Aas v. Avemco Insurance

246 ]; and Fullerton v. Houston Fire & Cas. Ins. Co. (1965) 234 Cal.App.2d 743 , 750-751 [ 44 Cal.Rptr. 711 ].) Plaintiffs seek to avoid the plain meaning of the policy on several theories.

-A-

In Travelers Ins. Co. v. Industrial Indem. Co. (1971) 18 Cal.App.3d 628 [ 96 Cal.Rptr. 191 ], the plaintiff company had issued a general liability insurance policy to the employer of a worker who was injured in 1949 in the course of his employment when he came into contact with a utility’s electric wire. After the worker recovered a judgment against the utility company, the latter sued the employer on the theory of implied indemnity. The plaintiff company provided a defense and demanded that the defendant company, which had issued workmen’s compensation and employer’s liability coverage to the employer, join in the defense. The latter company had agreed “To indemnify this Employer against loss by reason of the liability imposed upon him by law for damages on account of such injuries to such of said employees as are legally employed wherever such injuries may be sustained . . . .” (P. 631.) The defendant claimed .that the policy language limited the policy coverage to claims made directly by the employee against the employer. The trial court interpreted the language to include liability for indemnity claims of third parties against the employer which arose out of injuries to the latter’s employee; and it awarded the plaintiff company a pro rata share of its outlay to litigate and settle the utility’s claim against the employer. (See 18 Cal.App.3d at pp. 630-631.)

In 1949, when the injury occurred and when the policy was in effect, the courts of California had not recognized the right of a third party tortfeasor whose negligence concurred with that of the employer to recover from the negligent employer under the theory of implied indemnity. (See S. F. Unified Sch. Dist. v. Cal. Bldg. etc. Co. (1958) 162 Cal.App.2d 434 [ 328 P.2d 785 ].) The indemnity suit was commenced in 1962 after the decision last cited. The court on appeal noted that the case involved the question of “whether changes in the scope of liability under an insurance policy, resulting from court decisions handed down after a policy is issued, inure to the benefit of the policyholder.” (18 Cal.App.3d at p. 631, italics added.) It answered the question as follows: “We conclude that where the scope of liability covered by language contained in an insurance policy has been enlarged by judicial pronouncement, the language defining coverage embraces the total liability ascribed to it by the courts, so long as the policy remains in force. At first blush this

appears to be a harsh rule, particularly here because of the extremely unusual circumstance that the policy was written in 1949 and liability is being determined some 20 years later. However, a contraiy view would bring about an even more discordant result for it would mean that where courts enlarge liability during the effective period of a liability policy, an insured who contracted for complete coverage of a possible risk would be left without coverage because the scope of the risk had been enlarged by decisional law. Many examples come to mind where liability has been enlarged by a novel judicial interpretation of the law or by an expanded application of existing law. A good example is the liability of owners and occupiers of real property, as articulated in Rowland v. Christian, 69 Cal.2d 108 ....” (Id, p. 632, italics added.)

Reference to the emphasized language demonstrates that plaintiffs’ reliance on the principle set forth in the last quotation is unavailing in this case. When the insurer agrees to indemnify the policyholder for “loss by reason of the liability imposed upon him by law” it may take the risk that the law will impose a greater liability than was contemplated at the time of contracting. Here, however, there never was such a broad promise of indemnity. A change in the liability of the insured with respect to nonpaying occupants of the airplane cannot affect an insurer who has never assumed any liability for damages because of bodily injury, sickness or disease, including death, to occupants.

Insofar as the terms of the policy itself are concerned, as distinguished from the liability of the pilot for his negligence, the following rule governs: “It is well settled that insurance policies are governed by the statutoiy and decisional law in force at the time the policy is issued.” {Interinsurance Exchange v. Ohio Cas. Ins. Co. (1962) 58 Cal.2d 142 , 148 [ 23 Cal.Rptr. 592 , 373 P.2d 640 ]. See also Contreras v. America, Compania General De Seguros, S.A. (1975) 48 Cal.App.3d 270 , 275 and 281-283 [ 121 Cal.Rptr. 694 ]; and Mitchell v. National Auto. & Casualty Ins. Co. (1974) 38 Cal.App.3d 599 , 604-605 [ 113 Cal.Rptr. 391 ].)

-B-

Nor can plaintiffs successfully rely on the principle of strict construction of an exclusionary clause. It is a “fundamental principle that an insurer cannot escape its basic duty to insure by means of an exclusionary clause that is unclear.” {State Farm Mut. Auto. Ins. Co. v. Jacober (1973) 10 Cal.3d 193 , 201 [ 110 Cal.Rptr. 1 , 514 P.2d 953 ].) The court added, “As we have declared time and again ‘any exception to the

performance of the basic underlying obligation must be so stated as clearly to apprise the insured of its effect.’ (Gray v. Zurich Insurance Co. (1966) 65 Cal.2d 263 , 269 . . .); thus, ‘the burden rests upon the insurer to phrase exceptions and exclusions in clear and unmistakable language.’ (Harris v. Glens Falls Ins. Co. (1972) 6 Cal.3d 699 , 701 . . .) The exclusionary clause ‘must be conspicuous, plain and clear.' (Steven v. Fidelity & Casualty Co. (1962) 58 Cal.2d 862 , 878 . . .) (Italics added.)” (Id, at pp. 201-202.) On the other hand “courts may not rewrite the insurance contract or force a conclusion to exact liability where none was contemplated. [Citations.]” (State Farm Mut. Auto. Ins. Co. v. Flynt (1971) 17 Cal.App.3d 538 , 547 [ 95 Cal.Rptr. 296 ]. See also Cook v. Penn Mutual Life Ins. Co. (1963) 218 Cal.App.2d 194 , 197 [ 32 Cal.Rptr. 400 ].)

