Opinion
Rehearing Granted April 25, 1973.
Opinion on pages 45-50 omitted.
REHEARING GRANTED [*]
Opinion, 13 Cal.App.3d 656, 92 Cal.Rptr. 137, vacated.
Ball, Hunt, Hart, Brown & Baerwitz, Joseph A. Ball, Long Beach, and Albert H. Ebright, Beverly Hills, for cross-defendant and appellant.
Olney, Levy, Kaplan, Ormes & Tenner, Magana, Olney, Levy & Cathcart and Jack Tenner, Los Angeles, for cross-complainants and respondents.
Peter Burrows, Los Angeles, amicus curiae.
McCOMB, Justice.
This is a declaratory relief action brought by Reserve Insurance Company to determine the respective rights and obligations of itself and defendants Universal Underwriters Insurance Company, Allstate Insurance Company, National Auto Leasing Corporation, Richard Metz, Elmo Metz, and Gomer Hamlin with reference to a judgment obtained by Richard and Elmo Metz against Hamlin and National for $254,593.74.
Facts: On May 21, 1965, Hamlin leased a new Lincoln Continental from National for 36 months at $140.40 per month. In accordance with the requirements of the lease agreement, Hamlin carried $100,000/$300,000 liability insurance to protect both himself and National ($10,000/$20,000 under a policy issued by Allstate and $90,000/$280,000 under a policy issued by Reserve, which latter policy stated that the insurance provided for thereunder was excess insurance). National, together with Ogner Bros. Lmtd., and Danny McGroo, Inc., was also a named insured under a policy issued by Universal with coverage limits of $250,000/$500,000. That policy described the business of the named insureds as 'Automobile Sales and Service.'
National had two policies, but the other one is not involved here. That policy was called an errors and omissions policy and provided $10,000/$20,000 coverage limits for liability imposed upon National in the event a lessee failed to procure insurance.
On June 23, 1966, while driving the Lincoln, Hamlin collided with a motorcycle, which was being operated by Richard Metz. Richard was severely injured, and he and his father recovered judgment against Hamlin and National for $254,593.74. Allstate and Reserve have paid, in partial satisfaction of the judgment, the limits of their respective policies (Allstate $10,000 and Reserve $90,000).
[106 Cal.Rptr. 781][507 P.2d 85] In this declaratory relief action filed by Reserve, defendants Metz filed a cross-complaint seeking $154,593.74, the balance of the judgment after crediting the amounts paid by Allstate and Reserve. They moved for summary judgment against Universal, and the trial court granted their motion, entering judgment in their favor for $162,749.38 ($154,593.74 plus interest).
Admittedly, the judgment should have been for no more than $154,593.74, bearing interest of 7% from December 30, 1968. The inclusion in the amount of the judgment of interest which had accrued at the time judgment was entered would make the judgment debtor liable thereafter for interest on interest if the judgment was not immediately paid.
Under the insuring agreements of Universal's policy here involved, Universal agreed to pay, within the $250,000/$500,000 coverage limits, all sums which the insured shall become legally obligated to pay as damage for bodily injury 'caused by accident and arising out of the ownership, maintenance or use of any automobile'; and coverage is provided for permissive users, as required by law. However, in the main body of the policy it is further provided: 'It is agreed that there is no automobile liability or medical payments coverage applicable to any vehicle while rented to others by the named insured, or any vehicle used for ambulance, newspaper collection or delivery, transport of explosives, liquefied gas, gas, gasoline or oil, long haul truck, haulaway, exhibition, racing, emergency vehicles, or public passenger carrying.' (Italics added.)
A 'Garage' endorsement (UU-3159) attached to the policy states that the insurance afforded applies to certain hazards, including the 'Automobile Hazard.' The latter is defined to exclude any automobile while rented to others by the named insured (with exceptions not relevant here).
Thus, it appears that by the language of both the basic policy and the garage endorsement the parties have agreed that there is no coverage for vehicles owned by a named insured while such vehicles are rented to others under lease agreements such as that entered into by National with Hamlin.
