General Insurance v. Whitmore

— Plaintiff insurance corporation sought a judicial determination of its rights and liabilities under a public liability insurance policy issued to defendants Mr. and Mrs. Whitmore and their son. A similar adjudication was sought as to other defendants not appearing on this appeal. The Whitmores’ demurrer to the first amended complaint was sustained without leave to amend, and plaintiff appeals from the judgment of dismissal subsequently entered.

The facts assertedly warranting the declaratory relief prayed for are alleged in the complaint. Summarized, it appears that on or about March 4, 1963, a passenger train bound for Los Angeles became derailed near Northridge; passengers were injured and suffered destruction of their personal property. About July 3, 1963, Shelby Drucker, one of the passengers, instituted action against the carriers and against the Whitmores’ son and two other minors for personal injuries — a copy of such complaint is annexed to plaintiff’s amended pleading. While Drucker does not so allege, plaintiff’s complaint includes the allegation that young

In addition to the policy in suit (issued to the Whit-mores), plaintiff alleges the existence of public liability insurance policies issued by two different companies to the Morgan and Walk boys and their parents respectively; all three policies obligated the particular company to defend its named insureds against claims of third persons, and to pay any judgment resulting therefrom, arising out of the negligence of such insureds. Bach member of the Morgan and Walk families is joined as a defendant in the present proceeding, as are each of their insurers — -the parents and insurers being sued under fictitious names. Also joined as defendants are Mr. Drucker, 200 of his fellow passengers (Does 1 to 200), and the two carriers against whom (among others) the Drucker action is directed.

According to plaintiff’s complaint, for reasons now to be stated, an actual controversy exists between the parties. First, plaintiff contends that the train accident was solely and proximately caused by the wilful and intentional acts of the three defendant boys for which no coverage was afforded under its policy with the Whitmore family; such contention, it is further alleged, is contested by the Whitmores. Second, numerous claims (upon some of which complaints have been filed) are being made against the Whitmores as a result of the train accident; accordingly, if judgments be secured against such insureds and if plaintiff be required to indemnify them in regard thereto, plaintiff seeks a determination as to whom and in what proportion its policy limits of $10,000 should be paid. Third, if a recovery is secured against all three defendant sons and their parents, all three insurers should pay on a pro rata basis in accordance with the limits of the respective policies and share in the payment of any judgment up to the total limits of each such policy. Further in this connection, if defendant carriers and defendant passengers recover for the claimed negligence of defend

In California declaratory relief is frequently invoked to determine the question of whether or not coverage exists under an insurance policy in light of the facts alleged. (15 Cal.Jur.2d, Declaratory Relief, pp. 232-234.) For purposes of the present demurrer, of course, the allegations in the complaint must be accepted as true; but even if challenged, it has long been the law that a court may determine disputed questions of fact in declaratory relief proceedings. (R. G. Hamilton Corp., Ltd. v. Corum, 218 Cal. 92 , 95 [ 21 P.2d 413 ].) More recently, “In an action for declaratory relief, when the complaint shows the existence of an actual controversy among the parties, a general demurrer to the complaint should be overruled. The plaintiff is entitled to a declaration of his rights whether the declaration is favorable to him or not.” (Salsbery v. Ritter, 48 Cal.2d 1 , 7 [ 306 P.2d 897 ].) Two exceptions to the above rule are noted in Sdlsbery. (1) Where the complaint shows on its face that the action is barred by the statute of limitations and (2) where the whole controversy has been settled by a prior judgment. Neither exception, concededly, is present here. In a memorandum opinion supporting its order, the trial court took the view that there was “no controversy warranting declaratory relief among the parties in this case.” Several considerations are mentioned for its conclusion in this regard. Upon analysis of the various bases for such determination, however, we are of the view that the trial court erred and accordingly the judgment of dismissal must be reversed.

