Court Opinion

ID: 8305264
Source: CourtListenerOpinion
Date Created: 2022-10-17 11:28:17.051732+00
Date Added: 2024-06-11T16:44:30.845207
License: Public Domain

OPINION ON PETITION TO REHEAR
MeAMIS, P.J.
Tennessee Farmers Mutual Insurance Company has filed a petition to rehear calling attention to our failure to respond to its insistence that liability should, in any event, be pro rated between it and defendant in error Canal Insurance Company. It is insisted the opinion of the Supreme Court in United Services Automobile Association v. Hartford Accident & Indemnity Company decided April 21, 1967, and reported at 220 Tenn. 120, 414 S.W.2d 836, fortifies this insistence.
We considered the question. The author of the opinion was remiss, however, in not specifically responding to this insistence.
*9We think the question must turn upon whether there is an irreconcilable conflict in the policies of the two companies such as was found to exist in United Services Automobile Association v. Hartford Accident & Indemnity Company, supra.
Petitioner Tennessee Farmers’ policy provides that any person driving the insured vehicle with the permission of the owner should be included in the definition of “insured”. It is then provided that, if the “insured” has other insurance against the liability insured against, Tennessee Farmers “shall not be liable for a greater proportion of such liability or loss than the applicable limit of liability bears to the total applicable limit .of liability of all collectible insurance against such liability or loss.” Under our previous holding, Hodges was driving with the permission of the owner and was, therefore, driving as an insured under the Tennessee Farmers policy.
At the time of the accident Hodges was,insured against public liability under at least one of the Canal policies covering vehicles owned by himself and his wife. The “other insurance” provision of the Canal policies reads:
“If the insured has other insurance against a loss covered by this policy the company shall not be liable under this policy for a greater proportion of such loss than the applicable limit of liability stated in the declarations bears to the total applicable limit of liability of all valid and collectible .insurance against such loss; provided, however, the insurance with respect to temporary substitute automobiles under Insuring Agreement IV or other automobiles under insuring agreement V shall he excess insurance over any other valid and collectible insurance.” (Italicizing ours)
*10Except for the italicized portion of this policy provision in Canal’s policies, it would seem there conld he no reconciliation between the policies of the two companies, as in United Services etc., v. Hartford etc., supra. This language, however, must be given some meaning and effect unless repugnant to a corresponding provision in the Tennessee Farmers policy. It can not simply be read out of the Canal policies.
The Tennessee Farmers policy, in referring to “Other Insurance”, makes no reference to “excess insurance” but merely provides for prorating the loss in event its insured is covered under another policy. Unquestionably it would be proper, under this provision of the policy, to pro rate the loss in event there are two valid policies covering the vehicle being operated by the insured at the time of the accident giving rise to a claim of liability.
“In the case of policies containing conflicting ‘other insurance’ provisions, where both policies have béen issued to the same person and cover the same vehicle, it has been held that each company is required to share pro rata in the liability arising from an accident involving the insured vehicle, for the reason that ‘excess’ coverage clause is inoperative and cannot stand against the pro rata provision; but where each of the two policies is issued to different persons, one covering the owner of the insured vehicle and providing for pro rata liability in the case of other insurance, and the other covering the driver of a vehicle owned by another and providing only excess coverage as to him, the policy covering the owner is primary insurance and must bear the entire loss up to the policy limit, while the policy covering the driver is excess insurance which bears that part of the loss remaining after the primary insurance is exhausted.” *11BlasMeld’s Cyclopedia of Automobile Law and Practice, Yol. 8, Section 345.13, p. 499.
It seems to us tbe Canal policies contemplate two separate situations, first, where two or more policies cover tbe insured vehicle and, second, where the insured is driving another car which is insured under another policy. In the first instance the liability is to be pro rated; in the second the Company is to be liable only for any liability of its insured in excess of any coverage on the other car which the insured may claim as the driver of such other vehicle.
There is no necessary conflict between the two policy provisions. Appleman on Insurance Law and Practice, Yol. 8, Section 4914, p. 400.
