78 F. Supp. 895 | N.D. Cal. | 1948
I.
The Reserved Motion for Directed Verdict.
The Defendant’s Alternative Motions.
The plaintiffs, by their action, sought to recover from the defendant a total of $5,118.76, with interest, alleged to he due on a judgment secured by them on September 16, 1947, in the Superior Court of the State of California, in and for the City and County of San Francisco, against Allen J. Warner and Robert W. Woodrow.
Warner and Woodrow were co-partners engaged in the transportation of property for hire, as a business, over public highways in the State of California, by means of motor vehicles. They had been authorized by the Railroad Commission of California to operate such business, and obtained a permit, as required by the law of California.
The Decisive Question.
Under the interpretation which the Supreme Court has placed on Rule 50(b), we are required to rule on both motions.
Was the accident and the consequent injury to the plaintiffs, for which they recovered, in the Superior Court of the State of California, the judgment sued on here, within the terms of the public liability policy issued by the defendant?
And the answer is conditioned on the meaning of Declaration No. 5 in the policy, which reads:
“The automobiles described are and will be used only for transportation of merchandise purposes and will be operated as follows, and this insurance covers for no other use or operation
Compliance with the statutory insurance requirement is a condition precedent to the granting of a permit by the California Railroad Commission.
Under the Insurance Code of California, common carrier liability insurance includes insurance against any loss “from liability of a common carrier for accident or injury, fatal or nonfatal, to any person.”
The collision between the truck owned by the defendant and the automobile of the plaintiffs, which resulted in injury to them, occurred in Humboldt County, Calfornia, at a distance of three miles from the town of Scotia, on Public Highway 101. Warner, one of the partners in the trucking business, is our sole source of information as to the circumstance under which he found himself on June 22, 1946, with the truck, without the trailer, at the place where the accident occurred. His story is contradictory. The version he gave on the first day of the trial as to the object of his trip from San Francisco differs from that which he told at the trial in the Superior Court, and at a hearing in this court in an action for declaratory judgment, to which he was made a party, and in which a declaration of non-coverage was secured against him and his co-partner.
After the motion for a directed verdict had been made at the conclusion of all the testimony, Warner was recalled for the purpose of amplifying the version given the day before, and particularly, the statement that in returning to San Francisco, he also had in mind soliciting trucking business from a contractor residing at San Jose — a Mr. Dowdell. So, on the second day of the trial, he added that he had in mind soliciting from Dowdell and another contractor for whom he had previously transported materials, but that, as a fact, he did not do so after reaching San Francisco. On the contrary, after paying the premium', he started back for Humboldt County, where he picked up the trailer returning to San Francisco once more.
We are confronted here with the inherent improbability of a story, which bears almost on the fantastic. Motivation appears in the fact, admitted by Warner on the stand, that he made no mention whatsoever of the transportation of the pipe when he reported the accident to the highway patrol officer who interviewed him at the scene, or to the agent of the defendant, to whom he gave a full statement of the accident, which was reduced to writing and signed by him. In these statements, made shortly after the accident, the aim of the trip was given as a vacation for his mother, wife, and himself. He claimed that the reason for the omission of the fact that he was carrying the pipe and the household goods was that he thought it unimportant. He admitted, however, that he began to think about the possibile significance of the transportation feature of the trip, when, in talking to other truck operators, they reminded him that this transportation might have a bearing upon the liability insurance which he carried. One fact stands out in this narrative: The claimed main purpose of the return trip was to- pay the premium. This was, in fact, its sole purpose, because we cannot consider any intention not carried into effect, such as solicitation of business.
III.
The Law Applicable.
It is to be borne in mind that we are interpreting a contract which contains a condition or limitation of liability, regardless of who has the burden of proof.
In interpreting exceptions or limitations of the type here involved, courts have adopted a latitudinarian rule of construction. And, if it appear that a vehicle coverd by the policy, while not strictly used in the activity to which the exception limited it, was being used in the doing of something which, either under the terms of the policy, or under a broad rule of construction, could be considered “incidental” to the main activity, courts will not hesitate to find liability. Illustrative are the following:
When a policy covered a vehicle operated as a “jitney bus,” the fact that, at the time of the accident, it was on a different route than the route to which it was limited by municipal ordinance does not affect liability.
