Truck Insurance Exchange v. Torres

The policy of plaintiff Exchange says: “The insurance afforded by this policy shall be excess insurance over any other insurance available to the insured, either as an insured under a policy applicable with respect to the automobile, or otherwise, against a loss covered by this policy.” The Federal policy•. “If the insured has other insurance against a loss covered by this policy, the company shall not be liable under this policy for a greater proportion of such loss than the applicable limits of liability stated in the declarations bear to the total applicable limit of liability of all valid and collectible insurance against such loss; provided, however, that the insurance under this policy shall be excess insurance with respect to loss against which the named insured has other insurance disclosed to the company as in effect on the effective date of this policy and upon the basis of which the premium for the insurance under this policy is modified, but in such event the insurance under this policy shall apply only in the amount by which the applicable limit of liability stated in the declarations exceeds the applicable limit of liability of such other insurance.

“With respect to any valid and collectible insurance covering automobiles not owned by or registered in the name of the named insured and which extends to the benefit of the named insured, the insurance under this policy shall be excess insurance.”

The Exchange policy provides in case of other insurance for excess insurance only; Federal’s policy provides first for proration of the loss; the proviso in the first quoted paragraph is not applicable to the facts at bar and hence may be disregarded in our further discussion; the last paragraph distinctly spells excess insurance within certain narrow limits.

In approaching our specific problem it is well to remember what was said in American Auto. Ins. Co. v. Seaboard Surety Co., 155 Cal.App.2d 192 , at page 195 [ 318 P.2d 84 ] : “The reciprocal rights and duties of several insurers who have covered the same event do not arise out of contract,

for their agreements are not with each other. See Offer v. Superior Court, 194 Cal. 114 , 118 [ 228 P. 11 ]; Fireman’s etc. Co. v. Palatine Ins. Co., 150 Cal. 252 , 256 [ 88 P. 907 ]. Their respective obligations flow from equitable principles designed to accomplish ultimate justice in the bearing of a specific burden. As these principles do not stem from agreement between the insurers their application is not controlled by the language of their contracts with the respective policy holders.”

Comparing the Exchange provision with the first portion of the quotation from the Federal policy it appears plain from the language that Federal coverage is “available to the insured” to the extent of Federal’s share of a prorated loss based upon policy limits; hence, the Exchange excess insurance becomes operative with respect to the balance of the loss and the net result is proration in accordance with the terms of the Federal policy. Such has been the holding in similar situations. (American Auto. Ins. Co. v. Seaboard Surety Co., supra, 155 Cal.App.2d 192 , 199; Air etc. Co. v. Employers’ Liab. etc. Corp., 91 Cal.App.2d 129 , 133 [ 204 P.2d 647 ] ; Peerless Cas. Co. v. Continental Cas. Co., 144 Cal.App.2d 617 , 621 [ 301 P.2d 602 ].) This additional quotation from American Auto. Ins. Co. v. Seaboard Surety Co., supra, page 199, is pertinent: “This case lends itself to solution upon the basis of these policy provisions independently of the equities which in proper cases, as in subrogation instances, override the exact terms of the policies in the interest of substantial justice. The [Federal] provision renders it liable for its pro-rata portion of the loss . . . and the insured after paying can collect that much and no more from that insurer. It was so held in Fidelity etc. Co. v. Fireman’s Fund Indem. Co., 38 Cal.App.2d 1 , 5 [ 100 P.2d 364 ], Hence the policy is to that extent ‘good, valid and collectible’ other insurance within the purview of the [Exchange] policy, which in that event protects the insured with excess insurance ‘over and above the amount of any such other good, valid and collectible insurance, ’—namely, to the extent of one-half of the total loss. ’ ’

We are not troubled here with the disturbing thought (as was the Supreme Court in American Automobile Ins. Co. v. Republic Indemnity Co., 52 Cal.2d 507 , 512 [ 341 P.2d 675 ]) that our “reasoning has been referred to as circular, depending on which policy one happens to read first.” Having determined the matter from the standpoint of the Exchange policy

we now make a fresh start and find that Federal’s policy specifies only prorata coverage where there is other insurance and, that being the limit of its liability, the excess provision of the Exchange policy begins to operate and in filling the vacuum develops as a practical matter into prorata coverage.

