Case Title: Dukeman v. Hardware Mutual Casualty Company

Citation: 174 N.W.2d 237

Docket Number: 

State: minnesota

Court: Minnesota Supreme Court

Date: 1970-02-06T00:00:00Z

Document:
174 N.W.2d 237 (1970) Delores DUKEMAN, Respondent, v. HARDWARE MUTUAL CASUALTY COMPANY, Appellant, Aetna Casualty and Surety Company, Respondent, Francis C. Kichler, Sr., Respondent. No. 41649. Supreme Court of Minnesota. February 6, 1970. Kain & Kressel, Minneapolis, for appellant. Miller & Neary, Minneapolis, for Delores Dukeman. Murnane, Murnane, Battis, deLambert & Conlin, St. Paul, for Aetna Cas. & Sur. Co. *238 Robins, Davis & Lyons, St. Paul, for Francis C. Kichler, Sr. Heard before KNUTSON, C. J., and NELSON, MURPHY, PETERSON, and GRAFF, JJ. MURPHY, Justice. This is an appeal from a declaratory judgment in an action brought to determine the respective liabilities of two automobile insurance companies whose policies expose them to overlapping coverage of an accident-involved automobile. From the record it appears that plaintiff, Delores Dukeman, was insured by defendant Aetna Casualty and Surety Company on or about February 26, 1963. Its policy covered a 1954 Chevrolet and a 1962 Chrysler. The policy was in effect on October 13, 1964, when plaintiff and her husband purchased a new automobile from Bernard's Super Service, Inc., a dealership in New Richmond, Wisconsin. As a part of the purchase agreement, plaintiff immediately traded in the 1962 Chrysler, even though the new car was not to be delivered for approximately 6 to 8 weeks. To accommodate plaintiff, the seller furnished a loaner automobile for her convenience. No restrictions were placed on its use. Plaintiff and her husband informed the Aetna agent, one Clifford R. Thomas, of this transaction, and while there is a conflict in the evidence, the court could find as a fact that the 1962 Chrysler was deleted from the Aetna policy and plaintiff was given an oral binder by the agent, the effect of which was to provide the same coverage on the borrowed car as she had on the Chrysler which was traded in. On October 26, 1964, plaintiff was involved in an accident with one Francis Kichler while driving the borrowed car. As a result, Kichler brought an action for damages in the claimed amount of $110,000 against plaintiff in the District Court of Ramsey County, alleging personal injury arising out of the negligent operation of the loaned vehicle by plaintiff. In a letter dated November 11, 1965, Aetna acknowledged coverage of plaintiff up to the $100,000 figure stipulated in the policy and cautioned her to consider retaining counsel to represent the additional $10,000 sought in the action. At a later date Aetna denied coverage. Defendant Hardware Mutual Casualty Company, insurer for Bernard's Super Service, Inc., also denied coverage. As a result, plaintiff brought this action to compel one or both of defendant insurance companies to provide coverage and to supply counsel. The relevant portions of the Aetna policy are as follows: Similar provisions of the Hardware Mutual policy state: The pertinent findings of the trial court are: Defendant-appellant Hardware Mutual contends that the trial court erred in its determination that, as between the two companies, its policy affords the primary coverage to plaintiff, and the policy of defendant Aetna affords the secondary coverage under the excess liability clause of its policy. Hardware Mutual submits that both defendants ought to be deemed to afford concurrent coverages to plaintiff and that they should bear any loss suffered by plaintiff, distributed ratably between them according to the limits of coverage. The trial court felt that his decision was controlled by our holding in Federal Ins. Co. v. Prestemon, 278 Minn. 218, 153 N.W.2d 429. That case also involved a garage-owned automobile loaned to a customer whose personally-owned automobile was being repaired. We noted in that case the difficulty in determining the extent of liability created by policy provisions designed to escape liability where there is overlapping coverage. We there held that, in construing the two automobile liability policies issued by separate insurers, both of which purport to restrict or escape liability for a particular risk in the event there is other insurance, the rule generally followed is that, where one of the policies contains an "excess insurance" clause and the other contains a "no liability" clause, liability is imposed upon the latter, the reason being that the "excess insurance" policy does not in fact provide other valid and collectible insurance as far as the "no liability" clause of the other policy is concerned. We are of the view that there are two significant distinctions between Federal Ins. Co. v. Prestemon, supra, and the case before us, which require a different result. Unlike the Prestemon case, we have in the case before us two policies, each providing primary coverage, and each providing for ratable distribution of loss. *241 Our determination that Aetna provided primary coverage to the loaned automobile follows from the trial court's finding that the accident-involved automobile was insured by an oral binder given by an authorized agent of Aetna. The determination of primary coverage eliminates from the provisions of the Aetna policy the category of the "non-owned automobile" or the "temporary substitute automobile" referred to in the escape clauses of the contract. The finding of the trial court that an oral binder was provided to plaintiff was not challenged in the court below. Since it is not contended that the agent's undertaking was outside the scope of his authority, the finding of the trial court must be sustained. Koivisto v. Bankers & Merchants Fire Ins. Co., 148 Minn. 255, 181 N.W. 580; 17 Minn.L.Rev. 572; Nehring v. Bast, 258 Minn. 193, 103 N.W.2d 368, 85 A.L.R.2d 1400. We conclude that, since the loaned automobile was specifically covered by Aetna's binder, primary coverage exists. The second significant distinction between this case and Prestemon is that here both the Aetna and Hardware Mutual policies provide by identical language that where overlapping coverage exists, liability should be shared ratably by the insurers. In this connection, the policies recite: Under such circumstances each insurer must pay its share of the damages and defense expenditures in proportion to the limits of the respective policies. 7 Am. Jur.2d Automobile Insurance, § 200; Woodrich Const. Co. v. Indemnity Ins. Co., 252 Minn. 86, 89 N.W.2d 412; Celina Mutual Cas. Co. v. Citizens Cas. Co., 194 Md. 236, 71 A.2d 20, 21 A.L.R.2d 605. We accordingly conclude that the respective policies provide concurrent coverage and remand the case to the district court with direction to amend the conclusions of law and order for judgment to conform with the views herein expressed. Reversed and remanded with directions.