In this case the limitation is in the coverage itself, and the policyholder’s election to exclude or include protection for liability to occupants is clearly designated in the declarations by typewriting added to the printed form. There is no manifestation of thé decried “practice of building into policies one condition or exception upon another in the shape of a linguistic Tower of Babel.” (Insurance Co. of North America v. Electronic Purification Co. (1967) 67 Cal.2d 679 , 691 [ 63 Cal.Rptr. 382 , 433 P.2d 174 ].)

-C-

Nor is there any ambiguity to be resolved in favor of the policyholder, pilot or the plaintiffs who claim under them. In Continental Cas. Co. v. Phoenix Constr. Co., supra, the court also stated, “It is elementaiy in insurance law that any ambiguity or uncertainty in an insurance policy is to be resolved against the insurer .... 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 .... 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. .. the amount of liability ... or the person or persons protected . . . the language will be understood in its most inclusive sense, for the benefit of the insured.” (46 Cal.2d at pp. 437-438, citations omitted. See also State Farm Mut. Auto. Ins. Co. v.Jacober, supra, 10 Cal.3d 193 , 203.)

On the other hand it must, be recognized, as stated in Burr v. Western States Life Ins. Co. (1931) 211 Cal. 568 [ 296 P. 273 ], “The terms of a contract are to be understood in their ordinary and popular sense

and as a man of average intelligence and experience would understand them.” (211 Cal. at p. 575. See also New York Life Ins. Co. v. Hollender (1951) 38 Cal.2d 73 , 81 [ 237 P.2d 510 ]; Cook v. Penn Mutual Life Ins. Co., supra, 218 Cal.App.2d 194 , 197-198.) In the New York Life Ins. Co. case the court stated: “While it is settled law that in case of doubt the provisions of the insurance contract will be construed most strongly against the insurer [citations], the rule 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 cast a liability upon the insurance company which it has not assumed.” (38 Cal.2d at p. 81. See also American Motorists Ins. Co. v. Moses (1952) 111 Cal.App.2d 344 , 347-348 [ 244 P.2d 760 ].)

Here a reading of the policy raises no ambiguity. Any uncertainty is only that engendered by changes in the substantive law which may have provided new risks to be insured against, but which could not change the terms of the policy.

-D-

Plaintiffs suggest that if the parties had contemplated the change of the guest law they would have bargained for greater coverage, and that liability should be imposed in order to give effect to the expectations of the policyholder. “In interpreting an insurance contract we must consider the intent and reasonable expectations of the parties in entering into the agreement. Hence, we must evaluate not only plaintiff’s contract form but also [the policyholder’s] knowledge and understanding as a layman and his normal expectation of the extent of coverage of the policy.” (Atlantic Nat. Ins. Co. v. Armstrong (1966) 65 Cal.2d 100 , 112 [ 52 Cal.Rptr. 569 , 416 P.2d 801 ], See also Insurance Co. of North America v. Electronic Purification Co., supra, 67 Cal.2d 679 , 688-689.) In this case, however, in the light of the clear provisions of the coverage, the declaration and the exclusion, as reviewed above, any construction of the policy which would provide coverage for damages incurred by reason of the wrongful death of a nonpaying occupant would be contrary to the intent and reasonable expectation of both insurer and insured. (See Herzog v. National American Ins. Co. (1970) 2 Cal.3d 192 , 197 [ 84 Cal.Rptr. 705 , 465 P.2d 841 ]; and State Farm Mut. Auto. Ins. Co. v. Allstate Ins. Co., supra, 9 Cal.App.3d 508 , 517.) Here at the time of the issuance of the policy and at all times up to the time of the loss, each intended that the liability, if any, for damages to an injured occupant should not be covered even though that liability might arise in the event

of intoxication or wilful misconduct under the existing guest law. The fact that liability to a nonpaying occupant was broadened by judicial decision and statutory action could not broaden the express terms of the policy. The expectations to be considered are those at the time of contracting, not what might have been expected in the light of subsequent developments.

