ISLAND v. FIREMAN FUND INDEMNITY CO (1946)

This is an appeal by plaintiff from an order granting a new trial in an action by plaintiff against defendant as insurance carrier of one J. C. Cave, Sr., and a cross appeal (taken pursuant to the new procedure set forth in Rule 3(a) of the Rules on Appeal) by defendant from the judgment in favor of plaintiff.

On November 14, 1942, defendant executed a policy of automobile insurance to J. C. Cave, Sr., covering a 1934 Ford Tudor Sedan automobile owned by him and also covering said J. C. Cave, Sr., ‘with respect to the operation of any other private passenger automobile by such named insured.’ At the time he entered military service in December, 1942, J. C. Cave, Jr., and his wife were living at the home of his father, J. C. Cave, Sr., in Oakland, California. The son was the owner of the Ford sedan automobile which was involved in the accident with plaintiff, which automobile he had left at his father's home upon going into the army. The son was in the military service about eight months. His automobile was left at the father's home, the son requesting the father to ‘drive it once in a while and keep the battery up—charged.’ On March 22, 1943, while J. C. Cave, Sr., was driving the son's automobile a collision occurred in which plaintiff was injured, and judgment was thereafter recovered by plaintiff against J. C. Cave, Sr., which judgment is the one upon which the action involved in this appeal was brought.

Upon the trial plaintiff rested his case after reading in evidence certain admissions made in the pleadings and stipulation of counsel and after the court had received in evidence the policy of insurance and the judgment in the case of Island v. Cave. Defendant as part of its case called J. C. Cave, Sr., as a witness and he testified that he drove his son's car 15 or 20 times during the time his son was in the army. Defendant claimed surprise and was permitted to lay the foundation for impeaching the witness, after which the witness resumed the stand and counsel for defendant had the witness identify an affidavit which had been sworn to by the witness several months before, which affidavit quoted the witness as stating that he had driven his son's automobile ‘about 15 days per month to work or just about as much as I drove my own car.’ The affidavit was admitted in evidence as defendant's exhibit and it is clear from the record and from the statement of the trial court in admitting it, that it was offered solely for the purpose of impeachment.

Among the instructions given by the court to the jury was the following: ‘In this case, evidence was received tending to show that the witness Cave had made statements, with reference to his use of the automobile involved in the accident, inconsistent with his testimony upon the witness stand. Such testimony was admitted solely for the purpose of impeachment, in order to assist you in determining what credibility should be given to his present testimony. It should not be considered by you as evidence affirmatively establishing the existence or truth of the facts stated in such prior statements.’

Following the verdict of the jury in favor of plaintiff and the entry of judgment thereon, defendant made a motion for a new trial and it is conceded that the only ground argued in support of the motion was that the foregoing instruction was erroneous. The order of the trial court granting the motion did not mention insufficiency of the evidence as a ground thereof and it is conceded that the motion was granted solely because the trial court became convinced error was committed in giving the above quoted instruction.

The only question, therefore, which we have to consider upon plaintiff's appeal from the order granting a new trial is whether or not said instruction was erroneous. If the instruction was erroneous, the motion was properly granted; if the instruction was not erroneous, then it was error to grant the motion.

Plaintiff argues that the hearsay statement of the witness Cave, Sr., was not admissible against plaintiff for anything other than impeachment purposes and that, therefore, the instruction was properly given to the jury. Plaintiff cites Yore v. Booth, 110 Cal. 238, 42 P. 808, 52 Am.St.Rep. 81, in which the court held that statements by the assured are not binding on the beneficiary of a life insurance policy who had a vested interest in the policy. The trial court had refused to admit certain inconsistent statements of the assured. On appeal the court, speaking through Chief Justice Beatty, said $110 Cal. at pages 240, 241, 242, 42 P. at page 808, 52 Am.St.Rep.81: ‘I was at first inclined to regard this ruling as erroneous, but an examination of a large number of cases has convinced me that it is sustained at all points by the decided weight of authority. * * * From this it follows that, as to these plaintiffs, any declarations of the deceased not made at the time of procuring the policy, or as part of the res gestae, were hearsay and incompetent. The authorities in support of this proposition are numerous, and need not be cited here.’ To the same effect see also McEwen v. New York Life Ins. Co., 42 Cal.App. 133, 183 P. 373, and Paez v. Mutual Indemnity etc. Ins. Co., 116 Cal.App. 654, 3 P.2d 69.

