No. 14267 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1978 

TRUCK INSURANCE EXCHANGE, a 

reciprocal or inter-insurance 

exchange, 

Plaintiff and Appellant, 

TRANSPORT INDEMNITY COMPANY, 

a corporation, 

Defendant and Respondent. 

Appeal from: District Court of the Third Judicial District, 

Honorable Robert J. Boyd, Judge presiding. 

Counsel of Record: 

For Appellant: 

Worden, Thane and Haines, Missoula, Montana 

Ronald Bender argued, Missoula, Montana 

For Respondent : 

Gough, Shanahan, Johnson and Waterman, Helena, 

Montana 

Daniel Murphy argued, Helena, Montana 

Filed: Ff-F. 2 ; jFG 

Submitted: December 19, 1978 

Decided : FEB 2 1 1979 

erk 
Mr. Chief Justice Frank I. Haswell delivered the opinion of 

the Court. 

Plaintiff appeals from an amended judgment of the powell 

County District Court granting summary judgment in favor of defendant on the question of liability for insurance coverage and 

rights of indemnification. 

This is a controversy between two insurance companies as 

to which is obliged to provide coverage and defend against property damages and personal injuries arising out of an accident 

that occurred on January 24, 1976, on the Racetrack overpass 

near Galen, Montana. That accident involved a semitractor and 

trailer and a passenger car. The tractor on the semi belonged 

to Forest Products International, Inc. (FPI, an Oregon based 

contract hauler, and was being driven by one Michael Wirkkala, 

an employee and major stockholder of FPI. The trailer on the rig 

belonged to International Transport, Inc. (ITI), a Minnesota 

corporation which is an authorized carrier licensed by the Interstate Commerce Commission (I.C.C.). 

At the time of the accident, appellant Truck Insurance 

Exchange had an insurance policy in effect with FPI and with 

Michael Wirkkala individually, and respondent Transport Indemnity Co. had a policy in effect covering ITI. The dispute arises 

over conflicting provisions in the two policies as affected by 

certain I.C.C. regulations and the terms of a "haulers contract" 

entered into between FPI and ITI. 

On January 23, 1976, FPI and IT1 executed a "Single Trip 

or Exempt Haulers Contract" whereby IT1 (the carrier) retained 

the services of FPI (the hauler, Michael Wirkkala owner-operator) 

to transport an ITI-owned trailer from Oregon to Minnesota. ITI, 

as a licensed carrier, is subject to regulations promulgated by 

the I.C.C. FPI, as a hauler only and not a certified carrier, 

does not have to meet the same I.C.C. requirements. 
Among the terms of the hauler's contract were numerous 

provisions which the I.C.C. requires licensed carriers to include 

in such agreements. One of those provisions appears in the contract as paragraph 6 and reads: 

"During the existence of this contract, the Carrier 

[ITI] assumes liability for bodily injuries to or 

the death of any person (except the Hauler, or the 

employees, agents or servants of the Hauler) or for 

the loss or damages to the property of others 

(except the Hauler, or the employees, agents or 

servants of the Hauler) resulting from the negligent operation, maintenance or use of the vehicles 

described in appendix A hereof . . ." 

Both the tractor owned by FPI and Michael Wirkkala, and the 

trailer owned by IT1 were described in appendix A of the contract. 

An insurance company that enters into a policy of insurance with a licensed carrier is required by federal statute and 

regulation to file with the I.C.C. a certificate of insurance conditioned to pay up to specified limits any claims against its 

insured carrier arising out of negligent operation of motor vehicles under the carrier's operating permit. Respondent Transport 

Indemnity Co., ITI's insurer, had filed such a certificate of 

coverage for IT1 here. 

As a result of the accident on January 24, 1976, various 

parties have filed personal injury and property damage suits 

naming FPI and IT1 as defendants. On April 20, 1977, appellant 

Truck Insurance Exchange (FPI's insurer) filed a declaratory judgment action in Powell County District Court seeking a declaration 

that respondent Transport Indemnity Company (ITI's insurer) was 

obligated to FPI by reason of the assumption of liability clause 

in the hauler's contract to provide coverage for and defend against 

any claims asserted against FPI. 

