Plaintiffs appeal from an adverse judgment rendered after a nonjury trial in an action upon an insurance policy issued to them by defendant Anchor Casualty Company. Plaintiffs John C. Ritchie and John Burroughs do business under the name of All American Nut Company, a business of processing and selling food products, including refined peanut oil. In August 1950 they bought from defendant a “comprehensive liability” policy, covering primarily liability from operation of automobiles; but it also contained certain riders, one of which is entitled “Products Property Damage Endorsement for Attachment to Comprehensive Liability Policy.1 ’ So far as pertinent it provides: “In consideration of the premium at which this endorsement is issued, it is understood and agreed that the Policy to which it is attached is extended to cover the Viability imposed upon *249 the assured by law for damages because of injury to or destruction of property, including the loss of use thereof, ccmsed by accident and arising out of
“ (1) the handling or use of or the existence of any condition in goods or products manufactured, sold, handled or distributed by the insured if the accident occurs after the insured has relinquished possession thereof to others and away from premises owned, rented or controlled by the insured.” (Emphasis added.)
In April 1951, while the policy was in force, plaintiffs sold to Post Trading Company, a partnership consisting of Max Sorell and Irving Horowitz, 10 drums of refined peanut oil at a price of $1,324.80. The buyers refused to pay for same, claiming that the oil was rancid and they had been damaged through its use. Plaintiffs herein, through an assignee, A. F. Stark, sued to recover the purchase price and the buyer, Post Trading Company, not only resisted that claim but also filed a cross-complaint seeking recovery of damages from plaintiffs herein (as cross-defendants) in the sum of $12,140.80, alleged to have been proximately caused by use of the rancid oil in manufacture of certain food products (com chips) for which use the oil had been purchased. Plaintiffs furnished the cross-complaint to defendant insurance company, called upon it to defend pursuant to that provision of the policy which provides: “It is further agreed that as respects insurance afforded by this policy the company shall (a) defend in his name and behalf any suit against the insured alleging such injury or destruction and seeking damages on account thereof, even if such suit is groundless, false or fraudulent; ...” Defendant insurer refused to defend upon the ground that the causes of action alleged in the said cross-complaint were not within the coverage of the policy. After' the Stark case had been partially tried (defendant refusing to have anything to do with it) plaintiffs made a compromise by which they dismissed "the Stark complaint and Post Trading Company dismissed its cross-complaint, both dismissals being made expressly with prejudice. This action was brought to recover from the insurance company the sum of $2,574 alleged to be the cost of the settlement to plaintiffs, i.e. surrender of their claim of $1,324.80 plus reasonable attorney fees incurred in the Stark case in the sum of $1,250; they also seek recovery of an attorney fee of $750 in the instant action brought upon the policy. The heart of the trial judge’s ruling is found in paragraph VII of the *250 findings, reading as follows: “None of the allegations of said cross-complaint pleaded or alleged an ‘accident,’ or made claim for damages ‘caused by accident’ as those terms were used, and intended to be used, by the parties to the insurance policy. None of the allegations of said cross-complaint pleaded or alleged a ‘liability imposed upon the assured by law,’ as such term was used, and intended to be used, by the parties to the insurance policy. None of the allegations of said cross-complaint pleaded or alleged the ‘injury to or destruction of property’ caused by any ‘accident’ occurring after the insured ‘relinquished possession’ of ‘products sold,’ as those terms were used, and intended to be used, by the parties to the insurance policy.” This sustains defendant’s arguments (1) that the cross-complaint alleges no accident, (2) that it alleges a liability created by contract and not one “imposed upon the assured by law” and (3) that the accident, if any, did not occur after the insured had relinquished possession of the oil and away from the premises of insured. Appellant assails each of these phases of the ruling as legally unsound. Defendant introduced no evidence and the ruling is based upon the terms of the policy and the cross-complaint, supplemented by certain undisputed oral evidence, thus presenting questions of law upon this appeal.
The first question is whether the cross-complaint in the Stark case avers an accident. Respondent contends, and we agree, that the insurer’s obligation to defend is measured by the terms of the insurance policy and the pleading of the claimant who sues the insured. It is so held in
Lamb
v.
Belt Cas. Co.,
The cross-complaint in question alleges five causes of action, two of which sound in express warranty and three in implied warranty of fitness of the oil for the use'for which intended. *251 Counsel for respondent say this is an action in contract and hence is not one to recover for an accident or upon a liability imposed by law.
