Majority
Opinion
Edward J. Terzian (hereinafter “plaintiff”), the insured under an automobile policy issued by defendant insurance carrier, brought this action under the policy’s uninsured motorist coverage. He appeals from a judgment for defendant entered after nonjury trial.
Plaintiff’s policy included uninsured motorist coverage as required, and with the provisions required, by Insurance Code section 11580.2.[1] The coverage obligated defendant to pay him, subject to a policy limit of $ 10,000, all sums which he was “legally entitled to recover as damages from the owner or operator of an uninsured automobile because of bodily injury . . . caused by accident and arising out of the . . . use of such uninsured automobile; . . .” (See § 11580.2, subd (a).) An arbitration clause (ibid., subd. (d)) provided that if the parties disagreed concerning plaintiff’s entitlement to recover such damages or upon the amount due him under the coverage, “then, upon written demand of either,” the matters in disagreement “shall be settled by arbitration in accordance with the rules of the American Arbitration Association ...” Other provisions following the statute’s language subrogated defendant to plaintiff’s rights against third partie s[2] (ibid., subd. (f)), and excluded coverage {ibid., subd. (c)) in specified circumstances.[3]
1 The cited statute, to which we occasionally refer herein as “section 11580.2,” was enacted by the 1959 Legislature and repealed and reenacted in 1961. (Stats. 1961, ch. 1189, p. 2921 et seq. [§§ 1, 2].) As will appear, plaintiff’s claim under the policy arose when he was injured in July 1960. Accordingly, all references to the statute herein are to the 1959 version. (Stats. 1959, ch. 817, p. 2385 et seq.)
2 Language under the heading “Trust Agreement" provided among other things that in the event of payment to any person under the uninsured motorist coverage, “such person shall hold in trust” for defendant’s benefit “all rights of recovery which he shall have” against the uninsured motorist, and that “such person shall do whatever is proper to secure and shall do nothing after loss to prejudice such rights.”
3 One of the exclusionary provisions (the only one involved on the appeal, and to which we hereinafter refer as the “exclusionary clause”) read in pertinent part as follows: “This policy does not apply under . . . [the uninsured motorist coverage] . . . to bodily injury to "an insured . . . with respect to which such insured . . . shall, without [defendant’s] written consent . . ., make any settlement with or prosecute *94 to judgment any action against any person or organization who may be legally liable therefor; . . .” (See § 11580.2, subd. (c), par. (3).)
The complaint herein (entitled “Complaint—Breach of Insurance Contract”) alleged the policy, the uninsured motorist coverage and the language of the arbitration clause; the facts of the Alvarado accident, plaintiff’s injuries and Alvarado’s negligence as a proximate cause thereof; that the Alvarado vehicle was an “uninsured automobile”; that plaintiff had performed all his agreements under the policy and had demanded that defendant arbitrate the amount of money due him thereunder; and that defendant had refused to arbitrate, thereby breaching the policy to plaintiff’s damage in the amount of $10,000. Answering the complaint, defendant denied that plaintiff had performed under the policy; denied that it had refused to arbitrate or had breached the policy; denied plaintiff’s alleged damages; and admitted (by failure to deny) the other allegations of the complaint summarized above.
As originally filed in April 1962, the answer pleaded no affirmative defenses. In 1963, defendant was permitted to file a supplemental answer setting forth the language of the policy’s exclusionary clause (quoted in fn. 3, ante) and alleging that, without defendant’s written consent, plaintiff had “prosecuted to judgment an action against one Mario Alvarado for the bodily injuries referred to in the complaint on file herein.” By reason of the multiple issues thus presented, the pretrial conference order severed them for trial.[5]
4 We hereinafter refer to this litigation as the “Alvarado action.” Plaintiff named both Mario Alvarado and Jack L. Riveness as party defendants therein. As the role of Riveness is not involved on the appeal, we disregard him.
5 The pretrial conference order provided (1) for trial by the court, first, of the issues raised by the policy defense pleaded in the supplemental answer; (2) for the court’s determination whether the allegations thereof were true and stated a valid defense; (3) if the court found adversely to plaintiff on those issues, for the determination whether the trial evidence showed that plaintiff was entitled to judgment against *95 defendant for $10,000; (4) if such determination were negative, for the court’s further determination whether the policy’s arbitration clause applied; and (5), if the arbitration clause were determined to be inapplicable, for trial (by jury if demanded) of the amount due plaintiff.
At the conclusion of trial the court made formal findings of fact and conclusions of law.[6] The findings recited the language of the uninsured motorist coverage and of the exclusionary clause in plaintiff’s policy, set forth the facts of the 1960 accident and plaintiff’s injuries, and summarized the parties’ 1961 negotiations. No finding was made as to whether defendant had breached the policy in any respect, but the court found that Alvarado was an “uninsured motorist” and that the aforementioned $10,000 judgment had been entered against him in the Alvarado action on March 8, 1963, without defendant’s consent.
