Opinion
McCOMB, J. Plaintiffs appeal from a judgment in favor of defendant insurance companies in an action brought by plaintiffs against them on certain claims assigned to plaintiffs by Richard McGregor as part of a stipulated judgment in plaintiffs’ favor against McGregor.
Facts: Some time in 1960, McGregor and his wife leased from Ed Fletcher Company a 12-acre parcel of land, containing a house, which they occupied, a riding ring, bleachers on each side of the riding ring, a [260]small office structure, a cook’s shack, a hay bam, paddocks, and a stable. The 12-acre parcel was surrounded on three sides by a 500-acre pasture, which was completely fenced, with one chained and locked gate on the exterior perimeter and another gate between the pasture and the 12-acre parcel. The only structure on the 500-acre pasture was a windmill.
On the 12-acre parcel, McGregor, for profit, trained and broke horses, trained riders, advised owners and riders with respect to horses, showed horses, and carried on similar activities. He also bred quarter horses. The 500-acre pasture was used only for grazing horses, some of which belonged to McGregor and some to other persons, who paid McGregor for keeping them there. He charged between $15 and $25 per month for the use of the pasture for grazing. McGregor occupied the 12-acre parcel as lessee under a written lease and used the 500-acre pasture as a licensee under an oral license.
Some time during the night of June 29, 1963, or early morning hours of June 30, 1963, while McGregor was away from the premises at the Del Mar Fairgrounds, several of the horses kept in the pasture for grazing, including some owned by McGregor, escaped therefrom, someone apparently having left the gate open. One of the horses, owned by Dr. Ben F. Zundel, went onto Fletcher Parkway, where a car driven by James Donald Reece collided with the horse about 2 a.m. on June 30, 1963. Both Mr. Reece and the horse were killed in the accident. Mr. Reece’s widow (now Mrs. Wint) thereafter, individually and as guardian ad litem of the decedent’s minor child, brought a wrongful death action against McGregor, Dr. Zundel, and the Ed Fletcher Company.1
At the time McGregor entered into possession of the property in 1960, a policy of liability insurance, written by Great American Insurance Company (Great American), was assigned to him from a previous tenant. The Great American policy was a primary policy, with limits of $10,000/ $20,000, and covered McGregor for the “business liability” of his “riding club.” McGregor also acquired coverage under an “excess” policy, with limits up to $100,000, written by another insurance company; but six months after the commencement of his lease term he allowed that coverage to lapse. The Great American policy was renewed from year to year and was in effect at the time of the accident.
On February 10, 1963, through Venberg and Robson, a corporate insurance agency in San Diego, McGregor acquired coverage under a [261]$100,000 limit “Farmer’s Comprehensive Personal Liability Policy” issued by defendant The Fidelity and Casualty Company of New York (Fidelity). That policy was also in effect at the time of the accident. McGregor testified that before the policy was issued, he explained to the broker that he wanted coverage for all the activities in which he was involved personally, but did not want bleacher insurance, as he was already covered for that and did not want to incur additional expense with respect thereto.
Dr. Zundel was covered under a homeowner’s policy issued by defendant Glens Falls Insurance Company (Glens Falls). That policy specifically provided that the word “Insured” also included “with respect to animals . . . owned by an Insured, any person or organization legally responsible therefor .. . .”
McGregor requested a defense of the action from the three insurers, but only Great American, with a $10,000 maximum liability, provided a defense for him. After negotiations, an $80,000 stipulated judgment was entered against McGregor alone; and, as part of the judgment, McGregor assigned to plaintiffs all claims he might have against Fidelity and Glens Falls, plaintiffs agreeing not to seek personal liability from McGregor. Great American paid its $10,000 portion of the $80,000 judgment. Plaintiffs, as assignees, then instituted the present action against Fidelity and Glens Falls to recover the $70,000 balance, claiming (1) that the insurers were liable for the decedent’s death under the terms of their policies and (2) that, in any event, they were liable for the settlement payments "as a result of their wrongful refusals to defend the initial action. Judgment was entered in favor of the insurance companies and the insurance agency, and plaintiffs appealed.
Questions: First. Is Fidelity liable to plaintiffs under the facts herein?
Yes. If there is potential liability on the part of an insurer under a policy of insurance, there is a duty to defend, and the insurer is liable for all damages reasonably incurred by the insured in the event of a failure to defend. (Gray v. Zurich Insurance Co., 65 Cal.2d 263 [54 Cal.Rptr. 104, 419 P.2d 168].) As will hereinafter appear, such potential liability existed in the present case. Moreover, the policy can reasonably be interpreted to provide actual liability by the insurer; and, under well settled rules of construction, any ambiguity must be construed against the insurer. (Universal Underwriters Ins. Co. v. Gewirtz, 5 Cal.3d 246, 250 (1) [95 Cal.Rptr. 617, 486 P.2d 145]; Paramount Properties Co. v. Transamerica Title Ins. Co., 1 Cal.3d 562, 569 (2) [83 Cal.Rptr. 394, 463.P.2d 746].)
