Title: TRANSAMERICA INS CO v GLACIER GE
Citation: N/A
Docket Number: 12353
State: Montana
Issuer: Montana Supreme Court
Date: January 4, 1974

No. 12353 I N T H E SUPREME C O U R T O F THE STATE O F MONTANA 1973 TRANSkMERICA INSURANCE C O M P A N Y a corporation, P l a i n t i f f and Respondent, GLACIER G E N E R A L ASSURANCE C O M P A N Y et a l . , Defendants and Appellants. Appeal from: D i s t r i c t Court of t h e Fourth J u d i c i a l D i s t r i c t , Honorable Jack L. Green, Judge presiding. Counsel of Record : For Appellants : Mulroney , Delaney and Dalby , Missoula , Montana Stephen H. Dalby argued, Missoula, Montana For Respondent : Worden, Thane, Haines and Williams, Missoula, Montana Shelton C. Williams argued, Missoula, Montana Submitted : December 3 , 1973 Decided: 3 4 1974 Filed : 3 B 7 4 4 "?74 M r . Justice Wesley Castles delivered the Opinion of the Court. This i s an appeal from a judgment for plaintiff entered by the d i s t r i c t court, Missoula County, Honorable Jack L. Green presiding without a jury. The action was t o establish l i a b i l i t y for claims jointly paid by plaintiff Transamerica Insurance Company and defendant Glacier General Assurance Company pending determina- tion of t h e i r respective l i a b i l i t i e s . This action arose out of an accident which occurred on August 6, 1968, when a truck owned by Bob & Ray's Car and Truck Sales rented t o T o m Wickes and driven by Robert Barbe, an employee of Wickes, collided with another vehicle causing two deaths. A n action was commenced against Wickes, Barbe, and Bob & Ray's as a result of the accident. Transamerica, a s insurance c a r r i e r for Wickes and Barbe, and Glacier, as insurance c a r r i e r for Bob & ~ a y ' s , thought it mutually desirable t o compromise t h i s action for $50,000 with each insurance carrier contributing $25,000. A written reservation of rights was entered into under which each insurance company reserved the right t o bring an action t o determine i t s respective rights a s t o the other c a r r i e r , subse- quent t o settlement. This action i s founded on that reservation of rights. The record indicates Robert Peterson was general agent for Glacier and a s such was authorized to write auto casualty and l i a b i l i t y insurance. This authority extended t o accepting applica- tions and proposals for insurance on behalf of Glacier and t o binding coverage on behalf of Glacier. Peterson was also actively engaged i n the business of renting trucks under the name of Bob & Ray's Car and Truck Sales. The insurance agency and the vehicle rental business were conducted out of the same office and were a part of the same corporate entity. Bob & Ray's entered into an agreement whereby Glacier would insure the vehicles rented by them, with Peterson writing the insurance. Under the terms of this policy a copy of the rental agree- ment and a premium of $1.50 per day for each day the vehicle was rented was to be forwarded to Glacier. This policy extended coverage to the named insured, Bob & ~ay's, and to anyone using the insured vehicle with the permission of the named insured. This provision goes on to expressly exclude coverage of anyone other than the named insured with respect to any accident arising I I out of the operation of an automobile sales agency, repair shop, service station, storage garage or public parking place". The rental agreement signed by Wickes and which the Glacier policy required to be forwarded to it with the remittance provided in part: "INSURANCE COVERAGE "Renter is liable for the first $100.00 Collision damage only. Any & all liability will be carried and covered by Bob & Ray's Car & Truck Sales unless otherwise stated below. I I There is no insurance provided on cargo by Bob & ~ay's Car & Truck Sales. This must be carried by Renter if desired." At the time Wickes rented the truck he asked if it was covered by insurance and Peterson replied that it was. While Wickes had long been involved in the garage and auto storage business, on the date of the accident he no longer had any cars in storage; had disposed of his entire stock in trade; had had his business telephone disconnected; had discharged all his regular employees; and was no longer providing or offering to provide any services. He did have two employees who were engaged solely in cleaning up the building preparatory to Wickes' scheduled final vacation of the premises on August 7, 1968. At the time of the accident the truck was being used to transport some machinery, which had been used in the garage business and for which Wickes had no further use, to ~ickes' son in Polson. O n the date of the accident Transamerica had a blanket l i a b i l i t y policy containing a garage l i a b i l i t y clause issued t o Wickes which by i t s terms extended coverage t o his employee Barbe. The d i s t r i c t court granted defendant's motion t o dismiss Wickes and Barbe as p l a i n t i f f s on the ground they were not r e a l parties i n interest. The d i s t r i c t court subsequently entered f i n d i n s o f fact that: Peterson and Bob & Ray's had contracted with Wickes t o provide a l l l i a b i l i t y insurance on the truck; the contract was binding upon Glacier; the contract inures also t o the advantage of ~ i c k e s ' employee Barbe and t o Transamerica; the contract was made by Peterson acting within the scope of h i s duties as an agent of Glacier and Glacier had knowledge of the language of the agreement; and, Wickes was not on the date of the accident engaged i n the garage business. The court also found Glacier was obligated t o provide a defense for and t o indemnify Wickes and Barbe i n connection with the accident and owes t o Transamerica $25,000, together with interest amounting t o $4,620. Defendant Glacier raises essentially four issues on appeal: I ) That Glacier was under no contractual obligation t o indemnify Wickes and Barbe. 