Sullivan v. Royal Exchange Assurance

Plaintiff brought this action in declaratory relief to secure an interpretation of an insurance policy designated “Family Combination Auto Policy,” and a declaration of his rights thereunder. The facts are not disputed. Two automobiles owned by plaintiff were covered by the policy issued to him by defendant; among other coverages, the contract of insurance included medical payments for “$2000 each person” upon which a $13 premium was paid on “Car #1” and a lesser premium ($8.25) on “Car #2.” On December 19, 1958, the policy then being in full force and effect, plaintiff’s minor child was struck by a car not covered by the policy and sustained injuries in excess of $4,000. The trial court concluded that the limit of defendant’s liability under the “Medical Payments” coverage was $2,000 and gave judgment in that amount. Plaintiff by this appeal claims that under the terms of its policy the defendant’s liability for medical payments is $4,000.

The pertinent parts of the policy with reference to the issue above stated are as follows:

“1. Declarations

“Item 3. The insurance afforded is only with respect to such of the following coverages as are indicated by specific premium charge or charges. The limit of the company’s liability against each such coverage shall be as stated herein subject to all the terms of this policy having reference thereto.

Premiums Limits of Liability Coverages

Car §1 13.00 $2000 each person C Medical Payments

Car #2 8.25

“2. Coverage C—Medical Payments: To pay all reasonable expenses incurred within one year from the date of accident for necessary medical, surgical, X-ray and dental services . . . Division 1. To or for the named insured and each relative who sustains bodily injury, sickness or disease, including death resulting therefrom, hereinafter called ‘bodily injury,’ caused by accident, while occupying or through being struck by an automobile.

“3. Limit of Liability: (under Part II) The limit of liability for medical payments stated in the declarations as

applicable to ‘each person’ is the limit of the company’s liability for all expenses incurred by or on behalf of each person who sustains bodily injury as the result of any one accident.

“4. Conditions :

“Conditions 1, 2, 3, 4, 6, 13, 14, 15 and 16 apply to all Parts.

“5. Condition 4. Two or More Automobiles: When two or more automobiles are insured hereunder, the terms of this policy shall apply separately to each. ...”

Plaintiff contends that Condition 4 controls and that the limitation of $2,000 should be applied separately and individually to each automobile insured; defendant company, on the other hand, relies on the limit of liability clause, 3 supra, asserting that “Although Condition 4 is on the face of the policy described as applying to all parts of the contract . . . the aforesaid ‘Limit of Liability’ provision is to be found expressly within that part of the policy concerning Medical Payments—the classification at issue.”

“It is elementary in insurance law that any ambiguity or uncertainty in an insurance policy is to be resolved against the insurer” (Continental Cas. Co. v. Phoenix Constr. Co., 46 Cal.2d 423 , 437 [ 296 P.2d 801 , 57 A.L.R.2d 914 ]); however, it is equally well established that “where the terms of the policy are plain and explicit, the court will indulge in no forced construction so as to east liability upon the insurance company which it has not assumed (citations).” (New York Life Ins. Co. v. Hollender, 38 Cal.2d 73 , 81 [ 237 P.2d 510 ]). In the interpretation of any written instrument, the primary object is to ascertain and carry out the intention of the parties (citations).” (New York Life Ins. Co. v. Hollender, supra, 81); to this end, “ (E)aeh clause must be considered with reference to every other clause upon which it has any bearing and all provisions are to be construed together. ...” (Protex-A-Kar Co. v. Hartford, Ace. etc. Co., 102 Cal.App.2d 408 , 413 [ 227 P.2d 509 ]) or, as has been stated, “the intention being gathered from the whole instrument, taking it by its four corners . . . ” (Ogburn v. Travelers Ins. Co., 207 Cal. 50 , 52-53 [ 276 P. 1004 ]).