Plaintiff also cites Malmgren v. Southwestern A. Ins. Co., 201 Cal. 29, 255 P. 512, in which it was held that the injured person had a vested interest in the insurance policy in question immediately upon the happening of the accident.

In 2 Cal.Jur. 10 Yr.Supp., 145, it is said: ‘Under the provisions of the statute (Ins. Code, sec. 11580) the contract of insurance inures to the benefit of any person who may be injured by the assured ‘as completely as if such injured person had been specifically named in the policy.’'

In Wigmore on Evidence, Vol. IV., section 1081, it is stated: ‘* * * hence, unless the beneficiary has in the beginning been made a party to the contract so as to bind himself to be identified with the insured (and some forms of contract attempt this), the insured's admissions would not be receivable against the beneficiary.’

In Jones ‘The Blue Book of Evidence,’ 1913 edition, Vol. 2, section 242, it is said: ‘It has been held that there is no such privity of interest between an insured person and his beneficiary as to admit the declarations of the former in actions on life insurance policies. This general statement, however, must not be accepted without question and inquiry into each case on its own facts as to the extent of the influence of res gestae and the defense of fraud. Cases are frequently cited with the bald assertion that the statements of the assured are evidence against the beneficiary, and search will reveal that in such cases the testimony was received on one or the other of those grounds.’

Defendant in reply argues that the statement of the witness Cave, Sr., was admissible as a declaration against the interest of plaintiff, and the trial court properly granted defendant's motion for a new trial on the ground of error of law in instructing the jury that evidence of prior statements of Mr. Cave could be considered only for determining his credibility. Defendant contends that plaintiff stood in exactly the same position as did the insured. The cases of Valladao v. Fireman's Fund Indem. Co., 13 Cal.2d 322, 332, 89 P.2d 643; Hynding v. Home Acc. Ins. Co., 214 Cal. 743, 7 P.2d 999, 85 A.L.R. 13, and Purefoy v. Pacific Auto. Indem. Exchange, 5 Cal.2d 81, 53 P.2d 155, cited by defendant, are all cases where the assured's failure to cooperate with the insurance carrier precluded the plaintiff from recovering. The rule of those cases has no application to the case at bar. In those cases the conduct of the assured in failing to cooperate was set up as a defense. They do not purport to deal with the effect of hearsay statements made by the assured after the accident as to events occurring before. The same distinction may be drawn between the cases of Kindred v. Pacific Auto. Ins. Co., 10 Cal.2d 463, 464, 75 P.2d 69, and Sears v. Illinois Indemnity Co., 121 Cal.App. 211, 9 P.2d 245, also cited by defendant. In the Kindred case, the defendant insurance carrier proved by competent evidence that in violation of the provisions of the policy, the automobile was regularly used more than fifty miles from a given place. Hence, there was no coverage at the time of the accident. In the Sears case, there was held to be no coverage where the insurance carrier demonstrated by competent evidence that in violation of the provisions of the policy, a person under sixteen years of age was driving the automobile at the time of the accident.

Defendant contends further that the Supreme Court in the case of Emery v. Pacific Employers Ins. Co., 8 Cal.2d 663, 67 P.2d 1046, decided contrary to plaintiff's position. There plaintiff recovered a judgment against one Bronis, defendant's policy holder, and brought action to enforce it. Defendant denied liability because of false representations as to prior cancellations of other insurance. In reversing a judgment for plaintiff the court said, 8 Cal.2d at page 673, 67 P.2d at page 1052: ‘Defendant also sought to prove cancellation of automobile liability insurance policies issued in 1930 and 1933 by the Norwich Union Indemnity Company. The witness Addington, claims adjuster for the defendant insurance company in the instant action, testified that after the accident in which plaintiffs were involved Bronis stated that the Norwich Union Indemnity Company had cancelled his insurance in the year 1930. The court ruled against the admissibility of this testimony. The statement made by Bronis was admissible as a declaration against interest. Lansley v. Zurich Gen. Acc. & L. Ins. Co., 219 Cal. 101, 25 P.2d 418. It was to the interest of Bronis at the time when the statement was made and at the time of the trial that the defendant insurance company should recognize liability on the policy issued to him.’

However, it must be pointed out that the Emery case was a fraud case, and that the insurer was defending upon the ground that the insured had made false statements at the time of obtaining the policy. The distinction between the Emery case and the case at bar is well indicated by the quotation from Jones on Evidence hereinbefore set forth.

No cases in which public liability policies were involved, and bearing directly upon the issue under discussion, have been cited in the briefs, but we have found two decisions in other jurisdictions which appear to support plaintiff's contention that Cave's statements were not admissible upon the merits but were only admissible for the purpose of impeachment.