[262]Under its policy, Fidelity agreed “[t]o pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of bodily injury or property damage, and . . . [to] defend any suit against the insured alleging such bodily injury or property damage and seeking damages which are payable under the terms of this policy, even if any of the allegations of the suit are groundless, false or fraudulent . . . .”
Fidelity’s refusal to defend McGregor in the wrongful death action was based on its claim that the damages sustained as a result of the escape of -the horses from his pasture were excluded from coverage under an exclusionary clause which provided that the policy was inapplicable “to any business pursuits of an insured, except . . . activities therein which are ordinarily incident to nonbusiness pursuits . . . .”
Under the language of the policy, coverage is provided if an injury resulted from (1) a nonbusiness pursuit or (2) from a business pursuit which is also ordinarily incident to a nonbusiness pursuit. As will be seen, there is a basis for finding at least potential liability under either alternative.
Thus, although the pasturing of horses for a fee would normally be regarded as a business pursuit, Fidelity’s policy specifically defines “business” to include “trade, profession or occupation, other than farming (Italics added.) While McGregor’s “riding club” venture may well be considered beyond any reasonable interpretation of “farming,” the broad term “farming” is not limited merely to the cultivation of the soil, but includes, in addition, the raising and grazing of animals. (See, e.g., Security-First Nat. Bk. v. Pierson, 2 Cal.2d 63, 64-65 [38 P.2d 784].) It is not entirely clear from the record how closely interrelated the “riding club” and “grazing” activities may have been; but, in view of the broad reach of the policy’s undefined “farming” terminology, coverage or non-coverage of the grazing activities appears to be, at the very least, ambiguous, thus subjecting the insurer to liability.
It is worthy of note that the policy is not an ordinary homeowner’s comprehensive personal liability policy, but, rather, a “Farmer’s Comprehensive Personal Liability Policy.” (Italics added.) According to McGregor’s testimony, he described to the insurance broker the nature of his riding club and grazing activities. There is nothing in the record to indicate that McGregor engaged in any other farming activities; and to exclude the entire grazing operation would cut the heart out of the special coverage afforded by this farm-oriented comprehensive policy. As hereinabove stated, the policy fails to define “farming,” and grazing can reasonably be inter[263]preted to constitute a farming operation. Consequently, the nonfarming business exclusion is inapplicable, since, as pointed out above, any ambiguity must be construed against the insurer.
Even, however, if McGregor’s “grazing for hire” activities were regarded as nonfarming pursuits, they would still be covered as a result of the exception to the “business pursuits" exclusion, under which there is coverage for business injuries which are caused by activities “ordinarily incident to nonbusiness pursuits.” By the terms of the policy, “nonbusiness pursuits” include normal farming activities; and the acts of keeping fences and gates repaired and closed are ordinarily incident to normal farming activities. Hence, injuries resulting from a failure to keep farm gates closed, as here, would appear to be within the coverage provided by the policy. (See Crane v. State Farm Fire & Cas. Co., 5 Cal.3d 112 [95 Cal.Rptr. 513, 485 P.2d 1129, 48 A.L.R.3d 1089].)
Fidelity argues that even if it was under a duty to defend McGregor, its failure to do so was of no consequence, because Great American defended him, and he therefore was not prejudiced. Great American’s policy, however, had a $10,000 limit, and a defense by an insurer whose policy has a limit far below the amount claimed cannot be equated to the defense of an insurer who stands to lose 10 times as much as the insurer who defends. This court has, in fact, held that where more than one insurer owes a duty to defend, a defense by one constitutes no excuse of the failure of any other insurer to perform. (Continental Cas. Co. v. Zurich Ins. Co., 57 Cal.2d 27, 37 [10] [17 Cal.Rptr. 12, 366 P.2d 455].)
Since, as hereinabove shown, there was potential liability under the policy and Fidelity’s refusal to defend was unjustified, Fidelity is liable for its proportionate share of the judgment (Campidonica v. Transport Indemnity Co., 211 Cal.App.2d 403, 409[8] [31 Cal.Rptr. 735] (hg. den.); Walters v. American Ins. Co., 185 Cal.App.2d 776, 786 [8 Cal.Rptr. 665] (hg. den.)), subject, however, to its right to litigate on remand the remaining issue raised by the pleadings as to whether the settlement was collusive or fraudulent.