Based upon the findings last mentioned, the court stated in its conclusions of law (among other things not involved on the appeal) “1. That plaintiff did prosecute to judgment an action against Mario Alvarado, a person who might be legally liable for the bodily injury received [by plaintiff] in the accident on July 2, 1960” (italics added) and “6. Defendant is not obliged to make any payment to plaintiff . . . [under the uninsured motorist coverage] . . . on account of the accident of July 2, 1960.” The judgment (that “plaintiff take nothing”) followed, thus concluding the action in the first phase specified in the pretrial conference order. (See fn. 5, ante.)
Appealing from the judgment, plaintiff relies upon Calhoun v. State Farm Mut. Auto. Ins. Co. (1967) 254 Cal.App.2d 407 [ 62 Cal.Rptr. 177 ], In that case, an action by an insured under a similar policy, the appellate court held that the insurer could not invoke the exclusionary clause as a defense if it had itself breached the policy in the first instance (id., at pp.
6 The findings and conclusions were not included in the original record on appeal. For assistance in analyzing the judgment from which the appeal is taken, we ordered them transmitted to this court as “paper[s], [or]. record[s] . . . used on the trial . . . below and on file in . . . the superior court . . .,” whereupon they were deemed part of the record on appeal. (Rule 12 (a), Cal. Rules of Court.)
The trial court, having concluded in defendant’s favor on its policy defense, apparently applied the Kowalski rule upon the factual premise that defendant had not breached the policy; and we might perceive, in support of the judgment, an implied finding to that effect. (2 Witkin, Cal. Procedure (1954) Trial,§ 118, par. (1), p. 1850.) But the opposing arguments do not—as the trial court did not—take into account that, in the Alvarado bankruptcy proceeding mentioned in the evidence, Alvarado filed in bankruptcy on August 3, 1961; (2) that he scheduled as a provable debt therein his prospective liability to plaintiff arising from the 1960 accident (and identified the then-pending Alvarado action by court, title and number); and (3) that he (Alvarado) was discharged in bankruptcy therein in 1961. These facts are not explicitly disclosed in the trial record, but we judicially notice them. (People v. Rojas (1962) 57 Cal.2d 676 , 679 [ 21 Cal.Rptr. 564 , 371 P.2d 300 ]; Flores v. Arroyo (1961) 56 Cal.2d 492 , 496-497 [ 15 Cal.Rptr. 87 , 364 P.2d 263 ].)[7]
A discharge in bankruptcy releases the bankrupt from liability upon all his provable debts which existed when the petition in bankruptcy was filed (Bankruptcy Act, § 17, subd. a [ 11 U.S.C.A. § 35 , subd. (a)]; Douglas v. Bergere (1949) 94 Cal.App.2d 267 , 271-272 [ 210 P.2d 727 ]; 1 Collier Bankruptcy Manual (2d ed. 1969) § 17.00, p. 205; 9 Am.Jur.2d Bankruptcy, § 743, pp. 554-555) and which were duly scheduled as such in the bankruptcy proceeding. (Bankruptcy Act, § 17, subd. a, par. [3] [ 11 U.S.C.A. § 35 , subd. (a), par. (3)]; 1 Collier op. cit. supra, § 17.06, p. 214.)
7 The prerequisites of such judicial notice are (1) that the matters to be noticed be “ ‘appropriately drawn to the attention’ of the court” and (2) that “the opposing party have adequate notice and opportunity to be heard on the question of the effect” thereof. (People v. Rojas, supra, at pp. 679-680; Flores v. Arroyo, supra, at p. 497. See Witkin, Cal. Evidence (2d ed. 1966) § 169, pp. 155-157.) The facts noticed herein from the Alvarado bankruptcy proceeding were “drawn to the attention” of this court from the reference thereto in the stipulation and judgment received in evidence from the Alvarado action, and from other unmistakable references thereto in the augmented record on appeal. We afforded the parties an opportunity to be heard on these facts by calling them to the attention of both counsel and hearing further oral argument concerning the “effect” thereof.