On June 8, 1977, respondent Transport Indemnity Co. (ITI's 

insurer) filed an answer denying responsibility for providing 

coverage for or assuming the defense of the damages arising out 

of the accident and counterclaiming that all said damages were a 
consequence of the negligence of FPI and that therefore appellant Truck Insurance Exchange, as FPI'S insurer, was responsible for them. The counterclaim cited several provisions from 

the insurance policy issued to FPI by Truck Insurance ~xchange 

to support that conclusion. The cited provisions included the 

coverage clauses whereby Truck Insurance Exchange bound itself 

to pay all damages FPI became legally obligated for because of 

bodily injury or property damage arising out of the ownership, 

maintenance, or use of the vehicle to which the insurance applied, 

and the clause giving Truck Insurance Exchange the right and 

duty to defend any suit against FPI on account of such bodily 

injury or property damage. The counterclaim also cited language 

from the Truck Insurance Exchange policy issued to FPI that the 

insurance afforded by it was primary insurance, and contrasted 

that to language in the Transport Indemnity Co. policy issued to 

IT1 that if at the time of an occm-mce to which the Transport 

Indemnity Co. insurance applied there was in effect any other 

valid and collectible insurance applicable to the same occurrence, 

then counterclaimant Transport Indemnity's insurance was excess 

insurance only. 

As originally framed, the counterclaim included an allegation that certain language in the insurance policy issued to 

FPI by Truck Insurance Exchange also extended coverage to ITI, 

Transport Indemnity Cots named insured, and that therefore the 

policy issued to IT1 by Transport Indemnity Co. was only excess 

insurance giving use to no primary duty or liability on the part 

of Transport Indemnity Co. On appeal, the claim that IT1 is an 

included insured is abandoned and it is apparently conceded that 

IT1 is not covered by the Truck Insurance Exchange policy because 

of a specific exclusion therein. (The effect of the excess coverage clause on the issue of which insurer is liable for primary 

coverage, however, is still contested.) 
The significant underlying theory of the counterclaim 

for purposes of this appeal is that ultimate responsibility for 

the accident lay in the negligence of Michael Wirkkala; that 

the Truck Insurance Exchange policy is the only policy specifically extending coverage to him; and that therefore Truck Insurance Exchange is obligated to defend IT1 against any claims 

asserted against it from the accident and indemnify Transport 

Indemnity Co. for any settlements or other liabilities paid on 

behalf of IT1 by Transport Indemnity Co. under its policy with 

Truck Insurance Exchange filed its reply to the counterclaim on July 14, 1977, admitting that the language cited in the 

counterclaim was included in the policy issued to FPI by Truck 

Insurance Exchange but alleging that other language in the policy 

precluded the conclusion that Truck Insurance Exchange was liable 

for primary coverage. The reply did not specify what other language Truck Insurance Exchange relied on. 

Subsequent to the filing of the original pleadings, an 

error in the naming of the plaintiff became apparent and amended 

pleadings were filed. The amended pleadings are substantially 

identical to the originals except for the change in name. 

After a period of discovery, both sides moved for summary 

judgment and submitted briefs in support of their motions. The 

brief of Truck Insurance Exchange specified the language from the 

policy issued by Transport Indemnity Co. on which Truck Insurance 

Exchange based its allegation that the Transport Indemnity Co. 

policy should be liable for coverage. The language cited emphasizes that an "insured" under the Transport Indemnity Co. policy 

includes the named insured and "any other person, firm or organization to whom insurance protection has been extended under the 

policy or made so by any provision of law". Language from each 

of the coverage clauses to the effect that Transport Indemnity 
Co. will pay all sums for which "the insured shall become 

legally obligated, by contract or otherwise . . . arising out 

of the occupation of the named insured" was also emphasized. 

By tying this language to the previously mentioned assumption 

of liabilities clause in the hauler's contract and the federal 

statutes under which the I.C.C. had issued the regulations 

requiring such clauses, the Truck Insurance Exchange brief concluded that coverage under the Transport Indemnity Co. policy 

insuring ITI, an I.C.C. regulated carrier, was extended thereby 

to the damages at issue by operation of law and by contract within the meaning of the policy. 

