plaintiff Glens Falls Insurance Co. (Glens Falls) and its insured Camblin, defendant Imperial Casualty & Indemnity Co. (Imperial) and defendant Travelers Insurance Co. (Travelers). Respondents whose rights will be affected by the outcome of this appeal are defendants Transport Indemnity Co. (Transport), Argonaut Insurance Co. (Argonaut) and Insurance Company of North America (INA).
Pacific Gas and Electric Co. (P.G. & E. entered into a contract for the construction of Drum Powerhouse No. 2 on the American River at or near Alta, California. Its principal contractor was J. H. Pomeroy & Co. (Pomeroy). United States Steel Corporation (U.S.S.) subcontracted under Pomeroy to fabricate, supply and install all reinforced steel (‘rebar’), and U.S.S. in turn subcontracted for the same part of the job with Gilmore-Skoubye, a joint venture (Gilmore). By contract with Gilmore, Bay Freight Lines, Inc. (Bay) and its subcontractor, Stanley Jorgenson, were to haul and deliver the steel at the job site in trucks. At the time of the accident stated below Jorgenson was operating a truck-tractor owned by him attached to which was a trailer owned by Bay. We will refer to this as the ‘steel truck.’ Both Bay and Jorgenson were public carriers. Nick-Doris, Inc., doing business as Camblin Steel Service (Camblin), by direct subcontract with Gilmore was to unload and install the rebar in place in the building, using a crane owned and operated by the principal contractor, Pomeroy. The crane was a self-propelled mobile-type crane licensed for highway use but at the time of the accident was immobile and raised on outriggers.
It was the practice for the crane operator to use the crane's boom to pick up bundles of rebar and move them to a dock from which they were then again moved and installed into place. On the day of the accident two employees of Pomeroy, Moore and Schultheiss (one as operator and the other as supervisor), unloaded the bundles from the truck. Mathews and Porter, two employees of Camblin, assisted by guiding the bundles of rebar to the intermediate point. P.G. & E. owned and maintained a 60-thousand-volt power line overhead. As Mathews and Porter were guiding one of the last bundles of steel the boom of the crane came in contact with, or within arcing distance of, the current-carrying power line. Current was transferred through the boom and into the bodies of Mathews and Porter.
Thereafter they became plaintiffs in two actions brought in the Superior Court of San Francisco. P.G. & E., Pomeroy, Schultheiss, Moore, U.S.S. and Gilmore were defendants. The two actions were consolidated for trial. Settlement was effected after this declaratory relief action was brought.1 U.S.S. and Gilmore were voluntarily dismissed and did not contribute in the settlement. The other defendants named (through their insurers) did contribute to the settlement.
On the date of the accident the following insurance policies with the following named insured were in effect: Glens Falls policy, with a limit of $500,000/$1,000,000, issued to Camblin as named insured, which includes P.G. & E. as a named additional insured; Travelers policy, with a limit of $500,000, issued to Gilmore as named insured, which includes P.G. & E. as a named additional insured and Pomeroy as a second additional insured; Argonaut policy, with a limit of $200,000, issued to Pomeroy as named insured, which includes P.G. & E. as a named additional insured; INA policy No. XUA 706, with a limit of $1,000,000, $100,000 deductible issued to U.S.S. as named insured; INA policy No. MLP 80850, with a limit of $500,000/$1,000,000, issued to Pomeroy as named insured, which includes P.G. & E. as a named additional insured; Imperial policy, with a limit of $100,000/$300,000, issued to Jorgenson as named insured and including a P.U.C. endorsement certifying $25,000/$100,000 statutory coverage; Transport policy No. 2302781, with a limit of $5,000, issued to Bay as named insured; Transport policy No. 2302781–X with a single occurrence limit of $4,995,000, issued to Bay as named insured. (Transport certified to the P.U.C. that under policy No. 2302781, Bay was provided with coverage in the statutory amounts required: $25,000/$100,000.)