The legislative purpose in enacting the unconsented-judgment exclusion in the uninsured motorist statute (§ 11580.2, subd. (c), par. (3)) was to protect, and to prevent the insured from compromising, the rights against the uninsured motorist to which the insurer is subrogated under subdivision (f) of the statute (Mills v. Farmers Ins. Exchange (1964) 231 Cal.App 2d 124 , 129 [ 41 Cal.Rptr. 650 ]; see Eisler, California Uninsured Motorist Law (1969) § 7.5, p. 98), and to which defendant was subrogated under the policy in the present case. (See fn. 2, ante.) An unconsented judgment cannot compromise those rights as against an uninsured motorist who is judgment-proof by reason of a discharge in bankruptcy, and it protects the same rights to the extent that the insurer remains subrogated to any recovery by the insured as a creditor-claimant in the bankruptcy proceedings. It thus appears that the Legislature did not intend to require exclusion of uninsured motorist coverage under the circumstances perceived to exist here, and that the parties did not so intend when they contracted under the exclusionary clause in the policy. The Kowalski decision does not direct any contrary conclusions; such circumstances did not exist in that case. (Travelers Indem. Co. v. Kowalski, supra, 233 Cal.App. 2d 607 .)
Application of the foregoing considerations to the facts here (as shown in the record and as judicially noticed) would produce, as prospects at least, the successive conclusions (1) that Alvarado’s discharge in bankruptcy in 1961 released him from liability for plaintiff’s injuries sued upon in that action; (2) that Alvarado was not thereafter “legally liable therefor”; (3) that plaintiff, stipulating to the entry of judgment in the Alvarado action on March 8, 1963, did not—within the meaning of the uninsured motorist statute (§ 11580.2, subd. (c), par. (3)) or of the policy’s exclusionary clause founded upon it (see fn. 3, ante)—“prosecute to judgment any action against any person who may be legally liable” for his injuries; and (4) that defendant therefore cannot invoke the exclusionary clause as the basis of a policy, defense in this action.
Although these prospects require reversal of the judgment because they were not taken into account at the trial, the full legal effect of Alvarado’s discharge in bankruptcy depends upon the resolution of certain other questions. One is whether his liability for injury to plaintiff was discharge-able in bankruptcy as one sued upon in an “action for negligence” as that term is defined in the bankruptcy laws (Bankruptcy Act, § 63, subd. a, par.
Both parties attempted to have us resolve some of these questions on the appeal; each moved this court (1) for an order augmenting the record on appeal to include various documentary items and (2) to take judicial notice of the matters recited or mentioned therein. Defendant so moved with reference to records of a criminal prosecution in which Alvarado was convicted of felony'drank driving as a result of the 1960 accident; from these records, defendant would have us conclude that Alvarado’s liability to plaintiff was “for willful and malicious injuries to the person or property of another” and, hence, not dischargeable in bankruptcy. Augmentation to include some of the items moved by plaintiff is unnecessary because they already appear in the record. Augmentation to include others, as sought by both parties, would be improper because none were “used on the trial” (rule 12(a), California Rules of Court) or considered by the trial court through judicial notice or otherwise. (Id.; see Gelini v. City & County of San Francisco (1962) 199 Cal.App.2d 340 , 348 [ 18 Cal.Rptr. 853 ]; cf. Lipka v. Lipka (1963) 60 Cal.2d 472 , 481 [ 35 Cal.Rptr. 71 , 386 P.2d 671 ].) The matters mentioned in the latter category—and especially those propounded by defendant’s motion—are not, in our view, proper subjects of judicial notice for the purposes contemplated by the parties. For these various reasons, we deny both motions.
The unresolved questions should be decided by a trial court, upon conventional evidence and under the general rule that, although the granting of a discharge in bankruptcy is a function of the bankruptcy court, “the effect of a discharge is properly for the determination of any court in which it is duly pleaded or otherwise submitted for judgment.” (Yellow Creek Logging Corp. v. Dare (1963) 216 Cal.App.2d 50 , 55 [ 30 Cal.Rptr. 629 ].) The trial court can do this at retrial of the first phase hereof, upon relevant proof and consistent with our construction—as applicable—of the exclusionary provision of the uninsured motorist statute herein discussed. (Ins. Code, § 11580.2, subd. (c), par. (3).)
Devine, P. J., and Christian, J., concurred.
Cases cited
- Calhoun v. State Farm Mut. Auto. Ins. Co. 254 Cal.App.2d 407 p. 95
- Travelers Indemnity Co. v. Kowalski 233 Cal.App.2d 607 at 610 p. 96, p. 97
- People v. Rojas 57 Cal.2d 676 at 679 p. 96
- Flores v. Arroyo 56 Cal.2d 492 at 496-497 p. 96
- Douglas v. Bergere 94 Cal.App.2d 267 at 271-272 p. 96
- Mills v. Farmers Insurance Exchange 231 Cal.App 2d 124 at 129 p. 97
- Gelini v. City & County of San Francisco 199 Cal.App.2d 340 at 348 p. 98
- Lipka v. Lipka 60 Cal.2d 472 at 481 p. 98
- Yellow Creek Logging Corp. v. Dare 216 Cal.App.2d 50 at 55 p. 98