On January 19, 1978, the District Court entered an order 

granting summary judgment to Transport Indemnity Co., insurer of 

ITI, the licensed carrier. The court based its decision on the 

United States Supreme Court case of Transamerican Freight Lines, 

Inc. v. Brada Miller Freight Systems, Inc. (1975), 423 U.S. 28, 

96 S.Ct. 229, 46 L Ed 2d 169, which held under circumstances 

similar to those here that the party responsible in law (here, 

under the I.C.C. regulations, ITI, insured by Transport Indemnity Co.) may seek indemnity from the party responsible in fact 

(here, FPI and Michael Wirkkala, insured by Truck Insurance Exchange) . 

A petition for rehearing was subsequently filed by Truck 

Insurance Exchange, alleging that the case relied on was distinguishable and that under the provisions of the policies and 

all the circumstances present here Michael Wirkkala was an included insured under the Transport Indemnity Co. policy against 

whom Transport Indemnity had no claims for the reason that there 

is no subrogation or indemnification by an insurer against its 

own insured. The petition for rehearing was denied, and judgment was entered for Transport Indemnity Co. on February 9, 1978. 

The judgment ordered that Truck Insurance Exchange "is obligated 
by its policy to defend and indemnify IT1 for any settlements, 

judgments, attorney fees and expenses incurred in connection 

with the civil actions instituted as a result of the accident 

of January 24, 1976." An amended judgment filed February 27, 

1978, corrected the judgment to reflect that Truck Insurance 

Exchange's liability was only to the extent of its policy limits. 

From that amended judgment, Truck Insurance Exchange has brought 

this appeal. 

The issues we find controlling, together with the determinative arguments and authorities, are as follows: 

Issue I. Did the District Court err in relying on Transamerican Freight Lines Inc. v. Brada Miller Freight Systems, Inc. 

(1975), 423 U.S. 28, 96 S.Ct. 229, 46 L Ed 2d 169, as authority 

for its order of summary judgment on the circumstances present 

here? We conclude that it did. 

While the Brada decision involved the same federal statutes 

and regulations as here with respect to motor carriers' use under 

leases of motor vehicles not owned by them, 49 U.S.C. §304(e), 

49 C.F.R. §1057.4(a)(4), a close reading of the case indicates 

it is not controlling. It is true that in Brada the court said: 

"Although one party is required by law to have control and responsibility for conditions of the vehicle, and to bear the consequences of any negligence", (referring to I.C.C. licensed carriers, 

and the duties imposed on them by the federal statutes and regulations), "the party responsible in law to the injured or damaged 

person may seek indemnity from the party responsible in fact." 

Brada, 423 U.S. at 40, 96 S.Ct. at 235, 46 L Ed 2d at 179. However, distinguishing facts and other language in the opinion 

limiting its scope do not permit the broad conclusion Brada was 

cited for here that any I.C.C. carrier can ignore its statutory 

assumption of liability and seek indemnity from the negligent 

party anytime. 
In Brada both parties were authorized carriers. Transamerican apparently had more business than its equipment could 

handle, while Brada had some spare equipment. Transamerican 

therefore leased a rig from Brada, to be operated by a Brada 

driver but over Transamerican's roubes and under Transamerican's 

operating authority. The lease, as required by the I.C.C. regulations, recited that Transamerican, the certified carrier, had 

responsibility for the operation of the equipment "in respect to 

the public, shippers, and I.C.C." In addition, the lease contained a separate paragraph in which Brada, the lessor, specifically agreed to indemnify Transamerican for any claims or losses 

arising out of negligent operation of the vehicle by the Brada 

driver. The narrow question before the Court was whether the indemnification agreement was void and ineffective as contrary to 

the public policy behind the I.C.C. regulations (that licensed 

carriers would be responsible in fact, as well as in law, for the 

actions of borrowed drivers). The Court pointed out that: "The 

regulations do not expressly prohibit an indemnification agreement between the lessor and the lessee. In fact they neither 

sanction nor forbid it." Brada, 423 U.S. at 39-40, 96 S.Ct. at 

235, 46 L Ed 2d at 178. The Court concluded: "We hold only that 

the presence in an equipment lease of an indemnification clause 

directed to the lessor's negligence is not in conflict with the 

safety concerns of the Commission or with the regulations it has 

promulgated." Brada, 423 U.S. at 41, 96 S.Ct. at 236, 46 L Ed 2d 

at 179. 