It appears that the precise problem at bar has not heretofore been the subject of judicial review in our state courts. There is much force to respondent’s claim that Condition 4 and the limit of liability clause are complementary rather than contradictory; if not, there is further force to its argument that the specific limitation provision would prevail over the general Condition 4 which applies to “all parts of the

In the federal appellate case previously mentioned, Standard Acc. Ins. Co. of Detroit v. Winget (9 Cir.), 197 F.2d 97 , plaintiff Winget and one Mack had recovered a judgment in a California court against one Terry, an insured defendant. Subsequently, alleging that Terry’s insurance carrier refused to pay the judgment, they instituted suit thereon in the federal court. During the trial, Mack settled with the company for $6,000; ultimately Winget secured a verdict for $10,000. He appealed, asking for a larger sum. At page 103, it is stated:

“Two questions are involved.

“ (A) Extent of Liability Under the Policy.

“The first comes from the refusal of the trial court to render a judgment in favor of Winget in the sum of $13,617.02 instead of $10,000.00. The amount is arrived at by totaling the two judgments in favor of Winget and Mack and establishing a percentage of 68.0851 for Winget and 31.9149 percent for Mack. These percentages, if applied to the maximum liability under the policy $20,000.00, would call for an award to Winget of $13,617.02. The answer to the contention is very simple. The policy does not create a fund of $20,000.00 to be distributed pro-ratedly to various persons according to the amount recovered. On the contrary, the policy, read in its entirety, shows distinctly that the limit is $10,000.00 for ‘each person.’ Indeed, Paragraph 6 of the Declaration provides: ‘ The insurance afforded is only with respect to such and so many of the following coverages as are indicated by specific premium charge or charges. The limit of the company’s liability against each such coverage shall be as stated herein, subject to all of the terms of the policy having reference thereto.

Coverage Limits of Liability

(A) Bodily Injury $10,000 $20,000

Liability

(C) Medical Payments $ 2,000.00

Each person

(Named Insured

Included) ’ . . .

“We are bidden to construe contracts,—even contracts of insurance—reasonably. Burr v. Western States Life Insurance Company (1931), 211 Cal. 568 , 576, 597 [ 296 P. 273 ] ; Blackburn v. Home Life Insurance Co. (1941), 19 Cal.2d 226 , 229 [ 120 P.2d 31 ] ; Protex-A-Kar Co. v. Hartford Accident (& Indemnity Co. (1951), 102 Cal.App.2d 408 , 412 [ 227 P.2d 509 ]. Words are to be construed in the sense in which they are ordinarily used. California Civil Code, Sec. 1644; California Code of Civil Procedure, Sec. 1861; Pacific Portland Cement Co. v. Food Mach. & Chem. Corp. (1949), 9 Cir., 178 F.2d 541 , 552. And the only reasonable interpretation is to take the words of the policy which limit liability for ‘each person' to $10,000.00 to mean what they say. Where the recovery exceeds that amount, the liability still remains $10,000.00 for ‘each person.’ . . .

“We agree with the conclusion reached. And we find no

California ease which, under conditions such as existed here, calls for an apportionment . . .

“In the light of what has just been said, we do not believe that the clause under discussion lends itself to the strained construction which appellant Winget would place on it. Courts do not resort to forced construction in order to fasten liability upon an insurer which, by the terms of the policy, it has not assumed. Maryland Casualty Co. v. Industrial Accident Commission (1930), 209 Cal. 394 , 397 [ 287 P. 468 ]; Blackburn v. Home Life Insurance Co. (1941), 19 Cal.2d 226 , 229 [ 120 P.2d 31 ].”

The Winget case also cited Mannheimer Bros. v. Kansas Casualty & Surety Co., 149 Minn. 482 [ 184 N.W. 189 ], which similarly construed the words “$5,000 one person” to mean precisely what they say and denied recovery by one of two injured persons in excess of that amount. To the same general effect is Hutton v. Martin, 43 Wn.2d 574 [ 262 P.2d 202 ],

Absent any case directly in point, we can only dispose of the question by analogy to what has been settled by the cases just mentioned; and it appears to us that the construction of the contract contended for by respondent is proper.

The judgment is affirmed.

Wood, P. J., and Pourt, J., concurred.