What we have just said relates to the first portion of the Federal paragraph referring to other insurance. The last paragraph of that text is not applicable; it could not possibly fit any vehicle other than the George tractor and semitrailer, and while he had never registered same in his name he continued to be the owner, both in the sense that it should have been registered in his name and that as a matter of common law the title still stood in him.

If, perchance, both policies were held to afford only excess coverage the result would be that equity would require pro-ration in order that insurers who had undertaken a single and common burden should not be absolved entirely. (See Oil Base, Inc. v. Transport Indem. Co., 143 Cal.App.2d 453 , 468 [ 299 P.2d 952 ]; Employers etc. Corp. v. Pacific etc. Ins. Co., 102 Cal.App.2d 188 , 191 [ 227 P.2d 53 ] ; Peerless Gas. Co. v. Continental Gas. Co., supra, 144 Cal.App.2d 617 ; Oregon Auto. Ins. Co. v. United States Fidelity & Guar. Co., (9 C.C.A.) 195 F.2d 958 ; Continental Gas. Co. v. St. Paul Mercury F. & M. Ins. Co., (D.C.Fla.) 163 F.Supp. 325 ; 69 A.L.R. 2d 1122 , 1124.)

American Automobile Ins. Co. v. Republic Indemnity Co., supra, 52 Cal.2d 507 , upon which appellant relies is not controlling for the factual situation is plainly distinguishable. It there appeared that Steinberg was driving a courtesy car belonging to Barish. They were covered by separate insurers, language concerning other insurance being substantially the same in both policies. At pages 511-512, the court said: ‘ ‘ The clauses consist of two parts; the first provides generally for prorating where there is other insurance covering the loss, and the second provides, as a specific exception, that when the named insured is driving a ear not owned by him the insurance will be excess over all other insurance. Because American’s named insured, Steinberg, was driving another person’s car, American’s insurance falls within the exception specified in its policy if the insurance of Republic is treated as other insurance. On the other hand, Republic’s insurance comes under the prorate provision in its policy if American’s insurance is treated as other insurance.

“Where ‘other insurance’ clauses of this type appear in

establishes Torres’ liability as that of registered owner and hence George and his insurer cannot be held in that same capacity. But the complaint also alleged Rodriquez to have been the agent, servant and employee of Torres, and that allegation was admitted by Torres’ answer. The record seems to require the inference that Torres was held liable on the theory of respondeat superior, as witness the fact of a verdict in favor of Juanita Carroll in excess of the statutory limit. But these considerations are not determinative.

The basic applicable rule is that a judgment is res judicata only between parties who are litigating with each other, ordinarily not so operative with respect to codefendants. Truck Insurance Exchange defended the action on behalf of Torres and Rodriquez. This undoubtedly established that Exchange is liable to them and to the plaintiffs in that action to make payment of the judgments, now final. (Lamb v. Belt Casualty Co., 3 Cal.App.2d 624 , 631 [ 40 P.2d 311 ]; Osborne v. Security Ins. Co., 155 Cal.App.2d 201 , 206 [ 318 P.2d 94 ].) But Federal, though participating in some preliminaries to the trial, was not present at that time. No pleading was filed by it or by Exchange in its own right. No issue was drawn between the two insurers. They were not litigating with each other and between them the judgment is not binding as to any of the subsidiary issues or as to the major question whether they are to share the burden of the judgment.