Thus, reliance on Brada as authority here was inappropriate. 

Here, there was no specific undertaking in the lease by the lessor 

to indemnify the lessee authorized carrier. To cite Brada as 

blanket authority for indemnification in the absence of such a 

specific agreement is to circumvent the I.C.C. regulations placing 
primary responsibility on the carrier. 

Issue 11. Does the Transport Indemnity Co. policy include Michael Wirkkala as an insured so that no rights of indemnity or subrogation can arise in favor of Transport Indemnity Co.? We hold that it does. 

There is no right of subrogation in favor of an insurance company against its own insured. Home Insurance Co. v. 

Pinski Brothers, Inc. (1972), 160 Mont. 219, 500 P.2d 945. This 

is true both as to the named insured and as to any party to whom 

coverage is extended under the terms of the policy; an additional 

insured is entitled to the same protection as the named insured. 

Cf. American Surety Company of N.Y. v. Canal Ins. Co. (4th Cir. 

1958), 258 F.2d 934. 

Respondent Transport Indemnity Co.'s brief concedes that 

the terms of the additional insured endorsement in the policy it 

issued to IT1 extend coverage to FPI. Respondent is adamant, 

however, that the endorsement does not extend coverage to Michael 

Wirkkala. Therefore, respondent argues, Transport Indemnity Co. 

is not barred from indemnification by Wirkkala by the rule that 

an insurer cannot seek indemnity from its own insured. 

Respondent's argument that the endorsement does not extend coverage to Wirkkala is based on an erroneous premise. The 

pertinent language in the endorsement is: 

"It is hereby understood and agreed that the 

insurance . . . is extended to any person or 

organization (hereinafter called CONTRACTOR) 

as an additional INSURED but only with respect to the ownership, operation, maintenance 

or use of AUTOMOBILES whether owned or nonowned by CONTRACTOR which are contracted to the 

NAMED INSURED under a written supplemental lease 

or contract subject to all terms and conditions 

of the policy to which this endorsement is 

attached . . .." 

Transport Indemnity Co. argues that by this endorsement the coverage of their policy is extended only to persons or organizations 

who contract with the named insured (ITI) for the lease of motor 
vehicles. Thus, respondent argues, since the lease contract 

was only between IT1 and FPI and not between IT1 and Wirkkala, 

coverage is not extended to Wirkkala. 

This conclusion improperly construes the language of the 

endorsement. The endorsement does not refer to "persons or 

organizations contracting with the named insured" (as Transport 

Indemnity argues). Rather, it refers to "automobiles . . . contracted to the named insured" (Emphasis added.), and extends 

coverage to "any person or organization . . . with respect to 

the ownership, operation, maintenance or use" of the contracted 

automobiles. The proper interpretation of that language clearly 

extends coverage to both FPI and Wirkkala regardless of whose 

name appears on the contract leasing the vehicle to ITI. This 

conclusion is buttressed by the fact that Transport Indemnity 

Co.'s interpretation of the endorsement would render it substantially meaningless in that FPI, the contracting party, could 

never itself "operate, maintain, or use" the vehicle, but could 

do so only through its agents or employees who would never ordinarily be direct parties to the contract. We conclude, therefore, that the Transport Indemnity Co. policy does run to Michael 

Wirkkala by its own terms under the additional insured endorsement and that respondent is barred from seeking indemnification 

from him. 

Issue 111. Do federal statutes and regulations automatically impose responsibility for primary coverage on the insurer 

of the I.C.C. carrier as a matter of law? We find that they do 

not. 