2) That i f it should be found that Glacier does have some obligation to indemnify, t h i s obligation i s limited t o con- tributing a pro r a t a share of the t o t a l l i a b i l i t y . 3) That Transamerica has no claimant's status. 4 ) That the d i s t r i c t court's findings of fact are clearly erroneous. A n additional issue i n which Glacier claimed that i t s coverage was, i f anything, "excess" while ~ransamerica's was 11 primary" was formally abandoned during oral argument. Glacier's contention that it was under no contractual obligation t o indemnify Wickes and Barbe has two bases. F i r s t , Glacier claims that no contract was entered into and second, that i f such a contract was entered into t h i s accident i s excluded by a policy term excluding coverage of accidents arising out of a garage business. t o Glacier's claim that it was under tion t o provide insurance coverage t o Wickes and Barbe, plaintiff Transamerica urges that the language of the rental agreement used by Glacier's agent Peterson with the knowledge of Glacier, and ~ e t e r s o n ' s representations a t the time the truck was rented are sufficient t o create a contract of insurance binding on defendant Glacier. W e agree with the d i s t r i c t court's conclusion that a binding contract was entered into. It i s undisputed that Peterson was a general agent of Glacier. The rule a s t o the power of a general agent t o bind the insurance company by whom he i s employed i s clearly stated i n 43 Am Jur 2d, Insurance,,§ 204, which states: "No general rule can be satisfactorily evolved which w i l l f i t a l l cases other than that an in- surance contract i s binding upon the insurer i f entered into by an agent acting i n such respect within his express, implied, or apparent authority * * Jx*" This rule has long been the law of Montana. Baker v. Union Assurance Society of London, Ltd., 81 Mont. 281, 264 P. 132. Peterson combined h i s a c t i v i t i e s as an insurance agent for Glacier with the vehicle rental business known as Bob & Ray's. The insurance agency was operated essentially as an adjunct t o the rental and sales busi.ness with almost a l l of ~ e t e r s o n ' s a c t i v i t i e s as an insurance agent arising out of transactions of Bob & ~ a y ' s Car and Truck Sales. The operation of the truck rental business of Bob & ~ a y ' s was covered by a policy issued by defendant Glacier. The terms of t h i s policy required the use of a rental form which was t o be forwarded t o Glacier. This form provided i n pertinent part "Any & a l l l i a b i l i t y w i l l be carried & covered by Bob & ~ a y ' s * * *.'I While a s a whole t h i s wording appears t o be unique, the word I I covered" has been considered in t h i s context by a number of courts. In Mowles v. Boston Ins. Co., 226 Mass. 426, 115 N.E. 666, the word "cover" when used i n the context of insurance was held t o - 5 - mean "insurance for a reasonable time under a l l the circumstances". In Michigan Idaho Lumber Co. v. Northern Fire & Marine Ins. Co., 35 N.D. 244, 160 N.W. 130 and Hurd v. Maine Mut. Fire Ins. Co., 139 Maine 103, 27 A.2d 918, a promise by a general agent t o hold a r i s k "covered" was held t o obligate the agent's insurance com- pany principal t o protect against loss from the risk. In the Montana case Austin v. N e w Brunswick Fire Ins. Co., 1 1 1 Mont. 192, 108 P.2d 1036, a statement by an insurance agent that an individual had "full coverage" was held t o create an insurance contract binding on the insurance company. The effect of a promise that insurance would be "carried & covered" i s the same as a promise to provide "full coverage", to "cover" a r i s k or t o hold a r i s k "covered". The clause clearly s t a t e s the r i s k to be insured against by specifying "Any 6: a l l liability". Accordingly, Peterson by the use of t h i s term i n the rental agreement with the knowledge of Glacier, entered into a contract t o insure against any l i a b i l i t y that might r e s u l t from the operation of the rented truck. As with any insurance agreement entered into by a general agent acting within the scope of h i s apparent o r actual authority, t h i s contract entered into by Peterson was binding on h i s principal, Glacier. This conclusion i s reinforced by the d i s t r i c t court's finding that defendant Glacier had actual knowledge of the terms of the rental agreement. Since the foregoing indicates that Glacier was obligated t o insure Wickes and Barbe, we note the uncontradicted testimony of Wickes i s that a t the time he rented the truck he inquired specifically a s t o insurance and Peterson assured him that insurance coverage was provided. This assurance would also be sufficient t o j u s t i f y a finding that defendant