-E-

Finally the plaintiffs assert that the contract should be interpreted to cover the liability of the pilot to the occupant because of a public policy analogous to that which has been enunciated in the past in connection with automobile liability insurance. In Continental Cas. Co. v. Phoenix Constr. Co., supra, the court observed in connection with California’s general automobile financial responsibility law, that it was “designed to give monetaiy protection to that ever changing and tragically large group of persons who while lawfully using the highways themselves suffer grave injury through the negligent use of those highways by others.” It concluded, “Such a law is remedial in nature and in the public interest is to be liberally construed to the end of fostering its objectives.” (46 Cal.2d at p. 434. See also State Farm Mut. Auto. Ins. Co. v. Jacober, supra, 10 Cal.3d 193 , 205-206; Atlantic Nat. Ins. Co. v. Armstrong (1966) 65 Cal.2d 100 , 106 [ 52 Cal.Rptr. 569 , 416 P.2d 801 ]; and Interinsurance Exchange v. Ohio Cas. Ins. Co., supra, 58 Cal.2d 142 , 153-154.) Nevertheless, when the statutes governing the content of an insurance policy permit a limitation or exclusion, the validity of such exclusion cannot be questioned. (See Ins. Code, § 11580.1, cf. § 11584. Note, Associated Indem. Corp. v. King (1973) 33 Cal.App.3d 470 , 472-474 [ 109 Cal.Rptr. 190 ]; Donohoe v. Wilshire Ins. Co. (1972) 26 Cal.App.3d 471 , 473 [ 103 Cal.Rptr. 57 ]; State Farm Mut. Auto. Ins. Co. v. Flynt, supra, 17 Cal.App.3d 538 , 542-546; and State Farm Mut. Auto. Ins. Co. v. Allstate Ins. Co., supra, 9 Cal.App.3d 508 , 520-526.)

Turning to the aircraft financial responsibility act (Pub. Util. Code, §§ 24230-24410) we find that it does not apply to “[A]ny person who maintains in effect an insurance policy meeting the requirements of Section 24350 and who has filed with the department a certificate of insurance issued by the insurance company which issued such policy.” (§ 24243, subd. (f).) As we have noted, section 24351 provides, “The policy or bond need not cover: . . . (c) A guest, or any other person, riding in or upon any aircraft without giving compensation.” The requirements for posting security after an accident do not apply: “

an aircraft involved in an accident in which no injury was caused to the person of anyone other than the operator or guests, ... [If] (d) To the owner if there is in effect at the time of the accident an aircraft liability policy or bond with respect to the aircraft involved in the accident. [H] (e) To the operator, if not the owner of the aircraft, if there is in effect at the time of the accident an aircraft liability policy or bond with respect to his operation of the aircraft involved in the accident. [U] (f) To the operator or owner if his liability for damages resulting from such accident is covered by any other form of liability insurance policy or bond in effect at the time of the accident.” (§ 24327, subds. (a), (d), (e) and (f).) The only requirement for aircraft liability coverage found in the Insurance Code is a section which prohibits any provision which “shall exclude or deny coverage because the aircraft is operated in violation of federal or civil air regulations, or any state law or local ordinance.” (Ins. Code, § 11584.)

There is no established legislative or other policy requiring that insurance be furnished to cover the aircraft owner’s or operator’s liability for damages for injury or death suffered by a guest or any other person riding in or upon any aircraft without giving compensation. It is, therefore, not appropriate to rewrite the policy to create such a liability.

-F-

The foregoing conclusions render it unnecessary to consider defendant insurance company’s contention that despite the repeal of the aircraft guest statute there would be no liability to owner-occupant of the airplane on the part of a negligent operator to whom the owner had entrusted the operation of the aircraft. (See, e.g., Patton v. La Bree (1963) 60 Cal.2d 606 , 608-609 [ 35 Cal.Rptr. 622 , 387 P.2d 398 ]; and note Schwalbe v. Jones (Cal. 1975) rehg. granted June 11, 1975, involving the automobile guest law.) Since the aircraft guest law never had a clause which referred to “personal injury to or the death of the owner,” the relevancy of those precedents may be questioned.

The order of the trial court denying plaintiffs’ motion for a summary judgment, although not an appealable order, may be reviewed on their appeal from an adverse judgment. (Code Civ. Proc., § 906 [former § 956, repealed Stats. 1968, ch. 385, § 1, p. 811]; Clements v. T. R. Bechtel Co. (1954) 43 Cal.2d 227 , 241-242 [ 273 P.2d 5 ]; and City of Oakland v. Darbee (1951) 102 Cal.App.2d 493 , 504-505 [ 227 P.2d 909 ].

Cf. Whitney’s at the Beach v. Superior Court (1970) 3 Cal.App.3d 258 , 262 [ 83 Cal.Rptr. 237 ]; Thompson v. Occidental Life Ins. Co. (1969) 276 Cal.App.2d 559 , 563 [ 81 Cal.Rptr. 37 ]; and Nevada Constructors v. Mariposa etc. Dist. (1952) 114 Cal.App.2d 816 , 818 [ 251 P.2d 53 ], See 4 Witkin, Cal. Procedure (2d ed. 1971) Proceedings Without Trial, § 195, p. 2842; and 6 id., Appeal, § 34, p. 4048.) The ruling of the court having been in accordance with the principles outlined above, no error is found in the denial of plaintiffs’ motion for summary judgment.

The judgment is affirmed.

Molinari, P. J., and Elkington, J., concurred.

Appellants’ petition for a hearing by the Supreme Court was denied March 31, 1976.