In connection with an annotation of 76 A.L.R.2d 505, after noting that there are a variety of factual situations as well as variations in policy terms in the decided cases, it is said:
“Despite the foregoing, the cases seem susceptible of a certain amount of generalization. Thus, if the nonownership coverage offered by one of the policies involved is of the ‘excess insurance’ type, the conclusion is generally reached — no matter how various the reasoning adopted in support of it in the different cases may be — that the policy issued to the owner of the vehicle is the ‘primary’ policy, and the company issuing it is liable up to the limits of the policy without apportionment, although the policy contains a ‘prorata’ clause. To state the proposition in another way: if one policy has been issued to the owner of the vehicle causing damage, and another covers the same loss by virtue of the relationship to the accident of one who is not the vehicle owner, the latter’s insurer, *12at least where its coverage is of the ‘excess insurance’ variety, is in the favorable position and need not assume any of the loss, although the vehicle owner’s policy contains a ‘prorata’ clause. As involving the foregoing factual pattern and reaching the conclusion indicated, reference is made to the following cases.”
■ Following the above there appears a digest of cases from many states, as well as federal cases. These cases without exception appear to deny proration to the company having a policy on the involved vehicle providing for proration but not containing an excess insurance provision when the driver’s policy provides for excess coverage. See also for general discussion, 7 Am. Jur.2d 544, 545.
In United Services Automobile Association v. Hartford Accident & Indemnity Company, supra, 220 Tenn. 120, 414 S.W.2d 836, United brought an action for declaratory judgment against Hartford to which Hartford filed a demurrer. The Chancellor sustained the demurrer and United appealed.
It appears Lt. Col. Helms had a policy covering his own automobile in United. While this policy was in force he leased a truck which was insured under a public liability policy in Hartford and while driving the truck he was involved in an accident. As a result certain judgments were obtained against him. Both companies declined liability, United claiming the “other insurance” provision in its policy made its liability secondary. Hartford claimed under the “other insurance” provision of the policy covering the truck it was not liable for any amount since the driver Helms had other insurance.
Hartford in that case occupied the same position as Tennessee Farmers in this case in that it had a policy *13on tlie offending vehicle operated at the time by a non-owner. United occupied the position of Canal in this case in that its policy covered the driver of the offending vehicle by virtue of a provision in its policy obligating it to defend its policy holder while driving another vehicle. Under the terms of the two policies the Supreme Court, in an opinion by Mr. Justice Creson, held there was a repugnancy between the two policies and that the loss should be prorated between the two companies.
The United policy covering the driver, Lt. Col. Helms, while driving another vehicle with the permission of the owner, under the heading “Other insurance” contained a proration clause with the proviso that “the insurance with respect to a temporary substitute automobile or non-owned automobile shall be excess insurance over any other valid and collectible insurance. ”
The Hartford policy covering the truck contained a provision undertaking to relieve it of all liability unless the loss exceeded the amount of all other insurance and in that event limiting its liability to the excess. Thus both undertook to limit liability to the excess over other valid and collectible insurance. On unassailable reasoning this was held to be such repugnancy as to make the provision in both policies void. As pointed out in the opinion as to which company should he let out depended upon which policy was read first. The Supreme Court concluded, under the circumstances, it was proper and right that both insurers should bear the loss.
The case here is different. In the Tennessee Farmers policy covering the truck involved in the collision there is no provision for “excess insurance”, only a provision for proration. The Canal policies do contain such “excess *14insurance ’ ’ provision. The question is: Can both policies, by a fair and reasonable construction, be given effect? "We think they can.
It seems to us the language of the Canal policies above copied was intended to cover the situation here presented where the insured is driving another vehicle with the permission of the owner and becomes entitled to invoke the protection afforded by the owner’s policy. On the other hand, if the insured should incur liability while driving the vehicle described in the policy and in so doing should be covered by another policy the provision for proration would apply. So, we think there is no conflict between the two provisions and, since the Canal policies have an excess insurance provision and the Tennessee Farmers policy does not, there is no repugnancy between the coverage of the two policies.
The principle of proration in the law of insurance is designed to equalize the burden between compensated insurers of identical risks. See 8 Appleman Insurance Law and Practice, Sec. 4911.
It results from the foregoing that the petition to rehear must be denied.
Cooper and Parrott, JJ., concur.