NO. 90-307 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1991 

MOUNTAIN WEST FARM BUREAU MUTUAL 

INSURANCE COMPANY, 

Plaintiff and Appellant, 

CREDIT GENERAL INSURANCE COMPANY, 

Defendant and Respondent. 

FEB -5 3991 

APPEAL FROM: District Court of the Fourth Judicial District, 

In and for the County of Missoula, 

The Honorable Edward McLean, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Larry E. Johnson; James, Gray & McCafferty, Great 

Falls, Montana 

For Respondent: 

Ronald B. MacDonald; Datsopoulos, MacDonald & Lind, 

Missoula, Montana 

Submitted on Briefs: December 13, 1990 

Decided: February 5, 1991 

Filed: 
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Justice Diane G. Barz delivered the Opinion of the Court. 

This is an action for contribution. Mountain West Farm Bureau 

Mutual Insurance Company (Farm Bureau) appeals from an order of 

the District Court for the Fourth Judicial District, Missoula 

County, granting judgment on the pleadings to Credit General 

Insurance Company (Credit General). We affirm. 

The issue is whether the District Court erred in ruling that 

the Farm Bureau insurance policy provided primary coverage and that 

the Credit General policy provided only excess coverage. 

On September 16, 1988, a fire destroyed a residence owned by 

Gerald Richie in Ravalli County, Montana. Richie had purchased a 

policy of property and liability insurance from Farm Bureau for 

that property. Citizen's State Bank (the bank) had a security 

interest in the Richie property. The bank carried insurance with 

Credit General to protect its interest in the Richie property and 

in other properties in which it retained an interest. 

In a bankruptcy proceeding, Farm Bureau petitioned for a 

determination of insurance coverage between itself and Credit 

General. The parties stipulated that Farm Bureau would pay 

$127,500, the policy limit on the residence, to the bank. Farm 

Bureau then brought this separate action to obtain contribution 

from Credit General. 

Both the Farm Bureau and the Credit General insurance policies 

contained ''other insurance1' clauses. The Farm Bureau policy 

purchased by Richie provided 

If you are carrying other insurance on the property to 

which this policy applies, the coverage under this policy 
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is null and void. We may permit other insurance, 

however, by endorsement to this policy. If other 

insurance is permitted, we will not be liable for a 

greater portion of any loss than our pro rata share in 

excess of any deductible. 

The Credit General policy purchased by the bank provided 

If there is any other valid and collectible insurance 

which would attach if the insurance provided under this 

policy had not been affected, this insurance shall apply 

only as excess and in no event as contributing insurance, 

and then only after all other insurance has been 

exhausted. 

The District Court concluded that the Credit General policy 

provided excess coverage which did not constitute "other insuranceI1 

within the meaning of the Farm Bureau policy. It therefore granted 

Credit General judgment on the pleadings. 

In deciding this case, the District Court cited Mountain 

States Mut. Cas. Co. v. American Casualty Co. (1959), 135 Mont. 

475, 342 P.2d 748. That case involved an accident in which a 

borrowed truck was at fault. The two insurance companies which 

were potentially liable were the insurer of the truck and the 

insurer of the borrower/driver of the truck. The lower court prorated liability between the two insurers. On appeal, this Court 

stated that 

[A] non-ownership clause with an excess coverage 

provision does not constitute other valid and collectible 

insurance, within the meaning of a primary policy with 

an omnibus clause. 

Mountain States, Under this Court I s ruling , the 

company that insured the truck bore full liability for damages. 

Farm Bureau argues that application of the above rule to this 

case is error. It asserts that unlike Mountain States, this case 

involves two llnon-ownershipll insurance clauses. Farm Bureau argues 
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that its policy contains a llunion-typell loss payable endorsement 

which constituted an independent insurance policy between itself 

and the bank, not dependent on the rights of Richie. It asserts 

that both its policy and the Credit General policy insured the same 

property, the same interest in the property, and the same risks 

payable to the same party: the bank. It urges that liability be 

prorated between the two carriers based on the limits of both 

insurance policies, as is done where two applicable policies have 

the same type of "other insurancel1 clauses. See Bill Atkin 

Volkswagen, Inc. v. McClafferty (1984), 213 Mont. 99, 689 P.2d 

1237; Glacier Gen. Assur. Co. v. State Farm Mut. Auto. Ins. Co. 

(1968), 150 Mont. 452, 436 P.2d 533. 

In this case, however, the two insurance policies do not have 

the same type of "other insuranceI1 clauses. The "other insurancel1 

clause in the credit General policy is an excess clause. The Farm 

Bureau policy contains a pro-rata clause. In a majority of 

jurisdictions, such conflicts between two insurance policies 

covering the same interest are resolved as follows: 

in [a conflict between a policy with a provision that it 

will only provide excess coverage over that available 

from other policies and one which specifies that it will 

share coverage with other policies 1, the terms of the 

excess clause prevail over the terms of the pro-rata 

clause. As explained by many of the courts adopting this 

view, the policy containing the excess clause does not 

purport to cover the event until other insurance covering 

the event has been exhausted, so that there is no 

"~ollectible~~ insurance with which the loss can be shared 

by the insurance policy containing the pro-rata clause. 

Thus, the policy containing the pro-rata clause is the 

primary insurance on the event, and this policy must be 

exhausted before the excess policy is required to 

contribute anything. 

Annotation, vlResolution of conflicts, in non-automobile liability 
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insurance policies, between excess or pro-rata 'other insurance' 

 clause^,'^ 12 ALR 4th 993, 997 (1982). The majority rule contains 

no limitation concerning whether the insurance policies are 

ownership or non-ownership policies. 

We conclude that in this instance it is immaterial whether 

both insurance policy clauses are non-ownership clauses. The 

majority rule is consistent with Mountain States and does not 

conflict with the Montana cases cited by Farm Bureau. We agree 

with the rationale behind the majority rule and hereby adopt that 

rule in Montana. We therefore hold that the District Court did not 

err in deciding that the excess provision in the Credit General 

policy controls and that the Farm Bureau policy provides primary 

coverage. We further hold that the District Court did not err in 

granting Credit General's motion for judgment on the pleadings. 

Affirmed.