Insurance of an automobile while used in the business of “auto tours” applied to the return trip to a passenger’s home, when, by reason of bad weather, the trip to the real estate development was cancelled.
Liability has also been found when there was deviation from the route of a truck,
Behind all these cases runs the norm that if the vehicle, at the time of the accident, can be said to be on a mission incident to the object to which its use is limited, the courts will give full effect to the policy.
However, if the vehicle is doing something totally unrelated to the use or the physical incident which resulted in the accident is not contemplated by the policy, liability does not exist. Thus, indemnity insurance on vehicles used “incidental to business of funeral director” does not include use of an automobile to transport, for hire, a wedding party.
A “collision” does not include the turning over of an. automobile on the edge of a road without striking or colliding with another object other than the ground,
A policy of insurance indemnifying against risk incident to the hauling of coal with trucks does not cover the use of a truck by one of the insured’s employes for pleasure, after working hours.
The reason back "of these cases has been stated in this language;
“While it is true that insurance contracts should be construed most strongly against the insurer (French v. Fidelity & Casualty Co., 135 Wis. 259, 115 N.W. 869, 17 L.R.A., N.S., 1011; Kelly v. Fidelity Mut. L. Ins. Co., 169 Wis. 274, 172 N.W. 152, 4 A.L.R. 845), yet they are subject to the same rules of construction applied to the language of any other contract. It is a fundamental
It is evident from a consideration of these cases that the use of a portion of the insured equipment, the truck part, to return to the place of origin, San Francisco, 250 miles away, not for the purpose of picking up a new load, or beginning a new haul, or storing or repairing the truck, but for tha purpose of paying a premium on an insurance policy -on the truck, is not an act incidental to the transportation of goods on the truck or trailer. Nor, for that matter, is the soliciting of business an incidence of such transportation. To be accessory to the business in which the truck was used, it would have to be covered by a policy which, either did not include any limitation, or insured generally against any act or acts of the defendmU while engaged in trucking for hire. But the policy here under consideration was not so comprehensive. The defendant did not insure against all the risks of the plaintiffs while engaged in the business of trucking, but only against a specific risk. Otherwise put, it insured the automobiles when “used only for transportation of merchandise purposes.” (Emphasis added)
The Railroad Commission rider attached to the policy, which is reproduced in the margin, did not enlarge on the coverage.
Rejecting an identical contention as to the effect of an obligatory rider imposed by a Kansas statute, the Circuit Court of Appeals for the Tenth Circuit said: “Defendants argue that the effect of the rider required by the Corporation Commission was to make plaintiff liable under the policy for damage resulting while the truck was operated for pleasure, notwithstanding that stick loss was expressly excluded from coverage. They construe that part of the rider stating that no violation of any of the provisions of the policy by the insured should relieve the company from liability thereunder to mean that the company would be liable for any damage suffered by the insured, whether resulting while the truck was being operated in his business of a contract carrier or outside of such business. '
“The only power the Corporation Commission has is to adopt rules that will effectuate the statute. It may not adopt any regulation changing the statutory liability. Dunn v. Jones, 143 Kan. 218, 53 P.2d 918. No doubt the Legislature could have required as a prerequisite to the issuance of a
Cases which seem to declare a contrary ruling are distinguishable on the facts. The courts found, either in the policies themselves, or in the statutes under which they were issued, an intention not to limit the use of the vehicle to distinct operations.
This was the situation in Smith v. California Highway Indem. Exchange.
“ * * * It cannot be doubted that the Chandler automobile was ‘maintained’ by Davis for the purpose and business of a jitney bus at the time of the accident. It was operated at the time ‘in the service of the subscriber as a jitney bus * * * within the city and county limits of the city of San Francisco,’ and it may not fairly be said that the car was at the time operated for any other purpose than that of a jitney bus. Necessarily Davis was required to keep the car somewhere, and it was kept at his home, which was the place specified in his operator’s permit where it was to be kept and which was in the vicinity .of the Twenty-ninth and Mission terminus of the route. At the time of the accident he was operating, using, and maintaining his car with the equipment, plates, and badge placed and displayed as required by local regulations. The policy did not specify the particular or any route over which the car should be operated. The limits of the operation thereof were the city and county of San Francisco.” (Emphasis added)
It is thus evident that a return trip must relate directly to the business in which the vehicle is to engage, or to the specific act of transportation, if the policy is so limited. And this was not the case here. The trip on which the accident occurred was, therefore, not a use within the terms of the policy.