P.G. & E. was covered by insurance with a policy issued by Lloyd's of London, admittedly ‘excess,’ and that policy is not involved in this appeal.
Other facts peculiarly material to the several policies involved will be related below in connection with the discussion applicable to such policies.
The trial court found: Transport's liability to be primary coverage under its policies limited to the total required by the P.U.C. endorsement to be discussed below—$25,000 in each of the two actions; Imperial's coverage to be primary in the sum of $100,000 in each action; Traveler's coverage to be primary in the total sum of $500,000;2 Glens Falls coverage to be primary in the sum of $500,000 in each action. As to all primary coverage it concluded the loss should be borne proportionately. It found the coverage of INA (as to both its policies) and the coverage of Argonaut to be excess.
Before we confront the individual issues, generalizations of some of the terms used can be made. Some policies are so worded that courts have referred to them as insurance extending ‘primary’ coverage or as ‘participating’ policies. Such instruments participate in the payment of a loss on a pro rata basis—the proration being on the basis of the proportion of the loss which the policy limits bear to the policy limits of all of the same type of insurance. Other policies are called ‘excess' insurance. If a policy is actually and solely an excess policy the coverage furnished does not participate in the loss to be paid unless and until all the insurance afforded by primary or participating insurance covering the same risk has been exhausted up to the policy limits of such insurance. (Pacific Employers Ins. Co. v. Maryland Casualty Co. (1966) 65 Cal.2d 318, 54 Cal.Rptr. 385, 419 P.2d 641; Donahue Constr. Co. v. Transport Indem. Co. (1970) 7 Cal.App.3d 291, 86 Cal.Rptr. 632; Fireman's Fund American Ins. Companies v. State Farm Mutual Automobile Ins. Co. (1969) 273 Cal.App.2d 445, 78 Cal.Rptr. 38.) Thereafter the so-called ‘excess' insurance coverage will become applicable on a pro rata basis with any other ‘excess' insurance. We do not become concerned here, however, with the latter type of proration. The trial court found, and we will find, that there is adequate ‘primary’ or ‘participating’ coverage afforded so that coverage found to be truly ‘excess' will not be reached.
IMPERIAL AND TRAVELERS—PRIMARY (PARTICIPATING) POLICIES
Both Imperial and Travelers, the policies of which companies are described above, are admittedly primary (participating) to the extent of their policy limits—$200,000 and $500,000 respectively. They were so declared by the trial court and discussion of their provisions need not be included herein
INA POLICY NO. XUA–706; ARGONAUT: PRIMARY OR EXCESS?
INA policy No. XUA–706, providing only motor vehicle liability insurance with a single occurrence limit of $1,000,000, $100,000 deductible, covered U.S.S. as named insured. It contained the following ‘other insurance’ provision which stated in relevant part: ‘If other valid and collectible insurance with any other insurer is available to the insured covering a loss also covered by this policy, other than insurance that is in excess of the insurance afforded by this policy, the insurance afforded by this policy shall be in excess of and shall not contribute with such other insurance * * *.’
The Argonaut policy, containing, but not limited to, vehicle liability coverage, with a single occurrence limit of $200,000 was issued to Pomeroy and named P.G. & E. as an additional insured. Its ‘other insurance’ provision stated in relevant part: ‘If the insured is insured by any other policy or policies of insurance against loss covered by this policy, this policy shall provide excess insurance over and above the amount collected from such other valid and collectible insurance * * *.’