One is the case of Dziadosc v. American Casualty Co., 114 N.J.L. 137, 176 A. 150, which involved an action against the automobile liability insurer by a party who had judgment against the insured for injuries negligently inflicted by the insured while driving the insured vehicle. A new Jersey statute allowed an action against the insurer by the injured person who had first taken judgment against the insured and had his levy returned unsatisfied. The statute allowed such action ‘under the terms of the policy.’ The trial court admitted the testimony of the insurer's investigator to the effect that the insured had admitted to him after the accident that he had been carrying passengers for hire at the time of the injury to plaintiff—such being in violation of an exclusionary provision in the policy absolving the insurer from liability in such case. In the opinion of the reviewing court it is said that the ‘passengers for hire’ exclusion was a clear cut defense, but that it had to be established by competent evidence. The court held that the testimony of the investigator was inadmissible against the plaintiff. The court in reversing the trial court's judgment in favor of the defendant for the error in admitting the hearsay statements of insured on the merits of the exclusionary defense said: ‘The defendant must establish its defense by competent evidence. The plaintiffs had a right of action to recover under the terms of the policy, and statements of the assured to third persons were not competent to prove the fact sought to be set up in defense, as against the plaintiffs, any more than a like statement was binding on the plaintiff in the Center Garage Co. case [Center Garage Co. v. Columbian Ins. Co., 96 N.J.L. 456, 115 A. 401]. The assured, Keir, was not the representative or agent of the plaintiffs and they do not sue in his right, strictly speaking, but are given an independent right to sue, dependent, of course, upon the validity of the policy.’

The case of Indemnity Ins. Co. of North America v. Forrest, 9 Cir., 44 F.2d 465, was an action by a surviving widow against an insurance carrier after a prior judgment had been reversed against the chauffeur of the insured, the chauffeur having been driving the car of the insurer when the injuries were inflicted. Both the insured and the chauffeur had been originally sued, but the insured died while the action was pending, and it was later dropped as against her and her estate. In addition to covering the insured herself, the policy also covered persons driving the car of insured with her permission. The insurance company's defense was that the chauffeur was driving the car without the permission of the insured at the time he injured plaintiff. In affirming a judgment in favor of the widow, the Circuit Court of Appeals of the Ninth Circuit ruled that a letter from the insured addressed to the defendant, in which she (insured) stated that her chauffeur was driving without permission at the time of the accident, was properly refused admission. The court said, 44 F.2d at page 466: ‘The letter addressed to the appellant by Mrs. Kittredge during her lifetime, in which she declared that Hooper was driving the automobile at the time of the accident without her permission, was not a declaration against interest, and was not admissible in evidence against the appellees in any conceivable aspect of the case.’

In view of the authorities hereinbefore set forth, our conclusion is that the trial court correctly instructed the jury that the statement of Cave, Sr., could only be considered by them for the purpose of impeachment, and that the court erred in granting defendant's motion for a new trial.

We shall now proceed to discuss the appeal of defendant from the judgment in favor of plaintiff.

Paragraph V of the automobile liability policy issued to J. C. Cave, Sr., relating to the use of other automobiles, provided in part as follows: ‘This insuring agreement does not apply: (a) to any automobile owned in full or in part by, registered in the name of, hired as part of a frequent use of hired automobiles by, or furnished for regular use to, the named assured or a member of his household other than such chauffeur or servant; * * *’

Defendant concedes that there is a conflict in the evidence as to the issue of regular use, but asserts that as a matter of law the evidence shows that Cave, Sr., was at the time of the accident driving an automobile ‘owned in full or in part by * * * the named assured or a member of his household,’ and that the accident was thus placed outside of the coverage contracted for. Defendant contends that the trial court erred in denying its motion for a directed verdict and that the evidence is insufficient to support the judgment in favor of plaintiff. (Italics added)

Defendant argues: ‘The automobile involved in the accident was owned by the son who was a member of the household of the named assured. The fact that the son had temporarily entered the armed services could have no effect on his status as a member of such household. The precise question was before the District Court of Appeal in Johnston v. Benton, 73 Cal.App. 565, 569, 239 P. 60, 62, in which it is said:

“It is well settled that the domicile of a person is in no way affected by his enlistment in the civil, military, or naval service of his country; and he does not thereby abandon or lose his domicile which he had when he entered the service, nor does he acquire one at the place where he serves. 9 R.C.L. 551; Stewart v. Kyser, 105 Cal. 459, 39 P. 19; People v. Holden, 28 Cal. [123], 124; Estate of Gordon, 142 Cal. 125, 75 P. 672; Percy v. Percy, 188 Cal. [765], 768, 207 P. 369.”