IV.
Conclusion.
From what precedes, it follows that the motion for a directed verdict, on which ruling has been reserved, should be
This conclusion still calls for the disposition of the motion for a new trial.
I realize that this motion could be granted conditioned on its taking effect only if the judgment notwithstanding the verdict is reversed on appeal.
However, I am of the view that the motion for a new trial should be denied. Obviously, if my interpretation of the insurance policy is correct, the jury’s verdict is wrong.
If the jury’s verdict is right, it can only be because the case presented a factual situation for their solution.
If this be so, then — despite what is said in this opinion about the unsatisfactory character of the testimony concerning the nature of the trip on which the accident occurred — I should allow the jury’s conclusion upon the facts to stand and not substitute my own for it.
The motion for a new trial will, therefore, be denied.
California Highway Carriers Aet, Sections 1, (e, f), 3; Dcering’s General Law's, Act 5129a, Secs. 1 (c, f), 3.
Federal Rules of Civil Procedure, Rule 50(b), 28 U.S.C.A. following section 723e. See, Dickerson v. Franklin Nat Ins. Co., 4 Cir., 1942, 130 F.2d 35; Western Union Telegraph Co. v. Dismang, 10 Cir., 1939, 106 F.2d 302, 303, 364; Howard v. Swagart, App.D.C.1947, 161 F.2d 651, 655; Cone v. West Virginia Pulp & Paper Co., 1947, 330 U.S. 1212, 67 S.Ct. 752, 91 L.Ed. 849; Fratta v. Grace Line, Inc., 2 Cir., 1943, 139 F.2d 743.
Montgomery Ward & Co. v. Duncan, 1910, 311 U.S. 243, 61 S.Ct. 189, 85 L.Ed. 147.
The Highway Carriers Act, Secs. 5, 6 & 7, Deering’s General Laws, Act 512.9a, Secs. 5, 6 & 7.
California Insurance Code, Sec. 110.
California Insurance Code, Sec. 530.
The action for declaratory judgment was instituted by the defendant in this ease for the purpose of securing a declaration of non-liability. The plaintiffs here were named parties defendant, summons directed to them was issued, but they were not served. Warner defaulted. After a bearing before the Honorable Louis E. Goodman, one of the Judges of this court, a judgment was entered on August 14, 1947, decreeing that the accident was not covered by the policy. A similar judgment was entered on October 27, 1947, against the copartner, Robert W. Woodrow, after his default. The defendant in this case pleaded this judgment as res judicata. The portion of the Answer which stated this plea was stricken, on motion, by the Honorable Michael J. Roche, on March 1, 1948. At the trial, sought to restore this de- fense, but I declined to do so, agreeing with the view of Judge Roche that the judgment was binding only on the parties who were served with process and ap- peared or defaulted, and not on the plaintiffs, who, although made parties, were not served, and did not appear. The case cited by the defendant, Bernhard v. Bank of America, 1942, 19 Cal. 2d 807, 811-813, 122 P.2d 892, does not call for a contrary ruling. It recog- nizes the principle which limits the bind- ing effect of a judgment to parties and their privies. The plaintiffs here were not represented in that action by the defaulting partners. There was no identity of persons or of cause of ac- tion, under such circumstances as re- sult w. estoppel by judgment. See, 50 C.J.S., Judgments, §§ 601, 648, 768; and see, Tait v. Western Maryland Ry. Co., 1933, 289 U.S. 620, 623, 53 S.Ct. 706, 77 L.Ed. 1405; Hardy v. Rosenthal, 1934, 2 Cal.App.2d 442, 444-446, 38 P.2d 412; Sasser v. First Joint Stock Land Bank, 1938, 5 Cir., 99 F.2d 744, 745; Rheinberger v. Security Life Ins. Co., 1945, 7 Cir., 146 F.2d 680, 683. 680, 683.
See, Zohner v. Sierra Nev. L. & Co., 1931, 114 Cal.App. 85, 90, 299 P. 749; Cardoza v. West American Commercial Ins. Co., 1935, 6 Cal.App.2d 500. 502. 44 P.2d 668; Ells .v. Order of United Commercial Travelers, etc., 1942, 20 Cal.2d 290, 304, 125 P.2d 457.