The trial court determined that declaratory relief was not available against the “tortfeasees.” It further determined

We first consider the problem as it concerns the tortfeasees none of whom have demurred to the complaint as amended. (An answer, it appears, was filed by one of the carriers which asks that it be held entitled to the benefits of insurance coverage for its own loss as well as for the claims made against it.) Immediately upon the happening of the derailment, they had an interest in the insurance policy of the asserted tortfeasors and were entitled to information as to its existence and its limits. (Laddon v. Superior Court, 167 Cal.App.2d 391 , 394-396 [ 334 P.2d 638 ].) While not necessarily indispensable parties, they were proper parties. “Proper parties,” it has been stated, can be joined as defendants when “. . . they have some interest in the subject of the action or the issues, and it would be convenient to settle their rights in the same action.” (2 Witkin, Cal. Procedure (1954) p. 1052.) Indeed, since “Litigation is a practical business” and since “The litigant sues to recover money and is not interested in a paper judgment that cannot be collected” (Pettie v. Superior Court, 178 Cal.App.2d 680 , 689 [ 3 Cal.Rptr. 267 ]), perhaps a favor was conferred upon the tortfeasees by the filing of the present action. There is the further fact that the tortfeasees are many in number (200

These matters, in our view, are not capable of resolution in a trial of the damage suit which seems to be impliedly suggested by the court’s memorandum opinion. In Maguire v. Hibernia S. & L. Soc., 23 Cal.2d 719 , 732 [ 146 P.2d 673 , 151 A.L.R. 1062 ], it is declared that such alternative remedy must be “speedy and adequate or as well suited to the plaintiff’s needs as declaratory relief” before a court may properly refuse to exercise its discretion to refuse such relief on that ground. For example, since coverage under the policy is denied by reason of the wilful and intentional acts alleged in the complaint, plaintiff could not possibly advance that claim in the damage suit which would be wholly inconsistent with the interests of its assureds and render the latter liable as a matter of law. See State Farm, etc. Ins. Co. v. Superior Court, 47 Cal.2d 428 , 431 [ 304 P.2d 13 ], where the court ordered a severance of the declaratory relief suit from the damage actions because of the prejudice which would be done to the carrier if the proceedings were consolidated for trial. No prejudice, on the other hand, will be suffered by the tortfeasees if plaintiff’s claims to declaratory relief are tried on their merits. Contrary to the trial court’s view, they would not be compelled to litigate their claims “twice.” Their right to recover against the Whitmores would not be in issue in the present proceeding, and the principles of res judicata and collateral estoppel could not later be invoked (Exchange Cas. & Surety Co. v. Scott, 56 Cal.2d 613 , 620 [ 15

As to the demurring defendants, certain of the above principles are clearly applicable to their contentions that no actual controversy exists between them and their insurer. The additional point is made by the Whitmores that plaintiff cannot claim noncoverage under the policy (due to the minor’s intentional acts) because the amended pleading expressly admits the company’s agreement to “defend” the named insureds and to “indemnify” them against any claims that might be made by third parties as a result of the insureds’ negligence; the Drucker action, it is pointed out, asks damages for negligence — there is no allegation of wilful or intentional acts. But plaintiff in this proceeding is not litigating the issue of negligence; it is a proceeding in which a determination is sought that the acts involved were wilful or intentional and thus excluded from coverage. As of now plaintiff owes its assureds some measure of responsibility, and courts have declined to “take [any] issue with the right of the insurance company to file an independent action to determine [such] responsibility. ...” (Fireman’s Fund Ins. Co. v. Chasson, supra, 207 Cal.App.2d 801 , 806.) The case just cited also holds that where, as here, the facts al

Respondents’ brief places full reliance upon the reasoning of the trial court which (as stated at the outset) we find to be erroneous. Nor are the several cases cited and discussed of any assistance to them, being either distinguishable on their facts or not in harmony with the established law of this jurisdiction as reflected by the decisions to which we have heretofore referred.

The judgment is reversed.

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

Respondents’ petition for a hearing by the Supreme Court was denied September 15, 1965. Traynor, C. J., Peek, J., and Mosk, J., Avere of the opinion that the petition should be granted.