Second. Is Glens Falls liable to plaintiffs under the facts herein?
No. Although the same legal principles are applicable to determine whether Glens Falls had an obligation to defend McGregor in the wrongful death action, the factual situation is entirely .different. It will be recalled that the Glens Falls policy was a homeowner’s policy written on behalf of the owner of the horse, Dr. Zundel, as the named insured and that McGregor claimed to be an additional insured under the definition of [264]“Insured” hereinabove referred to.2 Like the Fidelity policy, the Glens Falls policy contains an exclusionary clause making the policy inapplicable “to any business pursuits of an Insured other than . . . activities therein which are ordinarily incident to nonbusiness pursuits . . . .” “Business,” however, is defined to include “trade, profession or occupation,” with no exception relating to farming activities. Farming for profit must, therefore, be regarded as a business pursuit; and, since the grazing of animals is included in the broad term “farming,” and McGregor charged for the grazing, he was engaged in a farming operation for profit. Consequently, the failure to keep farm gates closed must be considered an act incident to a business pursuit and within the terms of the exclusionary clause hereinabove quoted, as a result of which there is no coverage for McGregor under the Glens Falls policy. Since gates are only infrequently used in nonbusiness pursuits, keeping them closed is not an act which is ordinarily incident to nonbusiness pursuits. The analogy between the present case and Crane therefore does not exist with respect to the Glens Falls policy.
Further clauses in the policy reinforce the conclusion that McGregor was not an additional insured thereunder. For instance, the definition of “premises” specifically excludes farm land owned by, or rented to, an insured; and the policy provides that if three or more spaces in stables are held for rental, the property constitutes “business property” within the meaning of the policy.
Under the circumstances, there being no ambiguity with respect to the exclusion of activities relating to farming, it remains only for us to determine if under the language of the policy the insurer has led the insured reasonably to believe that a defense would be provided.
In Gray, this court indicated that in an insurance contract written by the more powerful bargainer (the insurer) to meet its own needs and offered to the weaker party (the insured) on a “take it or leave it” basis, the reasonable expectations of the latter may have significance in determining whether the former owes a duty to defend. In Gray, we found that the policy did not clearly define the application of the exclusionary clause to the' duty to defend, that the exclusionary clause was unclear, and that the insured could reasonably have expected that the protection he had purchased included a duty to defend him. The person being sued in Gray, however, was the named insured, who had purchased and paid for the protection afforded by the policy. It is to the reasonable expectations of [265]such a person that we must look in making our determination whether the protection includes the right to a defense. In other words, under the Glens Falls policy we must consider what the reasonable expectations of Dr. Zundel were—not the reasonable expectations of someone claiming to be an additional insured thereunder. In analyzing the situation, we have concluded that it would be unreasonable for Dr. Zundel to have assumed that part of the premium he paid for the policy was to purchase the protection of a defense to someone claiming to be an additional insured, when such person, because of a clear exclusionary clause in the policy, actually had no basis for sustaining his claim of being covered thereunder. Furthermore, our holding in Gray is premised upon a finding that the policy provisions reasonably led the insured to expect to be defended. Here, McGregor had never seen the policy and probably did not even know of its existence, and hence cannot claim that it reasonably led him to expect to be defended. Under the circumstances, the trial court properly found in favor of Glens Falls.
Third. Should the judgment insofar as it finds in favor of Venberg and Robson, the insurance agency, be affirmed?
Yes. Although plaintiffs appealed from the entire judgment, they failed to urge any error in law which would support a reversal of the judgment insofar as it finds in favor of the insurance agency. Under the circumstances, since it is counsel’s duty by argument and citation of authority to show in what respects rulings complained of are erroneous (see Green-stone v. Claretian Theo. Seminary, 173 Cal.App.2d 21, 35 [21] [343 P.2d 161]), the attack on the judgment insofar as it finds in favor of the insurance agency may be deemed to have been abandoned (Sutter v. Gamel, 210 Cal.App.2d 529, 531 [2] [26 Cal.Rptr. 880]; Utz v. Aureguy, 109 Cal.App.2d 803, 806-807 [241 P.2d 639]).
The judgment, insofar as it finds in favor of Glens Falls and Venberg and Robson, is affirmed and, insofar as it finds in favor of Fidelity, is reversed and remanded for proceedings consistent with the views herein-above expressed.
Tobriner, J., Mosk, J., Burke, J., and Kaus, J.,* concurred.
The action was subsequently dismissed, with prejudice, against both Dr. Zundel and the Ed Fletcher Company.
The policy provides: “The word ‘Insured’ also includes . . . with respect to animals . . . owned by an Insured, any person or organization legally responsible therefor .. . .”
Assigned by the Chairman of the Judicial Council.