Universal Automobile Ins. Co. v. Noel, 9 Cir., 1933, 04 E.2d 916; Moblad v. Western Indemnity, etc., Co., 1921, 53 Cal.App. 683, 200 P. 750; Sumida v. Pacific Automobile Ins. Co., 1942, 51 Cal. App.2d 472, 125 P.2d 87.
Smith v. California Highway Indemnity Exchange, 1933, 218 Cal. 325, 23 P.2d 274.
Davis v. California Indemnity Exchange, 1931, 118 Cal.App. 403, 5 P.2d 447.
Central Mutual Ins. Co. v. Tartar, 6 Cir., 1937, 92 F.2d 839.
Liberty Mutual Ins. Co. v. McDonald, 6 Cir., 1938, 97 F.2d 497.
Mitchell v. Great Western Stages, 1942, 140 Ohio St. 137, 42 N.E.2d 771, 141 A.L.R. 624.
American Fidelity & Casualty Co. v. McWilliams, 1937, 55 Ga.App. 658, 191 S.E. 191; and see, Johnson Transfer & Freight Lines v. American National Fire Ins. Co., 1935, 168 Tenn. 514, 79 S.W.2d 587, 99 A.L.R. 277; Zelber v. Commonwealth Casualty Co., 1930, 106 N.J.L. 611, 150 A. 243.
Heritier v. Central Indemnity Co., 1942, 109 N.J.L. 313, 162 A. 573.
Moblad v. Western Indemnity Co., 1921, 53 Cal.App. 683, 200 P. 750. See also, Bell v. American Ins. Co., 1921, 173 Wis. 533, 181 N.W. 733, 14 A.L.R. 179; Flythe v. Eastern Caroline Coach Co., 1928, 195 N.C. 777, 143 S.E. 865.
Bell v. American Insurance Co., supra.
Gudbrandsen v. Pelto, 1939, 205 Minn. 607, 287 N.W. 116.
Bell v. ' American Insurance Co., supra, 173 Wis. at page 734, 181 N.W. at page 734. The language just quoted was adopted by the California District Court of Appeals in Moblad v. Western Indemnity Co., supra, a case which, in turn, has the approval of the Circuit Court of Appeals for the Ninth Circuit. See, New Jersey Ins. Co. v. Young, 9 Cir., 1923, 290 F. 155.
“The policy to which this endorsement is attached is an Automobile Bodily Injury Liability and Property Damage Liability policy, and is hereby amended to assure compliance by the insured, as a motor carrier of property, with appropriate provisions of law (Highway Carriers’ Act, Statutes 1935, Chapter 223, as amended [Gen.Laws, Act 5129a]; City Carrier’s Act, Statutes 1933, Chapter 312, as amended [Gen.Laws, Act 5134]; and Public Utilities Act, [Statutes 1915, Chapter 01, as amended [Gen.Laws, Act 6383]); and with the pertinent rules, orders, and regulations of the Railroad Commission of the State of California.
“In consideration of tha premium provided for in the policy of which this endorsement is made a part the Company agrees that within the classes of coverage provided by the policy it will pay any final judgment rendered against the insured for bodily injuries to or death of any person or persons other than the named insured, or damage to or destrue-
tion of property, or both, arising out of the ownership, maintenance or use of any vehicle operated under authority of the aforesaid statutes, although such vehicle may not be specifically described in the policy; that the judgment' creditor may maintain an action in any court of competent jurisdiction to compel such payment; that the right of any person, firm or corporation to recover under the policy shall not be affected by any act, omission, or misrepresentation of the insured or his employees with regard to any warranty, condition, declaration, or provision of the policy; and that the policy shall remain in full force and effect notwithstanding such act, omission or misrepresentation or the violation of any warranty, condition, declaration or provision of the policy by tho insured or his employees; provided, however, that this endorsement shall not be construed to imitóse any obligation on the Company for which it would not be liable independently hereof with respect to (1) bodily injuries to or death of employees of the named insured arising out of or in the course of their employment,
(2) bodily injuries to or death of any person occurring while such person is riding in or upon or entering or alighting from any vehicle covered by the policy,
(3) loss of or damage to property owned by, rented to, in charge of, or transported by the insured, or (4) any loss arising out of auy operations of tha insured ex-
“The Company further agrees that such insurance as is afforded by the policy and this endorsement against liability for injuries to or death of persons and damage to or destruction of property shall not be cancelled, rescinded, or suspended, nor shall the cancellation, rescission, or suspension of the policy or of this endorsement take effect, nor shall the policy or this endorsement become void for any reason whatsoever, except by the expiration of the term for which it is written, until the Company shall have first given ten days’ notice in writing to the Railroad Commission of the State of California at its office, State Building, San Francisco, California. Said ten days’ notice shall commence from the date notice is received at said office of said Commission.