“ [I]t is fundamental as to the doctrine in res judicata that before the former adjudication may operate as an estoppel as to issues in the later action, there must be an identity of parties, as well as an identity of issues.” (Standard Oil Co. v. John P. Mills Organization, 3 Cal.2d 128 , 139 [ 43 P.2d 797 ].) Section 1910, Code of Civil Procedure, says: “The parties are deemed to be the same when those between whom the evidence is offered were on opposite sides in the former ease, and a judgment or other determination could in that case have been made between them alone, though other parties were joined with both or either.” There are numerous cases in this state to the effect that a judgment is not res judicata as to codefendants. (Victor Oil Co. v. Drum, 184 Cal. 226 , 239 [ 193 P. 243 ]; Tanaka v. Highway Farming Co., 76 Cal.App. 590 , 594 [ 245 P. 434 ]; City of San Diego v. California Water & Tel. Co., 71 Cal.App.2d 261 , 276 [ 162 P.2d 684 ]; County of Los Angeles v. Continental Corp., 113 Cal.App.2d 207 , 222 [ 248 P.2d 157 ]; Allen v. California Water & Tel. Co., 29 Cal.2d 466 , 491 [ 176 P.2d 8 ], are a few

of them. See also 15 Cal.Jur. § 217, p. 186.) The cases having direct application to the question of the effect, as between the defendants, of a judgment in favor of plaintiff and against one or more of them, are collected in notes in 101 American Law Reports 104; 142 American Law Reports 727 ; 152 American Law Reports 1066. They are thus summarized in 101 American Law Reports at page 105: “While the cases are not entirely in harmony, sometimes even in the same jurisdiction, the rule supported by the great weight of authority is that a judgment in favor of the plaintiff in an action against two or more defendants is not res judicata or conclusive of the rights and liabilities of the defendants inter se in a subsequent action between them, unless those rights and liabilities were expressly put in issue in the first action, by cross complaint or other adversary pleadings, and determined by the judgment in the first action.” And in 142 American Law Reports at page 728: “The same conflict of authority prevails in the later cases, with the weight of authority, as in the older cases, supporting the view that the judgment in favor of the plaintiff in the former action is not res judicata or conclusive, in a subsequent action between the codefendants, of their rights and liabilities inter se, unless those rights and liabilities were expressly put in issue in the first action by cross complaint or other adversary pleadings, and determined by the judgment therein.” In Merrill v. St. Paul City Ry. Co., 170 Minn. 332 [ 212 N.W. 533 ]; Pearlman v. Truppo, 10 N.J. Misc. 477 [ 159 A. 623 ] ; 10 N.J. Misc. 772 [ 160 A. 334 ]; Snyder v. Marken, 116 Wash. 270 [ 199 P. 302 , 22 A.L.R. 1272 ]; United States Fid. & Guar. Co. v. Thomlinson-Arkwright Co., 172 Ore. 307 [ 141 P.2d 817 , 824], it is pointed out that mere assertions in separate answers that the other defendant was at fault do not make the co-defendants adversaries where no cross-pleading is filed. Bern-hard v. Bank of America, 19 Cal.2d 807 , 813 [ 122 P.2d 892 ], prescribes as one of the elements of res judicata an affirmative answer to this question: “Was the issue decided in the prior adjudication identical with the one presented in the action in question?” The case has been cited many times to this effect.

Hardy v. Rosenthal, 2 Cal.App.2d 442 [ 38 P.2d 412 ], seems to be controlling. One Stoffel sued H. J. Hardy, his employee J. W. Nicholson, and one T. Rosenthal. Automobiles driven by Nicholson and Rosenthal collided on the highway and traveled thence to plaintiff’s house and swept it from its

foundations. Stoffel recovered judgment, which was paid by Hardy and Rosenthal. Hardy then sued Rosenthal to recover his own damages. Defendant claimed the former judgment holding both parties liable to Stoffel was a bar to the action. That claim was rejected. The court said, at page 445: “It is apparent that to constitute a judgment in one case a bar to the prosecution of a second action, there must have been an identity of a question litigated in the two cases which would form the basis of a recovery in the second case. Such identity is entirely lacking in the two cases we are considering.” And at page 446: “It is true that both Drum and the plaintiff were parties defendant in the action in which the judgment was rendered, but the judgment was not between them, but between them on the one side and the plaintiff in that action on the other. A judgment may operate as an estoppel between parties to it only when they are adverse parties, so that the judgment is a determination of issues between them. (Code Civ. Proe., § 1910; 23 Cyc. 1237.)”