The ‘other insurance’ clauses quoted above purport to afford ‘excess' coverage and under the three cases cited, Pacific Employers Ins. Co., Donahue Constr. Co. and Fireman's Fund, they must be given that effect. Of the three Fireman's Fund is most explicit. (It is quoted in Donahue.) It mentions and cites two lines of California authority. One exemplified by Colby v. Liberty Mutual Ins. Co. (1963) 220 Cal.App.2d 38, 47–48, 33 Cal.Rptr. 538, holds that where one policy contains a proration clause and another contains an ‘excess' clause the loss must be prorated. In Colby and in other cases adopting the same rule hearings by our Supreme Court were denied. The second line of cases holds to the contrary. Pacific Employers Ins. Co., supra, spearheads the second group, and since it was the latest statement of a rule by our Supreme Court, the court in Fireman's Fund concluded, Donahue adopted the conclusion, and this court adopts the same conclusion, that the rule in California must be declared to be that even in situations where to do so may be inconsistent with proration provisions in other policies the ‘excess' clauses as in INA policy No. XUA–706 and Argonaut policy as quoted above sill be given effect over primary-proration clauses in other policies. Despite ‘overriding equity’ arguments urged by other insurers here involved, this reviewing court perceives none prompting us to change or justify an exception to the general rule. We conclude that INA No. XUA–706 and Argonaut policies provide only excess coverage.
INA POLICY NO. MLP–80850: PRIMARY OR EXCESS?
This policy, providing vehicle as well as general liability coverage, with a single person limit of $500,000 and a single occurrence limit of $1,000,000, was issued, effective January 1, 1963, to Pomeroy, with P.G. & E. added at that time (under Endorsement No. 2) as an additional named insured.
Its ‘other insurance’ clause provided: ‘If the insured has other valid and collectible insurance available to him with any other insurer covering a loss also covered by this policy the insurance afforded by this policy shall be in excess of and shall not contribute with such other insurance * * *.’
Endorsement No. 37, however, referring specifically to the Alta project, was added, effective March 31, 1964. This endorsement states in relevant part: ‘In consideration of an additional premium to be determined at audit, it is hereby understood and agreed that solely as respects the Bear River Drum 2 Powerhouse, Placer County, such insurance as is afforded by this policy for bodily injury liability insurance other than automobile shall apply as primary insurance only insofar as coverage is not afforded by the Argonaut Insurance Company. Insofar as coverage therefor is afforded by the Argonaut Insurance Company this policy shall apply only after the Argonaut Insurance Company has paid or has been held liable to pay the full amount of their ultimate net loss liability as follows: $200,000. Ultimate net loss in respect of each person and subject to that same limit for each person $200,000. Ultimate loss in respect of each occurrence.’
If the ‘other insurance’ clause stood alone, this policy as well as INA policy No. XUA–706 would provide excess insurance. Endorsement No. 37 does not change the situation. It provides that under three conditions the coverage of that policy is primary: (1) the insurance was said to be for a ‘liability insurance other than automobile,’ (2) it applied ‘only insofar as coverage is not afforded by Argonaut,’ and (3) coverage applied ‘solely as respects the Bear River Drum 2 Powerhouse.’
Inasmuch as (excess) coverage is afforded by Argonaut, the second of those conditions is not met. Accordingly, no primary coverage is provided under INA policy No. MLP 80850.
GLENS FALLS POLICY: PRIMARY OR EXCESS?
Glens Falls policy contains a prorating ‘other insurance’ clause. That clause is qualified as follows: ‘provided, however, the insurance under this policy with respect to loss arising out of the maintenance or use of any hired automobile insured on a cost of hire basis or the use of any nonowned automobile shall be excess insurance over any other valid and collectible insurance.’
The policy defines ‘automobile’ as follows:
‘* * *.
‘(b) Automobile. Except where stated to the contrary, the word ‘automobile’ means a land motor vehicle or trailer as follows:
‘(1) Owned Automobile—an automobile owned by the named insured;
‘(2) Hired Automobile—an automobile used under contract in behalf of, or loaned to, the named insured provided such automobile is not owned by or registered in the name of (a) the named insured or (b) an executive officer thereof or (c) an employee or agent of the named insured who is granted an operating allowance of any sort for the use of such automobile;
‘(3) Non-Owned Automobile—any other automobile.’
