Finally, we discuss Allied Mut. Ins. Co. v. Universal Underwriters Ins. Co., supra, in which the Nebraska Supreme Court discussed both lines of cases. The Nebraska Supreme Court first explicitly adopted the principle later termed mutual repugnancy in Bituminous Cas. Corp. v. Andersen, 184 Neb. 670, 171 N.W.2d 175 (1969). Although previous Nebraska Supreme Court cases on the same issue had reached a result consistent with the rule announced in Bituminous Cas. Corp., they had not elucidated this rule in precise terms.
Most courts have given effect to the "excess" provision and imposed full liability for the loss upon the other policy involved despite the "escape" (no liability) provision contained therein. ( Employers' Liability Assurance Corp. v. Fireman's Fund Ins. Group (D.C. Cir. 1958) 262 F.2d 239 [104 App.D.C. 350]; Zurich General Accident Liability Ins. Co. v. Clamor (7th Cir. 1941) 124 F.2d 717; Michigan Alkali Co. v. Bankers Indemnity Ins. Co. (2d Cir. 1939) 103 F.2d 345; Bituminous Casualty Corp. v. Andersen (1969) 184 Neb. 670 [ 171 N.W.2d 175]; Federal Ins. Co. v. Prestemon (1967) 278 Minn. 218 [ 153 N.W.2d 429]; Hardware Dealers Mutual Fire Ins. Co. v. Farmers Ins. Exchange (Tex.Civ.App. 1969), 437 S.W.2d 390; New Amsterdam Casualty Co. v. Certain Underwriters at Lloyds (1966) 34 Ill.2d 424 [ 216 N.E.2d 665]. A number of courts, however, have given effect to the "escape" clause and imposed full liability for the loss upon the other policy involved despite the excess provision contained therein.
Other courts, when confronted with identical clauses, have held that the excess clause prevails over the escape clause. Federal Ins. Co. v. Prestemon, 1967, 278 Minn. 218, 153 N.W.2d 429; Hardware Dealers Mut. Fire Ins. Co. v. Farmers Ins. Exchange, 1969, Tex., 437 S.W.2d 390; State Farm Mut. Automobile Ins. Co. v. Home Indemnity Ins. Co., 1970, 23 Ohio St.2d 45, 261 N.E.2d 128; Bituminous Cas. Corp. v. Andersen, 1969, 184 Neb. 670, 171 N.W.2d 175. The results in these cases have been based on either strict construction of the policies or a judicial determination of the intent of the parties as determined from policy risks and premium bases.
The holding in State Farm Mut. Auto. Ins. Co. v. Cheeper's Rent-A-Car, supra, follows a line of cases in which this court has stated that when a conflict exists because insurance policies contain "mutually repugnant language intended to restrict or escape liability for a particular risk in the event there exists other insurance. . . . the owner's policy . . . provide[s] primary coverage and the driver's policy . . . provide[s] excess coverage." See Boren v. State Farm Mut. Auto. Ins. Co., 225 Neb. 503, 508, 406 N.W.2d 640, 644 (1987), citing Jensen v. Universal Underwriters Ins. Co., 208 Neb. 487, 304 N.W.2d 51 (1981); Bituminous Cas. Corp. v. Andersen, 184 Neb. 670, 171 N.W.2d 175 (1969); Farm Bureau Ins. Co. v. Allied Mut. Ins. Co., 180 Neb. 555, 143 N.W.2d 923 (1966); Protective Fire Cas. Co. v. Cornelius, 176 Neb. 75, 125 N.W.2d 179 (1963); and Turpin v. Standard Reliance Ins. Co., 169 Neb. 233, 99 N.W.2d 26 (1959). In Jensen v. Universal Underwriters Ins. Co., supra, the driver was involved in an accident while driving a temporary replacement automobile.
Boren v. State Farm Mut. Auto. Ins. Co., 225 Neb. 503, 508, 406 N.W.2d 640, 644 (1987). See, also, Jensen v. Universal Underwriters Ins. Co., 208 Neb. 487, 304 N.W.2d 51 (1981); Bituminous Cas. Corp. v. Andersen, 184 Neb. 670, 171 N.W.2d 175 (1969); Farm Bureau Ins. Co. v. Allied Mut. Ins. Co., 180 Neb. 555, 143 N.W.2d 923 (1966); Protective Fire Cas. Co. v. Cornelius, 176 Neb. 75, 125 N.W.2d 179 (1963); Turpin v. Standard Reliance Ins. Co., 169 Neb. 233, 99 N.W.2d 26 (1959). Based upon our well-established case law, we conclude that given the mutually repugnant language of Billings' insurance policy and Cheeper's January 15, 1998, rental car agreement, Cheeper's, as the owner of the automobile driven by Billings pursuant to a rental agreement in which Cheeper's represented that it had liability insurance which was secondary to that of the driver, has the primary liability in this case.
