Meritplan Ins. Co. v. Universal Underwriters Ins. Co.

SIMS, J.

In this action for declaratory relief between two liability insurance carriers, each has appealed from the judgment.

The judgment awards the plaintiff and cross-defendant Meritplan Insurance Company, the insurer under a policy which expressly covered the negligent driver and the car involved, contribution to the extent of one-half the amount expended in the settlement of one of two claims arising out of an accident involving its insured. It complains on appeal that it was entitled to a larger sum, first, because the respective liabilities of the insurers should have been prorated in accordance with the respective limits of insurance in force, and, second, because the trial court failed to order any contribution for the sums it disbursed in connection with the settlement of the second claim.

The judgment relieved the defendant and cross-complainant Universal Underwriters Insurance Company, the insurer under a policy which covered the seller of the vehicle involved and which also admittedly covered the purchaser-driver because of the seller’s failure to comply with provisions of law controlling registration, of all liability other than that set forth above. It contends that the court erroneously required it to contribute a sum in excess of the amount necessary after plaintiff’s coverage was exhausted. Universal further asserts that, if it is liable at all, the court correctly refused to require it to contribute more than one-half of the claim; and that it properly was not required to contribute to the second claim because Meritplan was a volunteer in settling that matter, without notice to, or consultation with Universal.

Application of established principles to the uncontradicted facts of the case reflects that plaintiff’s contentions must be sustained and that the judgment is erroneous.

Meritplan’s coverage

The court found that the driver-purchaser purchased an automobile from the dealer-seller on September 19, 1959; that on or about September 22, 1959, Meritplan issued to him a

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policy of liability insurance which described the automobile he purchased; and that up to the applicable policy limits, this insurance covered his liability arising out of an accident which occurred on September 30, 1959. The evidence reflects that the limits of bodily injury liability under this insurance were $10,000 for each person, and $20,000 for each accident.