The trial court found that the steel truck (owned by Bay and Jorgenson) was a ‘hired automobile’ as to the named insured, Camblin, within the meaning of the policy.
Glens Falls argues that the ‘other insurance’ clause in Glens Falls policy does not extend primary pro rata coverage because of the exclusionary provision relating to ‘hired automobiles.’ Its argument in this respect is unclear. Obviously, neither Camblin, named insured, nor P.G. & E., an additional named insured, hired the steel truck. Nevertheless, it was a hired automobile within Glens Falls own ‘definition’ since it was ‘an automobile used under contract in behalf of * * * the named insured * * * not owned by or registered in * * * [its] name * * *.’
The so-called ‘definition’ of an automobile quoted above from Glens Falls policy was actually not a definition at all. Nowhere does it tell what it deems an automobile to be. It is merely a classification for the purposes of the policy of automobiles into three groups. By the very terms of this classification each class is mutually exclusive. A ‘hired automobile’ therefore is not a ‘non-owned automobile’ within Glens Falls own ‘definition.’ An identical clause was so construed in Wilshire Ins. Co. v. Transit Cas. Co. (1967) 248 Cal.App.2d 719, 723, 56 Cal.Rptr. 861. We agree with that construction. (See also Monolith Portland Cement Co. v. American Home Assur. Co. (1969) 273 Cal.App.2d 115, 123, 78 Cal.Rptr. 113.)
Actually we need not pause to determine whether the steel truck was being used ‘under contract in behalf of’ Camblin. It was certainly being used in that capacity in behalf of P.G. & E., the additional named insured.
The ‘hired automobile’ was not ‘insured on a cost of hire’ basis. (Glens Falls does not so contend.) It therefore does not come within the exclusionary proviso of the ‘other insurance’ clause transferring the status of the Glens Falls policy from primary pro rata to excess insurance. The finding of the trial court with reference to Glens Falls policy under which the coverage is in the sum of $500,000 to each injured person was therefore correct.
TRANSPORT'S ‘POLICIES': WHAT ARE THEY AND WHAT IS THEIR EFFECT?
Bay, a common carrier, was required by the Public Utilities Commission (P.U.C.) to carry motor vehicle personal liability and property damage coverage at a minimum of $25,000 to each person and $100,000 for all injuries or damages sustained in any one accident. Transport issued a certificate to P.U.C. that it had insurance in force in favor of Bay (‘Policy No. 2302781’) ‘which, by the attachment of the * * * [P.U.C.] Endorsement, Form P & F 675, has been amended to provide the liability protection authorized or required for motor carriers of property pursuant to General Order No. 100A and by the pertinent rules, orders and regulations * * * issued by [P.U.C.] * * *.’ (Nowhere do any of the briefs or arguments inform us of the provisions of Form P & F 675, nor do we find it in the bale of exhibits sent up to this court.) Order No. 100A covers the requirement stated in the first sentence of this paragraph.
Transport used a—to us—unique method of issuance of contracts of ‘insurance’ to effectuate whatever purpose its underwriters may have had in mind. It issued to Bay two documents bearing designation No. 2302781 (already referred to) and No. 2302781–X issued contemporaneously therewith. (As they appear in the file they form a single document.) When referring to document No. 2302781, we cannot, considering it in the light of the evidence in the record, accurately call it an insurance policy. True, it refers to insurance coverage of $5,000 and in its 20 pages most of the trappings of a ‘PL and PD’ insurance policy—provisions, definitions, endorsements, conditions, exclusions, exceptions to exclusions, etc.—occur. But when one wanders through its labyrinths and reads the testimony of the underwriter in the record, it is learned that the document does not actually extend to Bay any insurance coverage at all. Bay deposits $5,000 with Transport. When any claim is made against Bay, Transport undertakes to service that claim at a price for management fees, adjuster's services and similar matters. If and when the $5,000 has been expended, Transport calls for more money from Bay. On the other hand, if at the end of a specified accounting period the value of such services has not equalled $5,000 there is a refund. Thus, the $5,000 is not insurance; it is a rotating deposit.
