Fageol Truck & Coach Co. v. Pacific Indemnity Co.

MOORE, J., pro tem. This appeal by Pacific Indemnity Company is from the same judgment as that affirmed by our decision this day filed (No. 16600, ante, p. 731 [117 Pac. (2d) 661]). Other points, however, raised by this appeal require separate consideration.

1. It is contended that the conditional judgment transforms appellant’s excess insurance to a suretyship for Detroit’s financial responsibility. Pacific argues that if it should be forced to satisfy the judgment and attempted, as subrogee, to enforce its judgment against Detroit, it would upon Detroit’s application be restrained from such enforcement “upon the ground that it never requested Pacific to act as its surety.” If such a contention ever had any merit, it comes too late to avail appellant. It was not mentioned in Detroit’s appeal.

The V. S. I. endorsement of Pacific provides that “this insurance shall not apply nor contribute to the payment of any loss until all such specific insurance shall have been exhausted.” Notwithstanding this language, Pacific contends that its excess insurance never became effective because the face of Detroit’s policy exceeded the amount of the loss. But the clause quoted has the ring of intelligible English. It must be given “such a construction . . . as if fairly warranted will best carry out the object for which the contract was entered into, namely, that of securing indemnity to the insured for the losses to which the insurance relates”. (Cutting v. Atlas Mutual Ins. Co., 199 Mass. 380 [85 N. E. 174]; Fageol v. Pacific Indemnity Co., et al., supra.) It was held in the Cutting case that specific insurance is exhausted “when all that is collectible in respect to any given loss has been paid . . . when all that can be collected has been collected for a loss arising from any of the risks so insured against.” The very purpose of an agreement for indemnity is to make the indemnitee whole in event of the insolvency of the primary obligor. We [752]can perceive no other intention to have been contemplated by the provision of the V. S. I. endorsement. When that rider was affixed to the Pacific policy there was no other insurance on the truck. Had the second policy never been issued the rider would surely have applied without a question. Since the legal effect of the Detroit policy was that it became primarily liable for the damage to the truck, we can conceive of no valid reason why Pacific should not still pay. the loss if Detroit should prove to be insolvent.

Properly to distinguish the authorities cited by appellant (Fairchild et al. v. Liverpool Ins. Co., 51 N. Y. 65; Klotz Tailoring Co. v. Eastern Fire Ins. Co., 116 App. Div. 723 [102 N. Y. Supp. 82]; Hartford Steam Boiler Inspection & Ins. Co. v. Cochran Oil Mill & Ginnery Co., 26 Ga. App. 288 [105 S. E. 856]) would unduly extend this opinion. They deal with a “floating policy”, a policy covering proportionate liability, or a policy not represented on the appeal. They do not aid in interpreting the meaning of the V. S. I. endorsement which provides that it shall “not contribute to the payment of any loss until after specific insurance shall have been exhausted.”