Glacier was obligated to provide insurance. Austin, supra. Defendant Glacier also claims that even i f an insurance contract was entered into, i t s policy exclusion relating t o acci- I I dents which a r i s e i n connection with the operation of an automobile s a l e s agency, r e p a i r shop, service s t a t i o n , storage garage o r public parking place" eliminates i t s l i a b i l i t y i n t h i s situation. While there was some dispute a s t o whether o r not Wickes was engaged i n the garage business a t the time of the accident, the d i s t r i c t court found Wickes was not a t t h a t time engaged i n the garage business. This finding i s supported by the testimony of Wickes and Barbe t h a t on the date i n question there were no longer any c a r s i n storage, the e n t i r e stock i n trade had been disposed o f , and the garage business telephone had been disconnected, a l l of the regular employees had been discharged, and services were no longer being provided. This i s substantial credible evidence i n support of the d i s t r i c t c o u r t ' s finding t h a t Wickes was no longer i n the garage business. A s s t a t e d i n Hellickson v. Barrett Mobile Home Transport, Inc . , Mont . , 507 P.2d 523, 30 St. Rep. 289, 291: "'Our duty i n reviewing findings of f a c t i n a c i v i l action t r i e d by the d i s t r i c t court without a jury i s confined t o determining whether there i s substantial credible evidence t o support them. f 11 Accordingly, since t h e d i s t r i c t court found and t h a t finding i s supported by substantial credible evidence t h a t Wickes was no longer engaged i n a garage business, we hold ~ l a c i e r ' s coverage i s not excluded by t h e policy provision excluding cover- age of garage business r e l a t e d accidents. Glacier's second issue on appeal i s the contention t h a t i t s l i a b i l i t y , i f any, i s limited t o the makifig of a pro r a t a contribution t o settlement. To supports i t s position Glacier r e l i e s on Glacier General Assurance Co. v. S t a t e Farm Mutual Auto. Ins. Co., 150 Mont. 452, 460, 436 P.2d 533, where t h i s Court stated: "Where, i n the absence of the other policy there would be no problem a s t o the l i a b i l i t y of e i t h e r of one of the companies and the 'other insurance' clauses a r e the same, the l i a b i l i t y i s more ration- a l l y prorated than a r b i t r a r i l y l a i d a t the f e e t of one o r the other. 11 The above quoted case involved two policies which differed only i n t h a t one policy covered the driver by name and the other covered him only a s a driver. I n the i n s t a n t case, the d i f f e r - ences a r e f a r greater. The r e n t a l agreement's insurance clause which created the contract of insurance provided s p e c i f i c a l l y t h a t "Any & a l l l i a b i l i t y w i l l be c a r r i e d & covered". Further, the Glacier policy was entered i n t o f o r the purpose of providing insurance coverage on the specific r i s k s involved i n the use of the truck involved i n the accident. These differences provide a r a t i o n a l basis on which t o assign defendant Glacier t h e duty of providing primary insurance coverage. W e hold t h a t a contract t o provide "Any & a l l " l i a b i l i t y coverage with regard t o a specific r i s k creates an obligation t o provide primary insurance of the r i s k . Therefore, Glacier was obligated t o provide primary coverage and i s not e n t i t l e d t o contribution of a pro r a t a share by the secondary insurer, Transamerica. The t h i r d issued raised by Glacier i s an a s s e r t i o n t h a t p l a i n t i f f Transamerica has no s t a t u s a s a claimant i n t h i s action. This claim i s without merit. It i s well established t h a t when an insurer pays a l l o r a portion of a l o s s on behalf of an insured, he i s subrogated pro tanto t o whatever r i g h t s the insured possessed. American Equitable Assurance Co. v. Newman, 132 Mont. 63, 313 P.2d 1023; Caledonia Insurance Co. v. Northern Pacific Railway Co., 32 Mont. 46, 79 P. 544. Transamerica by contributing t o the compromise settlement agreed t o by the insurers made a payment on behalf of the insured. Hence, Transamerica has become subrogated t o the r i g h t s of Wickes and Barbe. As the discussion of the preceding issues indicates, Glacier was under an obligation t o provide insur- ance coverage f o r Wickes and Barbe. Had Wickes and Barbe contri- buted instead of Transamerica, t h e i r r i g h t t o a s s e r t a claim against Glacier i s unquestionable. P l a i n t i f f Transamerica being subrogated t o t h a t r i g h t , i t i s obvious t h a t it does have a s t a t u s t o press a claim against defendant Glacier. ~ l a c i e r ' s f i n a l issues i s the claim t h a t the d i s t r i c t c o u r t ' s findings of f a c t a r e c l e a r l y erroneous. W e have reviewed the e n t i r e record and find the district court's findings amply supported by substantial credible evidence. As stated in Hellickson, our review is limited to determining whether there is substantial credible evidence to support the district court's findings. If there is, as in this case, then the determination of the district court will not be disturbed. The decision of the district court is affirmed. / / ' c h i e f Justice , ' stices.