49 U.S.C. S315 and 49 C.R.F. §1043.l(a) provide that no 

I.C.C. certificate or permit shall be issued to a motor carrier 

unless it has filed with the I.C.C. proof that the carrier is 

insured against any liabilities arising out of operations under 

its certificate or permit. In this case, Transport Indemnity Co., 
ITI's insurer, filed with the I.C.C. and attached to the policy 

issued to IT1 the following certificate of endorsement (in 

pertinent part) : 

"In consideration of the premium stated in the 

policy to which this endorsement is attached, 

the Company hereby agrees to pay, within the 

limits of liability hereinafter provided, any 

final judgment recovered against the insured for 

bodily injury to or death of any person, or loss 

of or damage to property of others . . . resulting from negligence in the operation, maintenance, 

or use of motor vehicles under certificate of public convenience and necessity or permit issued to 

the insured by the Interstate Commerce Commission . . . 

"Within the limits of liability . . . it is further 

understood and agreed that no condition, provision, 

stipulation, or limitation contained in the policy . . . shall relieve the Company from liability hereunder . . .." 

Truck Insurance Exchange has taken the position throughout this 

case that because Transport Indemnity Co. filed the above quoted 

endorsement, as required by the federal statutes and regulations, 

it is liable for primary coverage as a matter of law. Transport 

Indemnity Co. counters that the federal statutes and regulations 

are not determinative and do not absolve Truck Insurance Exchange 

of the contractual responsibility to provide primary coverage 

for FPI and Michael Wirkkala under the policy it issued to them. 

There is a plethora of case law involving disputes between insurers (on facts similar to those involved here) as to 

what effect the I.C.C. regulations have on coverage and rights 

of subrogation and indemnity. The authority is mainly from 

federal court decisions. 

Many cases stand for the proposition that the I.C.C. 

encorsement does impose primary liability as a matter of law on 

the insurer of the licensed carrier under whose permit a vehicle 

is in use at the time of an accident. Cf. Argonaut Insurance 

Co. v. National Indemnity Co. (10th Cir. 1971), 435 F.2d 718; 

Hagans v. Glen Falls Insurance Co. (10th Cir. 1972), 465 F.2d 
1249; Ryder Truck Lines v. Carolina Cas. Ins. Co. (Ind-App. 1978), 

372 N.E.2d 504; Allstate Insurance Co. v. Federal Insurance Co. 

Conversely, there are also numerous cases that reject 

the notion that the I.C.C. regulations are determinative. Cf. 

Allstate Insurance Co. v. Liberty Mutual Insurance Co. (3rd Cir. 

1966), 368 F.2d 121; Wellman v. Liberty Mutual Insurance Company 

(8th Cir. 1974), 496 F.2d 131; Vance Trucking Company v. Canal 

Insurance Company (D.S.C. 1966) 249 F.Supp. 33, aff'd (4th Cir. 

1968), 395 F.2d 391, Cert. denied, 393 U.S. 845, 89 S.Ct. 129, 21 

L Ed 2d 116 (holding that I.C.C. regulations are not designed to 

excuse a party from liability he might otherwise have). 

The most recent decision in the area, and one of the best 

reasoned, is also one that closely parallels many of the facts 

present here. Carolina Cas. Ins. Co. v. Underwriters Ins. Co. 

(5th Cir. 1978), 569 F.2d 304. 

In Carolina Cas. the court held: 

" . . . the endorsement does not make (the insurer 

of the licensed carrier) the primary insurer as a 

matter of law . . . I.C.C. policy factors are 

frequently determinative where protection of a 

member of the public or a shipper is at stake, but 

those factors cannot be invoked by another insurance company which has contracted to insure a 

specific risk and which needs no equivalent protection." 569 F.2d at 313. 

We find that reasoning persuasive and adopt it as controlling. 

Issue IV. Should one of the insurers here be responsible 

for primary coverage and the other for excess or should coverage 

be prorated between them? We conclude that coverage should be 

prorated. 