Yet, attached to document No. 2302781 (we are informed) there was a P.U.C. endorsement (which, again we cannot find among the exhibits). We are also informed this endorsement fulfilled P.U.C. requirement. We are told that it contains the following statement: ‘Nothing in this endorsement shall be construed to limit or restrict any coverage otherwise provided by the policy of which this endorsement is made a part.’
As stated above document No. 2302781–X was issued at the same time that document No. 2302781 was issued. The ‘X’ policy is an actual insurance policy of sorts. There is public liability and property damage coverage of $4,995,000 asserted ‘to afford the Insured the same coverage as is provided by the underlying primary policy issued by * * * Transport.’ (Italics ours.) (It seems clear therefore, 20-page document No. 2302781 was intended to be a backdrop for the three-page ‘X’ policy.) The coverage extended by the latter was for a very substantial premium (as distinguished from a deposit). It also contained a clause stating: ‘the Company shall be liable hereunder for loss up to an amount no greater than the limit expressed in the Declarations for each occurrence excess over the underlying insurance available to the Insured. * * *’ A similar clause is in policy No. 2302781.
Since, or if policy No. 2302781 was intended to be a ‘backdrop’ for the ‘X’ policy, then perhaps it may have been intended by the underwriters also to include conditions C. and D. of the former ‘policy’ in the reference to the ‘underlying primary policy’ quoted above. Conditions C. and D., like so many other underwriters' devices, are put-and-take provisions. Condition ‘C.’ is partially a ‘put’ provision. It provides that the insurance ‘afforded by this policy shall comply with the minimum provisions of any motor vehicle financial responsibility law * * * [or] motor carrier regulatory authority law or regulation * * *.’ It also provides: ‘but only to the extent of the minimum amount of limits of liability insurance protection required to satisfy any such law or regulation.’ Condition ‘D.’ entitled ‘OTHER INSURANCE’ is a ‘take’ provision. It provides that if there is other ‘insurance or self-insurance against an occurrence covered by this policy, this insurance shall be deemed excess insurance over and above the applicable amounts of all such other insurance * * *.’
The trial court held that the limit of Transport's coverage was $25,000/ $100,000, that being the limits of the P.U.C. endorsement. In so holding it treated document No. 2302781 (to which, as we have seen, the P.U.C. endorsement was assertedly attached) as being a separate policy for $5,000 raised to the greater amount by reason of the endorsement. It deemed all of the rest of Transport's liability to be excess.
We agree with the trial court's opinion in which it stated: ‘In Travelers Indemn. Co. v. Colonial Ins. Co., supra [(1966) 242 Cal.App.2d 227, 51 Cal.Rptr. 724] it was concluded that by virtue of the endorsement on the certification to the Public Utilities Commission the Transport policy within the required limits of $15,000 as therein provided was ‘primary’ insurance and that the excess provisions of the other insurance clauses on the policy were ineffectual. The court there was not concerned with the same question with which we are concerned here, namely: if a trucker is required by Public Utility Commission regulations, or law, to have minimum coverage of $25,000/ $100,000, but in fact has coverage under two integrated policies in the aggregate sum of $5,000,000 with express provisions therein that such $5,000,000 is ‘excess' as to any other insurance, and conceding that the P.U.C. endorsement vitiates the ‘excess coverage’ clause of the policies insofar as said minimum coverage is concerned, is there any prevailing public policy which requires that such reasoning equally be applied to the entire $5,000,000 coverage?
‘It is to be noted that in the certification to the P.U.C. Transport limited its unconditional promise to pay ‘within the limits of liability hereinafter provided’, that is to the extent of $25,000/$100,000. Such was the effect, also, of ‘Condition C’ of the policy, hereinabove quoted.