The garage endorsement makes coverage available to a permissive user, but further provides: '[T]he insurance coverage afforded hereunder to such person shall not be applicable if there is any other valid and collectible insurance applicable to the same loss covering such person as a named insured . . . under a policy with limits of liability at least equal to the requirements of the Financial Responsibility Law. In the event there is such other valid and collectible insurance, the two or more policies shall not be construed as providing cumulative or concurrent coverage and only that policy which covers the liability of such person as a named insured . . . shall apply. . . .' Section 11580.1, subdivision (f), of the Insurance Code, in effect at the time the subject policy was written, permitted such an escape clause '[w]here two or more policies are applicable to the same loss and one of such policies affords coverage to a named insured engaged in selling, repairing, servicing, delivering, testing, road testing, parking, or storing automobiles.' (Stats.1965, ch. 1968, p. 4497.)
Another endorsement (UU-3050) provides, in part, that where a person who is not insured under the policy becomes insured in accordance with the financial responsibility laws or other laws of the state in which the accident occurs, the insurance afforded by the policy for bodily injury liability or for property damage liability shall comply with the provisions of such law to the extent of the coverage and limits of liability required by such law but in no event in excess of $10,000/$20,000 and that such insurance shall be excess to any other insurance available to the insured.
In submitting the case to the trial court, Universal filed declarations that the policy was not intended to cover leased cars, that National maintained no stock of cars but purchased them after securing orders from customers, that the premium was calculated on the basis of the exclusion of leased [106 Cal.Rptr. 782] [507 P.2d 86] cars, and that the premium would have been $240 per car more if it had been intended to extend coverage to leased cars.
Questions: First. Is the purported exclusion of vehicles 'while rented to others' a valid exclusion?
No. The attempted exclusion of cars 'while rented to others' is invalid under the laws and public policy of this state, as the result would be to exclude a class of drivers using an insured vehicle with the consent of the insured. (Veh.Code, § 17150; Ins.Code, § 11580.1; Wildman v. Government Employees' Ins. Co., 48 Cal.2d 31, 39, 307 P.2d 359; see also Interinsurance Exchange v. Ohio Cal. Ins. Co., 58 Cal.2d 142, 23 Cal.Rptr. 592, 373 P.2d 640; Exchange Cas. & Surety Co. v. Scott, 56 Cal.2d 613, 622-623, 15 Cal.Rptr. 897, 364 P.2d 833; American Automobile Ins. Co. v. Republic Indemnity Co., 52 Cal.2d 507, 509-511, 341 P.2d 675.
Universal points out that an insurer is not required to insure all cars owned by a particular insured, and it urges that it has excluded coverage for leased cars while providing coverage for nonleased cars and that it had a right to do so. By the terms of the policy, however, the vehicle itself is not excluded from coverage except while rented to others; and it is clear that it was insured for any period when the lease was not in effect. Under the policy, there is an exclusion of certain vehicles, i. e., vehicles used for specified purposes, such as the transport of explosives, etc. ; but vehicles rented to others were purportedly excluded only while so rented and were not excluded altogether.
Section 11580.1, subdivision (c), of the Insurance Code, as in effect at the time the subject policy was written, required that a policy contain '[p]rovision designating by explicit description the purposes of use of such motor vehicles with respect to which coverage is not intended to be granted.' (Stats.1965, ch. 1968, p. 4496.)
Accordingly, assuming for the purpose of this discussion that National was the owner of the Lincoln, Hamlin, unless excluded by other provisions of Universal's policy, would have coverage thereunder, since there was no valid exclusion of the Lincoln from coverage, and Hamlin was driving it with National's permission.
Second. Is coverage excluded by other provisions of Universal's policy?
No. Universal contends that endorsements UU-3159 and UU-3050 limit its coverage of Hamlin as a permissive user. This contention is not relevant to Universal's liability in the present appeal. The trial court in the underlying action rendered judgment in favor of Richard and Elmo Metz and jointly against National and Hamlin for $254,593.74; the judgment is now final. Whatever Universal's liability, or lack of liability, as an insurer of Hamlin, Universal is obligated as National's insurer to pay the unsatisfied balance of the judgment against National.
The judgment is modified to provide that defendants and cross-complainants Richard William Metz, a minor, by and through his guardian ad litem, Elmo Metz, and Elmo Metz, individually, have judgment against cross-defendant Universal Underwriters Insurance Company in the amount of $154,539.74, bearing interest at the rate of 7 percent per annum from December 30, 1968; and, as so modified, it is affirmed.
TOBRINER, MOSK and BURKE, JJ., concur.
WRIGHT, C. J., and SULLIVAN, J., concur in the judgment.
Rehearing granted; CLARK, J., did not participate.
[*] See 10 Cal.3d 45 for subsequent opinion.