We have been required on a number of past occasions to resolve controversies arising because each of the applicable policies contained mutually repugnant language intended to restrict or escape liability for a particular risk in the event there exists other insurance. Where such conflict has existed, we have held the owner's policy to provide primary coverage and the driver's policy to provide excess coverage. E.g., Jensen v. Universal Underwriters Ins. Co., 208 Neb. 487, 304 N.W.2d 51 (1981); Bituminous Cas. Corp. v. Andersen, 184 Neb. 670, 171 N.W.2d 175 (1969); Farm Bureau Ins. Co. v. Allied Mut. Ins. Co., 180 Neb. 555, 143 N.W.2d 923 (1966); Protective Fire Cas. Co. v. Cornelius, 176 Neb. 75, 125 N.W.2d 179 (1963); Turpin v. Standard Reliance Ins. Co., 169 Neb. 233, 99 N.W.2d 26 (1959). In this case there is no conflict in the language of the applicable policies.
" A similar conflict between the automobile owner's policy and the driver's policy was resolved against the position of Underwriters in Bituminous Cas. Corp. v. Andersen, 184 Neb. 670, 673, 171 N.W.2d 175, 176 (1969): "Where an excess insurance clause in a driver's automobile liability policy and a no-liability clause in the automobile owner's liability policy apparently conflict, the no-liability clause is ineffective and the driver's insurance excess." Although Hartford Accident and Indemnity Co. is not a party to this action, and we are not called upon to declare its rights, in keeping with the rule laid down in Bituminous, supra, we agree with the judgment of the District Court that the policy of insurance issued by Underwriters affords coverage to Jensen, and that judgment is affirmed.
The third view which various courts have adopted is to hold the "escape" clause does not relieve the owner's insurer of a duty to defend where the driver's policy provides only "excess" coverage if there is other valid and collectible insurance on a non-owned automobile. State FarmMutual Automobile Insurance Co. v. Home Indemnity Insurance Co., 23 Ohio St.2d 45, 261 N.E.2d 128; Bituminous Casualty Corp. v. Andersen, 184 Neb. 670, 171 N.W.2d 175; Federal Insurance Co. v. Prestemon, 278 Minn. 218, 153 N.W.2d 429. We find the last mentioned line of authority most persuasive in light of our decision in New Amsterdam Casualty Co. v. Certain Underwriters at Lloyds, London, where the court adopted the view that "when the owner of an automobile `has a policy with an omnibus clause, and the additional insured also has a non-ownership policy which provides that it shall only constitute excess coverage over and above any other valid, collectible insurance, the owner's insurer has the primary liability.'"
Most courts have given effect to the "excess" provision and imposed full liability for the loss upon the other policy involved despite the "escape" (no liability) provision contained therein. Bituminous Casualty Corp. v. Andersen (Neb. 1969), 171 N.E.2d 175; Federal Ins. Co. v. Prestemon (1967), 278 Minn. 218, 153 N.W.2d 429; Hardware Dealers Mutual Fire Ins. Co. v. Farmers Ins. Exchange (Tex.Civ.App. 1969), 437 S.W.2d 390; New Amsterdam Casualty Co. v. Certain Underwriters at Lloyds (1966), 34 Ill.2d 424, 216 N.E.2d 665; Employers' Liability Assurance Corp. v. Fireman's Fund Ins. Group (1958), 262 F.2d 239; Zurich General Accident Liability Ins. Co. (1941), 124 F.2d 717; Michigan Alkali Co. v. Bankers Indemnity Ins. Co. (1939), 103 F.2d 345; Continental Casualty Co. v. Curtis Pub. Co. (1938), 94 F.2d 710. On the other hand, a number of courts have given effect to the "escape" (no liability) provision, and imposed the full liability for the loss upon the other policy involved despite the "excess" provision contained therein.
Section 44-508 is not applicable in the case before us. In German Mutual's brief, it argues that the Nebraska Supreme Court has permitted direct actions against insurers, citing as authority Bituminous Cas. Corp. v. Andersen, 184 Neb. 670, 171 N.W.2d 175 (1969), and State Farm Mut. Auto. Ins. Co. v. Union Ins. Co., 181 Neb. 253, 147 N.W.2d 760 (1967). Based upon our review of the literature, we conclude that there is a distinction between cases such as those cited by German Mutual in which insurers were directly sued and cases where the Nebraska Supreme Court has held that a direct action cannot be maintained against an insurer.