“The Company further agrees that if the policy shall be cancelled or suspended or otherwise terminated, and shall thereafter ho reinstated, notice in writing of such reinstatement shall immediately be given by the Company to said Commission at its said office.
“The Company further agrees that this endorsement shall prevail over any con-
flieting provision in the policy or in any other endorsement now or hereafter attached thereto or made a part thereof; provided, however, that this endorsement shall be of no effect with respect to any liability in excess of §5,000 for bodily injuries to or death of any one person and §10,000 for bodily injuries to or death of two or more persons in any one accident, and §5,000 for damage • to or destruction of property of one or more than one claimant in any one accident.
“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.
“When countersigned by an authorized representative of the Company this endorsement becomes a part of Policy No. MO 170330 issued by Commercial Standard Insurance Company (herein called Company) of Fort Worth, Texas, to Allen J. Warner and Robert W. Woodrow, effective April 19, 1946. Countersigned at San Francisco this 19th day of April, 1946.
“By E. L. Mitchell,
“Authorized Company Representative.”
Travelers Mutual Casualty Co. of Des Moines, Iowa, v. Thornsbury, 1936, 276 Ky. 762, 125 S.W.2d 229; Rusch v. Mielke, 1940, 234 Wis. 380, 291 N.W. 300.
Angel v. Bullington, 1947, 330 U.S. 183, 186, 187, 67 S.Ct. 657, 91 L.Ed. 832. See also, King v. Order of United Commercial Travelers, 1948, 338 U.S. 153, 157, 158, 68 S.Ct. 488.
Foster v. Commercial Standard Ins. Co., 10 Cir., 1941, 121 F.2d 117, 119. And see, Smith v. Republic Underwriters, etc., 1940, 152 Kan. 305, 103 P.2d 858, 860; Hawkeye Casualty Co. v. Halferty, 8 Cir., 1942, 131 F.2d 294; Associated Indemnity Co. v. Bunney, 9 Cir., 1942, 137 F.2d 1, in which our own Circuit Court of Appeals approves Foster v. Commercial Standard Ins. Co., supra; Simon v. American Casualty Co., 4 Cir., 1944, 146 F.2d 208; Stewart v. Hoffmeister, 1932, 16 Tenn.App. 495, 65 S.W. 2d 220, 224 — 226. The following statement from Smith v. Republic Underwritters, supra, 103 P.2d at pages 830, 861, sums up incisively the position here taken: “There is nothing novel in the limitation of coverage contained in the instant endorsement. For instance, provisions are common which limit coverage to specified use of the vehicle. In fact, the instant provision is really one as to use. * * * To disregard this limitation in the policy or to hold it invalid would constitute an attempt to expand the insurer’s liability, and if accepted by the insurance carrier, an increase in premiums would inevitably result.” (Emphasis in text)
218 Cal. 325, 326, 327, 23 P.2d 274.
Aetna Casualty & Surety Co. v. Yeatts, 4 Cir., 1941, 122 F.2d 350, 352-354; Murphy v. United States District Court, 9 Cir., 1945, 122 F.2d 1018, 1020. And see my opinion in Caldwell v. Southern Pacific Co., D.C.Cal.1947, 71 F.Supp. 955, 962, 963.
Western Union Telegraph Co. v. Dismang, 10 Cir., 1939, 100 F.2d 302, 363, 364; Howard v. Swagart, App.D.C.1947, 161 F.2d 651, 656; McIlvaine Patent Corporation v. Walgreen Co., 7 Cir., 1943, 138 F.2d 177, 179, 180.
Montgomery Ward & Co. v. Duncan, 1940, 311 U.S. 243, 61 S.Ct. 189, 85 L.Ed. 147.
Federal Rules of Civil Procedure, Rule 50(b).