Examination of the pleading reveals that it does factually allege an accident though it does not use that word. The draftsman of a complaint against the insured is not interested in the question of coverage which later arises between insurer and insured. He chooses such theory as best serves his purpose; if it be breach of contract rather than negligent performance of contract, he chooses the former; if it be negligence rather than warranty he alleges negligence; if he happens to choose warranty it may be an express one or one implied. And when the question later arises under an insurance policy as to what the facts alleged in the complaint do spell,—for instance, whether they aver an accident,-—the complaint must be taken by its four corners and the facts arrayed in a complete pattern without regard to niceties of pleading or differentiation between different counts of a single complaint. And the ultimate question is whether the facts alleged do fairly apprise the insurer that plaintiff is suing the insured upon an occurrence which, if his allegations are true, gives rise to liability of insurer to insured under the terms of the policy.
It is settled that “in case of doubt such doubt ought to be resolved in the insured’s favor”
(Boyle
v.
National Cas. Co.
(D.C.),
The instant cross-complaint alleges purchase by Post Trading Company of the oil from the Nut Company for use in preparation of food products in the course of the buyer’s business; that the seller knew the intended use; that previous purchases of such oil had been made from the Nut Company *252 by Post Trading and the oil was then satisfactory; that the particular batch of oil was used in preparation of food products; that it was not reasonably fit for the intended use; that it was so used without knowledge that it was rancid; that its condition was not discovered until after use or until after damage proximately caused thereby; that it did cause damage consisting of refunds to Post customers who had purchased unmerchantable food products from Post, cost of detergent and labor used in removing the effects of the rancid oil from machinery, cost of laboratory tests to determine cause of Post’s bad products, damage to its trade name and good will, in the total sum of $12,140.80; In short it alleges use of rancid oil in the belief that it was sweet, with the unexpected result that the oil ruined all food products in which it was used, and damaged the machinery employed in the manufacture of same. This occurrence was an accident within the law applying to insurance policies worded like the one under discussion. “Caused by accident” is the phrase to be interpreted here; not “accidental means” or “external, violent, and accidental means.”
Richards
v.
Travelers Ins. Co.,
There is a clear distinction between injury caused by “accident ’ ’ and one caused by ‘ ‘ accidental means. ’ ’ This is pointed out in most of the eases just cited and in
Horton
v.
Travelers Ins. Co.,
As above indicated the Post cross-complaint sounds in warranty, express as to two counts and implied in the other three counts. Respondent argues that this cannot be a “liability imposed upon the assured by law” because it is a liability arising from contract.
Girard
v.
Commercial Standard Ins. Co.,
If the complaint filed against the insured alleges several causes of action some of which are not covered by the policy but one or more being within its terms, the insurer is
*255
bound to defend the action. (8 Appleman Insurance Law and Practice, §4683, p. 10;
Pow-Well Plumbing & Heating, Inc.
v.
Merchants Mut. Cas. Co.,
It may be conceded that an action upon express warranty rests upon contract, but privity of contract is not necessary to an implied warranty when foodstuffs are involved, as here.
(Vaccarezza
v.
Sanguinetti,
The cited case of
Canadian Indem. Co.
v.
Andrews & George Co. Ltd.
(1953),
There is more than legalism in the application of the foregoing cases to the facts at bar. An insurance policy is to be construed most favorably to the insured, in such manner as to provide full coverage of the indicated risk rather than to narrow the protection.
(Olson
v.
Standard Marine Ins. Co.,
That the accident arose out of “the existence of any condition in goods or products manufactured, sold, handled or distributed by the insured” is equally clear. And, as the accident occurred at the time of use of the rancid oil in the belief that it was good, it cannot be gainsaid that it occurred “after the insured has relinquished possession thereof (the rancid oil) to others and away from the premises owned, rented or controlled by the insured.”
All of the conditions of the Products Property Damage Endorsement were fulfilled and defendant improperly refused to defend.
This gave plaintiffs the right to make any reasonable and bona fide compromise of the action against them.
(Lamb
v.
Belt Cas. Co.,
Appellant complains of dismissal of the second count of his complaint wherein he seeks recovery of a $750 attorney fee for prosecution of the instant action. There was no error in this. It is so ruled in
O’Morrow
v.
Borad, supra,
Appellants also complain of other alleged errors, such as refusal to receive evidence of expenses not alleged in their complaint and refusal to permit amendment to cover same. But this matter of permitting amendment during the trial is a discretionary one. And we do not apprehend that appellants will not have full opportunity upon retrial to fully prove their damages or be refused leave to amend to that end. No other points require discussion.
The judgment is reversed.
Wood (Parker), Acting P. J., and Vallée, J., concurred.
Notes
Assigned by Chairman of Judicial Council.