Defendant also cites a note in 148 A.L.R. where it is said on page 1414: ‘The residence or domicil of a person in the military or naval service is simply a question of intent. The actual residence of a soldier or sailor, since it is not the result of his own volition, does not, of itself, operate to change the residence or domicil which he had when he entered the service. Therefore, in the absence of a contrary intent, it will be assumed that that continues to be his present residence or domicil.’

Defendant also cites Kinsel v. Pickens, D.C., 25 F.Supp. 455, 456, in which the court said: ‘This man's location here (Texas) is dependent entirely upon the will of others. He came here under orders and he will leave under orders. * * * To hold him to be a resident of Texas * * * would be entirely outside the purpose and spirit of the law.’

Plaintiff in reply contends first that the ‘member of household’ defense was not pleaded by defendant, nor was it relied upon by defendant in the lower court, and plaintiff argues that defendant cannot properly urge such defense for the first time upon appeal. While it is apparent from the record that defendant in its answer and upon the trial placed its main reliance upon the ‘regular use’ defense, and did not even offer an instruction on the issue of whether Cave, Jr., was a member of the household of Cave, Sr., at the time of this accident, yet a reading of defendant's answer discloses that the hereinbefore quoted exclusionary clause was set out in full and it was alleged that the automobile involved in the accident was ‘furnished for regular use to J. C. Cave, Sr., by a member of his household, to-wit, his son’ and that said accident did not come ‘within the purview of the coverage afforded by said policy of insurance.’ Furthermore, one of the grounds included in defendant's motion for a directed verdict was ‘that the ownership of the car that he was operating was by a member of his [Cave, Sr.'s] household.’ Therefore, we may assume for the purposes of this appeal that the ‘member of household’ defense was raised by the answer and was properly before the trial court, even though it was inadequately presented if defendant intended to rely upon it either in the trial or upon appeal.

Plaintiff contends further that even though the ‘member of household’ defense may be properly before the court, under the authorities and the evidence, Cave, Jr., was not a member of his father's household at the time of the accident. He argues correctly that the decisions relied upon by plaintiff, and hereinbefore referred to, deal with the question of domicile and residence, and not with the definition of the term ‘household.’ It is, of course, true, as pointed out in these cases, that a person does not lose his legal residence by reason of absence due to military service.

It may be appropriate to point out here that the burden of proving that there was no coverage because of some exclusion clause or condition of the policy was upon the defendant. See 14 Cal.Jur. 617, et seq. And, as stated in Lumbermen's Mutual Casualty Co. v. Pulsifer, D.C., 41 F.Supp. 249, at page 252: “It is a general rule of law that an insurance policy must be interpreted to give effect to the intention of the parties so far as such intention can be discovered from the language of the policy and where the meaning of an insurance policy is fairly susceptible of two constructions, it should be construed most strongly in favor of the policy holder.' Trinity Universal Ins. Co. v. Cunningham, 8 Cir., 107 F.2d 857, 860, and cases cited.' For other statements of the rule see Culley v. New York Life Ins. Co., 27 Cal.2d 187, 194, 163 P.2d 698; Baine v. Continental Assur. Co., 21 Cal.2d 1, 5, 129 P.2d 396, 142 A.L.R. 1253; Fageol T. & C. Co. v. Pacific Indemnity Co., 18 Cal.2d 731, 747, 117 P.2d 661.

Plaintiff cites Moore Shipbuilding Corporation v. Industrial Accident Comm., 185 Cal. 200, at page 207, 196 P. 257, at page 259, 13 A.L.R. 676, where the court said: ‘There is little to be gained by reviewing the numerous definitions given by the courts and lexicographers of the words ‘family’ and ‘household.’ They mean different things under different circumstances. The family, for instance, may be an entire group of people of the same ancestry, whether living together or widely separated; or it may be a particular group of people related by blood or marriage, or not related at all, who are living together in the intimate and mutual interdependence of a single home or household. Again, the word ‘household’ is variously used to designate people, generally, who live together in the same house, including the family, servants, and boarders; or it may be used as including only members of the family relation. It is probable that the two terms are coupled together in this statute to indicate that they are used synonymously, the ‘family’ to include only those of the household who are thus intimately associated, the ‘household’ to exclude those of the family not living in the home.'