The claim of res judicata does not lie in the case before us.

Federal relies upon “Exclusion 13” of its policy as an exemption from liability for the instant loss. By endorsement there had been added to the Federal policy before the accident an exclusion clause which, with the introductory phrase of the policy, says: 1 ‘ This policy does not apply: . . . Exclusion 13. To the use by the insured of any automobile as a public or livery conveyance or for carrying property for a charge.” Federal claims that this immunized it from any obligation to protect its insured with respect to the negligence action and judgment, but it did not plead any such defense. It appears that Torres had, as a licensed radial highway common carrier, transported from Tracy to March Field certain miscellaneous freight which was delivered on March 3 or 4; this was done by means of the GMC tractor and trailer, with Rodriquez driving. After making the delivery he had visited his grandmother for two or three days and was on his way back to Tracy at the time of the accident; the truck was empty, not carrying any property whatever.

Respondent does not seriously argue that the vehicle was being used as “a public or livery conveyance,” nor could it successfully do so. (Cf. Pimper v. National American Fire Ins. Co., 139 Neb. 109 [ 296 N.W. 465 ]; Elliott v. Behner, 150 Kan, 876 [ 96 P.2d 852 , 857]; Allor v. Dubay, 317 Mich. 281

[ 26 N.W.2d 772 ]; Bathbun v. Ocean Accident & Guarantee Corp., 299 ILL. 562 [ 132 N.E. 754 , 755, 19 A.L.R 140 ]; Larson v. Aetna Life Ins. Co., 19 Wn.2d 601 [ 143 P.2d 850 , 851, 149 A.L.R 1289 ]; 1 Appleman, Insurance Law and Practice, § 576, p. 716; Cyclopedia of Automobile Law and Practice, Blashfield, vol. 6, § 3700, pp. 308-309.)

But respondent asserts that every carrying of property for a charge must involve a return trip and the exclusion clause reasonably covers the round trip. This view is precluded by the settled principle that the language of an insurance policy, being that of the insurer, is to be construed against it in ease of any ambiguity. Continental Cas. Co. v. Phoenix Constr. Co., 46 Cal.2d 423 , 437 [ 296 P.2d 801 , 57 A.L.R.2d 914 ] : “It is elementary in insurance law that any ambiguity or uncertainty in an insurance policy is to be resolved against the insurer. [Citations.] If semantically permissible, the contract will be given such construction as will fairly achieve its object of securing indemnity to the insured for the losses to which the insurance relates. [Citation.] If the insurer uses language which is uncertain any reasonable doubt will be resolved against it; if the doubt relates to extent or fact of coverage, whether as to peril insured against [citations], the amount of liability [citations] or the person or persons protected [citations], the language will be understood in its most inclusive sense, for the benefit of the insured. ’ ’ Fageol Truck & Coach Co. v. Pacific Indemnity Co., 18 Cal.2d 731 , 747 [ 117 P.2d 661 ] : “But if there be any ambiguity in the Detroit policy, it must be resolved against the insurer. (32 C.J. 1152, § 265.) If to give the quoted clause the meaning contended for would release Detroit from liability, then it must be construed so as to permit recovery since it is ‘susceptible of such construction. ’ Where two interpretations equally fair may be made, that which affords the greatest measure of protection to the assured will prevail.” This Exclusion 13 avails Federal nothing. This holding dispenses with discussion of other arguments advanced in this connection, such as invalidity of the exclusion clause.

The foregoing discussion disposes of all the contentions made by respective counsel which we deem it necessary to review, for they are dispositive of this appeal. Counsel present numerous other arguments but we consider that due regard for justifiable complaints against inordinately long opinions and increasing costs of necessary legal literature, such as official reports and advance sheets, demands that we not satisfy