‘The court is inclined to conclude that there is no public policy or law which extends the primary coverage of the Transport policy beyond the minimum limits of $25,000/$100,000, and that except as qualified by the endorsement and the terms of the policy, as stated, those provisions of the Transport policy which provide that if there is other insurance against an occurrence covered by such policy, such insurance shall be deemed excess insurance over and above the applicable amounts of all such other insurance or self insurance, is effective, as is any policy which provides excess insurance above a stated amount of primary insurance. (See American Automobile Insurance Co. v. Transport Indemnity Co., 200 Cal.App.2d 543, [19 Cal.Rptr. 558] citing Peerless Cas. Co. v. Continental Cas. Co., 144 Cal.App.2d 617 [301 P.2d 602].) In reaching this conclusion the court observes that Bay Freight, the insured under the Transport policy, does not suffer inasmuch as it is not a party defendant in the San Francisco litigation and there appears to be no compelling reason why the other insurance carriers involved herein should receive such a munificent benefit as the $4,975,000 additional primary coverage would result in were the court to rule to the contrary. This observation is not made with any thought of the court rewriting the policy of the insurance carriers or rewriting the law. The conclusion is reached merely with all of the provisions of the law and the insurance policies in mind, reconciling one with the other.’
In accordance with the views expressed above, we hold that the policies of Glens Falls (with limits of $500,000 for damages because of injuries to each person and $1,000,000 because of all injuries sustained in any one accident); Imperial (with limits of $100,000 for damages because of injuries to each person and $300,000 because of all injuries sustained in any one accident); Transport (No. 2302781) (with effective limits of $25,000 for damages because of injuries to each person and $100,000 because of all injuries sustained in any one accident); and Travelers (with limits of $500,000 for damages because of injuries to each person and $500,000 because of all injuries sustained in any one accident) afford coverage to Pacific Gas & Electric Company, J. H. Pomeroy & Company, Henry Schultheiss and W. J. Moore, and each of them, on a primary basis for the settlements made by them in personal injury action No. 548858 and personal injury action No. 558238, respectively, filed in the San Francisco Superior Court.
It has been brought to our attention that action No. 548858 filed by Billy G. Mathews has been settled for $375,000, that action No. 558238 filed by James L. Porter has been settled for $16,000, and that dismissals with prejudice have been filed in both actions.
As has been indicated above, there will be adequate funds available from the policies held to provide primary coverage and resort will not be had to those providing only excess coverage.
The primary coverage available as a basis for determining the pro rata shares of each of the primary carriers as to the settlement in action No. 548858 is the sum of the following limits: Glens Falls $500,000; Imperial $100,000; Transport $25,000; and Travelers $479,500 (equal to 375/391 x $500,000).
The primary coverage available in action No. 558238 is the sum of the following limits: Glen Falls $500,000; Imperial $100,000; Transport $25,000; and Travelers $20,500 (equal to 16/391 x $500,000).
Each carrier is to pay that proportion of the settlement in the respective actions which its contribution to the available coverage in that action bears to the total primary coverage thus available.3
The judgment as modified is affirmed.
1. Mathews received $375,000, Porter $16,000.
2. The trial court's findings correctly state the limits of the Travelers policy to be $500,000 for each person and $500,000 for each occurrence. Its conclusions, however, inadvertently reflect the coverage as $500,000 for each person without reference to the $500,000 single occurrence limitation. The inconsistency will be corrected in our decision.
3. In action No. 548858 the pro rata shares of the primary carriers are as follows:Glens Falls1000/2209Imperial200/2209Transport50/2209Travelers959/2209The pro rata shares in action No. 558238 are:Glens Falls1000/1291Imperial200/1291Transport50/1291Travelers41/1291
PIERCE, Presiding Justice.
FRIEDMAN and JANES, JJ., concur.