To this point, two things have been determined: 

(a) Michael Wirkkala is insured under both policies 

involved here (as an additional insured under the additional insured endorsement in the Transport Indemnity Co. policy, and as 

a named insured under the Truck Insurance Exchange policy). Thus, 
Transport Indemnity Co. is not entitled to indemnification 

from Michael Wirkkala and cannot shift primary liability to 

Truck Insurance Exchange on that ground. 

(b) There is a fairly even split of authority on whether 

I.C.C. regulations automatically impose primary coverage on the 

insurer of the certified carrier as a matter of law. The line 

of reasoning we find persuasive holds that they do not. Thus, 

Truck Insurance Exchange cannot shift primary liability to Transport Indemnity Co. on that ground. 

The upshot is that both insurance companies have legitimate arguments that the other should be primarily responsible. 

Truck Insurance Exchange argues that by reason of the 

terms of the lease contract between IT1 and FPI, where in paragraph 6 IT1 assumes liability for negligent operation of the 

vehicles, Truck Indemnity Co. as ITI's insurer is absolutely 

liable for primary coverage. Truck Indemnity Co. replies that 

it is not a party to and therefore not bound by the terms of that 

contract. "It is well settled that disputes of this sort hinge 

principally on the express terms of the policy and an insurer's 

contractual obligations cannot ordinarily be altered by collateral agreements between its insured and third persons." Carolina 

- Cas., 569 F.2d 313. 

The express terms of the Transport Indemnity Co. policy 

state that if at the time of an occurrence to which the insurance 

applies there is in effect other insurance applicable to the same 

occurrence, then Transport Indemnity's policy provides excess 

coverage only. The express terms of the Truck Insurance Exchange 

policy, on the other hand, state that where other insurance is 

applicable, the amount of Truck Insurance Exchange's liability 

shall not be reduced by the existence of such other insurance. 

Thus, Truck Insurance Exchange provides primary coverage. 
"However, it is equally well settled that a court 

can look to outside sources--such as lease agreements and I.C.C. 

regulations--to define the status of persons who are covered 

by the insurance contract." Carolina Cas., 569 ~.2d at 314. 

In addition to the assumption of liability by Transport Indemnity's insured in the hauler's contract, the I.C.C. endorsement 

attached to the Transport Indemnity Co. policy specifies that 

"no condition, provision, stipulation or limitation contained 

in the policy shall relieve the Company from liability hereunder." 

Thus, the excess coverage clause, at least up to the limits of 

liability specified in the I.C.C. endorsement, is negated and 

ineffective to relieve Transport Indemnity Co. from primary 

coverage. 

Taking into consideration all of the above factors, we 

conclude that both insurers have obligated themselves to provide 

primary coverage. Coverage should be prorated between them in 

accordance with the limits of liability applicable in each policy. 

In conclusion, we note that although Truck Insurance Exchange itself moved for summary in the District Court, on appeal 

it argues that summary judgment is improper because genuine issues 

of fact exist as to Michael Wirkkala's negligence. Transport 

Indemnity Co. replies that Truck Insurance Exchange proceeded in 

the District Court as if no genuine issues of fact were present 

and cannot now be heard to argue that summary judgment is precluded. 

Having determined that neither party is entitled to summary judgment against the other because both provide primary coverage, we 

have rendered this issue moot. 

The order of the District Court granting summary judgment 

in favor of Transport Indemnity Co. is vacated. The cause is 

remanded with instructions to enter a declaratory judgment: 

(a) That Transport Indemnity Co. provides primary coverage 

to ITI, FPI, and ~ichael Wirkkala and Truck Insurance Exchange 
provides primary coverage to FPI and Michael Wirkkala; 

(b) That if Michael Wirkkala was the negligent party, 

then coverage for any settlements or judgments should be prorated between Truck Insurance Exchange and Transport Indemnity 

Co. based upon the applicable policy limits in each policy; 

(c) That if the insurers contest the negligence of 

their insureds, then the contestant or contestants are obligated 

to defend their insureds against the claims pending in the 

District Court, each insurer to be responsible for its own attorney fees and costs and any judgments returned against its insureds. 

Reversed and remanded. 

Chief Justice 

We concur?