Plaintiff also cites Collins v. Northwest Casualty Co., 180 Wash. 347, 39 P.2d 986, 97 A.L.R. 1235, Lumbermen's Mutual Casualty Co. v. Pulsifer, supra, and numerous other cases dealing with various interpretations of the word ‘household.’

In Lumbermen's Mutual Casualty Co. v. Pulsifer, supra, 41 F.Supp. at page 251, 252 it is stated:

‘While Louis Pulsifer was the householder, having title to the premises, no control was exercised by him or his wife (who was the wage-earner) over the young couple. The son had a steady job which occupied him by day and often by night. * * * Whether the term ‘household’ or ‘family’ is used, the term embraces a collection of persons as a single group, with one head, living together, a unit of permanent and domestic character, under one roof; a ‘collective body of persons living together within one curtilage, subsisting in common and directing their attention to a common object, the promotion of their mutual interests and social happiness.’

‘Here two families came together tem porarily until the newcomer could find an other place of abode, which was expected to be a matter of only a few weeks. There was no one head of both groups; no permanence; no pursuit of a common object; no such union of the two families as would make them one. It was a temporary arrangement for the convenience of the son and his family while getting located elsewhere. Each family retained its own organization under its own head and did not merge to make one family or one household in any such way as the word is used in the policy.

‘It should not be overlooked that the language of this endorsement was framed by the Company itself which, by definition or otherwise, could have made the term ‘member of the household’ less ambiguous.'

In Webster's New International Dictionary, one of the definitions of ‘household’ is ‘Those who dwell under the same roof and compose a family; a domestic establishment.’

No clear and final definition can be arrived at from the decisions cited, and a reading of them convinces us that it must be determined upon the peculiar facts of the particular case under consideration when a person is a ‘member of the household.’

The evidence in the instant case showed that Cave, Jr., and his wife were living at the home of the insured at the time Cave, Jr., entered the military service. The only part of the record which states that Cave, Jr., and his wife were living in the insured's home prior to that time is in the prior written statement of the insured, offered and received for impeachment purposes only, and which we have already held the court correctly instructed the jury not to consider as evidence of the truth of the statements contained therein but only as bearing on the credibility of the witness. Furthermore the record shows that when defendant offered said statement in evidence, the court, in ruling upon plaintiff's objection to its introduction, stated: ‘That portion of this statement—that which states the extent of his driving of the automobile—may be admitted and you may read it. * * * Only a portion of the document.’ Therefore, it cannot be held that there is any evidence in the record as to how long Cave, Jr., had been living in the home of the insured prior to his entering the military service, nor is there any evidence in the record that his wife continued to live in the home of insured after Cave, Jr., left to enter military service. The record does show that Cave, Jr., was in the military service for 8 months and that the accident occurred during that time.

It must be borne in mind, as hereinbefore pointed out, that the burden of establishing its defense was upon defendant and that where the meaning of the term ‘member of the household’ is fairly susceptible of two constructions it should be construed most strongly against the defendant by whom it was drawn. We do not believe that we would be justified in holding, upon the record here, that the implied finding of the jury that Cave, Jr., was not a member of the household of the insured, Cave, Sr., at the time of the accident, lacks substantial support in the record. Nor do we believe that the record either compels or justifies a finding that Cave, Jr., was a member of insured's household at said time. We are not convinced that a married man who, at the time he enters the military service, is living at the home of his father, continues to be a ‘member of the household’ within the meaning of the exclusionary clause here involved during the time he is away from said home and in military service. We are rather inclined to believe that the term ‘member of the household,’ in view of the rules of law hereinbefore set forth, should be construed to refer to a person who at the time of the accident is actually dwelling under the same roof with insured at the time of the accident, for as stated in Lumbermen's Mutual Casualty Co. v. Pulsifer, supra, 41 F.Supp. at page 252: ‘It should not be overlooked that the language of this endorsement was framed by the Company itself which, by definition or otherwise, could have made the term ‘member of the household’ less ambiguous.' But, in any event, we are convinced from the record that defendant failed to sustain its burden of establishing its defense that Cave, Sr., was at the time of the accident driving an automobile owned by a ‘member of his household.’ We conclude, therefore, that the trial court correctly denied defendant's motion for a directed verdict and that the judgment in favor of plaintiff should be affirmed.

In view of the foregoing the order granting defendant's motion for a new trial is reversed and the judgment is affirmed.

SCHOTTKY, Justice pro tem.

PETERS, P. J., and WARD, J., concur.